Australian commodity exports are now expected to hit an all time high in the year to June, 2011, according to the latest estimate from the Federal Government’s key forecasting group.
The Australian Bureau of Agricultural and Resource Economics-Bureau of Rural Sciences said in its September forecasts that exports of minerals, oil and gas and rural commodities will reach a record $214.9 billion in the current financial year, up 26% from the outcome for 2010.
It’s $12 billion more than the June forecast of $202.5 billion and a massive $44.3 billion more than $170.6 billion for the June 30, 2010 financial year (which included a near record $44 billion of mineral exports from the June quarter alone!)
Abare-RS said export earnings from minerals and energy commodities are forecast to be around $179.9 billion in 2010–11, compared with $138.5 billion in 2009–10.
For metals and other minerals, export earnings are forecast to rise 31% to $106.1 billion in 2010–11.
The report says "In 2010–11, Australian mine production is forecast to increase by 12 per cent, in response to recent increases in demand for energy and minerals commodities in many of Australia’s key export markets.
"Production of metals and other minerals is forecast to also increase by 10 per cent, with rises of 14 per cent for copper, 11 per cent for gold and 4 per cent for iron ore.
"Underpinning the forecast increase is expected higher export values of iron ore (up 55 per cent to $53 billion), gold (up 38 per cent to $18 billion), alumina (up 12 per cent to $6 billion) and nickel (up 12 per cent to $4 billion).
"In total, Australian export earnings from energy and minerals commodities in 2010–11 are forecast to increase by 30 per cent to $180 billion, the forecast estimated."
But it did temper its forecast for steel making materials, such as iron ore and coking coal:
“Over the past few months, world steel consumption growth has moderated, and economic growth in 2011 is assumed to be weaker in China and major OECD economies.
Abare predicted that global exports of iron ore in 2010 will rise 10% to 1 billion tonnes, with growth slowing in 2011 to 8% to reach 1.1 billion tonnes.
“Australia and Brazil will be the main contributors to this growth,” it said.
However, it warned that iron ore prices were likely to fall further as Australia and Brazil have increased supplies at a time when many Chinese steel mills have cut iron ore inventories in anticipation of lower prices.
“Over the remainder of 2010, significant increases in commodity prices appear unlikely, under the assumption that economic growth, and hence commodity demand growth, will ease in China and OECD economies,” said Abare.
Abare said it expects iron ore spot prices to average $US134 a tonne for calendar 2010, dropping to $US105 a tonne in 2011, as the global supply of iron ore increases and Chinese demand for imports moderates as domestic ore production grows. Iron ore prices have been volatile this year, reaching a peak of $US186 a tonne in April then falling as low as $US116 in July.
They are around $US146 a tonne at the moment.
For energy commodities, export earnings are forecast to increase by 28.2% to $73.7 billion in 2010–11, being largely driven by higher negotiated contract prices for coal.
"Higher energy production in 2010–11 will be supported by output increases of 35 per cent for uranium, 15 per cent for thermal coal, 12 per cent for gas and 9 per cent for metallurgical coal."
"This increase is supported by higher export earnings for metallurgical coal and thermal coal, which are forecast to increase by 41 per cent and 33 per cent to $35 billion and $16 billion, respectively."
Export earnings
for farm commodities are forecast to be around $31.4 billion in 2010–11, an increase of 10% from an estimated $28.5 billion in 2009–10.
"Agricultural commodities for which export earnings are forecast to be higher in 2010–11 include wheat, barley, oilseeds, rice, cotton, beef, lamb, mutton and dairy products.
"For agriculture as a whole, production is forecast to increase by 8.1 per cent in 2010–11, following a decline of 1.1 per cent in 2009–10.
"Ideal growing conditions in eastern Australia over winter and early spring are forecast to significantly increase winter crop production in 2010–11, by 16 per cent to 40.7 million tonnes.
"Prospects for summer crop production have also improved significantly, with high soil moisture levels and rapidly rising water storage levels.
"In the Murray–Darling Basin, water storage levels reached 65 per cent of capacity in mid-September, the highest level since January 2002.
"For forestry and fisheries products, export earnings are forecast to be around $3.7 billion in 2010–11, a 4.2 per cent increase from the value in 2009–10.
"In light of ideal seasonal conditions across the eastern Australian wheat belt, Australian wheat production is forecast to increase by 16 per cent in 2010–11 to 25.1 million tonnes.
"Wheat growers in eastern Australia have experienced the best seasonal conditions in many years, as a result of average to well above average rainfall in July and August."
