Commodity export growth to soar Ray Brindal, Dow Jones Newswires...

Commodity export growth to soar Ray Brindal, Dow Jones Newswires | March 04, 2008
GROWTH in the value of Australia's commodity exports is set to accelerate swiftly next fiscal year, new official forecasts show.

The surging growth in export earnings forecast for next fiscal year assumes relatively strong world economic growth and hence higher demand and export shipments of commodities from Australia, according to the federal government’s chief commodities forecaster, the Australian Bureau of Agricultural and Resource Economics, or Abare.

The value of commodity exports from Australia will rise 30 per cent to $189.09 billion next fiscal year ending June 30, 2009, it forecast in a quarterly outlook publication timed to coincide with its annual conference.

The value of exports of mineral resources next fiscal year, which includes mineral and energy products, will surge 33 per cent on year to $153.45 billion, it said.

The value of commodity exports from Australia this fiscal year will rise a more sedate 4.3 per cent on year to $145.64 billion, a figure upwardly revised by 3.7 per cent since December, Abare said.

The sharp growth in commodity export earnings next fiscal year mainly reflects increased shipments of iron ore, coal, gold, liquefied natural gas, grains and oilseeds in response to strong demand in overseas countries, Phillip Glyde, Abare's executive director, said in a statement.

Assuming normal seasonal conditions, total farm exports next fiscal year are forecast to rise 18 per cent to $31.45 billion from this fiscal year, when export earnings are forecast to be barely changed on year at $27.80 billion, Abare said.

If the forecast for next fiscal year is achieved, the total value of Australian commodity exports will have more than doubled from an actual $82.90 billion in fiscal 2003-04, when the current commodity supercycle started.

Australia is a major global provider of many farm, mineral and energy products, which combined are an important part of the domestic economy.

An Abare index of the volume of mine production will rise 11 per cent next fiscal year, after an expected marginal rise this fiscal year.

Abare's forecasts for commodity exports are built on expectations of robust world economic growth, which is forecast to slow only slightly in 2008.

World economic growth will slow to 4.0 per cent in calendar 2008, a figure Abare revised downward from a projection of 4.6 per cent in December, after expanding an estimated 4.9 per cent in 2007. The world economy grew 5.0 per cent in 2006, Abare said.

Abare forecasts world economic growth at 4.3 per cent in 2009.

"Despite an assumed slowdown in economic growth in the United States in 2008, continued strong performance in the emerging market economies is expected to provide support for world economic growth," Abare said.

Strong increases in Chinese demand will continue to drive growth in markets for energy and mineral products in coming years, it said.

Significant new supply capacity is expected to be commissioned in coming years, but energy and mineral projects will continue to be affected by labour and equipment supply difficulties, high project costs and long lead times, it said.

In issuing its forecast, Abare assumed the value of the Australia dollar will average US83 cents next fiscal year, after averaging an estimated US87c this fiscal year.

Abare projected its index of unit returns for overall commodity exports to surge 20 per cent next fiscal year after rising an estimated 4.2 per cent this fiscal year.