U.S. farm exports will reach a record $149.5 billion in the year ending Sept. 30, up $6.9 billion from a February forecast. According to U.S. Department of Agriculture, the highest ever soybean purchases by China and surging sales of beef and dairy contributed to the record numbers.
The department’s Outlook for U.S. Agricultural Trade report says U.S. agricultural imports for fiscal year 2014 are forecast at a record $110.5 billion, up $500 million from February’s estimate.
Despite 6.4 percent expected increase in the imports than in fiscal 2013, the U.S. agricultural trade surplus in fiscal 2014 will still be up $6.3 billion from February to $39.0 billion, its second highest ever.
The report shows the growth is not just due to rising prices, which have driven export numbers in the past, but also increase in the volume of U.S. agricultural exports, which is projected to jump by 31 percent between fiscal years 2013 and 2014.
The Exports are projected to rise just over 6 percent from last year’s overseas sales of $140.9 billion, which USDA says supported almost one million jobs in the U.S. The department said fiscal years 2009 through 2013 were the strongest five years in history for agricultural trade, with sales totaling $619 billion for that period.
The forecast for grain and feed exports is boosted $4.5 billion to $35.8 billion due to higher prices for wheat and greater volumes and prices for corn and feeds and fodders, says the report. The corn export forecast is also raised $2.1 billion to $10.7 billion on strong foreign demand and diminished competition, especially from Argentina.
Oilseeds and product exports are forecast at a record $33.8 billion, up $2.4 billion, driven by larger volume and higher prices for soybean and soybean meal exports. The soybean export forecast is raised $1.8 billion to $23.5 billion based on record sales to China.
The export forecast for livestock, poultry, and dairy is raised by $600 million to a record $32.2 billion, with increases in dairy and beef more than offsetting declines in pork and poultry. Similarly, the horticultural product export forecast is lowered $400 million to $34.1 billion, but still forecast at a record high.
Agricultural Secretary Tom Vilsack pointed to programs in the 2014 Farm Bill that he said will continue to support trade promotion and market expansion. “Collectively, these efforts will ensure that America’s farmers and ranchers are well positioned to capitalize on emerging export markets and continue to drive economic growth in rural America,” Vilsack said in a news release.
The report says world growth, estimated at 2.0 percent in 2013, is expected to rise to 2.8 percent in 2014, despite a weak first quarter. Trade growth of 2.6 percent in 2013 is expected to rise to 4.1 percent in 2014, supporting world growth. Asian GDP growth, estimated at 4.2 percent in 2013, is slated to slow to 4.0 percent in 2014.
“China and other Asian economies, in pursuing policies of higher domestic consumption, have become less export dependent, leading to lower trend growth than in 2000-09. In the first quarter of 2014, exports shrank in leading Asian economies compared to the previous year,” it says.
The Chinese central bank tightened credit policy in 2013 due to concern that the booming commercial and residential real estate markets would boost inflation. This tight credit policy, says the report, meant that consumer spending did not grow fast enough to fully offset falling exports. As a result, China is expecting a slowdown in GDP growth to 7.0 percent in 2014.
It says Japan has had very accommodating monetary policy for some time, and experienced a very strong (almost 6 percent) annualized jump in consumer spending in the first quarter while exports grew slowly. “This growth in consumer spending is expected to abate as higher taxes on consumption began on April 1. Some economies in Asia are slated to see slower growth, such as the storm-ravaged Philippines. South Korea and Vietnam are expecting stronger growth in 2014.
“North American and European economies will boost world growth in 2014, as credit conditions ease in Europe, it says, adding that North American growth is expected to move up in 2014 as the U.S. economy speeds up from a severe winter.
The Latin American growth slowdown in 2014 comes as higher growth prospects for smaller Latin American economies do not fully offset a recession in Argentina and slow growth in Brazil.
The report projects that Europe is expected to recover from 2013’s 0.1-percent growth to 1.6 percent in 2014. World trade growth’s acceleration in 2014 comes as a speed-up of North American and European GDP growth boosts imports from other areas.
The dollar is projected to be flat in 2014 on top of 2013’s 0.7-percent appreciation. It says dollar appreciation over the last several years was the result of the belief in financial markets that U.S. energy-supply growth would boost U.S. corporate profit growth. In addition, U.S. financial markets were seen as a place to avoid the economic and political turmoil of some emerging economies.
“The recent U.S. stock market boom is a reflection of those perceptions. Nevertheless, the continued relatively low value of a slowly appreciating dollar, lower domestic energy prices, and higher growth in Europe and North America will further support U.S. farm and manufacturing export growth in 2014,” it projects. The stronger U.S. economy in 2014 will lift U.S. import demand even as U.S. exports rise, providing a boost to world growth beyond North America, it adds.
Low U.S. energy prices and increasingly available credit make the U.S. agricultural export trade outlook promising in 2014. “High transport costs for moving newly found fossil fuels to ports means that expanding supplies of natural gas and crude oil have made these energy supplies available at a discount on U.S. markets,” it adds. The relatively low cost of U.S. energy is a source of absolute advantage to domestic farm and manufacturing exporters.
“The main risk to higher world growth in 2014 is a BRIC (Brazil, Russia, India, and China) growth slowdown from overly harsh credit tightening,” it adds. However, most analysts regard that risk as of a low probability in 2014.