U.S. AGRICULTURAL TRADE UPDATE August 23, 2000 August 2000, ERS-FAU-44 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 $38.8 billion cumulative U.S. agricultural exports in fiscal 2000 are $1.3 billion more than in the first 9 months of 1999. However, the trade surplus to date is barely above 1999's $8.8 billion. The reason is that imports thus far are about $1.3 billion ahead of 1999. The export gain in June is only 1 percent over May's value. Exports-Total June bulk commodity export value is the lowest in the past year, a 7-percent decline from May. Continued low prices and foreign export competition are largely responsible. The $3.4-billion of corn exports thus far in 2000 is 8 percent below 1999, following a 4.4-percent drop in June from May. Corn shipment volume to date is 2 million tons, or more than 5 percent, behind 1999. Volume is significantly lower to Mexico, Venezuela, Egypt, and China. Depressed corn prices reflect an excess of exportable production over import demand. Argentina and especially China have significantly increased corn exports. Year-to-date wheat exports of $2.4 billion are down $224 million from 1999, despite no change in volume shipped. Low wheat prices, almost half those of 1996, are responsible for the much-reduced export earnings. Canada, Argentina, Australia, and the European Union (EU) have increased exports of wheat and wheat flour. The largest U.S. export volume declines are to China, Russia, Venezuela, South Korea, Nigeria, and Indonesia. Many of these countries' exchange rates have depreciated against the dollar, reducing their purchasing power. More than $4.2 billion of soybean exports have been shipped through June 2000, $328 million more than in fiscal 1999. Volume shipped likewise jumped 3.1 million from 1999 to a cumulative 21.6 million tons. Soybean prices edged up a bit over 1999 prices but remain 30 percent below the high 1996 prices. The largest shipments so far this year are to China and the EU. China dramatically increased soybean imports for processing into meal and oil. Brazil continues to increase soybean exports in competition with the United States. Cotton exports of $1.4 billion in fiscal 2000 are up $364 million from 1999, as volume shipped jumped 66 percent to $1.2 million tons. Cotton prices remain depressed but have pushed sales to Turkey, East Asia, and Southeast Asia far ahead of 1999. The United States' biggest market, Mexico, has imported 260,000 tons of cotton thus far in 2000, a 50,000-ton gain from 1999. Exports of high-value products (HVP) are up $1.3 billion from fiscal 1999, or 5.6 percent. By far, the largest gains are in red meats, up $900 million. The biggest customers for red meat have been Japan, South Korea, Russia, and Mexico. Hides and skins, poultry, and vegetables posted $550 million in combined export earnings as well. Only nuts and preparations registered an export loss thus far, as almond sales to the EU plummeted. Imports-The $30 billion-worth of U.S. agricultural imports are up 4.5 percent from fiscal 1999, due largely to competitive imports. This gain comes in spite of a 6-percent drop in June from May. Imports that have significantly increased include red meats (up $283 million), cashew nuts (up $123 million), wine and malt beverages (up $324 million), and rubber (up $98 million). Competitive imports were principally from developed countries-Canada, the EU, and Australia. [Andy Jerardo, 202-694-5323, ajerardo@ers.usda.gov] The exchange-rate competitiveness of U.S. agricultural exports has declined by 18 percent since 1995. That is, the dollar's higher export-weighted exchange value in fiscal 2000 has effectively raised U.S. farm export prices by 18 percent over the past 5 years. Based on local currency units per dollar, the inflation-adjusted exchange rate index for bulk commodity exports appreciated for soybeans, wheat, rice, and tobacco, but depreciated for corn. Since 1995, the exchange rate for U.S. bulk exports is up by almost 20 percent. Among high-value exports, the dollar's appreciation is more pronounced for feeds and fodders, tree nuts, soybean meal, and seeds. Overall for HVP exports, the dollar has risen 16.7 percent since 1995. Thus, U.S. HVP export prices in foreign currency terms are effectively 17 percent higher than 5 years ago. The dollar's exchange-rate competitiveness against foreign export competitors, on the other hand, is much lower with respect to both bulk and nonbulk exports. The high overall relative exchange value against competitors, up 26.5 percent from 1995, is partly responsible for reduced U.S. bulk exports in fiscal 2000. Next Update: September 26, 2000 END_OF_FILE