USDA: As the world economy slows, so will U.S. farm exports

U.S. farm exports will fall back to $190 billion this fiscal year, down 4% from the record set in just-ended fiscal 2022, as economic growth slows in most countries, forecast the Agriculture Department on Tuesday. Soybeans, the No. 1 ag export, as well as cotton and corn would see the largest declines, jointly falling by 7%.

“The global economic outlook for calendar year 2023 remains uncertain due to inflation, changing monetary policy conditions, and trade disruptions caused by the Russian invasion of Ukraine,” said the USDA in its quarterly Outlook for U.S. Agricultural Trade. Global economic growth was forecast at 2.7%, down from 3.2% in 2022. Except for China, central banks around the world were tightening their money supplies to combat rising inflation rates.

Exports were a record $196.4 billion in the fiscal year that ended on Sept. 30. Warfare in the Black Sea region drove commodity prices higher amid strong global demand for food and ag products. Commodity prices are expected to weaken as the growth slows around the world in the months ahead.

Soybean exports were forecast at $32.8 billion, down by $500 million from fiscal 2022 and generating more than $1 of every $6 in ag shipments. Growers harvested a smaller crop this year than last so there are fewer soybeans to export in the face of increased competition from South America. The U.S. cotton crop was the smallest since 2013 because of drought. Cotton exports are expected to plummet by $2.9 billion to $6 billion because of the smaller stockpile and shrinking consumer demand for clothes and home textiles. Corn exports would total $18.5 billion, a $1 billion drop, due to smaller demand.

China, the leading customer, would buy $34 billion of agricultural exports, compared to the record $36.4 billion of the past year, said USDA analysts, primarily due resurgent competition from Brazil and Argentina for soybean sales. “In addition, lower cotton unit values, sharply reduced U.S. sorghum production and weak pork demand further constrain the trade outlook,” said the USDA.

One-fifth of U.S. agricultural production is exported, so the foreign market is a major factor in farm revenue. Grains and oilseeds, such as soybeans, would account for $90.5 billion, or nearly half, of this year’s ag exports. Livestock, dairy, and poultry would generate $41.4 billion and horticultural products $39.5 billion.

For the third time in five years, food and agricultural imports will exceed exports, creating an ag trade deficit, said the USDA. Imports were forecast at $199 billion, with fruits, vegetables, nuts, beer, wine, and distilled spirits providing nearly half of the shipments.