China was less than $500 million ahead of Mexico as the leading customer for U.S. food and ag exports as the fiscal year entered its final months, according to recent USDA data. The agricultural trade deficit, forecast to set a record this year, was already at $18.8 billion, with three months to go.
Exports to China totaled $22.8 billion through June, roughly three-quarters as much as at the same point last year. Shipments to Mexico of $22.3 billion were 5% more than a year earlier.
The USDA has forecast that Mexico — and Canada — will push China into third place among export markets this year. Food and ag shipments to Canada totaled $21.5 billion through June. Fiscal years begin each October 1.
China, the largest customer in 2023, was buying markedly smaller amounts of U.S. soybeans and corn this year, according to USDA analysts. And, the drop-off has continued.
Meanwhile, the USDA has estimated that Mexico and Canada will buy record amounts of U.S. farm exports this year. Corn, soybeans, dairy products, and pork are the leading U.S. farm exports to Mexico.
The agricultural trade deficit was $17.2 billion in fiscal 2023, the largest ever. It was forecast to nearly double this year, to $32 billion. Exports are falling for the second year in a row due to the strong dollar and slow global economic growth. Imports are on the rise, driven by consumer demand for fresh fruits and vegetables, wine, beer, alcohol, coffee, cocoa, and sweeteners. USDA economists say the trade deficit will decline in the near term as the rest of the world catches up with the U.S. recovery from the pandemic.
The nine-month total for food and ag exports was $135.3 billion, and the import total was $154.1 billion.
EDITOR’S TAKE:
This article contains some good news and bad news. The good news is related to growth in exports to Mexico and Canada. The bad news – China is buying less while U.S. consumers are demanding more imported products. That adds up to a much larger trade deficit for the ag sector. Traditionally, agriculture, for many decades, boasted a net trade surplus, exporting much more than we imported. In fact, agriculture was often the only sector of our economy that could make such a claim. The U.S. really needs to pick up the torch for opening new and expanding existing markets overseas. Without such a move, our farmers/ranchers will eventually lose valuable earning power. If you have an opportunity to question your congressional representative about this topic, please take every opportunity to do so. Ask them to support expansion of ag markets overseas through more bi-lateral trade agreements and market expansion efforts, like trade missions and product demonstrations. Optimistically, the outcome will help farmers/ranchers that will in turn encourage them to purchase more trucks and help your business.
