According to the USDA, agricultural export sales are forecast at a record $175.5 billion this fiscal year, but just like the record set last year, the crest was not as high as it looked in the summer.
“The new estimate is down $2 billion from the August forecast, but still a record if realized,” said USDA’s quarterly Outlook for U.S. Agricultural Trade. “The projection for soybean exports is down $3.9 billion to $28.4 billion due to lower prices and softening Chinese demand.”
Soybeans are the most valuable U.S. farm export. China is the largest customer for U.S. farm exports, responsible for $1 of every $5 in sales.
Ag exports were a record $172.2 billion in fiscal 2021, which ended on September 30. That’s 10% higher than the old mark of $156.9 billion of 2015, but $1.3 billion lower than forecast in August. This year should top the record by $3.3 billion, or 2%, based on current conditions.
Roughly 20¢ of each $1 of farm receipts are generated by exports, so sales to foreign buyers are a key part of farmer income. The farm economy is vibrant, thanks to a run of high commodity prices that began in late summer 2020 and a torrent of pandemic-relief payments by the government.
“The forecast for China is down $3.0 billion from August to $36 billion, primarily because of expected lower soybean unit values,” said USDA economists. “Despite the downward revisions, the new forecast will still be a record if realized.”
In early 2020, China and the United States agreed to de-escalate the trade war in a “phase one” agreement that called for China to buy an additional $200 billion of U.S. goods and services over a two-year period. The agreement expires at the end of this year with many trade issues yet to be resolved by the two nations.
China was obliged to import $80.1 billion of U.S. agricultural products over the two-year period and has landed $50.3 billion through September of this year, according to the Think Tank Peterson Institute for International Economics, which tracks the phase one agreement.
“I think China buys what it needs,” said Joe Glauber of the International Food Policy Research Institute (IFPRI) Think Tank. “To understand China imports you need to look at their balance sheets and what is going on with the animal sector. Unfortunately, the answer isn’t always crystal clear because of the lack of quality data on production, consumption, and above all, stocks.”
The Chinese economy, which grew by 8% last year as it emerged from the pandemic, was expected to slow to 5.6% this year, weighed by concerns over real estate debt and manufacturing setbacks, according to the USDA. The U.S. recovery wobbled a bit this fall but growth in 2022 was projected at a strong 5.2%, up from the 4.2% forecast in August.
Ethanol exports were forecast at a record $2.9 billion in fiscal 2022, breaking a decade-old record on the strength of higher prices per gallon.
EDITOR’S TAKE:
Not sure about anyone else, but a record is a record in my book. Forecasts are simply that – an estimate of where prognosticators think things are headed. Simply because the sales didn’t meet the forecast doesn’t diminish the fact that the U.S. sold a lot of ag products overseas! Once again, as the article states, the ag economy is “vibrant”. Exports are a major factor in creating that vibrancy. Exports can contribute 50% or more of a farmer’s/rancher’s income depending on the commodity. That can mean a hefty amount of cash in their pockets, which helps them purchase trucks! Take advantage of the current positivity in the ag economy – NOW and in the FUTURE!
