Surging iron ore and coal export revenues are expected to push the value of Australia’s commodity exports to a record $202.5 billion in the 2010-11 financial year.
That would be up 23.4% from the estimated $164.1 billion for the 2009-10 financial year that finishes next Wednesday.
And it would also be 2.5% above the previous record of $197.57 billion in the 2008-09 June 30 year, according to the latest quarterly forecast from the Australian Bureau of Agricultural and Resource Economics (ABARE), which was released yesterday.
The Bureau echoed the Reserve Bank in warning that the possiility of a sharper than expected slowdown in China, could affect these forecasts.
And while the Australoian dollar had fallen recently from its highs, it has bounced from the lows in the past week or so as risk fears have eased and could easily retrace to 90 USc and above and once again cut returns hard.
In March, the Bureau said 2011 export earnings would be worth $187 billion, so there was a $10 billion improvement in three months.
It’s a further sign of the improvement in our terms of trade and national income that is already showing up in monthly trade figures, with a surplus being reported for April and another expected for May.
ABARE said that export earnings from minerals and energy commodities are forecast to be around a record $169.8 billion in 2010-11, compared with an estimated $132.2 billion in 2009-10 and the previous record of $161.6 billion in 2008-09.
For energy commodities, export earnings are forecast to rise by 27.8% to $71.3 billion in 2010-11, being largely driven by higher negotiated contract prices for coal (coking and thermal).
ABARE said that metals and other minerals’ export earnings are forecast to jump 29% to $98.5 billion in 2010-11.
"Expected higher export shipments and prices for Australian iron ore are the main reason for this forecast increase," the Bureau said
"Australian mine production is estimated to rise by 5 per cent in 2009-10, reflecting increased production of energy commodities, metals and other minerals.
"In 2010-11, mine production is forecast to rise by a further 8 per cent, in line with increased demand and forecast higher prices for a number of commodities, including iron ore.
"Production of energy commodities is estimated to increase by around 6 per cent in 2009-10, reflecting increased production of metallurgical coal, natural gas and thermal coal.
"In 2010-11, production of energy commodities is forecast to increase by 7 per cent, largely reflecting increased metallurgical and thermal coal production."
ABARE said that in the financial year about to end, export earnings from energy and minerals commodities are estimated to fall by 18% to around $132 billion, despite forecast higher export volumes.
This mainly reflects lower bulk commodity contract prices for Japanese Fiscal Year 2009 (JFY, April 2009 to March 2010), and a significantly higher value of the Australian dollar.
World prices for many energy and minerals commodities in the second half of 2010 are forecast to average lower than the first half of the year.
In 2011, prices are generally forecast to increase, assuming a strengthening of world economic activity during the year.
Over the next 18 months, continued demand from emerging economies such as China and India is expected to drive growth in consumption of energy and minerals commodities
In the rural sector, ABARE forecast that "under the assumption of a return to more favourable seasonal conditions, export earnings from farm commodities are forecast to be around $29.1 billion in 2010-11, which is an increase of 2.5 per cent from an estimated $28.3 billion in 2009-10.
"Agricultural commodities for which export earnings are forecast to be higher in 2010-11 include canola, rice, raw cotton, wine, wool, beef, veal and mutton.
"For forestry and fisheries products, export earnings are forecast to be around $3.6 billion in 2010-11, 2.1 per cent higher than the estimated value in 2009-10."
In commentary on current price trends, ABARE said that "The recent easing in prices for many energy and minerals commodities from the peaks of the early 2010 mainly reflects uncertainty surrounding the outlook for world economic growth.
"Nevertheless, the fall in prices for most major energy and minerals commodities has been less substantial compared with the price increases observed throughout 2009.
"In the second half of 2010, world prices for most energy and minerals commodities are forecast to average lower compared with the first half of the year.
"This mainly stems from the expected effect of the European debt crisis on economic growth in Europe, and the intention of the Chinese Government to slow its rapid economic growth to a more sustainable pace.
"In addition, a relatively high level of stocks for most metals will place downward pressure on prices.
"In 2011, prices for most energy and minerals commodities are forecast to increase with the assumed gradual increase in industrial and economic activity in key consuming regions.
"However, the extent of the forecast increases for many commodities is likely to be modest given the price gains that have already occurred and the assumed gradual recovery in some OECD economies.
"Over the next 18 months, the strength of e
