(Reuters) – Australia upgraded its forecast for agricultural exports for the 2020/21 season as heavy rains boosted production, even as mounting trade tensions with China have hurt demand for several commodities this year.
The Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) said on Monday agricultural exports will total A$49.24 billion ($36.59 billion) for the current season ending at the end of June 2021, up 1% from its previous estimate of A$48.8 billion in September.
The export rise could give a further boost to Australia’s economy which has rebounded sharply in the third quarter from a coronavirus-induced recession.
“Australian agricultural production is bouncing back from the drought,” said ABARES executive director Steve Hatfield-Dodds, pointing to the heavy rains which have ended a three-year drought across the country’s east coast.
“We’re expecting a near all-time high winter crop, the best ever in New South Wales, and a more favourable outlook for summer cropping than we have seen in recent years.”
The upgrade comes as tensions between Australia and its largest trading partner China have mounted this year.
Beijing has imposed a series of trade reprisals after Australia led calls for an international inquiry into the coronavirus.
ABARES acknowledged that the outlook for Australia’s barley and wine industries was depressed by China’s decision to impose tariffs on each.
“There are a number of risks present for the rest of 2021 that remain a watch point, including wine trade with China,” said Hatfield-Dodds. ABARES did not give forecasts for exports to China.
China has imposed temporary anti-dumping tariffs of 107.1% to 212.1% on wine imported from Australia since late last month.
The move echoes similar tariffs on Australian barley exports after Beijing concluded Canberra subsidises its growers – a claim denied by Australia.
Meanwhile, China’s wheat buyers are scrambling to source low-gluten wheat for the country’s booming fancy bakery market, traders said, as exporters in key supplier Australia shy away from striking sales deals amid escalating trade tensions.