abare.gov.au

6 December 2007

Commodity export earnings up despite drought and strong dollar

Australian commodity export earnings are forecast to increase by 1 per cent to more than $140 billion in 2007-08, according to the December issue of ABARE's Australian Commodities. This increase is smaller than the 4 per cent rise forecast in ABARE's September issue, and reflects the effects of drought and the strong Australian dollar.

"Farm export earnings are forecast to decline by more than 3 per cent to $26.8 billion in 2007-08, because of poor seasonal conditions in many parts of Australia," said Phillip Glyde, Executive Director, ABARE, on releasing the report today.

The decline in farm export earnings is due mainly to a drought reduced winter grains crop. Export earnings from grains are forecast to decline by 14 per cent, mainly because of substantially reduced carry-in stocks from the previous year meaning volumes shipped will be well down.

"While much of the commodity focus has recently been on the lack of rain and its effect on both irrigated and nonirrigated agriculture, mineral resources will continue to be far and away the mainstay of Australia's commodity export performance," Mr Glyde noted.

The value of Australia's minerals and energy exports is forecast to be around $110 billion in 2007-08, an increase of 2 per cent from $108 billion in 2006-07. The forecast increase is slightly less than ABARE's September forecast because of the negative effect on earnings of the stronger Australian dollar and some weakening in metals prices.

"We are now starting to see the benefits of recent high levels of investment in the Australian mining industry, with the volume of mineral resources production and exports increasing," Mr Glyde said.

Earnings from energy exports are forecast to increase by 7 per cent to $42 billion, supported by an increase in the value of thermal coal, LNG, uranium, crude oil and related petroleum products exports.

The metals and other minerals industries are forecast to contribute nearly $68 billion – a decline of more than 1 per cent – to Australian exports in 2007-08.

"The fall reflects the effects of lower forecast prices for a number of metals and an assumed higher Australian dollar," Mr Glyde said.

The December issue of Australian Commodities also features articles on:

the impacts of climate change on Australian agriculture
India"s economic prospects and implications for Australian commodity exports
farm management deposits
minerals and energy major developments projects – October 2007.

For media interviews and comment on the overall OUTLOOK and prospects for energy and minerals, please contact Karen Schneider, Deputy Executive Director, ABARE on 02 6272 2033 or 0419 227 194.

For media interviews and comment on the OUTLOOK for agriculture, contact John Hogan, Manager, Agricultural Commodities, on 02 6272 2056 or 0407 458 526.

For free downloads of the December issue of Australian Commodities, visit the ABARE website www.abare.gov.au or phone Publications on 02 6272 2010.

For general media enquiries, contact Maree Finnegan, Media Coordinator on 02 6272 2260, mobile 0417 689 567 or email mfinnegan@abare.gov.au.