Trade Surplus Increases

December 27, 2000

The U.S. agricultural trade surplus increased again in October, and was 17% more than in October 1999. The January- October surplus of $9.7 billion is 18% greater than in the same period in 1999. Exports to date of $42.2 billion are 7% higher than the past year, while imports are only 4% more.

October exports are $400 million more than in October 1999, and $900 million more than in September 2000. Bulk commodity exports of $14.4 billion from January to October are 6.5% ahead of last year. This gain is from larger sales of soybeans and cotton. Export values of wheat, corn, rice, and tobacco all declined.

Shipments of soybeans were $4 billion, $695 million more than in 1999, a 21% gain in value that is less than the 23% increase in volume as prices declined since June. Soybean prices from July to October are comparable with 1999 prices which were the lowest in the past decade. Volume shipped to China increased almost 200 percent thus far as China's demand for soybeans for crushing increased significantly. Most of that is used as livestock feed.

Cotton exports to date of $1.6 billion are 133% more than in 1999 as volume shipped jumped more than 800,000 tons. Import demand from Mexico, Turkey, and Indonesia was strong, as cotton prices remain relatively low despite some recent gains. World production in marketing years 1999-2000 and 2001 is estimated to fall short of total consumption. As a result, global stocks are smaller. The United States remains the world's leading exporter of cotton.

Wheat sales are down significantly as volume shipped declined and as prices remained low. January-October exports of $2.7 billion are $228 million less than in 1999 and volume is down nearly 1 million tons. Exports to Russia, Pakistan, Japan, and other East Asian markets all declined. However, volume shipped to the European Union, the Mid-East, Egypt, and the Philippines increased. Estimated world production in 1999/2000 was down somewhat, and the EU is expected to have lower exportable supply.

Shipments of corn declined $356 million and 2.8 million tons from 1999. Despite higher world consumption, year-to-date sales of $3.8 billion slipped because competitors raised their exports, especially China and Argentina. A major U.S. market, South Korea, increased corn imports from China, displacing U.S. exports. U.S. volume shipped to Japan, Malaysia, and South Africa declined the most. At close to $28 billion, year-to-date exports of high-value products are responsible for two-thirds of the $2.8-billion increase in total U.S. farm exports.

Red meat, hides, and feeds and fodders lead with export gains of $1.2 billion. An additional $740 million are earned from exports of poultry, fruits, nuts, vegetables, and sugar products. Despite the high exchange value of the dollar in foreign markets--gaining 11% since 1997--import demand from Mexico, Japan, and South Korea, among others, was strong enough to offset the exchange-rate effect.

The $1.3-billion increase in U.S. agricultural imports is largely from purchases of high-value products. Of $32.5 billion in total imports to date, only $6.7 billion are noncompetitive, or mostly tropical products. Their low prices keep import values flat. The imported products that increased significantly were red meats (up $491 million), beverages (up $352 million), live animals (up $227 million), and vegetables (up $110 million).