July 2 (Bloomberg) -- Australia's trade deficit probably narrowed to the smallest gap in 15 months in May as increased coal shipments boosted exports.

The shortfall narrowed to A$900 million ($859 million) from A$957 million in April, according to the median estimate of 24 economists surveyed by Bloomberg News. The statistics bureau will release the report tomorrow at 11:30 a.m. in Sydney.

Record prices for natural resources such as iron ore and coal supports the central bank's view that Australia's $1 trillion economy will be boosted by a 20 percent surge in income from overseas sales. That may offset falling consumer and business confidence, which prompted employers to fire workers for the first time in 19 months in May.

``Massive increases in bulk commodity prices will be more than enough to see the trade deficit turn into a surplus later this year,'' said Riki Polygenis, a senior economist at Australia & New Zealand Banking Group Ltd. in Melbourne.

The Australian dollar bought 95.45 U.S. cents at 10:30 a.m. in Sydney, compared with 95.73 cents in late Asian trading yesterday and a 25-year high of 96.68 touched on June 30.

Rio Tinto Group, the world's third-largest mining company, said yesterday it won a price increase of as much as 97 percent for Western Australian iron ore from Asian steelmaker customers, matching an agreement with Chinese mills.

Bloomberg Survey

Prices of the 19 commodities in the Reuters/Jefferies CRB Index jumped 29 percent in the six months through June 30, the most since 1973 and more than any second-half gain in at least five years, data compiled by Bloomberg shows.

Following is a table of economists' estimates for the May trade balance in Australian dollars:

========================================
Median                        -900
High                           400
Low Forecast                  -1600
No of replies                  24
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========================================
                              Trade
                             Balance
                           (Millions)
========================================
4cast                         -900
ABN Amro                      -500
ANZ Bank                      -50
AMP Capital                   -300
Barclays                       150
BT Financial                  -800
Citi                          -1500
Commonwealth Bank             -1200
Deutsche Bank                 -1200
Goldman Sachs                 -200
ICAP Australia                -1250
JPMorgan Chase                -900
Lehman Brothers               -1200
Macquarie                      50
Merrill Lynch                   0
National Australia            -1000
Nomura Australia              -800
RBC Capital                   -1600
St. George Bank               -1000
Suncorp Banking               -1100
Thomson Reuters               -760
UBS                            400
TD Securities                 -1600
Westpac Bank                  -1400
========================================

To contact the reporter for this story: Jacob Greber in Sydney at jgreber@bloomberg.net

Last Updated: July 1, 2008 20:35 EDT