U.S. AGRICULTURAL TRADE UPDATE                               February 26, 1999
February 1999, ERS-FAU 26-1999
            Approved by the World Agricultural Outlook Board
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U.S. AGRICULTURAL TRADE UPDATE is published monthly by the Economic 
Research Service, U.S. Department of Agriculture, Washington, DC 
20036-5831.
 
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Summary--Calendar 1998 U.S. agricultural exports totaled $51.8
billion, nearly 10 percent less than in 1997. But, at $37.1
billion, imports rose 2 percent from 1997. The export surplus
declined $6.2 billion (30%) to $14.8 billion.  December 1998
exports declined 8 percent compared with December 1997, but rose
from November by 3 percent. December 1998 imports increased from
November by 10 percent, but were 2 percent below December 1997. 

Exports--Bulk exports (wheat, rice, coarse grains, soybeans,
cotton, and tobacco) were responsible for $3.9 billion, or 72
percent, of the $5.4 billion decline in total exports. Soybeans
had the steepest drop in sales--$2.5 billion in 1998--due to
lower prices and abundant world supplies. The next largest drop
was corn, by $800 million, mostly the result of depressed prices.
The value of wheat and cotton sales also fell, but volume rose
slightly.

Wheat exports declined by $400 million, or 10 percent from 1997.
Lower demand from Asia--Pakistan, Japan, and the 
Philippines--accounted for much of the loss. However, sales to
Mexico rose as the peso depreciated less than other currencies
against the dollar.

As export competition rose and demand dipped, corn exports were
down sharply in Europe and Asia during 1998. But because of more
stable exchange rates and healthy economic growth, exports to
Mexico were higher than in 1997. Sales to Japan dropped $400
million (-23%) below 1997. Taiwan took $314 million (-46%) less.
Spain accounted for the steep drop in sales to Europe.

Soybeans accounted for 65 percent of the $3.9 billion decline in
bulk exports during 1998, as volume and prices both fell. All
regions significantly decreased soybean purchases from the United
States, reflecting strong export competition from South America
and weak world demand.

Cotton exports fell by $137 million, a 5-percent decline in 1998.
Shipments to China fell $454 million as excess domestic supplies
led to stricter enforcement of import controls. Sales to Mexico
increased, reflecting a doubling of monthly exports in November
and December before Step 2 subsidies ended.

Exports of high-value products fell 4 percent in 1998, or $1.5
billion, to $33.1 billion. This decline was distributed among red
and poultry meats, hides and skins, fruits, oilseed meals, and
nuts. The higher value of the dollar in the past 2 years, along
with real income declines in Asia and elsewhere, lowered demand
for high-value products severely. Exports of hides and skins to
Japan, Korea, and Taiwan, in particular fell sharply.

Imports--The $1.1 billion increase in U.S. agricultural imports
was led by vegetables, imports of which rose 25 percent to $4.4
billion. Vegetable import growth came largely from Mexico,
Canada, and Europe. Strong import growth also occurred in
vegetable oils (+20%), dairy (19%), wine (+15%), malt beverages
(+17%), cocoa (+13%), meats (+7%), and fruits (+3%). These
increases are principally attributed to the U.S. economy's
exceptional growth in the past 2 years.
[Andy Jerardo, 202-694-5323]

The top 10 U.S. export markets in calendar 1998--Japan, European
Union (EU), Canada, Mexico, Korea, Taiwan, Hong Kong, China,
Egypt, and Russia--purchased 75 percent of agricultural sales.
Many of these countries suffered recessions or downturns in 1998,
including loss of purchasing power due to currency depreciations.
Reduced demand from Asian countries accounted for the $5.4
billion export decline. Japan purchased $1.4 billion less in
1998, and shipments to Southeast Asia were $900 million less.
Sales to Europe were also $1.4 billion lower. However, exports to
Mexico, Canada, and Central America were up $1.4 billion, with
Mexico accounting for almost $1 billion. Strong demand from
Mexico reflected healthy economic expansion (+4%) and only a
slight depreciation of the peso against the dollar after
adjusting for relative inflation rates. The top three sources of
imports--Canada, EU, and Mexico--made up 54 percent of total U.S.
imports in 1998.

Next Update: March 22, 1999

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