USDA: Ag exports up; Trump election creates ‘uncertainty’
December 1, 2016
Fiscal year 2017 agricultural exports are projected at $134 billion, up $1.0 billion from the August forecast, largely due to expected increases in dairy and livestock byproduct exports, the Agriculture Department's Foreign Agricultural Service said in a December quarterly report issued Wednesday.
The report said, "While beef and pork forecasts remain unchanged, dairy is forecast $500 million higher at $5.3 billion."
"Grain and feed exports are forecast up $300 million to $29.6 billion, driven primarily by stronger wheat volumes and unit values as well as by corn volumes, helping to offset expected declines in rice exports.
"Cotton exports are forecast at $4.4 billion, a $200 million increase, due to a poor harvest in Brazil and production uncertainty in India
"Soybean export volumes continue to set records, raising the soybean forecast $500 million, which is countered by expected declines in soybean meal, soybean oil and other oilseed products.
"Overall, the oilseed and product forecast remains unchanged at $31 billion."
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Forecasts to China and Mexico received the largest upward adjustments, each increasing $300 million. China continues to be forecast as the top market for fiscal year 2017 at $21.8 billion, followed by Canada ($21.3 billion) and Mexico ($18.3 billion).
U.S. agricultural imports in fiscal year 2017 are forecast at $112.5 billion, down $1 billion from the August forecast. Reduced imports of horticultural, sugar, and tropical products are leading the forecast decline. As a result, the U.S. agricultural trade surplus is expected to increase to $21.5 billion in fiscal 2017.
In the economic outlook section of the report, FAS said, "The election of Donald Trump as U.S. president has introduced an element of uncertainty as the emphasis of the next administration's economic policy agenda is unknown."
"On balance, markets have responded positively to early indications of a fiscal stimulus in the form of tax cuts and increased spending on infrastructure," FAS said. "Expectations for 2017 U.S. per capita GDP growth have thus been raised slightly to 1.2 percent."
"However, analysts are watching closely for the extent to which policies advocated during the campaign, such as restrictive immigration policies and high tariffs, will be pursued. A change in the U.S. trade relationship with China and Mexico is of particular concern for agricultural competitiveness. Together, these two countries were the destination for an average of almost one-third of total U.S. agricultural exports from 2013-2015. China alone was the destination for roughly 60 percent of U.S. soybean exports, on average, during this period.
"In contrast to the significant weakening of the British pound in the wake of the Brexit vote, the U.S. dollar strengthened with respect to most of the currencies of its closest trading partners and competitors in the first few days after the election," FAS reported.
"The dollar strengthened over 10 percent relative to the Mexican peso in the two days following the election. In general, emerging market currencies lost considerable value against the dollar over expectations that higher U.S. interest rates would trigger capital outflows.
"The agricultural exports-weighted dollar value index is expected to reflect a 2.6-percent appreciation in 2016 and maintain strength with a further 2.1-percent appreciation in 2017. The strong dollar is thus expected to continue to weigh on U.S. agricultural export competitiveness."
In a news release, Agriculture Secretary Tom Vilsack said, "The $134 billion forecast represents an increase of $4.3 billion from 2016 and would be the sixth-highest total on record. U.S. agriculture is once again expected to post a trade surplus, totaling $21.5 billion, up nearly 30 percent from the $16.6 billion surplus in 2016.
"The expected volume of 2017 exports is noteworthy, with bulk commodity exports expected to surpass last year's record levels — led by soybeans at a record 55.8 million metric tons, and corn, up 11 percent from last year, to 56.5 million metric tons. The volume of cotton exports is expected to begin recovering and most livestock and poultry products should see moderate increases in export volume as well."
Vilsack also noted that exports are responsible for 20 percent of farm income and added, "Over the past eight years, USDA has worked to boost export opportunities for U.S. agricultural products by opening new markets, pursuing new trade agreements, enforcing existing agreements, and breaking down barriers to trade."
"USDA has made support for exports and production agriculture one of the Four Pillars of a 21st century rural economy, along with local and regional food systems, the biobased economy, and conservation and natural resources, and has made significant, targeted investments in these areas," Vilsack said.
"Today's reports showing growing exports and stable farm incomes reflect the strategic, consistent work of the Obama administration since 2009 to help rural America thrive. We must continue promoting a favorable trade environment for American exports and making targeted investments that drive the rural economy forward to ensure this progress continues."
–The Hagstrom Report