USDA Expects Record Ag Exports in 2006

Fiscal 2006 U.S. agricultural exports forecast at a record $64.5 billion. Compiled by staff 

Published on: Nov 23, 2005

Fiscal 2006 U.S. agricultural exports are forecast at a record $64.5 billion, up $1 billion from August and $2.1 billion higher than 2005, according to new figures from USDA's Economic Research Service.

Since August, unit values for wheat and rice are raised, and the outlook for pork is improved. Soybean shipments are lowered 500,000 tons with increased competition from Brazil. Cotton exports are revised up 300,000 tons, while unit value is lower.

Compared with 2005, the export outlook reflects a $1.4-billion increase for horticultural products due to a competitive dollar, strong foreign demand, and higher prices. Tree nuts are a record $3 billion, up $600 million with almonds driving most of the gain. Livestock products are up $500 million with record pork exports forecast at $2.4 billion. Cotton is up $600 million with a near-record U.S. crop and strong demand from China.

Grain export value remains mostly unchanged with higher volumes offset by lower unit values.  Oilseed and products fall $800 million with increased competition and lower soybean and meal unit values.

Fiscal 2006 agricultural imports are forecast at a record $61.5 billion, $3.8 billion higher than 2005. The increase reflects continued strong U.S. consumer demand. Horticultural products again account for about two-thirds of the gain, with fresh fruits and vegetables, wine, and beer driving most of the increase. Live animal imports are up $600 million with resumption of cattle trade with Canada. The fiscal 2006 trade surplus is forecast at $3 billion.

The agricultural trade-weighted dollar for high-valued products depreciated around 17 percent from July 2004 to July 2005. The U.S. dollar is likely to depreciate further in 2006. USDA anticipates that the dollar will weaken against developing country currencies into 2006. The net result is a modest depreciation of the trade-weighted dollar in 2006. The value of the dollar will continue to support U.S. farm and manufacturing export growth in 2006.

The forecast for fiscal 2006 grain and feed exports is $16.3 billion, up $500 million from the August estimate but largely unchanged from fiscal 2005. The forecast change since August is largely due to stronger expected unit values for wheat and rice. U.S. hard wheat prices have strengthened due to strong demand and tighter supply. Rice export unit value is expected higher as well due to tighter global supplies. Also since August, corn export volume is increased to 51.5 million tons largely due to hurricane shipping delays and reduced competition from Argentina, but lower unit value should keep export value unchanged.

Compared with the previous year, the outlook for fiscal 2006 reflects a continuation of large global grain supplies and lower unit values for wheat and coarse grains. U.S. grain supplies remain large—the 2005/06 rice and corn crops are expected to be the second largest on record.

The outlook for fiscal 2006 reflects a continuation of abundant U.S. soybean supplies, a record South American crop, and lower soybean and meal unit values compared with the previous year. The second largest domestic soybean crop is expected, but lower soybean and meal export volumes are forecast due to South American competition. Prospects for U.S. soybean oil are brighter with the expectation that unit values should strengthen.

The fiscal 2006 forecast for U.S. cotton exports is increased 300,000 tons (1.4 million bales) from the August estimate, but lower unit values leaves value unchanged at $4.5 billion. Since August, the 2005/06 U.S. crop estimate is increased 1.87 million bales due to favorable weather, while China’s crop was lowered 1.5 million bales. Compared with the previous year, the outlook for fiscal 2006 is improved, reflecting a near-record U.S. cotton crop and a very large increase in China’s imports, resulting in an increase in U.S. shipments and higher unit values.

Fiscal 2006 exports of livestock, poultry, and dairy products are forecast to reach $12.5 billion, an increase of $600 million from the August forecast and $400 million higher than 2005. Pork cuts and variety meats account for most of this upward revision. The export outlook for these products is improved for Mexico and Canada, as well as secondary markets like Russia, South Korea, and Australia.

Much of the expected annual gain is due to the further expansion of pork exports, which are expected to rise 73,000 tons and $152 million to a record 955,000 tons valued at about $2.4 billion. Consumer concerns in selected markets related to cattle and poultry diseases and a competitive dollar support increased pork sales.

The beef forecast, which is unchanged from fiscal 2005 levels and the previous forecast, assumes that the current BSE-related import bans remain in place for the year. Regarding broiler meat, some increase in volume is expected but lower prices leave the value unchanged at $2 billion. Russia, Mexico, and Turkey remain the major markets. Hide and skin exports are forecast at $1.8 billion, with China remaining the major market. After a large increase from 2004 to 2005, the value of dairy product exports is expected to remain flat with slight volume increases offset by lower prices.