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Smallest U.S. Ag Exports in Three Years Amid Trade War
The trade war with China and low commodity prices will combine to slash U.S. farm exports by 4.5% this fiscal year, said the USDA on Thursday in a quarterly forecast. Exports of $137 billion would be the smallest since 2016, when exports bottomed out following the collapse of the commodity boom.
U.S. sales to China, formerly the country’s No. 1 customer, were forecast at $6.5 billion, down by $10 billion in one year and less than one third of the annual tallies before retaliatory tariffs throttled trade. “That [$10 billion] is a huge number, and it explains a majority of what we’re seeing in this report,” said USDA Chief Economist Rob Johansson in a USDA radio interview.
Global economic growth overall is slowing, said the quarterly Outlook for U.S. Agricultural Trade, pointing to “global trade tensions and the fading impact of fiscal stimulus in the United States” and other nations. Per-capita GDP growth was forecast at 1.8% this year compared with 2.1% in fiscal 2018.
Slower economic growth could further reduce U.S. ag exports, a key source of revenue for farmers and ranchers. The U.S. is the world’s largest agricultural exporter.
The USDA initially forecast exports of $144.5 billion this year, an uptick from $143.3 billion in fiscal 2018. The latest estimate would be $6.3 billion, or 4.5%, smaller than last year’s total. “The impact of additional retaliatory tariffs announced by China on May 13 on exports of other commodities have been determined to be minimal for fiscal 2019,” said USDA analysts.
Soybean exports are forecast at $17 billion this year, down by about a fifth from last year’s $21 billion. “Soybean volumes are down, in part, due to lower demand caused by African swine fever in China and continued duties on U.S. soybeans. Weaker soybean demand in China also has contributed to price weakness as U.S. producers continue to hold large stocks,” said the Outlook report.
The U.S. soybean stockpile is forecast to double in size, to nearly 1 billion bushels, by harvesttime this fall. China used to buy one of every 3 bushels of soybeans grown in the U.S.
Cotton exports are also lagging because of the Sino-U.S. trade war. They are forecast at $5.7 billion this year compared with $6.6 billion last year, “as pessimism increases regarding U.S.-China trade relations and the level of world demand,” said the USDA.
Wheat and rice exports are up this year — wheat by $1.2 billion, to $6.3 billion — while corn, pork, and poultry exports are down. The USDA said that the slow start in pork exports “will be mostly offset in the second half as stronger global demand, due to the spread of ASF [African swine fever] in Asia, boosts prices.”
U.S. farm exports peaked at $152.3 billion in 2014 as the commodity boom reached its crest. Since then, large crops worldwide have driven down market prices and swelled grain reserves.
The Outlook for U.S. Agricultural Trade is available here.