Export value to set record in 2022-23 and decline

The value of agricultural exports is expected to be a record at $75 billion in 2022–23 – the frst-time exports have risen above $70 billion in nominal terms.

Another year of exception-ally large grain and oilseed harvests will be the main contributor to an increase in export volumes.

Record volumes of wheat, barley, canola, cotton, and sorghum are all expected to be exported in 2022–23. High global commodity prices are also expected to contribute to the strong export result. While they are expected to ease somewhat from the highs of 2021–22 for some commodities, such as oilseeds and red meat, prices are forecast to remain strong through 2022–23.

However, wheat prices are expected to peak in 2022–23.

Despite global freight costs falling from extraordinarily high levels in 2021–22, regional freight costs re-main elevated.

While the freight rate discrepancies create additional challenges for the region, Australia continues to be wellplaced to export into major Asian markets, given Australia’s proximity to the region.

This is expected to give Australian exports a competitive advantage over many competitors outside of the region.

Expected strong demand for Australian commodities in international markets in 2023–24, including for agricultural commodities, is likely to put upward pressure on the Australian dollar exchange rate, which may reduce the competitiveness of Australian exports going forward.

Nevertheless, the sector is currently capitalising on exceptional domestic production and strong global commodity prices and is in a good position to meet these challenges.

In 2023–24, exports are forecast to fall to $64 billion, refecting lower domestic production due to drier conditions and easing global commodity prices.

It is also expected that global infation will start to ease through the year, although remain at elevated levels. Global growth is forecast to start to pick up toward the end of the fscal year and demand from many of Australia’s main markets, particularly China, is expected to grow.

However, as global demand starts to pick up, the upward pressure it would put on prices is forecast to be more than offset by increasing global supply of many agricultural commodities as major producers such as the United States, Canada, Brazil and Argentina recover from dry conditions.

Over the medium-term, exports are expected to fall further in 2024–25 and fuctuate be-tween $53–$58 billion in real terms over the period to 2027–28, tracking movements in domestic production driven by seasonal conditions.

Prices are also projected to continue easing over the period, which will put further downward pressure on the value of Australian agricultural exports.

A similar pattern would be expected in the drier scenario, with more frequent and prolonged drought-like and dry conditions reducing domestic production and ex-ports even further. In this scenario, it would be expected that exports fuctuate between $45–$49 billion from 2024–25 to 2027–28. Figure 1.2 shows the real value of exports of crops and livestock over the projection period compared to historical levels.