Roger Bernard, Farm Journal Policy & Washington Editor
Increased exports of grain and feed at higher values along with increased livestock, poultry, and dairy product exports all helped to push up the forecast for U.S. ag exports in fiscal year (FY) 2010. USDA today said the value of U.S. ag exports for FY 2010 will be $107.5 billion, up $3 billion from their May forecast. And their first look at FY 2011 has the value of those shipments projected at $113 billion, billion, up $5.5 billion from FY 2010 forecast.
On the import side, USDA now puts FY 2010 imports at a value of $77 billion, up $500 million from their May forecast. For FY 2011, USDA sees the value of U.S. ag imports rising $81.5 billion.
USDA now expects a slightly larger trade surplus for U.S. agriculture for FY 2010 -- $30.5 billion, up $2.5 billion from May -- and for FY 2011 they expect the trade black ink will total $31.5 billion.
One of the areas where an uptick in trade is forecast is in U.S. beef, and USDA Secretary Tom Vilsack said work continues at USDA to broaden trade paths on that front.
Regarding Japan, Vilsack noted the turnover at the Japan's Ministry of Agriculture and that has kept action on idle for a while. "I believe we're on the way to having technical teams meet," he noted. "I hope they (the meetings) will happen sooner rather than later." He would not offer a specific timeframe for those talks except to say they should happen in "the very near future."
But while expressing optimism for those discussions, Vilsack cautioned the two sides have "been on the brink before of a breakthrough and had to take step back so I don't want to be overly hopeful." A letter will soon be headed to Japan that is aimed at establishing a timeline for the meetings.
Regarding China, Vilsack said there has been progress in terms of building a positive relationship with China on livestock trade issues, and the two sides have continued to talk. "We hope make progress as we have on poultry and pork in Chinese market," Vilsack said of the situation on beef trade.
Regarding the forecast rise in the value of U.S. poultry exports, Vilsack was asked about that since Russia -- a key market for U.S. poultry -- has only recently reopened. "There are 26 facilities we would like Russia to do business with," he explained. "They have signed off on about half of those and we are working through the process to open up the others." Vilsack expressed confidence there will be "shipments very, very soon and I think our (export) forecast reflects that."
While Vilsack was brimming with confidence on the updated export forecast, analysts for USDA's Economic Research Service (ERS) also included this caution, in two paragraphs labeled "Risks and Caveats:"
"The three major threats to world growth in 2011 are the EU economy tanking due to their debt situation, the U.S. economy going into a recession, and a continuing widening of the Chinese trade surplus. A major near-term risk to the world recovery is a potential spillover of the crisis brought on by high government debt in Greece, Portugal, Spain, Italy, and Ireland.
"The consensus forecast for 2010 and 2011 is of continuing recovery in both the developed and developing economies, with a few regional rough patches. The case for moderate world growth for the rest of 2010 and solid growth for 2011 is based on low interest rates, increasing trade flows, and the willingness of central banks to keep financial assets on current balance sheets, encouraging easier private credit and strong growth in corporate profits. At this time, that scenario is much more likely than any or all of the downside scenarios."
Interestingly, one of the countries touted by USDA when the May forecast was released was China. In May, USDA said shipments for October-March tallied $10.632 billion, with a full-FY forecast of $14 billion. And, the Oct.-June total outlined in today's forecast puts the value of U.S. ag exports to China at $12.461 billion, with the full FY forecast unchanged at $14 billion.