High global dairy prices and demand for Australian beef and lamb are expected to lead farm export earnings to record levels this financial year.
The Australian Bureau of Agriculture and Resource Economics and Sciences (ABARES) is forecasting the value of farm export earnings to reach $38 billion in the 2013-2014 year, representing an increase of about 8 per cent on the five-year average.
ABARES chief commodity analyst Jammie Penm says export earnings from livestock and livestock products are expected to increase by 12 per cent, due to higher world prices and increased production, while the value of crop exports will be lower because global prices have fallen.
«Last year, we had very strong world prices for cereals because of drought conditions in the United States,» Mr Penm said.
«Now seasonal conditions in the United States have improved, so that has placed downward pressure on world prices for grains and cereals and oilseeds, so we do expect that will have an impact on our crop export value.»
Mr Penm says global demand for dairy and a lower Australian dollar, trading at around 90 US cents, are pushing up returns for Australian dairy producers.
«Because our export contracts are mostly in $US terms, we estimate that every one US cent depreciation in the Australian dollar, on a sustainable basis, can increase farm sector incomes by over $200 million a year.»
Drought in northern Australia is expected to take a bite out of farm earnings, with smaller crops harvested in Queensland and northern New South Wales.
«Seasonal conditions are the most important factors influencing production and farm incomes in the short term, so certainly in those regions we have seen a steep decline in financial performance,» Mr Penm said.
«In this financial year, we expect that farm cash income in the drought declared areas in Queensland will be significantly lower, compared with last year, and will be around 45 per cent below the average farm cash income in real terms for the past ten years.»
Forecasts by commodity:
Wheat
The world wheat price is forecast to fall by 9 per cent in 2013-14 to average US$315 a tonne.
World wheat production is forecast to increase by 8 per cent in 2013-14 to 705 million tonnes.
Australian wheat production is forecast to increase by 17 per cent in 2013-14 to around 26.2 million tonnes. Production increases are forecast in Western Australia, South Australia and Victoria, while falls in production are forecast in New South Wales and Queensland.
The volume of Australian wheat exports is forecast to decline by 13 per cent in 2013-14 to around 18.6 million tonnes. Although wheat production is forecast to increase, the supply of wheat available for export is expected to decline because of lower carry-over stocks from the 2012-13 season. The value of wheat exports is forecast to decline by 6 per cent to $6.4 billion.
Barley
World barley production is forecast to increase by 11 per cent in 2013-14 to 144 million tonnes, largely reflecting higher yields in most major producing countries.
Australian barley production is forecast to rise by 15 per cent in 2013-14 to 8.6 million tonnes. If realised, this would be the third largest barley crop on record.
Barley exports are forecast to increase by 15 per cent to 5.9 million tonnes.
Canola
World canola production is forecast to increase by 11 per cent in 2013-14 to more than 69 million tonnes, primarily reflecting estimated record production in Canada.
Australian canola production is forecast to fall by 15 per cent in 2013-14 to 3.4 million tonnes, driven by large declines in production in New South Wales and Victoria.
Sugar
The world indicator price for raw sugar (Intercontinental Exchange, nearby futures, no. 11 contract) is forecast to fall by around 6 per cent in 2013-14 (October to September) to average US17 cents a pound.
World sugar production is forecast to be 181.6 million tonnes in 2013-14, down marginally from the record production of 183.6 million tonnes in 2012-13. Production is forecast to be lower in Europe, the United States, India and Mexico but higher in Brazil, Thailand and China.
Australian sugar production is forecast to fall by around 2 per cent in 2013-14 to 4.2 million tonnes, driven by an estimated 5 per cent decline in average yield.
Cotton
The world indicator price for cotton (Cotlook ‘A’ index) is forecast to average US86 cents a pound in 2013-14 (August to July), compared with around US88 cents a pound in 2012-13.
World cotton production is forecast to decline by around 3 per cent in 2013-14 to 25.7 million tonnes.
Australian cotton production is forecast to be 975 000 tonnes in 2013-14, compared with 1 million tonnes in 2012-13.
Australian cotton exports are forecast to be 987 000 tonnes in 2013-14, 24 per cent lower than the record 1.3 million tonnes of 2012-13.
Beef
Australian beef and veal exports in 2013-14 are forecast to rise by 7 per cent to a record 1.1 million tonnes (shipped weight), reflecting growing demand from emerging markets. With domestic beef demand largely unchanged, the proportion of Australian beef and veal production that is exported is forecast to increase in 2013-14 to around 70 per cent. Forecast higher export volumes to the United States, China and the Middle East are expected to more than offset forecast lower exports to Australia’s largest market, Japan.
Sheep meat
The value of sheep meat exports is forecast to rise by 14 per cent in 2013-14 to $1.78 billion, reflecting increased export volumes and prices.
Live sheep exports are forecast to remain at around 2 million head in 2013-14.
Wool
Shorn wool production is forecast to fall by 4 per cent in 2013-14 to around 345 000 tonnes.
Dairy
World prices for dairy products are forecast to average higher in 2013-14. This reflects limited growth in supplies from key exporting countries and continuing firm world import demand.
The Australian average farmgate price for milk is forecast to increase by around 22 per cent in 2013-14 to 47.7 cents a litre.
Australian milk production is forecast to decline slightly to 9.1 billion litres in 2013-14.
Source:ABC
