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U.S. AGRICULTURAL TRADE UPDATE

Summary

(December 22, 2000) The U.S. agricultural trade surplus increased again in October, and is 17 percent higher than in October 1999. The January-October surplus of $9.7 billion is 18 percent larger than in the same period in 1999. Exports to date of $42.2 billion are 7 percent higher than the past year, while imports are only 4 percent more. October exports are $400 million more than in October 1999, and $900 million more than in September 2000.

Exports

Bulk commodity exports of $14.4 billion from January to October are 6.5 percent ahead of last year. This gain is from larger sales of soybeans and cotton. Export values of wheat, corn, rice, and tobacco all declined.

Shipments of soybeans already exceed $4 billion thus far in 2000, $695 million more than in 1999. This 21-percent gain in value is less than the 23-percent rise in volume as prices fell since June 2000. Soybean prices from July to October are comparable with 1999 prices, which were the lowest in the past decade. Volume shipped to China increased almost 200 percent thus far as China's demand for soybeans for crushing shot up, most of which are used as livestock feed. The other export markets of note are the European Union (EU), Mexico, and South Korea.

Cotton exports to date of $1.6 billion are 133 percent higher than in 1999 as volume shipped jumped more than 800,000 tons. Import demand from Mexico, Turkey, and Indonesia was strong, as cotton prices remain relatively low despite some recent gains. World production in marketing years 1999/2000 and 2001 is estimated to fall short of total consumption. As a result, global stocks are smaller. The United States remains the worlds leading exporter of cotton.

Wheat sales are down significantly as volume shipped fell and as prices remain low. January-October exports of $2.7 billion are $228 million less than in 1999 and volume is down nearly 1 million tons. Exports to Russia, Pakistan, Japan, and other East Asian markets are all down. However, volume shipped to the EU, the Mid-East, Egypt, and the Philippines is up. Estimated world production in 1999/2000 was down somewhat, and the EU is expected to have lower exportable supply.

Shipments of corn are down $356 million and 2.8 million tons from 1999. Despite higher world consumption, year-to-date sales of $3.8 billion slipped because competitors raised their exports, especially China and Argentina. A major U.S. market, South Korea, increased corn imports from China, displacing U.S. exports. U.S. volume shipped to Japan, Malaysia, and South Africa declined the most.

At close to $28 billion, year-to-date exports of high-value products are responsible for two-thirds of the $2.8-billion increase in total U.S. farm exports. Red meat, hides, and feeds and fodders lead with export gains of $1.2 billion. An additional $740 million are earned from exports of poultry, fruits, nuts, vegetables, and sugar products. Despite the high exchange value of the dollar in foreign markets--gaining 11 percent since 1997--import demand from Mexico, Japan, and South Korea, among others, was strong enough to offset the exchange-rate effect.

Imports

The $1.3-billion rise in U.S. agricultural imports is largely from purchases of high-value products. Of $32.5 billion in total imports to date, only $6.7 billion are noncompetitive, or mostly tropical products. Their low prices keep import values flat. The imported products that increased significantly are red meats (up $491 million), beverages (up $352 million), live animals (up $227 million), and vegetables (up $110 million).

The fastest growing import values of major agricultural products in the past 3 years are red meats, dairy products, fruits and juices, nuts, vegetables, beverages, and fish. Red meats and products, whose share of total imports is now 10 percent, grew 37 percent since only 1998. These high-value products account for most of the growth in U.S. imports of competitive products, increasing 16 percent since 1997. In contrast, other competitive U.S. farm imports declined 26 percent since 1997. Much of these increases are attributed to average U.S. gross domestic product growth of 4.5 percent and the dollars 20-percent real exchange-rate appreciation since 1997 (with respect to the currencies of U.S. import sources). Import values that declined include noncompetitive tropical products, sugar, tobacco, and oilseeds and products, due in large part to lower prices.

December 22, 2000

Economic Research Service

USDA, Washington, D.C.

202-219-0515

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