# Presentation: 669550

## Changes in FY 2007 Forecast since MayAgExports increased $1.5 billion to record $79.0 billion

**Fiscal Year Trade Forecasts for**
**Ag, Fishery & Solid Wood Products**

- USDA’s “Outlook for U.S. Agricultural Trade”
- Was released on August 31, 2007, 4pm EST
- Slides prepared by OGA/FAS

- *Includes summaries on all ag groups except tobacco, planting seeds, and sugar& tropical products.  Forecasts for fishery and solid wood products are unofficial.

-   _Initial Public FY 2008 Forecast_AgExports rise $4.5 billion to record $83.5 billionAgImports rise $4.5 billion to record $75.0 billionAgSurplus remains at $8.5 billion

## U.S. Agricultural Trade

**U.S. Agricultural Trade**

***Exports***

***Imports***

***Trade Surplus******   ***

- Record export values forecast for all major commodity groups in 2008.              Bulk commodity unit values continue rising, and export volume rises for nearly every group except oilseeds.  Import growth slows slightly.

- Record

**75.0**

**8.5**

**79.0**

**70.5**

**83.5**

**8.5**

**’****08p**

## Key Revisions                                                  in FY 2007 Export Forecasts Since May

- Oilseeds       $500 million to $13.1 billion  record
-  (+) soybeans / higher vol (record) & unit value – strong demand from China/EU
- Cotton       $400 million to $4.3 billion
-  (+) 200,000 tons to 3.2 mil tons due less competition from India; unit value higher
- Livestock/Poultry/Dairy Products       $500 mil to $15.3 bil  record
-  (+) dairy products up $380 million to record $2.3 billion on (+) vol & world prices

**Key Revisions                                                  in FY 2007 Export Forecasts Since May**

- Grains       $400 million to $23.0 billion  record
-  (–) corn / volume lowered 2 mmt on more competition from Argentina/Brazil
-  (+) wheat / higher vol & unit value – less comp. from Canada/EU; tighter supply

## Commodity Developments, 2007 to 2008

**Commodity Developments, 2007 to 2008**

- Grains & Feeds       $1.3 billion to $24.3 billion  record
-  (+) $800 mil. cgrains on higher prices/vol – record corn crop & reduced comp.
-  (+) $195 mil. wheat on higher prices/vol – tight global supply & reduced comp.
-  (+) $170 mil. rice on higher prices/vol – smaller US crop
- Cotton       $1.2 billion to $5.5 billion  record
-  higher vol due to largest carry-over stocks in 40 yrs & strong demand (China)
-  unit values higher due to tighter global stocks – limited production growth
- Horticultural Products       $800 million to $18.6 billion  record
-  strong global demand and weak US dollar support growth
- Oilseeds & Products       $640 million to $13.7 billion  record
-  (+) unit values – strong domestic & foreign demand (feed, ethanol, biodiesel)
-  (-) 2.1 mmt soybean export volume due to smaller crop
- Livestock/Poultry/Dairy Products       $350 mil to 15.6 billion  record
-  (+) $400 million for beef to $2.2 bil. due to 110,000-ton increase (Japan/SKorea)
-  pork remains at 1 mmt ($2.6 billion); no significant chgs for broilers & dairy

## Export Outlook for Grain & Feed Products

- Includes corn gluten feed/meal

- Record

- Revised FY 2007 Forecast
*Key Developments*
-  Wheat vol & unit prices rise – less Canada/EU comp. & tighter supply
-  Corn vol down w/ increased comp.
- _Initial FY 2008 Projection_
*Upside Developments*
-  Larger export vols (esp corn) & higher unit values (tight world supply)
-  Record US corn crop, reduced comp. & strong foreign demand boost corn 1.5 mmt & $600 mil.
-  Wheat vol up +500,000 mt & prices rise – HRW & HRS benefit from tight global high-protein wheat supply
*Wild Cards*
-  High prices & competition could slow corn & wheat shipments
-  US & foreign 2007/08 crop size

**Export Outlook for Grain & Feed Products**

- Revised FY 2007 Forecast:     $400 Million to $23 Billion

- Initial FY 2008 Projection:  $24.3 Billion

- ’08p

## Export Outlook for Oilseeds & Products

- Excludes corn gluten feed/meal

- Revised FY 2007 Forecast
*Key Developments*
-  (+) volume to China/EU & (+) unit values boost soybean export volume & value to new records
- _Initial FY 2008 Projection_
*Upside Developments*
-  Demand from China and EU biodiesel mkt keep oil mkts tight & soybean & product prices high
-  Large carry-in stocks help offset lower US soybean production
*Downside Developments*
-  Smaller soybean crop & strong domestic demand limit export vol
*Wild Cards*
-  US & SAmerica 2007/08 crops
-  Impact of higher prices on China soybean demand

**Export Outlook for Oilseeds & Products**

- Revised FY 2007 Forecast:     $500 Million to $13.1 Billion

- Initial FY 2008 Projection:  $13.7 Billion

- ’08p

- Record

## Export Outlook for Cotton

- Note:  FY ’06 and prior years based on U.S Census data; FY ’07 and FY ‘08 forecasts based on WASDE MY forecast.

- Record

- Revised FY 2007 Forecast
*Key Developments*
-  (+) unit value & vol; less comp. (India) & solid demand (Turkey)
- _Initial FY 2008 Projection_
*Upside Developments*
-  Export vol +400,000 mt to 3.6 mmt largest carry-over stocks in 40 yrs help capture early season demand
-  Higher unit value – foreign production growth not expected to match China demand growth
-  Most export vol gain due to China
*Downside Developments*
-  Continued competition from India
*Wild Cards*
-  US & foreign crop size
-  Increasing uncertainty over China’s production estimates

**Export Outlook for Cotton**

- Revised FY 2007 Forecast:     $400 Million to $4.3 Billion

- Initial FY 2008 Projection:  $5.5 Billion

- ’08p

## Export Outlook for Dairy, Livestock & Poultry

- Record

- Revised FY 2007 Forecast
*Key Developments*
-  Dairy jumps to record $2.3 bil – strong vol gains for cheese and by-products; higher global prices
-  (-) pork export vol – sales to Mexico slow due to less disposable income;  Brazil regains pre-FMD dominance in Russian market
- _Initial FY 2008 Projection_
*Upside Developments*
-  Beef up 110,000 mt & $400 mil; broiler export vol up on lower prices due to US production increase
*Wild Cards*
-  Progress in normalizing Asia beef trade disrupted by BSE bans
-  Ractopamine ban on pork plants eligible to export to China

**Export Outlook for Dairy, Livestock & Poultry**

- Revised FY 2007 Forecast:     $500 Million to $15.3 Billion

- Initial FY 2008 Projection:  $15.6 Billion

- ’08p

## Export Outlook for Horticultural Products

- Record

- Revised FY 2007 Forecast
*Key Developments*
-  Fresh/processed fruit & veg exports raised on higher volumes & unit values
-  Tree nut exports lowered – large US almond crop lowers prices, and almond export volume lower to EU
-  Slower wine sales growth to EU
- _Initial FY 2008 Projection_
*Upside Developments*
-  “Misc.” products like essential oils and food preparations continue to fuel most of the export growth
*Downside Developments*
-  Tree nuts unchanged at $2.9 bil. as record almond crop lowers price
*Wild Cards*
-  Weather & US crop sizes

**Export Outlook for Horticultural Products**

- Revised FY 2007 Forecast:     $200 million to $17.8 Billion

- Initial FY 2008 Projection:  $18.6 Billion

- ’08p

## Export Outlook for Fishery Products

***Forecasts are not official USDA estimates.***

- Record

_***Trade Balance***_
**Trade deficit is estimated at $10 billion**

**Export Outlook for Fishery Products**

- Revised FY 2007 Forecast:      $200 Million to $4.0 Billion

- Initial FY 2008 Projection:  $4.1 Billion

- ’08p

- Revised FY 2007 Forecast
*Key Developments*
-  Export vol & unit value of squid, surimi and some other fishery products are down
-  Very large sockeye salmon catch; salmon exports may increase because of disease problems with salmon from Chile & Norway
- _Initial FY 2008 Projection_
*Upside Developments*
-  US exports to Europe rise on strong demand
*Downside Developments*
-  None
*Wild Cards*
-  Size of U.S. harvests of lobster, salmon, pollock and other species

## Export Outlook for Solid Wood Products

***Forecasts are not official USDA estimates.***

_***Trade Balance***_
**Trade deficit is estimated at $14 billion**

- Revised FY 2007 Forecast
*Key Developments*
-  Japan’s demand for US softwood is rebounding
- _Initial FY 2008 Projection_
*Upside Developments*
-  Continued strong demand for hardwood logs/veneer & softwood lumber from Europe & China
*Downside Developments*
-  Exports to Canada and Mexico expected to decrease slightly largely due to hardwood lumber
-  Weakness in US housing market continues to dampen US solid wood exports to Canada
*Wild Cards*
-  None

**Export Outlook for Solid Wood Products**

- Revised FY 2007 Forecast:  Unchanged at $6.5 Billion

- Initial FY 2008 Projection:  $6.6 Billion

- ’08p

## A Word (or Two) on Imports ...

- Long-term demand drivers for food imports
-  changing consumer preferences (variety, luxury, healthful, ethnic)
-  population growth – 2.7 million more consumers every year since 1980
-  high disposable incomes which are growing rapidly for some segments
- Key products driving most of the increase in FY 2008
-  import growth rate slows to pre-2003 level reflecting a weak dollar and negative impacts of higher fuel prices and the housing market slump
-  continuing a well established trend:  horticultural products account for 60% of     increase with fruits, wine and beer driving much of the growth in this category
-  not typical of long-run trends: coffee/tropical products continue strong gains & bulk grain import value is up on sharply higher unit value and some vol increase
- Import values for product groups driving most long-term growth
-  horticultural products $35.4 billion, of which fresh/process f&v $17.9 billion, wine & beer $9 billion, essential oils 2.5 billion, tree nuts $1.2 billion
-  snack foods $5.2 billion, beef & pork $4.7 billion, vegoils $3 billion, dairy $2.6 bil

**A Word (or Two) on Imports ...**

***AgImports Continue Nearly Four Decades of Expansion . . .***

## Top Ag Markets and Ag Suppliers

**Top Ag Markets and Ag Suppliers**

***Top Ag Markets...                   Top Ag Suppliers...***