Australian Commodity Exports to Expand to Record in Fiscal 2012 on Prices

Commodity exports from Australia, the largest shipper of coal, iron ore and wool, may gain 14 percent to a record next financial year, driven by rising prices, according to the federal government’s forecaster.

Sales may expand to A$251.3 billion ($255 billion) in the 12 months to June 30, 2012, the Canberra-based Australian Bureau of Agricultural & Resource Economics & Sciences said today in a report. The agency revised its forecast for the current year to A$220.6 billion, from A$211.1 billion in December.

Growth from China to Brazil is powering demand for metals, energy and farm products, boosting prices of copper and cotton to records and elevating food costs to an all-time high. The world economy will grow 4.4 percent this year, according to the International Monetary Fund, more than expected last October.

“On the minerals and energy side we are seeing very good prices for iron ore, coal, oil, gold and that is providing a very good basis for export value growth,” Paul Morris, deputy executive director at the bureau, said in an interview. Rising agricultural prices also drove the forecast higher, he said.

Global commodity prices are likely to remain elevated for an extended period, and tighter monetary policy in Asia may be necessary to contain inflation, Reserve Bank of Australia Assistant Governor Philip Lowe said last month. In the past year, prices of grains surged, while copper, gold and cotton jumped to records.

Tight Supplies

BHP Billiton Ltd., the largest mining company, and Rio Tinto Group are boosting output of iron ore as growth in China fuels demand. Rio de Janeiro-based Vale SA, the world’s biggest iron-ore producer, last month forecast supplies of the steelmaking material will be tight for as many as four years.

The value of Australia’s mineral resource exports may increase to A$214.6 billion in 2011-2012 from A$185.6 billion this fiscal year, according to Abares, as the Australian state forecaster is known.

Agricultural shipments are forecast at A$32.5 billion next year. This year’s forecast was revised higher by about A$1 billion to A$31.2 billion as gains in international prices outweighed the damage to crops from floods in eastern Australia and Cyclone Yasi in Queensland.

Wheat futures in Chicago climbed 62 percent in the past year, while raw sugar in New York advanced 29 percent. Australia is the world’s third-largest exporter of sugar and fourth- largest shipper of wheat after the U.S., European Union and Canada, according to the U.S. Department of Agriculture.

“Food prices generally are a lot higher than we were expecting,” Morris said. Prices of wheat, cotton, sugar and wool had all been better than anticipated, he said.

Loss of agricultural production because of adverse weather was estimated at A$2.3 billion this fiscal year, including a loss of about A$300 million caused by Cyclone Yasi, the bureau said. Flooding and damage to infrastructure may cost about 15 million metric tons of coal exports worth A$2 billion to A$2.5 billion this fiscal year, it said.

To contact the reporter on this story: Wendy Pugh in Melbourne wpugh@bloomberg.net.

To contact the editor responsible for this story: James Poole at jpoole4@Bloomberg.net.

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