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NZ terms of trade in June worst since Sept 06 as export prices slumped

NZ terms of trade in June worst since Sept 06 as export prices slumped

A fall in New Zealand's merchandise terms of trade index in the June quarter to its lowest level since September 2006 meant the country's exports could pay for 9% fewer imports than in the March quarter, figures released by Statistics New Zealand (Stats NZ) show. In another sign of the pain caused to the economy by the high New Zealand dollar, merchandise export prices fell 11.6% over the June quarter from March. This fall was faster than the 2.9% fall in merchandise import prices over the three months. The 11.6% fall in merchandise export prices followed a 7.9% fall in the March quarter and a 2.5% rise in the December quarter. The latest fall was the largest since a 40% fall in the June 1951 quarter which was influenced by a large price decrease for wool, Stats NZ said. "The food and beverages index (down 14.8 percent) made the most significant contribution to the decrease in total export prices in the June 2009 quarter. The latest quarterly fall is the largest since the series began in the September 1971 quarter, and follows an 8.1 percent fall in the March 2009 quarter and a 6.5 percent rise in the December 2008 quarter," Stats NZ said. "The dairy products index (which is part of the food and beverages index) fell 24.1 percent in the June 2009 quarter, which is the largest quarterly fall since the series began in the March 1950 quarter. The latest fall brings the dairy products index to its lowest level since the June 2007 quarter. The latest decrease compares with a 19.9 percent decrease in the March 2009 quarter and a 5.5 percent increase in the December 2008 quarter. " "The June 2009 quarter fall was driven by price decreases for milk powder (down 22.8 percent), cheese (down 23.7 percent), and butter (down 25.7 percent). In the year to the June 2009 quarter, the dairy products index fell 31.1 percent compared with a 57.5 percent rise in the year to the June 2008 quarter. The latest annual fall is the largest since a 31.6 percent fall in the year to the March 2003 quarter." However, recent rises in prices at Fonterra's internet auctions for whole milk powder indicate that dairy prices have bottomed and are on their way back up again. Recent dairy price figures show NZ whole milk powder export prices are up 38% in US dollar at the start of September since their lows in February, but the rising New Zealand dollar meant that prices were only up 4.2% in NZ dollar terms. New Zealand's services export prices fell 3.3% in the June quarter from March, as services import prices fell 6.9% over the quarter. The services terms of trade index was up 3.8% from March.

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