Continuing growth in mineral and energy commodity prices and export volumes will boost Australia's commodity earnings to nearly $150 billion in the new financial year starting next Sunday, July 1.
The Australian resource and agricultural export sectors though will have to battle the impact of a higher Australian dollar, and static to easing prices, to reach their goals.
Normally this would be good news, but contained in the latest forecasts from the Federal Government's main commodity forecaster, The Australian Bureau of Agricultural and Resource Economics (ABARE), is evidence that our resources boom has peaked and the fantastic growth figures are no more.
ABARE said that "Unit export returns for Australian mineral and energy commodities is forecast to ease by around 1 per cent in 2007-08, following a rise of over 10 per cent in 2006-07.
"While unit returns for energy exports are forecast to remain largely unchanged in 2007-08, unit export returns for metals and other minerals are forecast to fall by around 2 per cent, compared with an increase of 26 per cent in 2006-07."
But because of rising export volumes, total income from metals, minerals and energy, will still rise in 2007-08.
In its March quarter commodities report, released yesterday, ABARE forecast minerals and energy exports to hit some $117 billion in 2007-08, up eight per cent from the figure expected for this financial year which ends on Saturday.
ABARE said that total export earnings from the farm sector and minerals and energy are forecast at $149.5 billion, just up from its March forecast of $147.6 billion.
"While farm-sector exports are forecast to rebound following the drought-affected earnings of 2006/07, higher export earnings in 2007/08 from mineral resources will be the main contributor to commodity export performance," ABARE executive director Phillip Glyde said in a commentary.
Energy export earnings are expected to rise by more than six per cent to nearly $43 billion, thanks mostly to an increase in the value of thermal coal and crude oil exports.
And exports of metals and other minerals will rise nine per cent to nearly $75 billion, with the iron ore, gold and nickel sectors being the standout performers.
ABARE says farm export earnings will rise by 3.3 per cent to $28.1 billion (or around $900 million) in 2007/08, reflecting a recovery from the impact of the drought.
Higher exports for most crop commodities and increased prices for beef, lamb, veal, wine and dairy products, will be behind the improvement
ABARE repeated last week's forecast that winter crop production would more than double to 37 million tonnes.
Wheat production is forecast to more than double to an estimated 22.5 million tonnes, with world prices up 66 per cent. Cattle prices are up 21 per cent so far in 2007 and dairy prices worldwide are at record levels because of shortages from the Australian drought and rising demands in China and other Asian countries.
"The increase in earnings reflects significantly higher export volumes for most crop commodities and increased prices for beef and veal, lamb, wine and dairy products,'' the bureau said.
……….
This is a summary of ABARE's March Outlook paper.
The index of unit export returns for Australian commodities, in aggregate, is forecast to remain largely unchanged in 2007-08, following a rise of nearly 9 per cent in 2006-07.
For farm commodities, the index of unit export returns is forecast to rise by nearly 5 per cent in 2007- 08, after increasing by only 2 per cent in 2006-07.
World indicator prices are forecast to average higher in 2007-08 for corn, soybeans, cotton, beef, wool and dairy products.
Unit export returns for Australian mineral and energy commodities is forecast to ease by around 1 per cent in 2007-08, following a rise of over 10 per cent in 2006-07.
While unit returns for energy exports are forecast to remain largely unchanged in 2007-08, unit export returns for metals and other minerals are forecast to fall by around 2 per cent, compared with an increase of 26 per cent in 2006-07.
Earnings from Australia's commodity exports are forecast to be around $149.5 billion in 2007-08, compared with an estimated $139.7 billion in 2006-07, a rise of 7 per cent. The forecast increase in the value of commodity exports reflects higher earnings from both farm and mineral resource exports.
For farm commodities, export earnings are forecast to be around $28.1 billion in 2007-08, a rise of over 3 per cent from $27.2 billion in 2006-07.
Agricultural commodities for which export earnings are forecast to increase in 2007-08 include most grains and oilseeds, wine, lamb and milk powders.
For forest and fisheries products, export earnings are forecast to be around $3.9 billion in 2007-08, a rise of 3 per cent from 2006-07.
The value of Australia's minerals and energy exports is forecast to be around $117.5 billion in 2007-08, compared with $108.7 billion in 2006-07.
For energy commodities, export earnings are forecast to increase from $40.0 billion in 2006-07 to $42.6 billion in 2007-08. For metals and other minerals, export earnings are forecast to rise by 9 per cent to $74.9 billion in 2006-07.
