(Corrects import forecast number in eighth paragraph in story published May 31.)
May 31 (Bloomberg) -- U.S. farm exports will drop 2.1 percent from a record in the year that began Oct. 1 as slower economic growth erodes sales of grain, oilseeds and cotton to European Union countries, the government said.
Shipments worldwide will slide to $134.5 billion, the second-highest on record, from $137.4 billion in fiscal year 2011, the U.S. Department of Agriculture said today in a quarterly report. Estimated exports to the EU will fall 17 percent to $8.5 billion, after sales in first half of the year dropped 21 percent, the USDA said.
“Continuing turmoil in European financial markets, coupled with falling employment and GDP in most of the euro zone, reflects a recession likely to last through most of 2012,” the USDA said in the report. “World 2012 growth is expected to slow.”
The Standard & Poor’s GSCI Agricultural Spot Index is down 7.2 percent since the start of October. Corn, the most valuable U.S. commodity, is down 6.3 percent.
Soybean exports to the EU in the current fiscal year have dropped to $360 million from $1.1 billion at the same time a year ago, the USDA said. Corn shipments to the trading bloc in the first half were down 85 percent to $37 million, according to the report.
The overall export forecast was up from a February estimate of $131 billion as the outlook for grain exports improved. Canada will be the biggest U.S. trading partner, with estimated purchases of $20 billion, followed by Mexico at $19 billion and China, excluding Hong Kong, with $18.5 billion, the USDA said.
Fueled by export demand, U.S. net farm income reached an all-time high of $98.1 billion in calendar year 2011 and will reach $91.7 billion this year, the second-highest, the USDA said in February. The department will update its farm-export forecast in August.
U.S. agricultural imports are projected to reach $107.5 billion, up $1 billion from the February forecast and a 14 percent increase from $94.5 billion in the previous year.
“Increases are forecast for vegetable oils, oilseeds, oilmeal, bulk grains and beef and veal imports,” the USDA said. “Larger imports of rapeseed oil from Canada are leading the vegetable-oil gains.”
The USDA predicts a trade surplus for the year of $27 billion, 10 percent higher than the February estimate while below the record $42.9 billion in 2011.
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