OUTLOOK FOR U.S. AGRICULTURAL EXPORTS                       February 28, 1995
             Approved by the World Agricultural Outlook Board
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OUTLOOK FOR U.S. AGRICULTURAL EXPORTS is published four time a year by the
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Commodity Highlights
 
The forecast for fiscal 1995 exports of U.S. wheat and flour is increased 1.5
million tons and $400 million from USDA's November forecast to 34.5 million
tons valued at $5 billion.  This upward revision is largely due to improved
prospects for U.S. wheat shipments to China and Egypt and slightly higher
export prices.  The relatively tight exportable surplus of major competitors
(due mainly to a smaller crop in Australia) and strong domestic use in the
European Union also support the expansion of U.S. wheat exports.
 
The forecast for U.S. coarse grain shipments in fiscal 1995 is increased 8.6
million tons and $1.1 billion from November's forecast to 57 million tons
valued at $6 billion.  This is mainly due to an upward revision in corn
exports, which are now forecast at 50 million tons valued at $5.3 billion. 
China, normally the major U.S. competitor in the global corn market, is now
expected to export only 3 million tons versus a forecast of 9 million tons in
November.  In addition, China is expected to import 2.5 million tons.  Given
this situation, the United States will ship some corn to China, and sales to
Japan, South Korea, and other Asian markets are expected to increase.
 
The fiscal 1995 forecast for U.S. rice exports is revised upward 200,000 tons
to 2.9 million tons valued at $800 million.  Strong demand from China and
Indonesia has supported Asian export competitors' prices at higher than
expected levels, leaving the United States in a competitive position.  As a
result, the United States is expected to increase export volume while lower
prices will keep total export value unchanged.
 
The forecast for U.S. exports of oilseeds and products in fiscal 1995 is
increased 600,000 tons to 30.5 million tons and $400 million to $7.6 billion. 
This is due, in part, to an upward revision of 400,000 tons and $100 million
for soybean exports, which are now forecast at 21.4 million tons valued at
$4.5 billion.  The forecast for soybean oil is raised 130,000 tons to 930,000
tons and $120 million to $620 million.  Soybean meal exports remain unchanged
at 5.4 million tons valued at $900 million.  The sharp recovery in U.S.
oilseed production and reduced world carryover for seeds and products continue
to support increased U.S. exports of both oilseeds and products.  Although the
total vegetable oil output of Malaysia, Indonesia, and the Philippines is
expected to increase, beginning stocks in these countries are the lowest in 10
years.  China's demand for soybean oil is now expected higher, boosting U.S.
prices and foreign demand for U.S. soybean oil.
 
The fiscal 1995 forecast for U.S. cotton exports is increased 600,000 tons and
$900 million from the November forecast to 2.2 million tons valued at $3.4
billion.  These adjustments reflect weaker production prospects in India and
Pakistan and stronger than previously anticipated import demand from China. 
This situation, coupled with reduced exportable supplies in Central Asia this
year are expected to further boost U.S. export quantities and export prices. 
If this forecast is realized, the U.S. share of world trade could reach 34
percent, the highest since the 1960/61 marketing year.
 
The forecast for exports of U.S. livestock, dairy, and poultry products in
fiscal 1995 is increased $200 million from the November forecast to a record
$9.3 billion.  This is largely due to a $100-million upward revision in
poultry meat exports to $1.9 billion, as import demand in several major
markets, including Hong Kong and Russia, continues to strengthen.  U.S.
exports of dairy products and hides and skins are expected to remain unchanged
at $800 million and $1.5 billion, respectively.  Mexico's peso devaluation is
expected to slow U.S. live cattle and red meat exports to that country and
place downward pressure on U.S. red meat export prices.  Generally offsetting
these declines, however, are higher expected U.S. beef exports to Japan and
South Korea and EEP-supported pork shipments to Russia.
 
The forecast for fiscal 1995 exports of U.S. horticultural products is
increased $300 million from the November forecast to a record $8.9 billion. 
The forecasts for fresh and processed vegetables and tree nuts are each
revised upward by $100 million to $2.4 billion and $1.1 billion, respectively. 
The forecast for fresh and processed fruit remains unchanged at $3.3 billion. 
Highly processed food and beverage exports account for the remainder.  Market
liberalization, rising incomes, favorable exchange rates in many markets, a
growing demand for healthful foods, and on-going market promotion activities
in major foreign markets, such as Canada, Japan, the European Union, and other
Asian markets, continue to drive U.S. exports higher.  Growth in these markets
is expected to more than offset a decline in U.S. sales to Mexico due to the
recent peso devaluation.
 
Economic Outlook
 
Economic growth prospects for most regions and countries are little changed
since November, except for Mexico.  World gross domestic product (GDP) is
expected to grow 3.3 percent in 1995, compared with an estimated 2.8 percent
in 1994.  At over 8 percent, growth remains robust in the Asia-Pacific region,
supporting record U.S. agricultural exports there.  The peso devaluation is
expected to limit Mexico's 1995 GDP growth to 1 percent, if not lower, instead
of the nearly 5 percent earlier anticipated.  This sharp downward revision
will curtail U.S. export growth to Mexico in 1995.
 
Regional Highlights
 
U.S. agricultural exports to most major regions and countries are revised
upward or remain unchanged compared with the November forecast.  The former
Soviet Union (FSU) and Mexico are the exceptions.  At $21.4 billion, exports
to Asia are expected to be $3 billion higher than previously forecast. 
Increased corn and cotton exports to China, South Korea, and Taiwan, higher
wheat exports to China and Pakistan, and strong gains in meats, fruits, and
vegetables to the East Asian and Southeast Asian markets account for most of
the gain to Asia.
 
Forecast exports to both the European Union (EU) and Canada are raised $300
million because of increases in high-value exports.  Gains are expected in
meat, fruit, and vegetables.  U.S. exports of rice and animal feeds to the EU
should rise, and Canada is expected to purchase more U.S. corn than in fiscal
1994.
 
Exports to North Africa are boosted by increased sales to Egypt.  U.S. exports
to Egypt are expected to rise to $1.1 billion because of strong wheat sales. 
Egypt is buying wheat from the United States this year because Australia's
exportable supplies have been cut sharply due to drought.  U.S. wheat
shipments to Egypt totaled almost 2.1 million tons from October 1994 through
December 1994.
 
Mexico
 
U.S. agricultural exports to Mexico are revised downward $800 million to $3.6
billion because of the devaluation of the Mexican peso.  The devaluation is
expected to raise the price of imported goods, sharply curtail income growth,
stimulate inflation, and choke off previously expected U.S. export growth in
fiscal 1995.
 
Mexico is expected to suffer a short, but sharp recession in early 1995, given
restrictive fiscal policy, higher interest rates, and a jump in inflation. 
The peso is expected to stabilize at between 4.5 and 5.0 per dollar by the end
of 1995.  The Mexican growth rate should recover to 3 percent in 1996, from
about 1 percent in 1995.
 
Higher domestic prices are expected to encourage expansion in domestic food
and feed grain and oilseed production at the expense of imports.  Also,
stronger growth for beef, pork, and poultry production is expected, as higher
domestic producer prices offset increased costs for feed, seeds, and
fertilizers.
 
On the demand side, the devaluation will slow economic growth and income
gains, leading to lower meat consumption and increased consumption of corn as
a food staple.  Area planted in export-oriented crops, including horticultural
products, coffee, and cotton, will expand because rising export prices more
than offset rising credit and input costs.
 
PROCAMPO will increase its direct payments to eligible producers to 440 pesos
per hectare in the upcoming spring-summer cycle, a 3-percent real increase
over 1994.  Reportedly, CONASUPO (the government's agricultural marketing
agency) is considering the possibility of using a 4.5 pesos/dollar exchange
rate to sell corn to the feeding industry in order to provide additional
support to the domestic livestock sector.  To maintain lower prices for
consumers of wheat products, ASERCA (the government's grain marketing agency)
intends to provide direct subsidies to the wheat milling industry in Mexico.
 
Record exports of nearly $1.2 billion during the first quarter (October-
December 1994) of fiscal 1995 will limit the overall decline in U.S.
agricultural exports to Mexico to about 12 percent in fiscal 1995.  U.S.
exports of high-value products (HVP) such as meats and deciduous fruits, which
have gained as Mexico's income grew in recent years, are likely to suffer the
largest declines during the last three quarters.  Exports of beef, pork, and
poultry meats are expected to fall below 1994 as Mexicans reduce consumption
of higher-priced meat proteins in their diets.  Cuts of high-quality beef,
which are consumed by higher income buyers and in the tourist industry, are
likely to decline less than other cuts of beef.
 
Import demand for feed grains, particularly grain sorghum, is anticipated to
decline somewhat because higher feed costs will lead to short-term reductions
in the hog and poultry sectors.  U.S. corn exports are likely to remain stable
as Mexico's corn support policies keep domestic corn prices high.  Mexico is
expected to import corn at the NAFTA quota level in calendar 1995.
 
Dairy products are expected to decline below fiscal 1994 because of reduced
shipments of cheeses and soft dairy products, but Dairy Export Incentive
Program (DEIP) allocations will likely push exports of nonfat dry milk powder
(NFDM) above 1994 as the Mexican Government uses DEIP to meet increased
feeding needs.  Mexico was allocated 30,000 tons of NFDM in January.  Mexico's
GSM authorization is $1.25 billion for fiscal 1995, but only $805 million was
operational as of January 6, 1995.
 
Japan
 
U.S. exports to Japan are revised upward $400 million to $9.6 billion based an
improved outlook for bulk commodities and continued strong high-value product
sales.  The Kobe earthquake is expected to have a minimal negative impact on
U.S. agricultural exports in fiscal 1995.  Some stored grains and oilseeds and
perishable goods in cold storage were likely destroyed and may need to be
replaced.  Approximately 20 percent of the Japanese soybean crushing industry
is in the Kobe area, and although crushing in Kobe will be disrupted,
additional crushing in other parts of Japan is likely to maintain U.S. soybean
exports.  The main impact will be on the Japanese domestic distribution system
as exports are rerouted to other port facilities.
 
Since the November forecast, increased prospects for a rebound in corn use and
smaller exports by China have raised prospects for U.S. corn exports.  Soybean
export volume is expected slightly lower than in November, but higher soybean
prices since November will leave the value virtually unchanged.  Compared with
last year, however, the value of soybean exports will be lower because of
reduced soybean prices this year.  Higher cotton export unit values have also
boosted cotton export value.
 
The value of U.S. exports of red meats, poultry, fresh fruit and vegetables,
and processed vegetables was 28 percent higher during October-December 1994
than a year earlier.  These high-value product exports are expected to
continue strong and possibly surpass last year's records.
 
China
 
The forecast for exports to China is revised upward $600 million to $1.7
billion, the highest U.S. exports since 1982.  U.S. agricultural exports will
gain because of large increases in corn, cotton, soybean oil, and wheat
shipments.  Even though China recently canceled corn purchases of over 600,000
tons in February, the United States is expected to provide a significant share
of China's 2.5 million tons of total corn imports in fiscal 1995.  Through
February 9, 1995, U.S. exporters have reported shipments of over 400,000 tons
in marketing year (September-August) 1994/95, with most of the shipments
occurring in January 1995.
 
Cotton exports are expected to rise above fiscal 1994 as China continues to
buy U.S. cotton.  Higher cotton export unit values and strong Chinese import
demand caused by production shortfalls and distribution problems will push the
value of U.S. exports to China to one of the highest levels ever.
 
Wheat sales in fiscal 1995 continue ahead of 1994's pace.  During October-
December 1994, the United States shipped nearly 300,000 tons of wheat.  China
has purchased 2.7 million tons through the Export Enhancement Program (EEP),
and another 1-million-ton allocation was announced for China on February 7,
1995.  EEP bonuses are significantly lower than in fiscal 1994 because of
higher wheat prices, raising the value of wheat exports to China.
 
Former Soviet Union
 
The forecast for the FSU is revised downward $300 million to $1.2 billion
because of a weakened outlook for bulk exports, particularly to Russia. 
October-December exports totaled about $260 million, $485 million below a year
ago.  Total FSU coarse grain imports in marketing year 1994/95 are projected
at less than 2 million tons, and wheat import demand remains weak.  Shipments
of poultry meat were stronger in the first quarter than last year.  But
shipments could slow if Russia and other FSU countries manage to enforce
higher import tariffs on agricultural commodities.
 
U.S. Agricultural Export Programs
 
U.S. Food Aid Programs
 
The P.L. 480 program is the primary means by which the United States provides
foreign food assistance.  The assistance is provided through three separate
program authorities.  Title I of P.L. 480 provides for sales of U.S.
agricultural commodities to developing countries through long-term
concessional sales.  This program is administered by the Foreign Agricultural
Service of USDA.  Title II provides for donations of humanitarian food
assistance to needy people in foreign countries, and Title III provides food
on a grant basis to least developed countries.  Titles II and III are
administered by the Agency for International Development (AID).
 
The current estimates for P.L. 480 appropriations in fiscal 1995 are as
follows:  Title I, $260.1 million; Title II, $821.1 million; and Title III,
$64.9 million.  For fiscal 1995, the President proposed rescissions totaling
$60.2 million for Title I and $92.5 million for the Title III program.  The
proposed rescissions will produce an estimated 3.8 million tons of food
assistance in fiscal 1995 under the P.L. 480 program.
 
On January 19, USDA announced revised country and commodity allocations for
the second quarter of fiscal 1995 under Title I of the P.L. 480 program and
the Food For Progress (FFP) program funded under Title I appropriations.  USDA
has allocated $259 million for commodity loans and grants among 24 countries
and is holding an additional $32.3 million in reserve to fund unforeseen needs
during fiscal 1995.  The main changes to USDA's initial allocations for fiscal
1995 announced on October 7, 1994, are the increased allocations of $5 million
each to Jordan and the Ukraine.
 
As of late January 1995, AID had announced approved programs under Title II
totaling $506 million.  African countries are programmed to receive 45 percent
with Ethiopia, Burundi, Sudan, and Rwanda the major recipients.  Asian and
Latin American countries are programmed to receive 26 percent and 24 percent,
respectively.  The former Yugoslavia republics receive the remainder.  As of
February 15, 1995, AID had not announced country allocations under the Title
III program.
 
For fiscal 1996, the President proposes a program level of just over $1
billion for P.L. 480 food assistance that is expected to provide total
commodity shipments of approximately 3.4 million tons.  This includes $177.9
million for Title I, $795.7 million for Title II, and $50 million for Title
III.  The reduced program level recommended for P.L. 480 assistance in fiscal
1996 results from limitations on funding for U.S. international programs and
the need to increase disbursements for other priority activities.
 
CCC Export Credit Guarantee Programs
 
As of February 4, GSM-102 and GSM-103 credit guarantee applications received
by the CCC amounted to about $1,100.92 million, approximately 10 percent below
the same time last year.  Applications represent the amount of credit
guarantees requested by exporters and are an indication of sales activity
under the program.
 
As part of the 1996 budget, the Administration has proposed maintaining a
total program level of $5.7 billion for the CCC export credit guarantee
programs. However, the program of credit guarantees for emerging democracies,
which was mandated by provisions of the Food, Agriculture, Conservation, and
Trade (FACT) Act of 1990 during the 1991-95 period, will not be continued in
1996.  Two new credit guarantee activities (supplier credit guarantees and
facilities financing guarantees) are proposed to be implemented as part of the
GSM-102 program.
 
The Export Enhancement Program and the Dairy Export Incentive Program
 
EEP sales are strong in fiscal 1995 as of February 10, although bonuses are
much lower than a year earlier.  The total fiscal 1995 EEP bonus as of
February 10, 1995, is $213.3 million, down more than a half from the fiscal
1994 bonuses as of February 4, 1994.  Lower EEP bonuses are the result of
higher global wheat prices.  A major development in the EEP for wheat was an
announcement of an additional 1 million tons for China on February 7, 1995. 
China has already purchased 2.7 million tons of wheat under EEP in fiscal
1995.
 
A calendar 1995 Dairy Export Incentive Program (DEIP) was announced on January
20, 1995.  The 1995 DEIP will be available for sales to 110 countries for
114,500 tons of milk powder; 99 countries for 37,650 tons of butterfat; and 75
countries for 3,850 tons of cheddar, gouda, feta, cream, mozzarella, and
processed American cheeses.  The largest allocations for nonfat dry milk
powder are for Algeria (30,000 tons) and Mexico (30,000 tons).  DEIP sales of
nonfat dry milk powder under the 1995 initiative are brisk, totaling 36,812
tons as of February 10, 1995.  Bonuses for calendar year 1995 are $31.8
million.
 
Import Commodities
 
Agricultural imports are forecast at $28.5 billion, $500 million higher than
the November forecast because of expected increases in cattle, beef, and
vegetable imports.  Agricultural imports from Mexico are now forecast at $3.1
billion, a $200-million increase caused by the devaluation of the Mexican
peso.
 
The vegetable import forecast is $2.9 billion, up $100 million since November,
as imports of tomatoes, peppers, onions, cauliflower, and broccoli from Mexico
will increase.  Volume is projected up by 100,000 tons.
 
Beef imports are forecast at $2.1 billion, up $100 million since the November
forecast, with volume at 900,000 tons.  The forecast is raised because
Australia is allowed to ship more beef to the United States under the Uruguay
Round.  Due to reduced supplies of "short fed" beef, Australia is expected to
ship less beef to Japan, and the increased availability of lower-grade
processing meat will result in larger shipments to the United States.  The
live animal forecast is $1.3 billion, $100 million higher than in November due
to expected increases in cattle imports from Mexico.
 
The sugar import forecast is increased $100 million to $1.2 billion.  Volume
is forecast up 100,000 tons due to a downward revision in fiscal 1994 imports
which increased the quantity that can be imported under quota in fiscal 1995.
 
The forecast for rubber import value has been raised $100 million from the
November forecast to $1.1 billion as world rubber production is outpaced by
consumption, causing prices to rise.  Declines in Malaysian rubber output have
exacerbated the shortage.  Import volume remains steady at 1 million tons.
 
The coffee forecast import volume is unchanged at 1.2 million tons.  Coffee
prices are expected to be $3,100 per ton for fiscal 1995, resulting in an
import value of $3.7 billion.
 
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