Agricultural trade serves two important functions. First, it expands the choices consumers have to eat a varied diet such as Central and South American bananas and coffee in the U.S. and U.S. meat products in Japan. Second, it meets market demands that are normally filled by domestic supplies such as the short wheat crops in the EU in 2006 and 2007, pork imports to China in 2008 and possible imports for India this year after less than normal monsoon rains.
In dollar terms total U.S. agricultural exports for FY2009 are estimated at $97.5 billion, up from the $96.0 billion estimate in May and down from the $115.3 billion record for FY2008. Exports for FY2010 beginning October 1 are forecast steady at $97.0 billion. Imports for FY2009 are estimated at $76.0 billion, down from the May estimate of $81.0 billion and down from the FY2008 record of $79.3 billion, with FY2010 forecast at a new record of $82.0 billion.
On a volume basis wheat and corn have had the wildest rides the past two years. Wheat exports declined from 32.8 million metric tons (MMT) in FY2008 to an estimated 24.2 MMT in FY2009 with some recovery expected in FY2010 to 25.5 MMT. That is close to the 26.4 MMT exported in FY2005 and the 25.0 MMT in FY2006 before the commodity price boom. Corn exports topped out at 60.6 MMT in FY2008, declined to an estimated 47.0 MMT in FY2009 and are forecast at 53.0 MMT for FY2010. Corn exports averaged 51.8 MMT per year in FY2005- FY2007.
Soybeans and products exports have been on an upward track at 39.1 MMT in FY2007, 40.5 MMT for FY2008, estimated at 43.5 MMT in FY2009 and are forecast at 44.0 MMT in FY2010. Exports for FY2009 and the first half of FY2010 are being helped by the dry weather in Brazil and Argentina early this year that limited production for the crop harvested in February-May. The ERS analysis noted that the strongest economic growth in late 2009 and 2010 will be in Asia which has had the largest growth in recent years in demand for oilseed and products.
U.S. cotton exports are on a downward trend. Exports averaged 3.4 MMT per year in FY2005-FY2007, 3.0 MMT in FY2008, are estimated at 2.8 MMT in FY2009 and forecast at 2.2 MMT in FY2010. U.S. rice exports were just under 1.3 MMT per year in FY005-FY2007 before moving up to 2.0 MMT in FY2008 and an estimated 2.2 MMT for FY2009, with a forecast of 1.8 MMT for FY2010.
U.S. pork exports are also holding up well on volume. After averaging just less than 1.0 MMT per year in FY2005-FY2007, exports moved up to 1.5 MMT in FY2008 before backing off to an estimated 1.4 MMT in FY2009. The forecast for FY2010 is a return to the 1.5 MMT level. Low pork prices are probably helping shipments. Beef and veal exports are expected to retain the gains of the last few years with a forecast of 0.6 MMT for FY2010. U.S. broiler exports increased from 2.4 MMT in FY2005 to 3.1 MMT by FY2008 before backing off to an estimated 3.0 MMT in FY2009. A further decline to 2.8 MMT is forecast for FY2010.
Fruits, vegetables and other horticultural products exports continue to increase in dollar value. Exports increased from $14.9 billion in FY2005 to $20.8 billion in FY2008 and an estimated $21.0 billion in FY2009. The forecast for FY2010 is $22.0 billion, 22.7 percent of total U.S. agricultural exports. U.S. dairy product exports increased from $1.7 billion in FY2005 to $4.0 billion in FY2008 before declining to an estimated $2.3 billion in FY2009, with a forecast of $2.4 billion in FY2010.
The dollar value of agricultural imports change less year-to-year because less than 20 percent of imports are bulk commodities that tend to have the largest changes in volumes and unit prices. The downturn in import value from $79.3 billion in FY2008 to an estimated $76.0 billion in FY2009 reflects the pullback in U.S. consumer purchases and a 4.7 percent import price decline. Horticultural product imports declined by $1.3 billion and rubber by $0.7 billion. The expected economic recovery in the coming 12 months should increase imports to a record $82.0 billion in FY2010, with horticultural products leading with a $2.1 billion increase.
While U.S. agriculture can be somewhat relieved by the forecast, challenges remain. The ERS analysis pointed out that the value of bulk exports will decline by another $2.7 billion on lower unit values. With the exception of oilseeds, bulk commodities are currently in relatively large supply worldwide and oilseed supplies could grow if South American yields return to trend. U.S cotton is facing increased competition. For FY2010 the lower value of grain exports will be partially offset by a $1.0 billion increase in horticultural products exports. Sufficient liquidity to finance increased international trade will continue to be a key issue as the economic recovery continues into FY2010.
The ERS analysis also notes that just five markets, Canada at $15.6 billion, Mexico at $14.2 billion, Japan at $11.8 billion, China at $11.4 billion and the EU at $7.3 billion, account for 62 percent of U.S. agricultural exports in FY2009. These are large economies in the midst of recovery, with China expected to have 8 percent economic growth in calendar year 2009 and the EU being the slowest to recover, but they are also closely tied to the U.S. economy that is just beginning to recover.
Agricultural commodity and food trade has proven to be durable in difficult economic times. Barring a setback in consumer incomes caused by further economic declines in major markets, consumer demand will be positive, but likely slower that the rapid growth of a couple of years ago. Now is the time to further open trade to meet the everyday needs of consumers and to cover supply shortages that naturally occur due to weather and other production problems.