The ABS today released their International Trade Price Indexes for September. These figures are not used to produce the official terms of trade measure, but they can be used to generate a very close alternative estimate.
Today’s numbers show import prices flat over the Sept quarter, with export prices up 4%. This is likely to bring the official September quarter terms of trade up around 4% to 127.5 – an all time record high, noted on the chart below. From all accounts, this is in line with market expectations.
Here is the ABS summary 
Over the Sept quarter the big price moves were from coal and gas. Coal prices were up 9.3% (coal makes up 19% of the export price index) and gas prices an unbelievable 24.5%. Metalliferous ores, which currently comprises 31% of the export price index, were flat.
I have written at length on the sensitivities of the terms of trade to price fluctuations in just to commodities – coal and iron ore. This is important to keep in mind. As H&H has noted, iron ore prices in October have fallen substantially and coking coal has also fallen significantly in this quarter so the the next round of contract negations will probably see the terms of trade fall.
The trends in relative commodity prices over the next year will be very important for Australian policy makers.
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