The US trade surplus is projected to be down $2 billion, but still at $21 billion.
WASHINGTON – Despite the continued softening of the US dollar against many of its agricultural trading partners’ currencies and a lower-than-expected drop in oilseed and product exports, exports of beef, poultry, livestock and dairy served to offset the latest US Dept. of Agriculture (USDA) forecast for agricultural exports.    

In its Outlook for US Agricultural Trade February report, the USDA’s Economic Research Service projects US agricultural exports for the 2018 fiscal year to be $139.5 billion, a drop of $500 million from the agency’s November forecast. Meanwhile, imports are expected to be approximately $118.5 billion, resulting in a $21.0 billion trade surplus, down $2 billion.  

In its forecast, published Feb. 22, USDA attributes the bulk of its scaled back forecast to a 6-percent expected drop in oilseed exports, which translates to a $2.0 billion decline to $31.1 billion, due mostly to lagging demand for soybean from China and due to the competition from Brazil.

According to the report, the forecast for exports of livestock, poultry and dairy products were increased by $800 million to $30.5 billion. The positive news was attributed to higher projections for livestock byproducts as well as beef and pork products, with beef up $400 million to $6.7 billion; pork up $300 million to $5.5 billion; and variety meats $100 million higher to $1.9 billion. Beef demand is expected to increase due to volume and price increases while global popularity for pork despite stronger pricing pushed its forecast higher. Poultry and dairy product forecasts did not change.

Since early 2017, the US dollar has weakened compared to that of countries such as China, India and trading partners in Europe, where increasing per-capita Gross Domestic Product (GDP) and economic strength have resulted in stronger currency in those countries, especially during the past three years.

Compared to 2011-2014, however, the US Dollar remains relatively strong, according to the USDA report.

“The positive forces that supported a strong dollar since that time largely remain intact. Fiscal stimulus from tax and spending policies in an environment of very low unemployment may stimulate inflation,” the report states. “Such conditions would support more rapid increases in interest rates, driving up demand for dollars and thus the dollar’s value.”