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NZ trade deficit narrows in November, as rising meat exports offset dairy weakness

New Zealand posted its smallest November trade deficit in four years, beating economist forecasts, as falling dairy prices were offset by a rise in meat exports.

The country's trade deficit narrowed to $213 million last month, the smallest November deficit since 2010 and down from October's deficit of $908 million. The trade balance was a surplus of $153 million in November last year, when exports were at record highs, according to Statistics New Zealand. A deficit of $500 million was expected last month, based on a Reuters poll of economists.

Exports fell 9.5 percent to $4.02 billion from the same month a year earlier, beating the Reuters poll of $3.95 billion. Imports slipped 1.3 percent to $4.24 billion, higher than the Reuters prediction of $4.24 billion.

New Zealand benefited from strong terms of trade in the first half of the year as demand for dairy products and logs in China bolstered exports, while a historically high kiwi dollar has kept down the cost of imported goods. Dairy prices have nearly halved since the start of the year, as an oversupply in China weakened demand and pushed down prices, coinciding with a fall in log prices, easing the country's trade outlook, and weighing on the currency.

Today's figures show milk powder, butter and cheese dropped 27 percent to $1.2 billion, led by a 34 percent tumble in milk powder. Offsetting the decline in New Zealand's biggest export commodity was arise in meat and edible offal, which rose 20 percent, led by a 65 percent jump in frozen beef.

Capital goods led the decline in imports, falling 7.9 percent last month from November 2013. Intermediate goods increased 7.9 percent, led by processed industrial supplies and diesel, while consumption goods rose 4.2 percent as more processed food and beverages arrived in New Zealand.

Exports to China slid 44 percent to $686 million in November from a year earlier, led by a drop in milk powder, and reflecting when dairy prices were nearing their peak last year. Meanwhile imports from the country's largest trading partner rose 1.3 percent to $829 million last month.

On an annual basis New Zealand's trade balance was a deficit of $453 million, smaller than Reuters forecast deficit of $750 million. Exports rose 6.3 percent to $50.4 billion in the year ended November, while annual imports climbed 6.6 percent to $50.8 billion.

The country posted a trade deficit of $2.5 billion in the three months ended Nov. 30, as exports dropped 7 percent to $11.6 billion, while imports climbed 11 percent to $14.1 billion.