U.S. AGRICULTURAL TRADE UPDATE June 23, 2000 June 2000, ERS-FAU-42 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-The surplus in U.S. agricultural trade for April 2000 shrank to almost half its $1-billion value in March. This sharp decline is the result of a 16-percent drop in April exports, $750 million below March. Compared with last fiscal year, however, cumulative exports are up 2.3 percent to $30.7 billion. While April imports fell $300 million from March, year-to-date imports are almost $1 billion higher than last year, a 4-percent gain. The cumulative trade surplus of $7.6 billion is down $282 million from fiscal 1999 in spite of higher year-over-year surpluses from January through April 2000. Exports-Of the $750-million total export decline in April from March 2000, $443 million is due to lower bulk commodity sales. Soybeans were the main culprit, diving $303 million from March. Notwithstanding the fall of soybean shipments in April, year-to-date exports are still up $209 million, and volume is 16 percent larger. The European Union (EU), China, and Southeast Asia show strong purchases. Soybean prices are 21 percent higher than in July 1999, but still 35 percent below prices in April 1997. The recent strength in soybean prices reflects lower stocks in Brazil and Argentina, as well as smaller U.S. and foreign soybean supply. Wheat posted higher shipments in April, but year-to-date exports are 10 percent, or $209 million, behind last year. Volume is also below fiscal 1999 by 844,000 tons. This decline is attributed to contracting demand from South America, South Asia, China, and Egypt. Wheat prices remain close to 1999's dismal levels, which were almost half those of 1996. Corn exports are $177 million behind 1999 shipments. Greater competition from Argentina, South Africa, and especially China for world markets is mainly at the expense of U.S. sales. U.S. corn export volume is down 474,000 tons due to significantly lower purchases by South Korea, Mexico, Venezuela, and Japan. The slight rise in corn prices partly reflects smaller U.S. 1999/2000 production. Exports of cotton are $186 million ahead of fiscal 1999. Volume is also up by a cumulative 336,000 tons. Strong worldwide demand for cotton products is driving larger shipments. Sales to Turkey and Southeast Asia lead U.S. cotton markets. Nevertheless, cotton export prices remain close to the average price in 1999. High-value products (HVP) account for $307 million of the export decline in April. While all major HVP exports fell in April, the cumulative total is still $800 million ahead of fiscal 1999. Red meat exports show by far the largest gain, followed by poultry, hides, and vegetables. The $1-billion year-to-date gain in animal products is the principal reason behind the growth. Renewed meat demand by Japan, South Korea, Russia, and Mexico is a key factor in keeping U.S. trade in surplus. Imports-Even as imports in April are down sharply, year-to-date imports are almost $1 billion higher than in fiscal 1999. Competitive imports are up by more than $1 billion. Imports of red meat, live animals, fruits, nuts, and, especially beverages are helping drive the U.S. farm trade surplus down. Low prices for noncompetitive imports-coffee, cocoa, and rubber-are keeping import values down even as volume is up. [Andy Jerardo, 202-694-5323, ajerardo@ers.usda.gov] Since 1994-96, U.S. agricultural exports to China have fallen by 16 percent, while U.S. imports from China have grown by over 40 percent. Total farm trade with China declined by 2.4 percent, and the U.S. agricultural trade surplus narrowed by 41 percent in that period. Despite the real depreciation of the U.S. dollar against China's yuan and strong economic growth in China from 1994 to 1999, U.S. exports of some bulk commodities-wheat, corn, and cotton-have plunged. However, soybeans and soybean meal exports to China more than tripled in value. Other high-value exports such as hides and skins and red meat to China also grew sharply. U.S. imports of animal products from China have expanded substantially. Imports that have also significantly increased include fruits, nuts, vegetables, sugar, and seeds. (See table 5.) China's membership in the World Trade Organization will open its market to more agricultural exports. U.S. approval of permanent normal trade relations for China will likely enable the United States to gain export share in that potentially larger market. A more stable trade pattern, particularly for HVPs, may also result. Next Update: July 26, 2000 END_OF_FILE