The strength of emerging Asian economies is a large factor behind the lift in New Zealand's export earnings, ASB economist Jane Turner says.
"Indeed, exports to China are up 46% on year-ago levels, largely due to increased exports of dairy and logs.
Continued growth in China should underpin demand for commodities over the next year."
However, dry weather conditions remained a risk to agricultural production volumes, although recent rain had helped improve soil moisture, she said.
Statistics New Zealand (SNZ) figures released yesterday showed higher prices for dairy products were the main factor behind a 19% rise in the value of exports in November compared with November 2009.
SNZ put the value of exports for the month at $3.7 billion, up $589 million from November 2009.
The value of imports rose $495 million, or 15%, to $3.8 billion, including a rise of $152 million, or 21%, in processed industrial supplies.
The trade deficit for November was $186 million, or 5.1% of exports, compared with an average November deficit of 24% of exports for the previous five years.
For the year to November, New Zealand had a trade surplus of $1.3 billion, or 3.1% of exports.
It was the first annual surplus for November since 2001.
In November, milk powder, butter and cheese exports were up $243 million, or 32%, mainly because of higher prices, SNZ said.
The rise was led by unsweetened whole milk powder and butter, while cheese exports were down $21 million because of lower quantities.
Exports of logs, wood and wood articles were up $64 million, or 33%, compared with November 2009, led by pinus radiata logs.
The strength in commodity prices, particularly dairy, had been a positive development for New Zealand agricultural exporters, Ms Turner said.
Looking ahead, recent substantial increases in prices of other food commodities, particularly sugar and wheat, would begin to flow through as higher import prices - slightly reducing New Zealand's still-favourable international purchasing power, she said.
New Zealand drivers would not have appreciated the recent increase in petrol prices ahead of the holiday season.
Higher prices of feed would limit the ability of farmers to cushion the impact of dry conditions and potentially reduce agricultural production volumes.
"These factors remain key risks to a relatively fragile economic recovery.
Nevertheless, the trade balance has been improving over the past year for the right reasons: increased export earnings," Ms Turner said.
Among imports, the largest increase was in the intermediate good category, which includes processed industrial supplies, with a rise of $194 million, or 13%.
Consumption good imports were up $127 million, or 13%, in November from a year earlier, while capital goods lifted $121 million, or 22%, with machinery and plant up $83 million, or 17%.
Imports of vehicles, parts and accessories were up $73 million, or 22%, from November 2009, led by passenger and goods vehicles and tractors, SNZ said.
