Reduction on imports far outpaced the export reduction to boost forecast surplus
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US ag exports are now forecast for Fiscal 2016 at $124.5 billion with imports slashed to a still-record $114.8 billion to boost the forecast US ag trade surplus to $9.7 billion, USDA said in its updated Outlook for US Ag Exports. Link. In February, USDA had forecast ag exports at $125 billion against imports of $118.5 billion for a surplus of $6.5 billion. On the export side, USDA raised their outlook for grain and feed exports to $27.7 billion (up $500 mil. vs Feb.) on “larger wheat and corn volumes and higher unit values for corn and sorghum.” USDA also increased oilseed and product exports to $26.1 billion, a $700 increase. But those increases were more than offset by reductions to cotton (down $100 million), livestock, poultry and dairy (down $300 million) and the biggest – a $1.2 billion reduction in horticultural product exports. Regarding horticultural products, USDA noted, “This is the second consecutive quarter-to-quarter downward revision and the total would be the first year-over-year decline since Fiscal 2009. This reduction is mainly due to sharply lower unit prices of pistachios and walnuts, as well as reduced almond shipments to the EU and China.” As for imports, USDA cut the outlook $3.7 billion, to $114.8 billion, “mostly from a decline in tropical products.”
Comments: The reduction on the import side was what we expected would take place as through March, the US ag trade surplus already stood at $10.513 billion, well ahead of the forecast at that point for a $6.5 billion trade surplus. That tells us USDA is still expecting some trade deficits on a monthly numbers on trade for April-September, but not the kind of deficits that would have had to take place without a downward reduction in the import forecast, raising the forecast trade surplus.
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