The RBA commodity price index for July is out and shows a 2.4% fall for July:
Preliminary estimates for July indicate that the index rose by 1.3 per cent (on a monthly average basis) in SDR terms, after rising by 0.3 per cent in June (revised). The largest contributors to the rise in July were increases in the prices of wheat and oil. Other rural commodities prices also increased, while prices of coking coal and thermal coal declined in the month. In Australian dollar terms, the index fell by 2.4 per cent in July.
Over the past year, the index has fallen by 9.8 per cent in SDR terms. Much of this fall has been due to falls in the prices of coking coal and iron ore. The index has fallen by 10.8 per cent in Australian dollar terms over the past year.
As indicated in previous releases, preliminary estimates for iron ore, coking coal and thermal coal export prices are being used for recent months, based on market information.
I assume that the index calculates iron ore and coal prices on the basis of the long term contracts, not the spot prices, which would make sense given that’s the effective selling price, and is also why the falls are not much greater. They are coming in early October.
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal.
He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.
