"While farm sector exports will be adversely affected by the drought, higher export earnings from mineral resources will continue to underpin commodity sector performance," said Phillip Glyde, Executive Director of ABARE, when releasing the report today.

The value of Australia's minerals and energy exports is forecast to be around $111 billion in 2006-07, a rise of 20 per cent from $92 billion in 2005-06.

The price OUTLOOK across mineral resources remains positive, reflecting continued strong world demand and modest growth in supply. Following significant rises in 2005-06, further price increases in 2006-07 are forecast for many mineral commodities, including iron ore, gold, aluminium, nickel, copper and zinc. In addition to higher prices, the volume of Australian mineral resources exports, in aggregate, is forecast to rise markedly in 2006-07.

Farm export earnings are forecast to be down 8 per cent to $25.4 billion in 2006-07. The fall in farm export earnings mainly reflects lower export volumes for crops as a result of the drought. Agricultural commodities for which export earnings are forecast to fall significantly in 2006-07 include canola, cotton, barley, dairy products and lamb.

"Although world indicator prices are forecast to average higher in 2006-07 for wheat, corn, soybeans and cotton, the effects on farm incomes are expected to be more than offset by the forecast significant decline in crop production," Mr Glyde noted.

Total winter crop production in Australia is estimated to have declined by 62 per cent in 2006-07, while summer crop production is forecast to fall by 33 per cent as dry conditions continue.

The December issue of Australian Commodities also features articles on:

• factors influencing productivity growth in Australia's grains industry
• integrating developing countries into the architecture of climate change policies
• and major mineral and energy projects developments.