USDA Outlook for U.S. Agricultural Trade
31 May 2012
Grain exports are forecast up from February indications, with increased values for wheat, rice, and feed and fodders more than offsetting a reduction for coarse grains. Oilseeds are up on higher prices and volume, while cotton is up solely on volume. Horticultural exports are up on strong tree nut exports. The forecast for livestock, poultry, and dairy is up $400 million on increased exports of dairy, poultry, pork, and variety meats. Exports to the top three markets, Mexico, Canada, and China, are all raised. Exports to the EU are down $1.5 billion due to increased grain and oilseed competition.
U.S. import demand continues strong, lifting estimated import value by $1 billion to $107.5 billion from the $106.5 billion projected in February. Increases are forecast for vegetable oils, oilseeds, oilmeal, bulk grains, and beef and veal imports. Larger imports of rapeseed oil from Canada are leading the vegetable oil gains. These import increases were partly offset by projected declines for horticultural products and for sugar and tropical products. Smaller import projections for sugar and rubber offset gains from coffee beans.
Given that the forecast for exports is up $3.5 billion, compared with the February forecast, while imports are rising only $1 billion, the trade balance for 2012 is a surplus of $27 billion, still lower than the record $43 billion in 2011.
US Agricultural Trade, Fiscal Years 2007-12, Year Ending September 30
World Growth Down; Dollar Mixed but Weak
World 2012 growth is expected to slow. The dollar is expected to be mixed but mostly down in 2012. Continuing turmoil in European financial markets, coupled with falling employment and GDP in most of the Eurozone, reflects a recession likely to last through most of 2012. Modest North American growth will not offset the European recession. Despite problems in Europe, Asian economies are showing strong but slowing growth. In the developing world, tight credit, currency appreciation, and falling commodity prices are slowing growth prospects. Faster growth in Japan reflects recovery from last year’s tsunami. China is expected to slow as a result of slowing export growth, rising wages, and fiscal tightening, and relatively tight credit. Brazil, due to strong export growth and higher investment, is expected to grow even faster than in 2011. The main risk to world growth is a significant spillover of the Eurozone problem to North American and Asian financial institutions and markets.
Overall trade growth is expected to be 3.4 percent this year, down from over 6 percent in 2011. Despite slower expected world growth, the outlook for agricultural trade is promising. The stabilizing Middle East and slower world growth have mitigated sharp rises in energy prices. A weak dollar and low interest rates provide continued inexpensive credit. The macro environment is favorable for U.S. exports in 2012.
Fiscal 2012 grain and feed exports are forecast at $34.6 billion, up $600 million from the February forecast. Upward revisions in wheat, rice, and feeds and fodders more than offset lower corn values. Wheat is boosted nearly $500 million to $8.5 billion on sharply increased volume, although lower values are a dampening factor. The rise reflects strong shipments expected during the fourth quarter. Competition from other exporters will be limited during the summer, giving the United States increased market opportunities for the new crop.
The forecast export value for coarse grains is lowered $600 million to $13 billion, mostly due to corn. Corn prices are expected to weaken in the face of a record crop and greater competition (especially from Brazil). Feeds and fodders are up $300 million (primarily corn gluten feed and meal) on both volume and value. Distillers dried grains (DDGS) are up slightly based on shipments to China in recent months. Rice exports are up $200 million to $2.1 billion on the rapid pace of sales to Northeast Asia as well as South and Central America since March. U.S. prices are higher on tighter stocks and reports of lower planted area as farmers switch to more profitable crops.
The fiscal 2012 forecast for oilseeds and products is raised $1.4 billion to $26.4 billion. Significant crop losses in South America have strengthened U.S. unit prices and raised export prospects for soybeans and soybean meal. Limited U.S. exportable supplies of soybean oil due to strong domestic demand, leaves the export forecast unchanged.
The fiscal 2012 cotton export forecast is raised $200 million to $6.4 billion. A slightly higher export volume is driven by stronger import demand by China, which is purchasing domestic supplies for the State reserve. The expected average export unit value is unchanged.
The fiscal 2012 export forecast for livestock, poultry, and dairy is raised over $400 million to a record $29.6 billion. Gains in dairy, poultry, pork, and variety meats more than offset declines in other animal products. Dairy products are raised $300 million on stronger global demand and larger exportable supplies. Poultry products are increased over $250 million, on higher sales of both broiler meat and other poultry products. Pork exports are raised nearly $100 million as greater volumes more than offset a slight decline in unit values. Growing pork shipments to East Asia and North America are supported by a relatively weak dollar and competitive prices. Beef and pork variety meat shipments are higher by $100 million on robust prices.
The fiscal 2012 horticultural product export value is raised $500 million to a record $28.5 billion. Tree nuts are raised $500 million to $6.2 billion due primarily to strong almond demand from Europe, China, and Hong Kong, supported by ample supplies following a record harvest. The fresh fruit and vegetable export forecast remains at $6.9 billion, with exports to Canada, Europe, and Japan expected to continue rising. Processed fruit and vegetable exports are unchanged at $6.7 billion. Fiscal 2012 exports of sugar and tropical products are unchanged at $6.2 billion.
Revised Outlook for fiscal 2012
The forecast for agricultural exports is raised $3.5 billion from the February forecast to $134.5 billion. The forecast for Asia is increased on strong exports to China and Japan. The EU forecast is down, but the Western Hemisphere is up on greater exports to Mexico and Canada. Exports are increasingly concentrated in the top three markets of Canada, Mexico, and China with shipments in 2012 forecast at a record 43 percent of total U.S. agricultural exports.
The fiscal 2012 forecast for China is raised $1.5 billion to $18.5 billion. However, due to increases in Mexico and Canada, China remains the third largest U.S. market. Shipments of soybeans and soybean oil are down due to increased early season competition but sales of corn for the first half of the year were $725 million compared with less than $1 million last year. Nearly every other commodity category is up with significant increases seen in cotton, pork, dairy, poultry, and tree nut sales. The forecast for Japan is up $500 million to a record $14 billion. As is the case with China, decreased soybean exports are offset by greater high value product shipments, such as pork, beef, dairy, and horticultural products. Hong Kong is raised $200 million on increased shipments of almonds. The export forecast for South Asia is down $400 million due to reduced exports of cotton to Bangladesh and Pakistan.
Exports to Canada are raised $1 billion from February to a record $20 billion, which is nearly $1.5 billion above the previous record set last year. Canada is forecast to be the top market for U.S. agricultural products in fiscal 2012. Consumer oriented product exports totaled $7.2 billion over the first half of the fiscal year and constituted 25 percent of all U.S. consumer oriented product exports to the world. The record forecast to Canada is supported by strong shipments of beef, pork, dairy, and tree nuts.
Mexico is forecast up $1.5 billion to a record $19 billion, as tight corn supplies in Mexico have boosted U.S. corn and, to a lesser extent, feed-quality wheat exports. Corn exports should continue strong through the fiscal year as the main Mexican corn crop will not be harvested until October. The tight feed situation has also translated into increased purchases of U.S. DDGs, with Mexico the second largest U.S. market so far this year. Pork, poultry meat, and horticultural products are also up for the first half of the year and expected to continue strong.
The Caribbean and Central America are each raised $200 million, based on strong early season shipments. Peru is forecast down $300 million as wheat exports have plummeted on increased competition from Argentina. Additionally, there were essentially no soybean oil shipments over the first half of the year partly due to increased U.S. biodiesel consumption.
Europe, Africa, and the Middle East
The export forecast for the EU is down $1.5 billion to $8.5 billion. Exports have fallen 21 percent by value and 55 percent by volume in the first 6 months of the year compared with the same period last year. Declines are most pronounced in exports of bulk commodities, which are down 55 percent in value. The drop in U.S. soybean exports to the EU is the largest factor in the overall drop as soybean exports have fallen from $1.1 billion at this point last year to $360 million thus far this year. U.S. exports of corn and corn co-products during the first 6 months of the year have fallen 85 percent, from $241 million to $37 million. EU imports of corn and corn co-products from all sources have fallen as European import demand has slipped. A major reason for the downturn of U.S. corn and DDGs exports to the EU is that U.S. farmers are again cultivating corn varieties that have not yet been approved in the EU.
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