ASX 200 commodity shares down amid biggest drop in Australia's terms of trade since 2009

The terms of trade fell 7.9% in the June quarter, largely due to declining prices for key export commodities.

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ASX 200 commodity shares are in the red amid news that Australia's terms of trade (ToT) recorded its biggest fall in 14 years.

The Australian Bureau of Statistics (ABS) reports today that our ToT fell 7.9% in the June quarter.

This is the largest fall since the June quarter of 2009.

Australia's current account surplus fell by $4.8 billion to $7.7 billion in seasonally adjusted terms.

ABS head of International Statistics Grace Kim said:

The decrease in the current account surplus reflected the fall in prices for Australia's key export commodities, partly offset by a drop in the net primary income deficit.

The ABS said the balance on goods and services decreased by $8 billion to $31.4 billion.

The net primary income deficit dropped $3.2 billion to $23.4 billion.

Kim added:

Exports of goods fell 7%, the largest fall since June quarter 2014, as prices for energy commodities like coal and LNG continued to fall from the highs seen in 2022.

Drilling down into the categories of exports, Australia's income from metal ores and minerals exports fell 14.2% over the quarter.

Coal, coke, and briquettes income fell 8.4%, other mineral fuels fell 7.1%, and metals excluding non-monetary gold fell 0.3%.

7 ASX 200 commodity shares falling today

Meantime, ASX 200 commodity shares are in the red in line with the rest of the market on Tuesday.

Let's take a look at some examples.

  • BHP Group Ltd (ASX: BHP) shares are down 0.26% to $45.81
  • Fortescue Metals Group Ltd (ASX: FMG) shares are down 1.39% to $19.92
  • Rio Tinto Ltd (ASX: RIO) shares are down 0.29% to $116.78
  • Mineral Resources Ltd (ASX: MIN) shares are down 1.02% to $73.15
  • Woodside Energy Group Ltd (ASX: WDS) shares are down 0.99% to $37.86
  • Santos Ltd (ASX: STO) shares are down 0.95% to $7.84
  • Whitehaven Coal Ltd (ASX: WHC) shares are down 1.25% to $6.33

At the time of writing, the S&P/ASX 200 Index (ASX: XJO) is down 0.4% to 7,289.4 points.

What's next for commodity prices?

While commodity prices are inherently volatile, the long-term trend is downwards, in most cases.

At least, that's according to the latest five-year projections from the Department of Industry, Science, and Resources.

For example, the iron ore price (62% Fe) is expected to decline from US$117 per tonne today to an average price of US$69 per tonne in FY28, with an inevitable impact on ASX 200 iron ore share prices.

The department expects the Brent crude oil price to fall from US$89 per barrel now to an average of US$75 per barrel in FY28, impacting ASX 200 oil shares

The department also says lithium spodumene ore prices will dive from US$3,197 per tonne today to an average of US$2,700 per tonne in FY28.

Conversely, the department expects metallurgical coal to rise from US$156 per tonne today to an average price of US$185 per tonne in FY28, impacting ASX 200 coal shares

Motley Fool contributor Bronwyn Allen has positions in BHP Group, Fortescue Metals Group, and Woodside Energy Group. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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