Preliminary estimates for April indicate that the index fell by 1.5 per cent (on a monthly average basis) in SDR terms, after rising by 0.8 per cent in March (revised). The largest contributors to the decline in April were falls in the prices of gold, crude oil and thermal coal. The prices of base metals and many rural commodities also declined, while the price of iron ore increased in the month. In Australian dollar terms, the index fell by 2 per cent in April.
Over the past year, the index has fallen by 6.5 per cent in SDR terms. Much of this fall has been due to declines in the prices of coking coal and thermal coal. The index has fallen by 9.3 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. Using spot prices for these commodities, the index declined by 3.5 per cent in April in SDR terms, to be 7.5 per cent lower over the past year.
And here it is in Australian dollars, which is what matters:
Looks like a I’ve been a ahead of the curve on my assessment of the recent correction in the terms of trade. I expected the blue line to be approaching the low of last year. We are off by 3.5% from the rebound peak, not the seven percent I reckoned on. Gold and thermal coal has rebounded some and then there’s the contracts to consider and the dollar feel too. Lot’s of variables. Anyway, it amounts to less pressure to cut rates next week.
