CANBERRA, Feb 28 (AFP): Australian commodity exports will hit record levels next year as the resources sector booms and agriculture shakes off the impact of a long drought, according to an official forecast released today.
The Australian Bureau of Agricultural and Resource Economics (ABARE) predicted earnings from commodity exports would reach 134 billion dollars (100 billion US) on the 2006/07 financial year, up seven per cent on forecasts for the current earnings period.
But ABARE warned in its March commodity outlook report that declining demand and increased sources of supply would result in commodity prices easing over the medium term.
It said demand from China was the key driver in global commodity markets, helping lift Australia's forecast earnings from iron ore exports by 26 per cent to 18 billion dollars in 2006/07.
Liquefied Natural Gas (LNG) export earnings are forecast to increase 22 per cent to 6.1 billion dollars over the same period, while total minerals and energy export earnings are tipped to rise eight per cent to 101 billion.
ABARE said the intensity of demand from China would ease in the medium term as the country's industries became more technologically sophisticated and used resources more efficiently.
"However, with Chinas rate of economic growth expected to average around eight per cent a year over the medium term, the total demand for raw materials, and hence the impetus that China provides to world mineral resource markets, is expected to remain strong for many years to come," it said.
ABARE reaffirmed its forecast earlier this month that the 2005/06 winter grain harvest would be the second largest on record at 40.1 million tonnes.
"(It) exceeded all expectations," ABARE said, attributing the bumper crop to long-awaited rainfall in drought-affected eastern states.
ABARE predicted farm export earnings would rise six per cent to 29.6 billion dollars in 2006/07, event though the price paid for the goods was likely to ease 1.7 per cent.
It said beef export earnings would fall as the United States and Canada re-entered the Japanese market following lengthy bans over fears of mad cow disease.
Beef exports to Japan are expected to fall to about 300 million tonnes by 2010/11, from a high of 419 million in 2004/05.
The overall value of beef exports is expected to slip from 3.9 billion dollars in 2005/06 to 3.6 billion in 2010/11.