“While world prices for many commodities have declined markedly over the past few months, a significant depreciation of the Australian dollar, if sustained, is expected to provide some support for commodity export earnings,” Mr Glyde said.

Farm export earnings are forecast to be $29.4 billion in 2008-09, a 7 per cent increase from $27.5 billion in 2007-08, marginally lower than the $30 billion forecast in September 2008. Agricultural commodities for which export earnings are forecast to rise in 2008-09 include wheat, barley, canola, pulses, sorghum, sugar and live cattle.

Crop export earnings are forecast to increase by 18.3 per cent, to $15.4 billion in 2008-09. In contrast, export earnings from livestock and livestock products are forecast to decline in 2008-09 by 3.3 per cent to around $14 billion.

The forecast decline in exports of livestock and livestock products mainly reflects the combined effects of lower domestic supply and weak demand for wool. As a luxury fibre, export demand for wool is sensitive to changes in world economic conditions and income growth.

The value of Australia’s minerals and energy exports is forecast to be around $159 billion in 2008-09, a downward revision from the $180 billion forecast in September. This updated forecast of minerals and energy export earnings still represents a rise of 37 per cent on the previous year.

For energy commodities, export earnings are forecast to increase by 77 per cent to $80.8 billion in 2008-09. For metals and other minerals, export earnings are forecast to be $78.3 billion, an increase of 11 per cent on the previous year.

“The main adverse effect of the global financial crisis has been the sharply lower world prices for minerals and energy commodities,” said Mr Glyde.

Mr Glyde noted there have been reports of contract defaults, some mine closures, production cutbacks and requests from some overseas buyers to delay shipments for some commodities because of the significant changes to the global economic outlook.