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Up is Down in USDA Forecast of 2018 Ag Exports
U.S. farm exports are headed uphill and downhill at the same time in the USDA’s quarterly forecast of overseas sales, the source of one fifth of farm income. The agency forecast that exports will reach $140 billion during fiscal 2018, which opened on October 1 — $1 billion higher than its August estimate but $500 million lower than overseas sales in fiscal 2017.
If the forecast proves true, farm exports would be the fourth-largest on record, just behind the $140.5 billion total for 2017, which ended a two-year slump. Agriculture Secretary Sonny Perdue said that “exports are continuing strong.” The peak year for exports was fiscal 2014, at $152.3 billion.
The export forecast was the third major USDA report in three days on the agricultural sector. Together the reports offer a sketch of conditions four years after the 2013 collapse of the commodity boom that propelled corn, wheat, and soybean prices, along with farm income, to record-high levels.
The USDA estimates that farm income will tick upward this year, the first increase since 2013 but still the lowest this decade. It projects that farmers will harvest the third record soybean crop in a row in 2018 and the second-largest corn crop, 4% smaller than this year’s mark. Bumper crops would mean continued pressure on commodity prices that have been in a rut since 2013. Within a couple of years, USDA economists project, soybeans will dislodge corn as the most widely planted crop in the country.
China, Canada, and Mexico, in that order, will be the largest U.S. customers, accounting for nearly 45% of exports in fiscal 2018, said the USDA forecast. The Trump administration is currently engaged in negotiations for a new NAFTA with Canada and Mexico.
The USDA said it raised its forecast of exports “largely due to expected increases in corn and distillers’ dried grains with solubles,” a coproduct of corn milling. “Soybean export volumes continue to set records, raising the soybean forecast [by] $200 million, to $24.1 billion, which offsets expected declines in soybean meal and oil.”
Cotton exports, worth $5.85 billion in fiscal 2017, would drop by more than $1 billion in the current trade year due to lower prices. This year’s cotton crop was the fourth-largest on record.
As usual, agriculture would run a trade surplus, forecast at $23 billion this year, up from $21.5 billion in fiscal 2017. Canada and Mexico would provide 39% of the $117 billion in forecast imports. The two-country total of $46 billion would be equal to 2017.
To read the Outlook for U.S. Agricultural Trade, click here.