The U.S. food and ag trade deficit will soar to a record $42.5 billion in the fiscal year opening on Oct. 1, fueled by steadily growing consumer demand for imported fresh produce, alcohol, coffee, and sugar, said USDA economists on Tuesday. It would be the third year of largest-ever deficits while export sales, hobbled by the strong dollar, retreat from the record set in fiscal 2022.
Demand for imported food has rebounded from a pandemic slowdown and was expanding at $8 billion or more per year, said the USDA in its first estimate of ag trade in fiscal 2025.
“The U.S. economy remains strong going into the final months of FY (fiscal year) 2024, although that growth is expected to slow into FY 2025,” said the USDA. Economic growth worldwide was forecast at 3.2 percent as inflation eases and higher wages encourage consumer spending. U.S. growth was forecast at 1.9 percent.
Exports were estimated at $169.5 billion in the new fiscal year, down from $173.5 billion this year. Imports would be $212 billion in fiscal 2025, up from $204 billion in the current year. Lower prices for corn, soybeans, and cotton and lower beef tonnage would be the driving factors in the decline in 2025, said the USDA.
Mexico and Canada pushed China into third place on the list of export markets this year. Exports to Mexico and Canada were the highest ever, while sales to China fell sharply due to competition from Brazil.
The USDA said Mexico, Canada, and China would finish in the same order in 2025. Sales to Mexico were forecast at $29.2 billion and to Canada, $28.9 billion. Exports to China were estimated at $24 billion, down by $3 billion from this year. “Deceleration in economic growth and weak consumer sentiments weaken China’s overall import demand, especially for feed stuffs.”
The USDA report, Outlook for U.S. Agriculture Trade, was available here.