The government lowered its forecast of U.S. farm exports by 5 percent from August. The $7 billion cut was due to “lower prices, strong competition and diminishing Chinese demand,” said USDA in a quarterly report. It pegged exports during fiscal 2016 at $131.5 billion, or $8.2 billion below fiscal 2015, which ended on Sept 30, and a tumble of 14 percent from the record set in fiscal 2014. Ag exports account for a sizable part of farm income and are a consistent bright spot in U.S. trade accounts. The U.S. trade surplus is forecast to be the smallest, at $9.5 billion, since 2006, due to sharp increases in imports of fresh fruits and vegetables, and coffee. Imports of fresh vegetables are projected for a record $7 billion, boosted by higher consumer income and healthier diets.
“The Chinese economy is experiencing a significant slowdown, with growth expected at 6.5 percent in 2015 and 6.1 percent in 2016, the lowest rates since 1990,” said USDA in slashing its forecast of sales to the world’s most populous country. With U.S. exports to China plunging by one-fifth to $18.2 billion, China would fall behind Canada and barely edge Mexico for No. 2 in purchases of American goods. China ousted Canada as the top export market in 2010 and bought $22.55 billion in U.S. farm goods in fiscal 2015.
China will curtail imports of U.S. cotton, sorghum and an ethanol co-product, distillers dried grains, that is used as a cattle and hog feed, because it has large domestic stockpiles of cotton and corn. Beijing has lowered support prices for corn in order to spur consumption. It also is trying to work down its vast supply of cotton, estimated at nearly twice its annual consumption level.