Propelled by the global economic recovery from the pandemic, U.S. farm exports will set back-to-back sales records this fiscal year and in the new year beginning on Oct. 1, the government forecast on Thursday. China would account for $1 of every $5 in exports during the two-year span, with annual purchases running more than $10 billion above its previous record, set in 2014.
The United States is the world’s largest agricultural exporter. Sales to foreign markets generate 20¢ of each $1 in farm income, so exports are a key to farm prosperity. Half of U.S. wheat and soybeans, a quarter of pork production, and 17% of broiler meat are exported. In a quirk, the United States exported more cotton in the past marketing year than it grew; usually, three-fourths of the crop is sold to foreign buyers.
The USDA projected that ag exports would hit $173.5 billion during the current fiscal year, an increase of $9.5 billion from its estimate in May, due to larger livestock, dairy, and poultry exports. That would be far above the previous record of $156.8 billion, set seven years ago.
Sales in fiscal 2022 would be even larger — $177.5 billion, driven by increased sales of soybeans, cotton, and horticultural products — setting a record for the second year in a row, said USDA analysts in their first estimate for the new year. Soybean sales would hit $33.2 billion, the highest ever, due to high prices that would more than offset a predicted 9% decline in tonnage.
China, long the world’s largest cotton and soybean importer and blossoming into the No. 1 corn market, was forecast to buy $37 billion worth of U.S. farm exports this year — double its total in 2020 — and $39 billion worth in fiscal 2022. The record for U.S. sales to China was $25.7 billion in fiscal 2014.
U.S. exports sagged in 2019 and 2020 as the tit-for-tat tariffs of the Sino-U.S. trade war throttled sales to China. The countries de-escalated the trade war in early 2020. Large purchases by China in the latter part of the year helped ignite the ongoing boom in commodity markets. The 2020 “phase one” agreement called for China to import $43.6 billion worth of U.S. food, agriculture, and seafood products this calendar year.
Despite the impact of the COVID-19 Delta variant, “employment statistics and consumer confidence have remained strong, pointing to a continued economic recovery through the end of 2021,” said the USDA in its quarterly forecast of farm exports. The global economy will grow by 5.7% for the rest of 2021 and by 4.7% in 2022, it said. The U.S. and Chinese economies were growing rapidly this year — the United States by 6.2%, the quickest pace since 1984, and China by 8.1%.
“Many economic sectors are still in the process of establishing a new footing after the substantial shocks and changes from the pandemic,” said the USDA. “Commodity price increases have subsided, but many remain at elevated levels. … Higher commodity prices, as well as low interest rates across central banks, are expected to support inflationary pressures.”
With China back as the top market for U.S. farm goods, Canada will again hold second place, followed by Mexico, Japan, and South Korea. Combined, the three leading markets would account for 48% of exports this year and in 2022. Canada and Mexico are, far and away, the largest sources of U.S. ag imports, with 40% of the market.
Traditionally, farm exports are one of the bright spots in U.S. trade accounts, reliably posting a surplus. But the nation ran small deficits in fiscal 2019 and 2020, said the USDA. Hefty surpluses are forecast for this year and 2022.
In January, the USDA adopted the WTO definition of agricultural products for tallying exports and imports. The new definition, which includes ethanol, distilled spirits, and manufactured tobacco products while removing rubber and allied products, boosted the value of U.S. exports by an average of $4.7 billion annually and imports by $9.9 billion annually during fiscal 2018-20.
Source: Fern’s Ag Insider