outlook for Australia’s commodity sector aggregate commodity export prices
The index of unit export returns for Australian commodities, in aggregate, is forecast to decline slightly in 2007-08, following a forecast rise of 8.3 per cent in 2006-07. While higher unit export returns for farm commodities are forecast for 2007-08, the effects are offset by a forecast decline in export prices for mineral resources.
For farm commodities, the index of unit export returns is forecast to increase by 2.5 per cent in 2007-08, following an expected rise of 1.3 per cent in 2006-07. While world indicator prices are forecast to average lower in 2007-08 for wheat, wool and sugar, the effects are more than offset by forecast higher prices for corn, soybeans, cotton and dairy products.
Unit export returns for mineral resources are forecast to decline by 1.0 per cent in 2007-08, compared with a forecast rise of 10 per cent in 2006-07. Unit returns for energy exports are forecast to decline by 1.8 per cent in 2007-08, following a forecast fall of 7.3 per cent in 2006-07. Unit export returns for metals and other minerals are forecast to decline marginally in 2007-08, compared with a forecast rise of 25 per cent in 2006-07.
Unit returns for Australian commodity exports are projected to ease in real terms over the reminder of the outlook period. Reflecting a projected significant decline in export prices for mineral resources (in 2006-07 dollars), the real index of unit export returns in 2011-12 is projected to be around 21 per cent lower than its value in 2006-07.
medium term outlook for Australia’s commodity sector unit export returns
2004
2005
2006
2007
2008
2009
2010
2011
Unit
-05
-06
s
-07
s
-08
f
-09
f
-10
f
-11
f
-12
f
Farm
index
98.9
98.7
100.0
102.5
101.5
100.0
100.1
99.5
– real
index
105.3
101.8
100.0
100.0
96.6
92.9
90.7
87.9
Mineral resources
index
68.9
90.8
100.0
99.0
96.2
91.4
88.1
87.6
– real
index
73.4
93.6
100.0
96.6
91.5
84.9
79.8
77.4
Energy minerals
index
79.6
107.9
100.0
98.2
95.9
95.3
96.1
96.9
– real
index
84.8
111.3
100.0
95.8
91.3
88.5
87.0
85.6
Metals and other minerals
index
62.4
80.2
100.0
99.5
96.3
89.2
83.8
82.5
– real
index
66.4
82.7
100.0
97.0
91.7
82.8
75.9
72.9
Total commodities
index
74.9
92.3
100.0
99.6
97.0
92.8
90.2
89.7
– real
index
79.7
95.2
100.0
97.1
92.3
86.2
81.7
79.3
a Base: 2006-07 = 100. s ABARE estimate. f ABARE forecast. Sources:Australian Bureau of Statistics; ABARE.
Australia’s commodity export earnings
Reflecting assumed relatively strong world economic growth, and hence higher commodity demand and export shipments, the value of Australia’s commodity exports is forecast to be around $147.6 billion in 2007-08, 7.1 per cent higher than a forecast $137.8 billion in 2006-07. Over the medium term, the value of Australian commodity exports is projected to rise in real terms in 2008-09, before gradually easing toward the end of the projection period. By 2011-12, Australian commodity exports are projected to be worth around $140.6 billion (in 2006-07 dollars), 2.0 per cent higher than the forecast value in 2006-07.
Under the assumption of average seasonal conditions, export earnings for farm commodities are forecast to be around $27.2 billion in 2007-08, a rise of 3.4 per cent from a forecast $26.3 billion in 2006-07. For many agricultural commodities, including most grains and oilseeds, beef and veal, lamb and cheese, export earnings are forecast to increase in 2007-08.
medium term outlook for Australia’s commodity sector
2004
2005
2006
2007
2008
2009
2010
2011
Unit
-05
-06
s
-07
s
-08
f
-09
f
-10
f
-11
f
-12
f
Commodity exports
Exchange rate
US$/A$
0.75
0.75
0.77
0.75
0.73
0.70
0.68
0.66
Value of exports
Farm
A$m
27 650
27 654
26 322
27 211
29 221
30 253
31 374
32 205
– real a
A$m
29 431
28 524
26 322
26 547
27 813
28 093
28 424
28 465
Crops
A$m
13 542
13 967
12 669
13 185
14 905
15 953
16 866
17 604
– real a
A$m
14 415
14 406
12 669
12 863
14 186
14 814
15 279
15 559
Livestock
A$m
14 108
13 688
13 653
14 026
14 316
14 300
14 509
14 601
– real a
A$m
15 016
14 118
13 653
13 684
13 626
13 279
13 144
12 905
Forest and fisheries products
A$m
3 630
3 655
3 846
3 877
4 061
4 204
4 369
4 328
– real a
A$m
3 864
3 770
3 846
3 783
3 865
3 904
3 958
3 825
Mineral resources
A$m
69 461
92 152
107 653
116 495
122 226
121 448
119 916
122 592
– real a
A$m
73 936
95 048
107 653
113 654
116 337
112 776
108 638
108 354
Energy minerals
A$m
29 696
39 328
39 705
41 182
42 808
43 449
44 129
46 829
– real a
A$m
31 609
40 564
39 705
40 177
40 745
40 346
39 979
41 390
Metals and other minerals
A$m
39 765
52 823
67 949
75 313
79 419
77 999
75 787
75 763
– real a
A$m
42 327
54 484
67 949
73 476
75 592
72 430
68 659
66 963
Total commodities
A$m
100 741
123 461
137 821
147 583
155 508
155 904
155 659
159 125
– real a
A$m
107 231
127 342
137 821
143 984
148 015
144 773
141 020
140 644
Farm sector
Farmers’ terms of trade a
index
89.9
93.8
100.0
100.0
97.3
95.5
94.1
91.3
Gross value of farm prodn b
A$m
34 996
37 900
33 753
40 084
40 335
41 472
42 672
43 449
– real a
A$m
37 251
39 091
33 753
39 106
38 392
38 511
38 659
38 403
Crops
A$m
17 172
20 176
14 877
20 238
20 563
21 629
22 736
23 613
– real a
A$m
18 278
20 810
14 877
19 744
19 572
20 084
20 598
20 870
Livestock
A$m
17 824
17 723
18 876
19 846
19 773
19 843
19 936
19 836
– real a
A$m
18 973
18 281
18 876
19 362
18 820
18 426
18 061
17 532
Net value of farm production
A$m
5 028
7 026
2 206
7 836
7 208
7 813
8 299
8 346
– real a
A$m
5 352
7 247
2 206
7 645
6 861
7 256
7 519
7 377
Volume of farm production a
index
127.2
126.4
100.0
117.4
120.7
123.7
127.1
130.2
– crops
index
158.3
157.7
100.0
141.8
146.6
149.4
153.3
157.2
– livestock
index
102.3
101.4
100.0
98.0
100.2
103.3
106.3
108.8
Minerals and energy sector
Volume of mine production a
index
94.1
93.5
100.0
111.2
122.1
130.6
133.6
134.1
– energy
index
93.8
92.2
100.0
104.8
112.6
113.2
113.5
114.4
– metals and other minerals
index
94.2
94.6
100.0
115.5
128.5
142.7
147.6
147.9
Gross value of mine prodn
A$m
66 682
88 465
103 347
111 835
117 337
116 590
115 120
117 688
– real a
A$m
70 978
91 246
103 347
109 107
111 683
108 265
104 293
104 019
a In 2006-07 Australian dollars. b For a definition of the gross value of farm production see table 21. s ABARE estimate. f ABARE forecast.
Note:ABARE revised the method for calculating farm price and production indexes in October 1999. The indexes for the different groups of commodities are calculated on a chained weight basis using Fishers' ideal index with a reference year of 1997-98 = 100.
Sources:Australian Bureau of Statistics; ABARE.
Over the medium term, the value of Australian farm exports is projected to rise gradually in real terms. Australian farm exports are projected to be worth around $28.5 billion (in 2006-07 dollars) in 2011-12, around 8.1 per cent higher than the forecast value in 2006-07.
Export earnings from Australia’s mineral resources sector are forecast to be around $116.5 billion in 2007-08, compared with a forecast $107.7 billion in 2006-07. For energy commodities, export earnings are forecast to increase by 3.7 per cent to $41.2 billion in 2007-08. For metals and other minerals, export earnings are forecast to rise by 11 per cent to $75.3 billion in 2007-08.
Over the medium term, export earnings from Australia’s mineral resources sector in real terms are projected to increase in 2008-09, before easing gradually toward the end of the projection period. By 2011-12, mineral resources exports are projected to be worth $108.4 billion (in 2006-07 dollars), slightly higher than the forecast value in 2006-07. For metals and other minerals, export earnings in 2011-12 are projected to be around $67.0 billion (in 2006-07 dollars), while export earnings for energy commodities are projected to be worth $41.4 billion (in 2006-07 dollars).
