ANALYSIS - Agricultural exports are forecast higher versus the February report but lower compared to 2011 figures. However, import demand is booming, jumping $1 billion to $107.5 billion, writes Sarah Mikesell, The CropSite senior editor.
According to the USDA Outlook for Agricultural Trade report, agricultural exports for fiscal 2012 are forecast at $134.5 billion, up $3.5 billion from the
February forecast, but $2.9 billion below final fiscal 2011 exports.
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.
The forecast for livestock, poultry and dairy is up $400 million. US exports to Mexico, Canada, and China, the top three markets for the US, are all raised. However, exports to the EU are down $1.5 billion due to increased grain and oilseed competition.
US 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.
With the export forecast up $3.5 billion and imports rising only $1 billion, the trade balance for 2012 is a surplus of $27 billion, still lower than the record $43 billion in 2011.
World Growth Down; Dollar Mixed but Weak
For the rest of 2012, world growth is expected to slow, and the US dollar is expected to be mixed but
mostly lower. Continuing turmoil in European financial markets, falling employment and lower GDP in most of the Eurozone suggests the recession
likely to last through most of 2012.
Unfortunately, the 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 per cent this year, down from over 6 per cent 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, making the macro environment favorable for US exports.
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 due to rencent shipments to China. 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.
US 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 US unit prices and raised export prospects for soybeans and soybean meal. Limited US 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, driven by stronger import demand by China, which is purchasing domestic supplies for the State reserve.
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.
Further ReadingYou can view the full Outlook for U.S. Agricultural Trade report by clicking here.
ThePigSite News Desk