Primary industries exports forecast to grow to $44.3 billion
New Zealand's primary industry exports are forecast to increase by 3.8% for the year ending June 2019 to $44.3 billion, according to the Ministry for Primary Industries (MPI) Situation and outlook for primary industries (SOPI) report.
Overall, the forecast has been increased $505 million from the previous September forecast round. Changes in the last 3 months that have caused the forecast to increase are higher dairy production, a stronger outlook for beef prices, and increased forestry production.
Dairy revenue is rising due to an increase in milk production due to beneficial weather conditions and growth in value added products. Increases to horticulture revenue are being driven by strong consumer demand, rising prices, and good growing conditions for most horticultural crops. Increases in forestry are being supported by a strong first quarter for log and sawn timber exports.
This would be the fourth straight year of rising export revenue following the dairy downturn in 2015. Export revenue increased 11.7% last year, with higher export revenue across all primary industry sectors.
While the results are promising, there are indications of increased volatility in international markets across several areas including exchange rates, commodity prices, and equities.
While the underlying causes of this volatility are complex, Brexit and the trade dispute between the US and China both highlight the uncertainty under which global markets are currently operating.
While the medium term implications for this volatility are yet to become apparent, the risks to this outlook have increased.
Looking out beyond 2019, primary industry exports are forecast to fall slightly to $44.0 billion for the year ended June 2020. Dairy production and export volumes are forecast to dip slightly, and red meat prices are expected to decline since prices are currently well above long run averages.
The next forecast is scheduled for mid-March 2019.