U.S. AGRICULTURAL TRADE UPDATE July 23, 1999 July 1999, ERS-FAU-31 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: Thus far in fiscal 1999 U.S. agricultural exports have fallen 13 percent, or $5 billion, from 1998. Lower exports to Asia accounted for most of the decline in May of $202 million from April. In contrast, cumulative agricultural imports have increased 0.7 percent, or $165 million, despite a $155-million decrease in May from April. Thus, the October-May U.S. agricultural trade surplus of $8.3 billion is 38 percent smaller than last year. Exports: The total export decline is attributed in part to the $2.7-billion downturn in bulk commodity shipments in the current fiscal year. A year-to-year contraction in the value of wheat, soybean, and cotton exports more than offsets a rise in corn exports. Cumulative wheat export value is down $215 million, or 8 percent, even as volume sales are up 1.4 million metric tons. The drop stems from a 50-cent decline in the average U.S. Gulf ports price from 1998. Sales by competitors such as Argentina, Australia, Kazakstan, and Canada, are all up. U.S. wheat shipments to Asia, particularly Japan, and to the Middle East are down significantly. However, sales to Southeast Asia, Europe, and Latin America are up. While current corn prices at Gulf ports are still below 1998 levels, volume shipments have climbed dramatically by more than 8 million metric tons from 1998. This is because shipments by major competitors have all been down so far. The 11-percent, or $321 million, gain in total corn exports reflects increased volume to the large markets of South Korea, Mexico, Egypt, Colombia, and Venezuela. However, sales to Japan, Canada, and Taiwan are down, as their feed grain needs have decreased. Soybean exports to Latin America, Europe, and Asia continue to drop, compared with 1998. Record production in major exporting countries, including the United States, has intensified competition for sales. U.S. soybean sales are down $1.7 billion year-to-year, or 32 percent, as Rotterdam prices continue to fall--to below $200 per metric ton in May. Volume shipments are also lower to the European Union, China, and Malaysia. Cotton shipments are 47 percent lower in volume this fiscal year and $289 million less in value compared with October-May 1998. While U.S. export prices rose in May, they are still significantly below 1998 prices. Among the major markets, demand from Japan, South Korea, Taiwan, Indonesia, and the European Union is dismal. World stocks of cotton are also higher in China, the European Union, Brazil, and Australia. Exports of high-value products are also down from fiscal 1998 by 10 percent, or $2.3 billion. The decline in export value is only $500 million less than the drop in bulk commodity sales. Among the major products, only vegetables show an increase. In percentage terms, sales of meat (-6%), poultry (-28%), hides and skins (-23%), vegetable oils (-11%) and nuts (-10%) declined the most. Together, sales of these items have fallen more than $1 billion in fiscal 1999. Reduced exports of red meat and poultry to Russia, and hides and skins and nuts to Asia are behind these declines. Imports: Despite the U.S. dollar's high exchange value and lower prices for coffee, cocoa, and rubber than in 1998, imports of all noncompetitive products except bananas and spices are down. Led by coffee and rubber, noncompetitive imports are down 13.5 percent, or $864 million, from last fiscal year. The continued cumulative increase in total imports is due to the $1-billion rise in competitive imports. Among these are horticultural products (+$986 million), fruits and juices (+$520 million), beverages (+$343 million), and red meat (+$221 million). [Andy Jerardo, 202-694-5323] Begin Box Exports to Asia Have Plunged U.S. agricultural exports to Asia, including Japan and West Asia (Middle East), have declined steadily since fiscal 1996. This period coincides with the dollar's increasing exchange value and the 1997/98 recessions in most of East and Southeast Asia. From almost $29 billion in total sales to Asia in 1996 to $14 billion thus far in fiscal 1999, exports of bulk and high-value products have fallen sharply. Sales to the Middle East and Indonesia have also been affected by lower world oil prices. Even if total exports to Asia in fiscal 1999 reach $19 billion (the current USDA forecast), that value will still be $10 billion less than in fiscal 1996. In fact, U.S. farm sales to Asia were already more than $18 billion a decade ago. End Box Next Update: August 24, 1999 END_OF_FILE