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El Nino to affect commodity export earnings

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Media release ABARE

17 June 1997

GPO Box 1563 Canberra ACT 2601

Telephone (06) 272 2000 Facsimile (06) 272 2001 International code 616

El Nino to affect commodity export earnings

‘Prospects of drier than normal seasonal conditions, as a result of a developing El Nino weather pattern, will contribute to a forecast 5 per cent fall in the value of farm exports to $20.2 billion in 1997-98’, AB ARE’s Acting Executive Director, Dr Stephen Beare, said today when releasing the June issue of Australian Commodities.

‘But strong export performance from the minerals and energy sector means that total exports of Australian commodities in 1997-98 are forecast to rise 4 per cent to a record $60.8 billion’, Dr Beare said. Minerals resource exports are forecast to rise 9 per cent to $38.2 billion.

Aggregate unit returns for exports of Australian commodities are forecast to rise 1.6 per cent in 1997-98. A 3 per cent overall improvement in unit returns from mineral resource exports is expected to be partly offset by a 1.2 per cent decline in unit returns from farm exports.

Lower winter crop production, and hence lower exports of grains, is a major factor in the forecast fall in farm exports. Crop yields are forecast to be below average in the eastern states, reflecting the Bureau of Meteorology’s announcement that it is confident an El Nino weather pattern will persist for the remainder of the year. With yields well below last season’s record, the wheat crop is forecast to be down about 30 per cent to 16.2 million tonnes despite plantings being little changed.

Reflecting weather related problems in North America and Europe, as well as in Australia, the world indicator price for wheat is forecast to average slightly higher in 1997-98 at US$185 a tonne. W ith some improvement in demand, the eastern market indicator for wool is forecast to average 6 per cent higher in 1997-98. Australian saleyard prices of cattle are forecast to average 9 per cent higher in 1997-98 as US and North Asian demand strengthens.

If dry conditions persist poor pasture conditions in parts of New South Wales, Victoria and South Australia can be expected to deteriorate further. In that event, there could be a rise in forced yardings of cattle and sheep, with a corresponding adverse effect on livestock prices.

World prices for most metals are forecast to rise over the remainder of 1997 and in 1998 as demand strengthens on the back of a growing world economy and stocks remain relatively tight. Significantly higher prices are forecast in 1998 for aluminium (up 8 per cent), nickel (up 15 per cent), zinc (up 12 per cent) and crude oil (up 7 per cent).

For further information, contact Terry Sheales on (06) 272 2054. For copies of Australian Commodities, contact Denise Flamia on (06) 272 2211. For general media enquiries, contact Sharon Palmer on (06) 272 2257 or after hours on 018 487 825.

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