Exports May Become More Important, Bank Says
U.S. farmers “likely will become increasingly reliant on international demand and exports to support domestic prices and farm incomes,” says the Kansas City Federal Reserve Bank, if bumper crops become the U.S. standard. The three largest U.S. soybean crops were grown from 2014-2016, and corn production set records back to back in 2015 and 2016.
It’s no secret that commodity prices fall as U.S. stockpiles grow, as they are now. In that situation, exports are a money-earning relief valve. Roughly half of the 2016 soybean crop, more than 40% of wheat, nearly three quarters of cotton, 15% of corn, and 15% of beef, pork, and poultry will go to foreign markets, USDA estimates.
A surge in exports in the closing months of 2016 “seemed only to keep prices for some commodities from dropping further,” write Kansas City Fed economist Cortney Cowley and assistant economist Matt Clark in one of the Kansas City Fed’s periodic reports.
“Farmers in the U.S. and Brazil produce twice as many soybeans as their respective countries can consume,” write Cowley and Clark. “As production continues to increase, U.S. farmers will likely become dependent on countries like China that consume 10 times the amount of soybeans that they produce.”
This article was produced in collaboration with the Food & Environment Reporting Network, an independent, nonprofit news organization producing investigative reporting on food, agriculture, and environmental health.