Australia's Commodity Export Expected to Drop 10%

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Researched by Industrial Info Resources (Sugar Land, Texas)--Although the estimated value of Australia's commodity exports has been reduced by 10% from the levels of a previous forecast made in September, the actual value of commodity exports will rise by 30% in the current fiscal year. Phillip Glyde, Executive Director of the Australian Bureau of Agricultural and Resource Economics (ABARE), said, "While world prices for many commodities have declined markedly over the past few months, a significant depreciation of the Australian dollar, if sustained, is expected to provide some support for commodity export earnings."

The high-rolling boom for mineral raw materials powered by China, India, South Korea and Japan has deflated suddenly with the fast-paced onset of the global recession. The September estimate for commodity exports was $146 billion, which has now been marked down to $131.5 billion. But the revised figure still shows an increase of 30% from the revised figure of $101 million for the last fiscal year, which ended on June 30, 2008. ABARE has assumed in its forecasts that the Australian dollar rate for the 2008-09 fiscal year will average out at a value of U.S. 70 cents. Last fiscal year, the average value was U.S. 90 cents, and the September forecast was U.S. 85 cents. ABARE has based its forecasts on a world economic growth rate of 2.5% in 2009, which is down from the 3.8% forecast in September. The growth figure for 2008 is forecast to come in at 3.7%.

Australian exports of mineral and energy resource products are forecast at $109 billion for 2008-09, showing a reduction from the $123 billion forecast in September. But the exports earnings show a rise of 37% over the previous fiscal year's total. Energy commodity export earnings are forecast to increase by 77% to $55.3 billion, and metals and other minerals export earnings are forecast to rise to $53.6 billion, showing an 11% increase over the previous fiscal year.

These forecasts come out at a time when there are reports of contract defaults, mine closures and export customers delaying delivery shipments, causing production cutbacks. Glyde said that although the Chinese government's economic stimulus package was expected to provide some support for demand for resources in 2009, there was still a chance that more shipments may be delayed or canceled and that it was too early to make a firm assessment of 2009 prospects at this stage. The assumption is made that the overall growth of India and China will be only marginally impacted by the financial crisis and that the growth in those countries will remain at relatively high levels.

ABARE forecasts that total farm exports will rise 6.9% to $20 billion in 2008-09. The majority of Australia's mineral, energy and agricultural exports go to Asian markets.

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