Severe drought conditions and the recent strength of the Australian dollar have forced Australia's chief commodities forecaster to predict that commodity export earnings will grow by less than a fourth of what was previously expected.
The Australian Bureau of Agricultural and Resource Economics (Abare) said on Thursday that it now expected export earnings in the year to June 2008 to rise by 0.8 per cent to A$140bn against a previously forecast 4 per cent rise.
The downward revision was the second in recent months and put commodity export earnings at A$10bn lower than June's forecast.
John Hogan, Abare's agricultural commodities manager, said Australia's wheat exports would be materially lower, with this year's wheat crop likely to be half the long term average.
"The drought has also hit wool production and cut the size of the sheep flock," he said, with the Australian sheep flock estimated to fall to 85m by the end of June, its lowest level since 1924.