(Adds comment, market reaction and details) WELLINGTON, Sept 26...

(Adds comment, market reaction and details)

WELLINGTON, Sept 26 (Reuters) - New Zealand reported a wider-than-expected trade deficit in August, as milk powder exports fell to a seven-year low and meat exports also waned.

New Zealand posted a monthly trade deficit of NZ$1.26 billion ($910.85 million) in August, data from Statistics New Zealand showed on Monday, while the annual trade deficit was NZ$3.1 billion.

Economists polled by Reuters had forecast a monthly deficit of NZ$765.5 million, and an annual deficit of NZ$2.7 billion.

Exports totalled NZ$3.39 billion for the month, compared with NZ$3.96 billion the previous month. Imports came in at NZ$4.65 billion versus NZ$4.4 billion.

The New Zealand dollar eased on the data and was trading at 0.7224.

Milk powder exports fell to their lowest level since August 2009 and all top destinations of milk powder fell in value and quantity, with both China and the United Arab Emirates seeing a drop in value of over half, Statistics New Zealand said.

BNZ Senior Economist Doug Steel said, however, that while milk powder exports were softer than expected, "things will improve on that front" after recent price gains.

Whole milk powder prices – the staple of New Zealand’s dairy export basket - reached one-year highs this month as a global supply glut showed signs of easing.

The price recovery is bringing some relief to farmers, 85 percent of whom have been operating at a loss, and giving a boost to the dairy sector, which accounts for around a fifth of New Zealand's export revenue and remains the backbone of the Pacific island nation's economy.

He was less upbeat about meat exports, which were down 26 percent in August compared with August 2015, with declines in both beef and lamb.

Steel said the outlook for lamb exports to the United Kingdom remained challenging, in particular given the high New Zealand dollar. ($1 = 1.3833 New Zealand dollars)