00:00Treasurer Jim Chalmers issued a statement last night with Treasury's analysis of the
00:06iron ore market, pointing out that the price of Australia's largest export was now $81.80
00:12a tonne, below the price the Treasury had assumed for the budget, which was $83.
00:18Now I must confess to being rather confused by this, because when I look on Bloomberg,
00:22the iron ore spot price is $92.85.
00:27The answer is that Treasury's assumed price is FOB, that is it doesn't include freight.
00:33Everyone else quotes CFR, which does include it.
00:37These are the two lines on the graph, FOB and CFR, with Treasury's assumption as a green
00:42dotted line.
00:43I suppose the main reason for yesterday's statement, apart from warning us that tax
00:47receipts will be short $3 billion, and don't blame us, was to show that they got it right,
00:53and that it's not a hollow log after all.
00:57The iron ore miners and their shareholders will be hoping that Treasury is not right
01:00about what happens next, which is that it keeps falling to $60 a tonne, FOB of course,
01:07which means an actual CFR spot price of about $70.
01:11So as discussed, the iron ore price fell to a new two year low of $92.85 over the weekend,
01:18but the big one on commodity markets is gold, up 2% to a new all-time record high above
01:24the $2,500 US announce.
01:27The iron ore miners all fell, but the market closed with a small rise, its 7th in a row,
01:32which is the longest winning streak since 8 in a row in January.
01:35A2 Milk dropped almost 20% after missing profit expectations, while software firm Nuix jumped
01:4225% after beating them.
01:44The US market bounced back from a fall on Friday, and the Aussie dollar went up against
01:48the US dollar but fell against the yen and the kiwi.
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