Despite a forecast decline in the world’s real gross domestic product, the U.S. Department of Agriculture is forecasting United States ag exports to rise by $5.5 billion for fiscal year 2021.
The USDA’s Economic Research Service and Foreign Agricultural Service released its Situation and Outlook Report Aug. 26. According to the report, FY2021 U.S. ag exports are projected to hit $140.5 billion, primarily driven by higher exports of soybeans and corn.
“Soybean exports are forecast up $4.2 billion from FY2020 to $20.4 billion, largely due to expected strong demand from China and reduced competition from Brazil,” the report stated. Other commodity export projections include:
• Corn exports up by $700 million to $9 billion on expected higher export volumes and competitive prices;
• Livestock, poultry and dairy exports up $500 million to $32.3 billion; and
• Cotton exports reduced by $400 million to $5 billion on smaller volume and unit values.
China is expected to remain a large customer for U.S. agriculture, with a forecast increase of $4.5 billion in exports from FY2020. Predicted exports of $18.5 billion in FY2021 will be largely driven by higher expected soybean sales, according to the report. Meanwhile, the effects of the U.S.-Mexico-Canada Agreement will be seen in FY2021, with forecast exports to Canada at $21 billion and exports to Mexico at $19.3 billion.
U.S. agriculture’s forecast trade balance for FY2021 is expected to be $4.5 billion, up from the $3.3 billion trade balance in August 2020. However it is considerably less than the high trade balance of $43.1 billion in 2014, or the $15.9 billion balance of 2019.
High Plains export prospects
U.S. grain and feed exports for FY2021 are forecast to reach $31 billion, up $1.1 billion from 2020, based on higher corn, sorghum and rice exports. Meanwhile, wheat exports are predicted to decline by $200 million, with a forecast of $6 billion, mainly on lower volumes and lower unit values. Russia’s second-largest wheat crop on record is likely to give U.S. wheat a run for sales in price-sensitive markets.
“The prospect of continued shipments to China is a bright spot for U.S. wheat trade, but exports to other Asian countries could be affected by large exportable supplies in Australia and Canada,” the report stated.
Sorghum exports are expected to hit $1.4 billion, that’s up $400 million from the FY2020 estimate mostly based on early sales and strong demand from China.
FY2021 oilseed and oilseed product exports are forecast to reach $29.1 billion, up $3.7 billion from 2020 primarily based on 30% higher volume of soybean exports to China. With export volumes down out of Brazil, that opens the door to U.S. shippers, however record U.S. soybean supplies could push unit values lower, the report warned.
COVID-19 economic recovery
The USDA report states that the global COVID-19 pandemic is expected to hammer the world’s real gross domestic product, a decline for the first time in more than a decade.
“While some economists believe the worst of the economic and public health shock has already been observed, with the GDP of many advanced economies falling at annualized nominal rates of greater than 30% during the second quarter of this year, there remains significant uncertainty as to the length and speed of the recovery,” the report stated. And even with an anticipated recovery for most economies in 2021, the real GDP is expected to stay below levels seen before the pandemic.
The U.S. economy is forecast to decline by 5.8% in 2020, mostly because of hard hits to the service sector. Declines in 2020 GDP are also expected in: The Eurozone (minus 7.1%); Canada (minus 6.3%); Mexico (minus 8.4%); Brazil (minus 6.4%); Argentina (minus 8%).
China, though, is expected to have real GDP growth of 1.8% in 2020, according to the report.
“While this means China’s economy is forecast to avoid contracting, the growth rate remains markedly below the 5.7% real growth rate observed in 2019, which was the slowest rate in almost 30 years,” according to the report. “In 2021, China’s real GDP growth is expected to rise above 5%, although the outlook is dependent on the rate of economic recovery in China’s trading partners.”
To read the full report, visit https://www.ers.usda.gov/webdocs/outlooks/99228/aes-113.pdf?v=7591.1
Jennifer M. Latzke can be reached at 620-227-1807 or [email protected].
