U.S. AGRICULTURAL TRADE UPDATE March 22, 1999 March 1999, ERS-FAU-27-1999 Approved by the World Agricultural Outlook Board --------------------------------------------------------------------------- U.S. AGRICULTURAL TRADE UPDATE is published monthly by the Economic Research Service, U.S. Department of Agriculture, Washington, DC 20036-5831. Subscriptions to the printed version of this report are available from the ERS-NASS order desk. Call, toll-free, 1-800-999-6779 and ask for stock # SUB-FAT-4030, $52/year. ERS-NASS accepts MasterCard and Visa. --------------------------------------------------------------------------- Summary-U.S. agricultural exports in January 1999 fell 19 percent from both the previous year and December 1998 to $3.9 billion. January imports also declined, but only marginally to $3.1 billion. Cumulative October 1998-January 1999 exports equaled $18.2 billion, 13 percent less than in the first 4 months of fiscal 1998. Year-to-date fiscal 1999 imports also are off fractionally from fiscal 1998, dropping to $12.3 billion. The agricultural trade surplus has plunged 32 percent so far in fiscal 1999, to just $5.9 billion. The appreciation of the U.S. dollar compared with other currencies is partly responsible for the drop. Exports-Fiscal 1999 bulk exports, to date, of $7.2 billion, fell 20 percent ($1.8 billion) from the previous year. The export value of wheat, rice, coarse grains, soybeans, cotton, and tobacco all declined in January compared with December 1998. Weak demand and ample supplies in world markets translate into low prices, pulling value down. At $2.4 billion for 1999, soybean exports registered the largest drop in fiscal year-to-date exports, down $1.4 billion. Supplies in 1999 continue to build on already large supplies in 1998, and export competition is unusually intense at this point in the season. In addition, Brazil's currency devaluation is improving its ability to penetrate world markets. U.S. shipments to traditional markets in Latin America, including Mexico, Europe, and Asia have dropped from 1998. Fiscal 1999 wheat exports declined by almost $200 million, and equal $1.3 billion in the year-to-date. Shipments to North Africa are off due to its larger production this year. And demand continues to be sluggish elsewhere. January 1999 cotton shipments fell sharply to only $59 million from the high level of $267 million in December, as Step 2 program payments ceased. Cumulative cotton exports of $736 million are 20 percent below year-to-date fiscal 1998 shipments. Low supplies in the United States, abundant supplies elsewhere, and continued sluggish demand also contributed to the drop. In contrast to all the declines, January 1999 corn exports, as well as corn exports in the year-to-date increased in quantity. Cumulative corn exports so far in 1999 reached $1.6 billion, 6 percent above last year. Competition in the corn market have lessened somewhat this year. Exports of high-value products (HVP) shrank by $1 billion (9 percent) to $11.1 billion so far this year. Much of the drop was in January, which declined 13 percent. In the year-to-date, the largest decline was in soybean meal exports, where South American competition is unusually strong. Poultry meat exports also are off sharply as the Russian market has almost vanished. Hides and skins to Asia have not yet begun to recover. Red meat to Japan and Southeast Asia fell sharply, and hides and skins declined to South Korea, Canada, and Latin America. Imports-Fiscal 1999 imports from Southeast Asia and Africa slipped, as world prices continued to fall. Declines in imports of coffee, rubber, tobacco, and live animals were principally responsible. Coffee imports of $990 million are down 20 percent so far due to lower prices. In contrast, however, imports of vegetables, fruits, wine, malt beverages, and red meats continue to rise. Vegetables are up 12 percent, fruits 24 percent, and wine, malt beverages, and red meats 10 percent each. [Andy Jerardo, 202-694-5323 & Carol Whitton, 202-694-5287] Exports to Mexico Rising in Fiscal 1999-The combination of a healthy economy in 1998 (4.8% GDP growth), only a 1-percent real depreciation of the peso against the U.S. dollar, and freer trade due to NAFTA, continues to raise U.S. exports south of the border. Thus far, exports to Mexico are up more than $100 million, or 5.5 percent, in fiscal 1999, but down elsewhere in the world. The near $1-billion rise in fiscal 1998 also contrasted sharply with U.S. export declines outside of North and Central America. In the year-to-date, the largest gains in export value to Mexico are: corn-up 85 percent, vegetables-up 39 percent, red meat-up 12 percent, dairy products-up 42 percent, fruits -up 38 percent, vegetable oils -up 14 percent, and wheat-up 25 percent. The U.S. share of Mexico's wheat imports continues to increase, helped by comparatively low transport costs. Next Update: April 23, 1999 END_OF_FILE