ABARE’s December issue of Australian commodities, released by Dr Terry Sheales, deputy executive director for ABARE, forecasts the value of Australia’s farm exports will fall by six percent to $30 billion in 2009/10, following a significant rise of 16 percent to $32 billion in 2008/09.

“The forecast decline in farm export earnings in 2009/10 mainly reflects the adverse effects of a significantly higher Australian exchange rate, especially against the US dollar, and a downward revision to winter crop production in the current season,” Dr Sheales said.

Earnings from energy and minerals exports are also forecast to fall by 20 percent to close to $129 billion in 2009/10, while total earnings from Australia’s commodity exports are forecast to fall by 18 percent to $163 billion in 2009/10, following a rise of 33 percent to $197 billion in 2008/09.

“Strong demand for coal and iron ore from Japan, the Republic of Korea and China underpinned record export volumes in the September quarter,” said Dr Terry Sheales, ABARE deputy executive director.

ABARE’s latest Australian mineral statistics report attributes the dip in export earnings to the high Australian dollar, which appreciated 10 percent during the quarter.

On the up were export sales for liquefied petroleum gas, up 47 percent, and nickel, up 31 percent, while the resources with the highest declines were diamonds, down 22 percent, and gold down 13 percent.

The bi-annual Australian Forest and Wood Products Statistics report showed exports were strong in the first half of the 2008/09 financial year but a large decline in the second half saw revenue drop more than five percent to $2.3 billion. This was due to a seven percent fall in the value of woodchip exports, as well as a 15 percent decline in the volume of those.

ABARE executive director Phillip Glyde said 2009 has finally revealed the effect of the global financial crisis on Australia’s forest sector. “To compound this downturn, there has also been a significant drop in export demand for our major forest product exports this year. Together, these factors suggest it will be a tough year for the forest industry,” he predicted.

ABARE predicted the decline on the back of lower contract prices for bulk commodities, including coal and iron ore. While this represents a revision of $1 billion down from the June prediction, “at a forecast $123 billion, minerals and energy export earnings in 2009/10 will be the second highest on record,” said Dr Terry Sheales, ABARE’s deputy executive director.

Energy exports will suffer a 36 percent decline to $50 billion over the same period, he added, although Australian mine production in 2009/10 is forecast to increase by 4.6 percent, due to higher production of iron ore, gold, copper, liquefied natural gas and uranium.

“Although winter crop production is forecast to increase in 2009/10, an assumed higher average value of the Australian dollar is expected to lead to lower farm export earnings in the short term,” said Dr Terry Sheales, ABARE’s deputy executive director.

ABARE forecast that the value of farm exports would fall 2.5 percent to $31.1 billion over the same period, despite a significant rise of 16 percent during the 2008/09 financial year.

Commodities expected to performed strongly include pulses, as well as oats, rice, raw cotton and sugar while earnings from wheat, canola, wine, livestock and livestock products are expected to decline.

“The record earnings reflect a 16 percent depreciation of the Australian dollar and higher contract prices for bulk commodities in the first nine months of the financial year,” said ABARE deputy executive director Dr Terry Sheales releasing ABARE’s June quarter 2009 edition of Australian mineral statistics.

Higher index prices for energy, a 68 percent rise, contributed to the boosted earnings. According to ABARE, the index of metals and other minerals prices increased by 12 percent, with higher export prices for iron ore offset by lower export prices for other commodities.

Coal, liquefied natural gas, and iron ore were the top performers while “production of nickel, iron and steel, zinc, gold and black coal declined in 2008/09,” said Sheales.

Executive director of ABARE Phillip Glyde released the June issue of Australian Commodities yesterday and highlighted the good news.

“A forecast increase in winter crop production combined with relatively favourable world prices for many agricultural products is expected to support farm export earnings in the short term,” said Glyde.

Export earnings from farm-based commodities will increase by 16 percent to $31.8 billion by the close of the 2008/09 financial year, with a modest two percent rise predicted for 2009/10.

However, total earnings from Australia’s commodity exports could fall by up to $160 billion in 2009/10 due to lower contract prices for bulk commodities like coal and iron ore, and a decline in the value of energy exports.

Export earnings from energy and mining commodities dropped by 18 percent, reflecting dampening volumes and declining value for some commodities. While coal and bauxite fell in price, uranium and gold increased in value.

“We have recorded a significant decrease in export earnings but they are still at historically high levels,” said ABARE spokesperson Alan Copeland. “So even though we’ve had this decline, export earnings are still much higher than what they were at the end of 2007.”