U.S. farm exports will rise 5.1 percent to a record in the next fiscal year as overseas buyers pay more for tight supplies of crops damaged by the worst drought in 50 years, the government forecast.
The value of shipments will increase to $143.5 billion in the year starting Oct. 1 from a revised $136.5 billion in the current year, the U.S. Department of Agriculture said yesterday in a quarterly report. Export revenue from corn, the biggest U.S. crop, will rise 3.4 percent to $12.1 billion while volume declines as the drought pushes grain prices to records.
“Grain and feed exports are expected up, driven largely by higher wheat volume and value, but also supported by higher corn unit values,” the USDA said in the report. “Exports of livestock, poultry, and dairy products are forecast marginally lower as declines in dairy, pork, and poultry outweigh growth in beef.”
Since mid-June, corn futures have surged 60 percent as the dry conditions wither crops. Soybeans are up 34 percent and wheat 44 percent. The drought may push food inflation as high as 4 percent in 2013, the USDA said last week. The department has declared natural disasters in more than 1,800 counties in 35 states, more than half of the country’s total, mostly because of the dry, hot weather.
The projected value of next year’s exports would surpass the record of 2011, when U.S. shippers including Cargill Inc., Archer Daniels Midland Co. and Bunge Ltd. sold products worth $137.4 billion.
Agriculture Secretary Tom Vilsack said the forecast level of exports would be an “historic achievement” for America’s farmers, ranchers and agribusinesses.
“Even with tough odds due to extreme weather, U.S. agriculture is now poised for three consecutive years of record exports,” he said, adding that the sector is on pace to achieve President Barack Obama’s goal of doubling overseas shipments by the end of 2014. In 2007, the year before Obama was elected, exports totaled $82.2 billion.
Sales of soybeans, the second-biggest U.S. crop and one that has the highest export value, are projected to climb 4.2 percent to $19.9 billion. Wheat, with higher volume sales at higher prices, will have receipts of $12.3 billion, a 35 percent gain, the USDA said.
Demand for grains, oilseeds and fruits and vegetables remains high, and sales at higher prices will make up for transactions that won’t occur because of the drought, said Daniel Sumner, a professor of agricultural and resource economics at the University of California-Davis.
“Some other markets may cut back, but the Koreans, the Japanese have been quite inelastic in their demand,” he said in an interview.
Canada will be the biggest U.S. trading partner in the next fiscal year, with estimated purchases of $21 billion, followed by China, excluding Hong Kong, at $20.5 billion, the USDA said. This year, China will be the biggest buyer, at $21 billion, followed by Canada, the department said.
Livestock, poultry and dairy exports will reach $29.9 billion next year, down 0.7 percent, the USDA said.
Fueled by high prices, U.S. net farm income may reach an all-time high of $122.2 billion in calendar year 2012, the USDA said Aug 28.
U.S. agricultural imports are projected to reach a record $117 billion next year, up 9.9 percent from this year, according to yesterday’s report.
The department will update its agricultural trade estimates in November.