USDA's Economic Research Service expects another record year for agricultural exports in 2006 at $64.5 billion. The latest Trade Outlook reports imports are raised to another record $63.5 billion. The value of the dollar will continue to support U.S. farm and manufacturing export growth in 2006.
Abundant U.S. grain supplies support corn and wheat exports despite stiff competition. Soybeans and products fall $1.4 billion reflecting strong South American competition.
Since November, higher horticultural product sales and an improved beef outlook are offset by reductions in soybeans, broiler meat, and dairy products. Higher almond and tree crop prices raise horticultural products to a record $16.3 billion. Beef exports rise as BSE-related bans are removed, but record South American supplies lower prospects for U.S. soybean exports. Canada, Mexico, Japan, the EU-25, and China remain the top five destination markets.
Compared with fiscal year 2005, the export outlook reflects a $1.8-billion increase for horticultural products due to generally higher prices and strong foreign demand. Tree nut exports rise to a record $3.1 billion, pork is forecast at a record $2.3 billion, and beef exports are up as former markets reopen. Cotton exports are up with a record U.S. crop and strong demand from China.
Fiscal 2006 agricultural imports are raised to a record $63.5 billion, up 10% from last year, continuing the accelerated pace which began in 2003. Strong demand for fresh fruits and vegetables, sugar, cocoa, coffee, beer, and wine drive imports. Steady gains for many other products are also expected. The EU-25, Canada, Mexico, Australia, and Brazil remain the top suppliers.
The agricultural trade-weighted dollar is expected to appreciate against the euro and yen in 2006. However, ERS anticipates that the dollar will weaken against developing country currencies in 2006. The net result is likely to be a modest depreciation of the trade-weighted dollar in 2006.
The forecast for fiscal 2006 grain and feed exports is $16.5 billion, up $200 million from the November estimate and $300 million above fiscal 2005. Since November, a downward revision in corn shipments is more than offset by higher export unit values for corn and wheat. The forecast for wheat volume is unchanged at 27.2 million tons, but sales increase to $4.4 billion on higher unit values. Average export unit value for hard wheat is up, due to concerns over poorer U.S. growing conditions and continued strong foreign demand, especially from Iraq.
The fiscal 2006 corn export forecast is down 4 million tons from the November estimate due to renewed competition from China - Chinaâ€™s export forecast was raised 3 million tons to 6 million tons - and weaker foreign demand, especially from Canada and the Middle East. However, corn export unit value is increased due to strong domestic demand for feed and ethanol production. Sorghum is reduced 200,000 tons to 4.5 million tons, the lowest in 19 years, mainly due to slow shipments to Mexico. The overall forecast for rice remains unchanged.
Compared with the previous year, the outlook for fiscal 2006 grain exports reflects continued large U.S. and global grain supplies. The 2005/06 U.S. rice and corn crops are expected to be the second largest on record. Relative to fiscal 2005, export volumes are forecast to increase for corn (up 2.4 million tons) and wheat (up 800,000 tons) despite stiff competition. Little change in export unit values is expected. Rice volume and unit values are higher in fiscal 2006 than in 2005, reflecting stronger sales to the Middle East and tighter supplies.
The fiscal 2006 export forecast for oilseeds and products is $9.8 billion, or $500 million lower than the November estimate and $1.2 billion below the previous year. Soybeans are lowered 4.5 million tons from Novemberâ€™s estimate, but an upward revision in unit value to $240 per ton (roughly equal to fiscal 2005â€™s average) means export value falls by only $600 million to $5.9 billion. In the first quarter of fiscal 2006, 40% of expected soybean exports had been shipped at an export unit value 8% higher than a year earlier. The U.S. share of the import market in Europe and China is down due to large South American shipments. However, the forecast for Chinaâ€™s soybean imports remains at a record 27.5 million tons for 2005/06. Soybean meal and oil forecasts are adjusted slightly.
Compared with the previous year, the 2006 outlook reflects abundant U.S. soybean supplies and a record South American crop. The second largest domestic soybean crop is expected, but export volumes are forecast lower due to South American competition. Despite these conditions, U.S. soybean export unit value is forecast to remain largely unchanged from fiscal 2005 in the face of record demand from China and developments in the energy and animal feed markets. Foreign demand for vegetable oils is strong in part due to rising demand for bio-diesels.
The fiscal 2006 forecast for U.S. cotton exports is unchanged from the November estimate of 3.6 million tons valued at $4.5 billion. Since November, the 2005/06 U.S. crop estimate is increased 560,000 bales due to favorable weather, and Chinaâ€™s crop was increased 1.7 million bales. Compared with the previous year, the export outlook for U.S. cotton has improved, reflecting a record U.S. cotton crop and a very large increase in Chinaâ€™s imports.