U.S. agricultural exports are forecast to hit $59 billion in fiscal 2005, down from the $62.3 billion level of 2004, but up $3 billion from USDA's November 2004 projection.
The decline from 2004 is due to record global grain, soybean, and cotton supplies, according to Nora Brooks and Carol Whitton, Economic Research Service coordinators, and Ernest Carter, Food and Agriculture Service coordinator. Their projections were presented at USDA's Agricultural Outlook Forum 2005 at Arlington, Va.
“The gains in export value since the November forecast reflect further depreciation of the U.S. dollar compared to currencies of major export competitors and rising global demand, buoyed by strong economic growth,” their report noted.
Higher prices also will boost the expected export value of soybeans and cotton.
Supported by strong global demands and a weaker dollar, the value of U.S. horticultural products, dairy products, and pork are all forecast to hit record highs.
Agricultural imports are forecast to also set a record in 2005, at $58 billion. The faster pace in growth, which started in 2003, is mainly due to broad-based gains in the prices of imports as the value of the U.S. dollar has declined.
Horticultural products account for 50 percent to 60 percent of the annual gain, but rising imports of live cattle, beef, and snack foods “are also significant,” the report said.
Global economic growth remains strong, but is expected to slow somewhat in 2005, and oil prices appear likely to stay at historically high nominal levels “for some time to come.”
Higher industrial commodity prices and interest rates also pose a risk to continued robust global growth, the economists said.
World growth prospects for 2005 will be highly dependent on China, they noted. “China's economic growth is critical to world economic growth. China's roaring economy prompted a surge in demand in late 2003 and 2004 that resulted in increasing prices of raw materials, such as crude oil, and intermediate goods, such as steel and cement.”
Although the Chinese government has rationed credit in an attempt to curtail inflation, major forecasters see that country's total imports as comparable to those of the United States in 2004 and 2005.
“This import growth picture makes prospects for world growth very good for 2005.”
China's gross domestic product is expected to exceed 8 percent in 2005, compared to 9 percent in 2003 and 2004.
Economic growth in developing countries is projected to exceed 5 percent this year, with Asia continuing as the fastest-growing region, and India a close second, followed by South Korea. The five major economies in Latin America — Argentina, Brazil, Mexico, Venezuela, and Chile — are all experiencing strong growth.
The U.S. dollar has been declining against the currencies of major countries since February 2002, which results in higher prices for imports.
USDA's forecast for grain and feed exports is unchanged from its November report, at $15.1 billion. Rice export volume has been increased by 100,000 tons, based on larger sales to Southeast Asia and the Middle East and more competitive prices. Compared to 2004, rice export volume is virtually unchanged, but value is down about $200 million because of sharply lower prices due to a record U.S. crop and record supplies.
The forecast for oilseeds and products has been raised by 1.6 million tons, with a value of $9.9 billion. A sharp increase in shipments is expected for minor vegetable oils and processed oilseed products.
Soybean export volume is forecast at 27.5 million tons, but an increase in average unit price to $223 per ton will boost value to $6.1 billion. Most of the stronger pace of U.S. soybean shipments is attributed to China. A larger portion of U.S. soybeans is expected to be sold during the first half of the marketing year before most South American soybeans reach market in the spring.
The forecast for U.S. cotton exports for fiscal 2005 has been increased 100,000 tons from November; higher volume and somewhat stronger unit value will boost the value by $300 million to a total $3.4 billion.
“Despite a further upward revision in record global production, demand remains very strong and is expected to keep world prices somewhat higher than anticipated in November,” the economists said. “China's imports of cotton from all countries is expected to remain near record levels. U.S. exportable supplies are larger than anticipated due to an upward revision in the record U.S. crop in 2004.”
Livestock, poultry, and dairy products exports for fiscal 2005 are projected at $11.5 billion, up $700 million from the November forecast, with red meats and dairy products accounting for most of the gain. Pork exports are expected to reach a record 800,000 tons.
The forecast for U.S. horticultural products has been raised by $700 million from the November estimate, for a record $14.5 billion, mainly reflecting higher prices due to increased foreign demand and a weaker dollar.
Export forecasts for tree nuts, fresh and processed fruits, and fresh and processed vegetables have each been raised $200 million from the November estimates. Record walnut and pistachio crops are expected and the almond crop will be near-record, the analysts said. Successive almond crop failures in Spain and low global pistachio stocks will also support higher prices.