USDA forecasts agriculture exports for fiscal year 2012 at $132 billion, down $5 billion from the Aug. 31 forecast and 4% ($5.4 billion) below final fiscal 2011 exports.
Grain exports are forecast down $3.6 billion from August on increased competition for wheat and corn along with lower unit values for wheat, according to USDA. Oilseed exports are expected to be down $2.3 billion mostly due to lower soybean volume. And cotton exports are forecast down $600 million due to a smaller crop and increased foreign supply.
The forecast for livestock, poultry, and dairy is up $900 million, thanks to increases in all sectors but dairy. USDA predicts exports to Asia will decline $3.1 billion, which can largely be attributed to lower soybean shipments to China. Greater competition in the Middle East and North Africa are also expected to trim grain exports.
USDA raised the forecast for U.S. agricultural product imports in fiscal year 2012 by $500 million from August to $105.5 billion. As in 2011, the major import drivers in 2012 are tropical commodities—vegetable oils, sugar, coffee, rubber, nuts, and processed fruits, including juices. Import unit values account for about half of the 12% projected increase in U.S. import value from $94.5 billion in 2011 to $105.5 billion in 2012. The projected trade surplus for 2012 is $26.5 billion. This compares with the surplus of $42.9 billion in 2011.
World growth for 2012 is expcted to rise modestly from the year prior. World inflation if forecast down from 2011 but above historical rates, particularly for developing countries. The dollar is expected to depreciate, but at a slower rate than in 2011. Asian and Latin American central banks are likely to continue raising short-term interest rates and tightening credit into 2012 to control inflation and robust credit growth. Growth in the developed countries, particularly in the EU, will continue to be affected by the lingering Eurozone debt problem.
Inflation in the U.S. and the euro-zone is will likely moderate in 2012 compared with 2011, since unemployment rates and factory utilization will continue to reflect a large amount of economic slack. Recent debt-related turmoil in world financial markets, as well as weaker-than-expected 2011 employment gains and GDP growth, have reduced growth prospects in both the United States and the EU. Debt affected countries in the Eurozone are likely to continue to be in recession. The inflation situation in developing countries and turbulence in financial markets have reduced growth projections for both developing and developed economies for 2011 and 2012.
Despite slow growth, the outlook for agricultural trade is promising. The lower dollar will more than compensate for expectations of slower world growth.