Thanks to growing competitiveness in U.S. soybeans and a stronger outlook for pork exports, the USDA's latest quarterly Outlook for U.S. Agricultural Trade increased the estimated agricultural surplus to $2 billion.
"U.S. ag exports are forecast at $60.5 billion, up $1.5 billion over the February estimate but remain $1.8 billion below the record set in 2004," the update reports. U.S. agricultural imports are forecast at $58.5 billion.
The Economic Research Service shows that the overall export value is lower because record global grain, oilseed, and cotton supplies have lowered prices and increased competition. However, strong demand and a weaker dollar are boosting exports of horticultural and dairy products and pork -- partially offsetting these declines.
The upward revision for the export forecast mostly reflects reduced competition in soybean markets and a stronger outlook for pork. U.S. soybean export volume is raised due to a drought in Brazil, which has lowered the 2004/05 soybean crop. Pork exports are forecast at a record $2.3 billion with gains in volume and unit value.
Corn on the other hand is faced with increased competition from Argentina and China. The trade update revised the U.S. corn export volume lower due to abundant global feed grain supplies.
The updated import estimate at $58.5 billion is a slight increase over February's estimate and $5.8 billion above the record set in 2004. "This large year-to-year increase in value is mostly due to higher prices for imports, which are the result of a weaker dollar, higher fuel costs, and strong U.S. consumer demand," report authors Nora Brooks and Ernest Carter explain. The largest annual grains are forecast for horticultural products (especially fruits, essential oils, and wine), dairy products, coffee beans, and natural rubber.
Export product estimates
The following is excerpted from the May 24, 2005 Outlook for Agricultural Trade.
Grain and feed: The forecast for grain and feed export value is increased slightly from February's estimate. Supporting this outlook is a $110-million increase for rice exports, due partly to a 300,000-ton increase in shipments and somewhat stronger export unit values. The outlook for U.S. rice has improved with recent Iraqi purchases and tight supplies in Thailand. The forecast for wheat and flour exports remains $4.1 billion despite a 200,000-ton decrease in wheat volume due to large world stocks and slightly more competition. The wheat export unit price is increased slightly but still remains below the 2004 average. Strong world demand for high-quality wheat continues.
Coarse grain: The forecast for U.S. coarse grain exports is unchanged at $5.2 billion despite a 2.5- million ton reduction in corn shipments. Corn and sorghum export unit prices are increased but still remain below their 2004 averages. Abundant world feed grain supplies, an upward revision in the record Argentina corn crop, and increased competition from China in corn markets should dampen U.S. corn shipments. The forecast for sorghum exports remains at 4.5 million tons, and a slightly higher price pushes the value past $460 million.
Oilseeds: The forecast for oilseed and products export value is increased from February's estimate. Soybeans are raised 2.4 million tons to 29.9 million tons. Improved outlook for U.S. shipments and slightly higher average export unit value boost the soybean export value $800 million to $6.9 billion. China's record import demand for soybeans and large U.S. supply supports this forecast. The revision is largely due to reduced expectations for Brazil's 2004/05 soybean crop. Drought conditions in southern Brazil have sharply lowered Brazil's soybean production estimate, pushing prices higher and strengthening demand for U.S. soybeans. Brazil's tighter soybean supply also raises U.S. soybean meal and oil export forecasts. Soybean prices remain considerably below 2004 averages.
Cotton: The forecast for U.S. cotton exports is increased 100,000 tons from the February estimate to 3 million tons. Higher volume and somewhat stronger unit value raises export value $200 million to $3.6 billion. Favorable weather and higher area has led to a 600,000-ton increase in estimated world production. At the same time, strong demand has supported prices recently, and world cotton use has been revised upward as well.
Livestock, poultry, and dairy product: Fiscal 2005 exports are forecast to reach $11.8 billion, up $300 million from the February forecast. A stronger outlook for pork sales accounts for the upward revision. Pork export volume is increased nearly 60,000 tons from the February estimate to a record 860,000 tons. Along with an increase in average unit values, pork is now forecast at a record $2.3 billion, nearly three times the value of beef exports. Exports of pork variety meats add another 220,000 tons valued at $250 million. Pork sales to South Korea have risen sharply, and Japanese demand continues to rise. Shipments to Russia are rising, as have sales to China and Australia, and strong sales to Mexico continue. Remaining bans on beef and poultry by major importers creates increased opportunities for pork. The beef forecast, which remains largely unchanged at about $800 million for the year, still assumes there will be no resumption of shipments to Japan or Korea for the remainder of this year.