The value of Australian agricultural commodity exports is expected to slump by 10% in 2020-21, as the Covid-19 pandemic and trade tensions with China hit demand and prices, according to a report from government forecaster Abares.
“A combination of falling commodity prices, reduced livestock product exports and grain stock rebuilding is expected to result in a 10% fall in the value of agricultural exports to A$43.5 billion ($31.7 billion) in 2020–21,” Steve Hatfield-Dodds, Abares executive director, said in emailed comments. “The global economic outlook has deteriorated since the last outlook was issued in June and downside risks continue to dominate.”
Still, the value of crop exports is expected to edge higher, with the surge in output forecast to be far greater, as the country prepares for a bumper winter harvest after several years of drought. Meanwhile, livestock producers are holding back animals from sale and slaughter in order to rebuild their herds, lowering production and export expectations.
The total value of production is expected to remain steady at A$61 billion in the same period, as the higher crop production offsets lower livestock output, Abares said.
“The value of crop production is forecast to increase by 17% to over A$32 billion on the back of much improved seasonal conditions, particularly in New South Wales,” Hatfield-Dodds said.
Livestock production is expected to fall 14% to A$28.9 billion. “Almost every livestock category is forecast to fall in value in 2020–21 – apart from poultry and eggs, which will see modest rises,” according to the report.
Still, forecasts could change markedly if fresh Covid-19 outbreaks hit Australia or its key export markets, Hatfield-Dodds warned.
Other Abares estimates:
- The value of wheat exports is forecast to rise 27% from a year earlier to A$4.92 billion, with output up 61% while prices decline 21%
- Barley shipments are forecast to gain 31% in value year-on-year to A$1.95 billion, with volumes up 65% as prices fall 21%, even after the country’s growers were hit with prohibitive export tariffs by China
- Australian feed barley price is expected to fall to A$230 per ton, 17% below the world indicator price, reflecting the impact of the tariffs by China, the country’s largest agricultural trading partner
- The value of wine exports is expected to fall 24% to A$2.21 billion, with volumes 18% lower and prices down 8%
©2020 Bloomberg L.P.