Rising export prices lift merchandise terms of trade

Merchandise terms of trade for the June 2021 quarter rose 3.3 percent on the previous quarter, as rising global commodity prices contributed to a strong quarterly increase in export prices, Stats NZ said today.

Export prices for goods rose 8.3 percent on the previous quarter, while import prices rose 4.8 percent. Both export and import goods prices had previously fallen each quarter since the first half of 2020, including large falls in the September 2020 quarter.

Compared with the previous June quarter, merchandise terms of trade remained steady as both export and import prices fell 1.8 percent annually.

Terms of trade measures New Zealand's purchasing power for import goods, based on the prices it receives for exports. An increase in terms of trade means that New Zealand can buy more import goods for the same quantity of exports.

Dairy and forestry products lead rise of export prices

Dairy and forestry products were the major contributors to rising goods export prices. Export prices for dairy products increased 15.3 percent on the previous quarter, while prices for forestry products increased 12.7 percent.

"Export prices for dairy typically lag behind the more widely reported global dairy trade (GDT) prices," business prices delivery manager Bryan Downes said.

"While GDT only accounts for a portion of New Zealand dairy exports, it is likely that we're now seeing the high GDT prices reported earlier in the year push up our dairy export prices in the June quarter."

"We've also seen sustained demand for New Zealand logs, especially from China, which has continued to push up export prices for forestry products," Mr Downes said.

Other primary products also increased in price in the June 2021 quarter, with export prices for meat up 6.8 percent and prices for aluminium up 14.5 percent.

"Rising consumer petrol prices likely reflect both the rising cost of crude oil, and other rising costs including sustained increases in the cost of transportation services," Mr Downes said.

"Transportation prices - particularly for sea transportation - continued to rise this quarter due to ongoing container shortages, port congestion, and increased consumer demand."

In the June 2021 quarter, import prices for transportation services rose 19.9 percent on the previous quarter and 112.4 percent on the previous year.