MICHELE NORRIS, Host:
This is ALL THINGS CONSIDERED from NPR News. I'm Michele Norris.
ROBERT SIEGEL, Host:
As NPR's Anthony Kuhn reports from Brisbane, floods in northeast Australia have hurt production, and that has caused global commodity prices to spike.
ANTHONY KUHN: Professor John Rolfe specializes in Australia's resources economy at the University of Central Queensland. He argues that it's not just the total cost of the disaster that matters but its impact on the larger national economy.
P: Hurricane Katrina had a very big impact, but I think what is true here is that this shock would be a larger shock to the Australian economy proportionally than Katrina was to the American economy.
KUHN: The reason is that the state of Queensland has a dominant proportion of some of Australia's most valuable commodities. Many of these are sold to China, whose voracious demand for resources has driven commodity prices up, says Rolfe.
P: Commodity prices are very important to Australia. We are in the fortunate position of having a lot of coal to sell and a lot of iron ore to sell, again, because of the China growth, and that's really driving the national economy.
KUHN: Brian Redican, a senior economist at the Macquarie Group in Sydney, says this will take time.
NORRIS: That could take up to three months or maybe even longer before those coalmines are ready to go back into production. And, you know, Queensland controls about maybe half of the ocean-going traded coking coal market. So that's a lot of supply that's been removed from the global market at the moment.
KUHN: Redican notes that other coking coal producers, including Indonesia and the U.S., are profiting from the short supplies.
NORRIS: All those other suppliers that have been playing second fiddle to Queensland in recent years will now really be able to take advantage of those high prices and provide a much more important source of supply for the global market.
KUHN: But Tracey Allen, a commodities analyst at Rabobank in Sydney, notes that Queensland does not dominate Australia's production of those crops.
NORRIS: The reductions to cotton production Australia-wide are really at about an 8 percent sort of level. So it is a very significant downgrade up in Queensland, but when you consider production on a national level, we are still predicting a record crop issue with record production at about 3.95 million bales, I should say.
KUHN: Anthony Kuhn, NPR News, Brisbane.