If you looked at the performance of key commodities in the year to June, it’s no wonder the Reserve Bank’s Commodity Price Index surged a record 40% to an all-time high last month, capping off what was a remarkable 12 months for Australian trade and the economy generally.
That 40% rise and the factors behind it help explain part of the Australian economy rebound story over 2020-21.
The RBA said the index reached a reading of 131.2, up from a reading of just over 93 in June 2020. The previous high was a reading of 123 in October, 2008, as the GFC was imploding – then it was driven by oil and coal prices.
A 9% rise in the value of the Aussie dollar against the greenback over the year 9clipped in June by around 2%) restricted the gain to the still stunning 40% in Australian dollar terms.
The index reflects the 100% plus surge in iron ore prices (114% for 62% Fines), 84% for oil, 55% for copper, 38% for wheat and rises in many other commodities over the year.
But the main driver has been the surge in iron ore prices – besides the jump in 62% Fe fines prices which reflected the rebound last month after a selloff in late May (after record highs were reached around May 12).
That saw the index rose 6.8% in Australian dollar terms in June, to cap a record year. A 2% drop in the value of the dollar against the greenback added a bit of last-minute cream.
The RBA said in its brief commentary on the index that preliminary estimates for iron ore, coking coal, thermal coal and LNG export prices are being used for the most recent months, based on market information.