Pete Wargent blogspot

CEO AllenWargent Property Buyers, & WargentAdvisory (institutional). 6 x finance author.

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Wednesday, 8 February 2017

Australia's most valuable commodity

Lucky country

What is Australia's most valuable export commodity?

I guess most people would rightly say that it's iron ore, and then coal, in that order.

Although you could increasingly make the case for our services exports, such as tourism and education, given the potentially positive flow-on effects of these sectors over the longer term.

Or maybe you could even go with Crocodile Dundee, for a contrarian viewpoint.

Perhaps the most convincing argument of all, though, would be that Australia's most valuable commodity is something else again: luck!

Incredibly, despite Chinese port stocks apparently as full as they have ever been, iron ore futures were off on a tear again today.

The iron ore spot price, while recording less substantial gains of just $0.24/tonne today, has nevertheless come within a smidgen of taking out a new 2.5 year high at $83.53/tonne.

It's uncanny how often things like this seem to turn up in Australia's favour just when things need a boost.

Just when it seemed that the production phase of Australia's export boom would yield only a moderate boost to national income, the trade surplus surged to $5.8 billion in original terms in December, a figure the like of which has never been seen before.

Even after the seasonal adjustments, it was by far the biggest trade surplus on record.

Most analysts expect that the prices of the bulk commodities will pull back this year after booming in extraordinary fashion in 2016. 

But for now, the coffers are swelling nicely. 

A lucky country ("run mainly by second rate people"!) indeed.