The forecast for fiscal 2005 U.S. agricultural export value is increased $3 billion over November estimates, to a projected $59 billion. U.S. agricultural exports are expected to show a surplus of $1 billion above forecast imports. Exports remain below 2004 due to record global grain, soybean and cotton supplies, increased foreign competition, and lower prices, according to USDA's Outlook for U.S. Agricultural Trade released Thursday.
Agricultural imports are forecast at a record $58 billion. The faster pace of growth, which began in 2003, is mainly due to broad-based gains in the prices of imports as the value of the dollar has declined. Import demand remains strong due to domestic population and income growth. Following recent trends, horticultural products account for 50-60% of the annual gain, but rising imports of live cattle, beef and snack foods are also significant.
The Outlook forecasts the Western Hemisphere will continue to be the largest regional market for U.S. agricultural products in 2005. "Exports to the Western Hemisphere continue to be slightly higher than to Asia, and North America is forecast to take a higher value of U.S. products than is East Asia." Canada remains the top export destination for U.S. agricultural goods with an estimated $10.2 billion going there. Mexico stays ahead of Japan as the second largest destination of U.S. agricultural exports, taking an estimated $8.5 billion. Japan will remain the third largest export destination, taking $7.7 billion worth of U.S. agricultural products, the forecast states.
Here is a summary of the outlooks export forecasts for exports.
Grain and feed exports: The forecast is unchanged from Novemberâ€™s estimate of $15.1 billion, with a reduction in coarse grain exports offset by increases for processed grain products. The forecast for fiscal 2005 wheat and flour exports remains $4.1 billion despite a 200,000-ton increase for wheat shipments to 26 million tons. The U.S. average wheat export unit value remains largely unchanged at $154 per ton, down somewhat from the fiscal 2004 average. EU competition in wheat markets is now somewhat weaker than was expected in November, and strong world demand for high-quality wheat continues.
U.S. coarse grain exports: The forecast is lowered 4.5 million tons and $300 million from the November estimate to 53 million tons valued at $5.2 billion. The reduction in value is due to lower corn and sorghum shipments. Estimated unit values remain sharply lower than the fiscal 2004 average.
- Corn: Despite the record U.S. corn crop, corn export volume is reduced another 4 million tons due to record global coarse grain production and fierce competition from Argentina. The expectation for reduced competition from China in corn markets remains unchanged.
The forecast for sorghum shipments is reduced an additional 500,000 tons due to reduced demand from Mexico. Mexicoâ€™s supplies are ample this year due to very good corn and sorghum crops. Average U.S. corn and sorghum export unit values are now estimated at $98 per ton.
U.S. rice export volume is up 100,000 tons from Novemberâ€™s forecast based on expected larger sales to Southeast Asia and the Middle East and more competitive prices. The larger trade volume plus a slightly higher unit valueâ€”a result of a larger share of U.S. rice exports being shipped as milled rice instead of rough (or unmilled) riceâ€”raise export value $100 million to $1 billion. Compared with 2004, volume is virtually unchanged but value is down about $200 million as U.S. prices are sharply lower this year due to a record U.S. crop and record supplies.
Oilseeds and products: The export forecast is raised 1.6 million tons to 37.4 million tons. The export value rises $1.2 billion to $9.9 billion largely due to stronger than expected soybean export unit values. In addition, a sharp increase in shipments is expected for minor vegetable oils and processed oilseed products like protein concentrates due to strong demand and a weaker U.S. dollar that raises price competitiveness. Soybean export volume remains unchanged at 27.5 million tons, but an increase in average unit price to $223 per ton raises value $400 million to $6.1 billion. Prices rose higher than expected during the October-December 2004 period due to a slow pace of farm marketing. Most of the stronger pace of U.S. soybean shipments is attributable to China. A larger portion of U.S. soybeans is expected to be sold during the first half of this marketing year before most South American soybeans reach the market in spring. The outlook for soybean oil and soybean meal has improved as well.
Cotton: The fiscal 2005 forecast for U.S. cotton exports is increased 100,000 tons from the November estimate to 2.9 million tons. Higher volume and somewhat stronger unit value raises value $300 million to $3.4 billion. Despite a further upward revision in record global production, global demand remains very strong and is expected to keep world prices somewhat higher than anticipated in November. Chinaâ€™s cotton imports from all countries are expected to remain near record levels. U.S. exportable supplies are slightly larger than anticipated due to an upward revision in the record U.S. crop.
Livestock, Dairy, Poultry: Fiscal 2005 livestock, poultry and dairy product exports are forecast to reach $11.5 billion, up $700 million from the November forecast. Red meats and dairy products account for most of the overall gain. The estimate for red meats is raised 100,000 tons and $300 million to 1.4 million tons valued at $3.4 billion, mostly due to the improved outlook for pork.
- Pork: Continued strong sales to Japan, Mexico, and Canada leads to an 85,000-ton upward revision for pork. Pork exports are expected to reach a record 800,000 tons.
- Beef: Estimates are raised slightly due to a recovery in shipments to Mexico and higher unit values. The forecast still assumes there will be no resumption of beef exports to Japan or Korea during the forecast year. The United States and Japan have agreed to resume trade in beef once conditions are determined and approved by both governments.
- Dairy: The forecast is raised $400 million from Novemberâ€™s estimate to a record $1.7 billion, partly because of expected large commercial sales of dry milk powder. The weaker dollar is improving the price competitiveness of U.S. product. The 2005 outlook calls for continued tight global dairy markets and strong product prices. The major markets of U.S. milk powder are Mexico and several Asian countries such as the Philippines, Indonesia, and Malaysia, markets traditionally supplied by New Zealand and Australia.
- Other: As for other animal products, some weakness in broiler prices is expected to result in higher shipments which raises value to $1.8 billion. The estimate for hides and skins was lowered slightly, and there is no change in the forecast for live animals.
U.S. horticultural products: The forecast is increased $700 million from the
November estimate to a record $14.5 billion. This revision mostly reflects generally higher prices due to increased foreign demand and a weaker dollar. A further depreciation in the U.S. dollar, and continued strength in the global economy support this forecast which is up $1.2 billion from the previous year. Most of the annual gain is due to the increased value of exports to Canada, Mexico and the EU.
The export forecasts for all three major product categoriesâ€”tree nuts, fresh and processed fruits, and fresh and processed vegetablesâ€”are each raised $200 million from the November estimate. Record walnut and pistachio harvests are expected, and the almond crop will be near-record. Successive almond crop failures in Spain and low global pistachio stocks support higher prices. Floridaâ€™s grapefruit production in 2004/05 is down an estimated 68% from the previous year resulting in higher prices. Californiaâ€™s orange crop is up an estimated 16% from last year but export quantities are expected lower. Higher prices for fresh vegetables like tomatoes and lettuce account for most of the increased value. Sales of other processed horticultural products, especially essential oils and wine, are strong as well.
Imports margin narrows
On average, the volume of U.S. agricultural imports is up 5% so far in fiscal 2005, and unit values are up at about the same rate, leading to an estimated 10% gain in import value from 2004.
The $2-billion forecast increase in U.S. agricultural imports for 2005 is attributed largely to an $800-million boost in vegetable oils, $360 million more of cattle purchases, and an additional $800 million of imported horticulture products.
The large gain in value of vegetable oils results from underestimated forecasts in November 2004 as well as stronger volumes and prices than were previously anticipated. The unit value for olive oil is up 14% due to appreciation of the euro against the dollar. The import volume and price of coconut oil are also significantly higher.
The partial lifting of U.S. restrictions on imports of cattle from Canada will push the value of live animal imports to $2 billion in fiscal year 2005, compared with $1.4 billion forecast last November. Canadian cattle under 30 months of age will be allowed entry into the United States on March 7 under USDAâ€™s minimal risk rule. Total cattle shipments from Canada and Mexico are expected to be 2.5 million head. Beef and veal imports are forecast $100 million higher on increased shipments.
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