After setting a record last year, U.S. farm exports will shrink 8 percent this year, due to tightening economic conditions worldwide and lower commodity prices, said the Agriculture Department on Wednesday. The $15.4 billion decline in sales would be most pronounced for corn, cotton, beef, and soybeans.
In a quarterly forecast, the USDA pegged ag exports in fiscal 2023 at $181 billion, down sharply from the highest-ever exports of $196.4 billion last year. Ag imports were forecast at $198 billion. The ag trade deficit of $17 billion would be the largest ever, and the third in five years. For decades, farm exports were a reliable bright spot in the U.S. trade picture.
“Inflation remains a slowing trend, but economic growth challenges are materializing as monetary conditions tighten,” said USDA analysts in forecasting global GDP growth of 2.6 percent, a slowdown from 3.4 percent in 2022.
China, the No. 1 customer, was forecast to buy $34 billion worth of U.S. farm exports, compared to $36.4 billion last year, “with record soybean exports offsetting lower corn, wheat, and beef sales,” said the USDA. Mexico would be the second-largest buyer, at $28.5 billion, and Canada would be third, at $27.8 billion. This year would be the first time that Mexico surpassed Canada as a buyer.
The USDA estimated corn exports of $14.5 billion this year, which would be $5 billion smaller than last year. Cotton sales would fall by $2.3 billion, to a total of $6 billion this year, and beef sales of $9.3 billion would be $1.5 billion smaller than last year. Soybeans would remain the largest export commodity, with sales of $32.3 billion, a $1 billion decline. In each case, export tonnage and unit prices would be smaller than last year.
“Brazil is forecast to have a record production for its upcoming safrinha crop, to be harvested starting in June 2023, which has eased global prices and made Brazil’s corn more price-competitive than U.S. corn,” said the report.
The three largest customers — China, Mexico, and Canada — would account for half of U.S. farm exports this year.
Mexico is also the largest source of imports, with sales expected to rise $3.4 billion from 2022 to a total of $46.2 billion this year. Canada is the No. 2 supplier, with shipments estimated at $38.7 billion this year, a $2.8 billion increase. The 27-nation European Union would provide a combined $35.6 billion in food and agriculture products, up $500 million from last year.
A stronger euro and high costs in Europe “continue to be a drag on high-value manufactured goods. Such goods, including wine, distilled spirits, and essential oils, are among the most important goods imported by the United States,” said the USDA. “These goods are also expected to be the most affected by the slowing U.S. and global economies.”
One-fifth of U.S. agricultural production is sold on the international market.
The USDA’s Outlook for U.S. Agricultural Trade report is available here.