In its latest trade outlook report, the USDA said for fiscal 2019, US agricultural exports are projected at $144.5bn, up $500m from the revised forecast for fiscal 2018. This increase is primarily due to higher exports of wheat and horticultural products, which offset expected declines in oilseeds, livestock, and dairy product exports.
Wheat exports are forecast up $1.4bn from the previous year to $7.1bn as a result of higher volumes and reduced competition. Overall grains and feeds exports are forecast at $33.1 bn, up $1.5 bn from the revised fiscal 2018 forecast.
Additionally, total exports to China are anticipated to fall by $7bn based on based on a drop in soybean sales, said the report authors. Exports to Canada are forecast to be $21.5bn, while those to Mexico are $19.7bn.
“Canada is expected to be the largest US [export] market, while China drops to fifth place behind Mexico, the EU, and Japan,” they said.
China imposed a 25% tariff on several feed ingredient products, including soybeans, imported from the US in July. The move was in response to a series of tariffs levied on Chinese products.
“For fiscal 2018, the forecast of $144bn is an increase of $1.5bn from the previous forecast in May, largely due to higher corn, cotton, and soybean meal exports,” the report authors said. “Imports are forecast up $3bn to $124.5bn.”
Focus on trade
The US is a competitive supplier at the moment based on price and supply, Tom Sleight, president and CEO of the US Grains Council, told us in an earlier interview. However, continuing uncertainty in the export market, especially in relation to trade with China, may be causing some hesitation for exporters.
However, demand for feed grains continues, he said. “China’s looking for this feed grain and we’re very competitive, and we can still move it with the tariffs – albeit not a lot,” he added.
There also continues to be some hope that the ongoing trade issues between the US and China will see a negotiated conclusion before any additional tariffs are added, he said. “We think the tariffs might be in place for quite some time, although hope does spring eternal that we’ll see them go away,” he added.
Highlights for oilseeds, feed ingredients and feed grains
Overall, in 2019, exports for oilseeds and related products are forecast to drop by about $1.4bn to $30.2bn, noted the report authors.
“Soybean exports are forecast to fall $800m to $21b as both volumes and unit values decline, in large part due to weakening demand from China,” they wrote. “Agricultural exports to China are forecast down $7bn from fiscal 2018 to $12bn as soybean sales are expected to be sharply lower due to retaliatory tariffs, which also curb demand for other products.”
The potential for record soybean production in the US is also anticipated to put pressure on prices and record stocks are predicted, they said. In addition to soybeans, soybean meal is forecast to fall by $500m to $4.4bn.
“The greatest unknown is China’s demand for US soybeans,” they said. “However, premiums for South American soybeans will continue to enhance US soybean and product competitiveness in other markets, providing some relief from the effect of likely lower exports to China.”
In 2018, the estimates for exports of oilseeds and products has been increased by about $100m, the authors said, adding, “The upward revision is driven by strong soybean meal exports, a result of a drought-reduced crop in Argentina, traditionally the world’s largest soybean meal exporter.”
“Strong late-season soybean shipments to markets outside of China – a response to discounted US prices – helped boost export volume and partially offset the late-year price decline,” they said.
In 2019, corn export volumes are anticipated to drop slightly, though the overall market value is expected to remain at $11.2bn, they said. US producers of the feed ingredient are predicted to see increased competition from Ukraine, Brazil and Argentina.
The forecast for sorghum in 2019 predicts a drop of $100m based on smaller volumes, the report authors said. However, it also saw some declines in 2018 with exports anticipated to fall by $200m to about $900m overall.
Tight supplies in major exporting countries, especially Australia and the EU, are expected to make US wheat more competitive in the international market, they added.
For 2018, wheat exports are predicted to be down by $100m based on a drop in unit values and volumes, they said.
Value for feed users in 2019, however, is down, leading a drop in exports of livestock, dairy and poultry products of about $300m, the authors said. The decline has been linked to weaker shipment values for dairy, beef and pork.
“Beef is down $100m as growth in volumes is offset by lower unit values,” they said. “Pork is down $300m despite growth in volumes; weaker demand and the impact from retaliatory tariffs are expected to pressure prices lower.”
Poultry products, however, are expected to increase by $100m stemming from higher prices and increased volumes, they said. “Dairy product exports are down $100m to $5.6bn due to the expected negative impact of retaliatory tariffs and weak global prices,” they added.
Imports to the US in 2019 are predicted to increase by about $2bn from 2018, they said. Overall, the amount is expected to be about $126.5bn.