An economist is forecasting dairy exports, particularly to China, will fall further before they begin to stabilise.
The latest trade figures showed a $459 million fall in the value of milk powder exports to China, was a big factor in the highest trade deficit for an October month in six years.
The quantity of milk powder exports to China fell 67 percent.
The monthly deficit of $908 million dollars turned the annual balance to a $107 million deficit, from a trade surplus of $1.8 billion, in the year ended August.
Westpac's Michael Gordon said he expected further falls in dairy prices would drag down the trade balance in the next few months.