Forecast for U.S. exports could set new record for 2013

Markets
Sep 9, 2013

The U.S. Department of Agriculture released its Outlook for U.S. Agricultural Trade report at the close of August, with prediction’s that the fiscal year 2013 agricultural exports will reach $140 billion, which if realized, would be a new record.

Fiscal 2014 agricultural exports are forecasted at $135 billion, down $5 billion from the fiscal 2013. Oilseeds and products are expected to decline the most, down $5.4 billion due to lower soybean and meal prices. Grain and feed exports are expected to fall $1.7 billion due to lower wheat, rice, and feeds and fodders exports.

For fiscal 2013, the record $140 billion forecast for agricultural exports is up slightly from last quarter’s forecast. Fiscal 2013 imports are forecast at $105 billion, $6 billion lower than the May forecast, but still expected to exceed imports for any previous year.

“Driven by the productivity of U.S. farmers and ranchers, we have achieved five years of positive momentum for agricultural exports and today’s forecast is another promising development,” said Agriculture Secretary Tom Vilsack in a statement following the release of the report.

“Agricultural exports have a real impact on Main Street and beyond, supporting more than one million good jobs here at home. We’re counting on Congress to help keep up this momentum. With just a few weeks left before expiration of many Farm Bill programs—including trade promotion programs that return $35 in economic benefits for every dollar invested—producers and rural communities need passage of a comprehensive Food, Farm and Jobs Bill as soon as possible. This would enable USDA to continue trade promotion, and carry out a wide variety of additional efforts to support a productive U.S. agriculture sector. At the same time, America’s farmers and ranchers need a reliable and stable agricultural workforce to keep up production. Passage of the commonsense immigration reform measure, which was already approved by a bipartisan majority in the U.S. Senate, would further strengthen American agriculture and help put our nation on solid footing to maintain strong exports in the years to come.”

“At USDA we intend to build on the record agricultural trade already achieved in the Obama Administration,” Vilsack added. “We will continue breaking down barriers to U.S. products and working toward new agreements to expand exports, including a Transatlantic Trade and Investment Partnership with the European Union and a Trans-Pacific Partnership with Asian nations.”

Little change is expected in exports of livestock, poultry, and dairy products, while horticultural exports are forecast to increase $2.5 billion to a record $34.5 billion. Agricultural exports to China are forecast down $2 billion from fiscal 2013 and Canada is expected to return to its position as the top U.S. market for agricultural products.

U.S. agricultural imports are forecast at a record $113 billion, $8 billion higher than in fiscal 2013. Increases in import value are expected for most products in 2014, with the largest gains in horticultural products and sugar and tropical products. The U.S. agricultural trade surplus is expected to fall by $13 billion in fiscal 2014, to $22 billion.

This would be the smallest surplus since 2007.

Livestock exports up

Fiscal 2014 livestock, poultry, and dairy exports are up $100 million to $31.1 billion from the previous year. Growth in pork and poultry products offset declines in dairy and beef.

Pork is forecast $60 million higher at $5.1 billion, with strong demand expected from Mexico and some Asian markets. Poultry is forecast to increase by $50 million to $6.5 billion on greater egg and other poultry product exports.

Dairy exports are forecast to decline $200 million to $5.6 billion as volumes and global prices are expected to moderate. Beef exports are forecast to decline $170 million to $4.9 billion as lower volumes offset higher prices.

The fiscal 2013 export value is raised $1.0 billion to $31.0 billion with gains in dairy, poultry, and pork. Dairy is up $500 million to $5.8 billion on higher prices and volumes due to lagging milk production in the European Union (EU).

Agricultural exports in fiscal 2014 are forecast at $135 billion, which is $5.0 billion below the revised fiscal 2013 forecast. The forecast for exports to Asia is for a $2.4 billion decline in exports in fiscal 2014, mostly due to a lower forecast for China.

The Western Hemisphere is forecast down $500 million, while Canada returns as the top U.S. market. The Middle East, Africa, and the EU are forecast down a combined $1.8 billion on reduced wheat and soybean prospects.

Energy prices favor ag trade

Lower U.S. energy prices, a depreciating dollar, and more available credit are positive factors for the U.S. agricultural trade outlook in 2014, according to the report. While U.S. energy export transport costs remain high, expanding U.S. energy supplies from natural gas and oil fields will be available at a discount on domestic U.S. markets (albeit a smaller discount than in 2013). Farmers will benefit from lower fuel and fertilizer costs in 2014, facilitating higher agricultural output and export volumes.

Fiscal year 2014 grain and feed exports are forecast at $28.8 billion, down $1.7 billion from the 2013 estimate, a decline driven by sharply lower grain prices.

Wheat is forecast at $7.7 billion, a drop of $1.9 billion due to lower prices and volume. Abundant exportable supplies in competitor countries are expected to limit growth opportunities. Feeds and fodders are down $1.4 billion because distiller’s dried grains (DDGS) value is expected to drop sharply with corn prices.

Coarse grain exports are forecast at $8.4 billion, up $2.3 billion, mostly on higher corn volumes as exportable supplies are replenished following last year’s drought decimated crop. Corn is up $2.0 billion to $7.5 billion because of a near-doubling of volume with a forecast record crop; however, unit values fall by more than 25 percent. Rice exports, at $2.1 billion, are down 10 percent due to smaller supplies, an expected reduction in sales to South America and the Middle East, and more competition from lower-priced exporters.

The fiscal 2013 estimate for grain and feed exports is up $500 million to $30.5 billion. Wheat is up $600 million to $9.6 billion on higher volume, particularly to Brazil and China. Corn is reduced $500 million to $5.5 billion due to lower volumes as a result of competitive pressures. Feed and other products are up $400 million on both higher values and volumes. Rice is up $100 million to $2.3 billion on stronger sales to the Caribbean and South America.

The fiscal 2014 export forecast for oilseeds and products is forecast at $26.4 billion, down $5.4 billion from the 2013 estimate, driven by lower soybean and meal prices in response to an improved domestic supply. Soybeans are forecast to drop $2.4 billion to $18.4 billion as lower unit values more than offset higher volumes.

Soybean meal is projected down as domestic consumption rebounds, encouraged by lower prices and increased use in the pork and poultry sectors. Soybean oil is forecast to fall as a greater share of supply is diverted to the energy sector.

World growth expected to pick up in 2014

World trade growth is expected to accelerate in 2014 due in large part to a pick-up in developed economies. The end of Europe’s recession coupled with a speed up in North American and Japanese growth are key factors supporting more rapid world trade growth in 2014.

The boost in Latin American growth in 2014 is expected to be led by almost 4 percent growth in Mexico as Brazil slows and Argentina stagnates.

The dollar is projected to depreciate by 1.2 percent in 2014 due largely to its more than 4-percent depreciation against European and Asian currencies. The dollar’s estimated rise in 2013 of 2.3 percent was the result of increasingly attractive U.S. financial assets as growth stabilized in the United States and investment prospects diminished in other developed countries. As growth in Europe and Asia improves in 2014 their currencies are expected to appreciate. The low-valued dollar and higher growth in Europe and Asia will continue to support U.S. exports.

The stronger U.S. economy in 2014 will lift U.S. import demand even as U.S. exports rise providing a boost to world growth beyond North America. — Traci Eatherton, WLJ Editor

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