OUTLOOK FOR U.S. AGRICULTURAL EXPORTS                       August 31, 1998
August 1998, AES-19
               Approved by the World Agricultural Outlook Board
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OUTLOOK FOR U.S. AGRICULTURAL EXPORTS is published four times a year by the 
Economic Research Service, U.S. Department of Agriculture, Washington, DC
20036-5831. This release contains only the report text and text tables.  
Appendix tables and graphics are not included.

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FISCAL 1999 U.S. AGRICULTURAL EXPORTS FORECAST AT $52 BILLION

Fiscal 1999 U.S. agricultural exports are projected at $52 billion, down $2.5
billion from the revised fiscal 1998 forecast. Export volume is projected up
6.7 million tons due to expected gains in wheat and corn.  However, a stronger
dollar, large global supplies, and weak demand are pressuring prices of
agricultural products. Projected soybean and soybean meal exports are
expected to fall $1.5 billion from fiscal 1998, reflecting sharply lower
prices, while reduced shipments are expected to lower cotton exports $900
million. The total value of grain and feed exports is expected to be little
changed from fiscal 1998 as higher grain export volumes offset lower prices.

Slower growth is expected in agricultural imports in fiscal 1999. The value
of imports is expected to reach $39.5 billion, up $1.5 billion from fiscal
1998. 

The projected decline in fiscal 1999 exports and the increase in imports will
narrow the U.S. agricultural trade surplus to $12.5 billion, the smallest
since 1987.

The revised fiscal 1998 export forecast is down $500 million from May, to
$54.5 billion, reflecting weaker export unit values for wheat and slowed
soybean shipments. Fiscal 1998 imports, however, remain at $38 billion as
previously projected. The expected fiscal 1998 surplus slips slightly to
$16.5 billion.

Table 1--U.S. agricultural trade, fiscal years, 1994-1999
                        -- Year ending September 30 --
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Item             1994    1995    1996    1997 Forecast 1998 Fiscal 1999
                                               May    Aug.    projected
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                                     --Billion dollars--
Exports          43.9    54.6    59.8    57.3    55.0   54.5      52.0
                                               
Imports          26.6    29.9    32.6    35.8    38.0   38.0      39.5
                                                                       
Balance          17.3    24.7    27.2    21.5    17.0   16.5      12.5

                                       --Million metric tons --
Ex. volume127.5   169.7   158.4   147.3   142.2   142.0 148.7
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This outlook reflects commodity forecasts in the Aug. 12, 1998, issue of 
WORLD AGRICULTURAL SUPPLY AND DEMAND ESTIMATES.

Approved by the World Agricultural Outlook Board and released Aug. 28, 1998.

Contents
Fiscal 1998 Agricultural Exports
Commodity Highlights
Economic Outlook
Regional Highlights
U.S. Agricultural Export Programs
Import Highlights

Tables

Table 1--U.S. agricultural trade, fiscal years 1994-99
Table 2--U.S. agricultural exports:  Value by commodity, 1997-99
Table 3--U.S. agricultural exports:  Volume by commodity, 1997-99
Table 4--U.S. agricultural exports:  Value by region, 1997-98
Table 5--U.S. agricultural imports:  Value by commodity, 1997-99
Table 6--U.S. agricultural imports:  Volume by commodity, 1997-99
Table 7--U.S. agricultural imports:  Value by region, 1997-98

     Coordinator (ERS):

Carolyn Whitton (202)694-5287
Leader, Trade Data Analysis
Trade Analysis Branch
Market & Trade Economics Div. Economic Research Service (ERS)

      Coordinator (FAS):

Ernest Carter (202) 720-2922
Special Assistant
Office of Deputy Administrator
Commodity and Marketing Programs
Foreign Agricultural Service (FAS)

U.S. Department of Agriculture
Washington, D.C. 20250

The forecasts in the Outlook for U.S. Agricultural Exports are based on
information provided by the Market & Trade Economics Division of the ERS and
the Commodity Divisions of FAS. Editorial support is furnished by Martha R.
Evans, Information Services Division, ERS. All telephones are area code 202.

Commodity Information--ERS:  Karen Ackerman (Export Programs, 694-5264); Ed
Allen (Wheat/Coarse Grain, 694-5288); Mark Ash (Oilseeds, 694-5289); Nathan
Childs (Rice, 694-5292); Mark Gehlhar (Imports, 694-5273); Shayle Shagam
(Beef, 694-5186); Mildred Haley (Pork, 694-5176); Dave Harvey (Poultry,
694-5177); Gary Lucier (Horticulture, 694-5253); Steve MacDonald (Cotton,
694-5305); Stacey Rosen (Food Aid, 694-5164); Andy Jerardo (Macroeconomic
projections 694-5323).

Commodity Information--FAS:  Peter Burr (Tobacco, & Seeds 720-9497); Joel
Greene (Dairy & Livestock 720-6553); Alan Holz (Oilseeds, 720-0143); Linda
Kotschwar (Grains and Feeds, 690-1147); Dee Linse (Export Programs,
720-9847); JonAnn Flemings (Cotton, 690-1546); Nancy Morgan (Poultry,
720-1372); Debra Pumphrey (Horticultural and Tropical Products, 720-8899).

Regional information, ERS:  Chris Bolling (Brazil, 694-5212); Nancy Cochrane
(East Europe, 694-5143); Hunter Colby (China, 694-5215); Fred Crook (Hong
Kong, 694-5217); John Dyck (Japan & South Korea, 694-5221); Anwarul Hoque
(South Asia, 694-5222); Sophia Wu Huang (Taiwan, 694-5225); Susan Leetma
(European Union, 694-5153); Michael Kurtzig (North Africa and the Middle
East, 694-5152); Bill Liefert (New Independent States, 694-5156); John Link
(Mexico, 694-5228); Suchada Langley (Canada, 694-5227); Gary Vocke (Southeast
Asia, 694-5241).

The Outlook for U.S. Agricultural Exports is published in February, May,
August, and December. The next issue will be released Nov. 30, 1998. 

Persons with disabilities who require alternative means for communication  
of program information (braille, large print, audiotape, etc.) should contact 
USDA's Target Center at (202) 720-2600 (voice and TDD).

Commodity Highlights

Fiscal 1999 U.S. wheat and flour exports are projected to rise 6 million tons
from a year earlier to 32 million tons, due to reduced competition from
Canada and Argentina. The increase in wheat exports also includes an
appropriated aid donation of 500,000 tons to Indonesia and an additional 2
million tons which have not yet been allocated to specific markets. However,
global exportable supplies will be large, especially in the European Union
(EU), and many importing countries have harvested larger 1998 crops. Thus,
wheat prices could drop to their lowest level since the early 1990s. The
forecast for fiscal year 1998 exports of U.S. wheat and flour is reduced
500,000 tons and $300 million to 26 million tons valued at $3.8 billion. The
reduction in the export volume is due to less than expected sales this summer
because of weak global import demand.

Coarse grain exports are forecast to rise 2.1 million tons to 45.9 million
tons in fiscal 1999, but further price declines should reduce export value to
$4.7 billion. Corn volume is forecast to rise 3 million tons to 40.5 million
tons on the expectation of a larger U.S. crop and reduced competition from
Argentina, China, and Eastern Europe. However, with the U.S. 1998 corn crop
expected to be the second largest in history and weak Asian imports, prices
will drop sharply and more than offset the volume gains. The fiscal 1998
forecast for coarse grain exports remains largely unchanged from May
indications, at 43.8 million tons valued at $5 billion. No reductions were
made to fiscal 1998 corn and sorghum price estimates.

The fiscal 1999 rice export forecast, down 400,000 tons and $100 million,
assumes a return to normal growing conditions throughout Central and South
America. Forecast fiscal 1998 U.S. rice exports are increased 300,000 tons
and $100 million to 3.1 million tons valued at $1.1 billion. Weather-related
production shortfalls led to increased demand for U.S. rice from Central and
South America. The U.S. export price estimate fell $15 per ton because rough
rice should account for a larger portion of total shipments.

In fiscal 1999, U.S. exports of oilseeds and products are forecast to fall
600,000 tons and $1.8 billion to 35.6 million tons valued at $9.5 billion.
Soybean and soybean meal shipments are expected to fall slightly. The United
States is faced with higher South American soybean carry-in stocks and slowed
global demand for soybean meal. At the same time, lower soybean and soybean
meal prices are expected as domestic supplies and stocks rise. U.S. soybean
oil shipments and prices should remain strong at 1.3 million tons valued at
$800 million due to slow growth in palm oil output and low global palm oil
stocks. The fiscal 1998 forecast for U.S. exports of oilseeds and products is
reduced 600,000 tons and $300 million from May's forecast to 36.2 million
tons valued at $11.3 billion. This revision is largely due to changes in
soybean and soybean meal export volumes. U.S. soybean exports are reduced 1.3
million tons to 23.5 million in response to record 1998 soybean harvests in
Brazil and Argentina and weaker demand in Asia.

Fiscal 1999 U.S. cotton exports are forecast to drop 500,000 tons and $900
million to 1.1 million tons valued at $1.7 billion. This reduced outlook is 
largely due to a sharp drop in domestic production and reduced availability 
of exportable supplies. As a result of the drought which extended across most 
cotton growing regions, U.S. cotton production is expected to hit a 9-year 
low and fall 24 percent below the previous season. Also, China is expected to 
become a net exporter in fiscal 1999, the first time it has been a net 
exporter in 6 years. The fiscal 1998 forecast for U.S. cotton exports remains 
unchanged from the May forecast.

Table 2--U.S. agricultural exports: Value by commodity, 1997-1999
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                          October-June    Fiscal  Fiscal 1998   Fiscal 1999
Commodity                 1997   1998    1997     Forecast      Projected 
                                                      May   Aug.
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                                                   --Billion dollars--
Grains and feeds 1/           12.521 10.841  16.466  14.3  14.0         14.0
  Wheat & flour               2.835  2.910   4.263   4.1   3.8          4.2
  Rice                         0.803  0.921   0.962   1.0   1.1          1.0
  Coarse grains 2/             5.600  3.900   6.921   5.0   5.0          4.7
    Corn                      4.980  3.273   6.107   4.3   4.3          4.2
  Feeds and fodders            2.037  1.849   2.673   2.5   2.4          2.3

Oilseeds and products          9.551  9.680  11.437  11.6  11.3          9.5
  Soybeans                     6.112  5.580   6.950   6.5   6.2          5.1
  Soybean meal                 1.505  1.741   1.746   1.8   1.9          1.5
  Soybean oil                  0.384  0.711   0.516   0.8   0.8          0.8

Livestock products             5.683  5.862   7.706   7.8   7.9          7.9
  Red meats                    2.884  3.086   3.977   4.0   4.1          4.3
  Hides, skins, furs           1.300  1.073   1.693   1.5   1.4          1.4

Poultry & products             2.174  2.092   2.872   2.7   2.8          2.8
  Poultry meat                 1.905  1.809   2.516   2.3   2.4          2.4
Dairy products                 0.584  0.691   0.842   0.9   0.9          0.9
Tobacco, unmanufactured        1.391  1.213   1.612   1.4   1.4          1.4
Cotton & linters               2.268  2.105   2.737   2.6   2.6          1.7
Seeds                          0.754  0.716   0.924   0.9   0.9          0.9
Horticultural products         7.939  7.865  10.598  10.6  10.6         10.6
  Fruits & preparations        2.493  2.368   3.412   3.3   3.3          3.3
  Vegetables & prep.           2.025  2.185   2.655   2.8   2.8          2.9
  Tree nuts & prep.            0.956  0.938   1.283   1.2   1.3          1.3
Sugar, tropical,& other        1.509  1.533   2.064   2.2   2.1          2.2

    Total 3/                  44.374 42.598  57.258  55.0  54.5         52.0
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1/ Includes pulses and corn products. 2/ Includes corn, barley, sorghum,
oats, and rye. 3/ Totals might not add due to rounding.

No significant changes are forecast for fiscal 1999 U.S. unmanufactured
tobacco exports, and the fiscal 1998 forecast remains unchanged from May at
roughly 200,000 tons valued at $1.4 billion. Some downward pressure on U.S.
leaf exports should continue because world stocks remain very high, and
consumption in major cigarette-manufacturing countries remains flat or
slightly lower.

Livestock, poultry, and dairy product exports are forecast to remain
unchanged at $11.6 billion in fiscal 1999. Some recovery in beef prices
should raise export value, and pork shipments are expected to rise bolstered
by continued low prices. Weak economic conditions in Japan and Korea,
financial problems in Russia, and a strong U.S. dollar continue to hamper any
significant growth in U.S. red meat and poultry exports. The fiscal 1998
forecast for U.S. exports of livestock, poultry, and dairy products was raised 
$200 million from May to $11.6 billion. This upward revision reflects the 
faster than expected pace of meat sales to date. Supported by lower prices, 
the pace of beef shipments to Japan, pork shipments to Mexico and Russia, 
and poultry shipments to many markets, including Russia, have increased.

Table 3--U.S. agricultural exports:  Volume by commodity, 1997-99
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                       October-June    Fiscal     Fiscal 1998    Fiscal 1999
       Commodity      1997     1998      1997       Forecast      Projected 
                                                    May  Aug.
-----------------------------------------------------------------------------
                                    --Million metric tons--
Wheat                 15.547   18.397    24.531   26.0   25.5        31.5
Wheat flour            0.355    0.328     0.504    0.5    0.5         0.5
Rice                   2.087    2.687     2.564    2.8    3.1         2.7
Coarse grains 1/      41.635   33.075    53.027   43.7   43.8        45.9
   Corn               36.885   27.774    46.579   37.5   37.5        40.5
Feeds & fodders        9.371    8.962    12.259   11.7   11.7        11.9
Oilseeds & prod.      29.321   31.773    33.942   36.8   36.2        35.6
  Soybeans            21.215   21.016    24.027   24.8   23.5        23.3
  Soybean meal         5.450    7.387     6.345    7.7    8.4         8.2
  Soybean oil          0.693    1.130     0.924    1.3    1.3         1.3
Red meats              0.982    1.175     1.356    1.5    1.6         1.6
Poultry meat           1.872    2.070     2.553    2.6    2.7         2.8
Animal fats            0.401    0.477     1.028    1.1    1.3         1.1
Cotton & linters       1.356    1.319     1.648    1.6    1.6         1.1
Horticultural prod.    5.709    5.743     7.539    7.7    7.7         7.7
Other                  5.224    5.192     6.366    6.2    6.3         6.3
  Total agriculture  113.860  111.198   147.317  142.2  142.0       148.7
  Major bulk prod.2/  81.840   76.494   105.797   98.9   97.5       104.5
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1/ Includes corn, barley, sorghum, oats, and rye. 2/ Includes wheat, rice,
coarse grains, soybeans, and cotton.

Forecast U.S. horticultural exports for fiscal 1999 remain unchanged from
fiscal 1998 at $10.6 billion. U.S. exports of fresh and processed fruits and
vegetables to Canada and Mexico are expected to continue to grow rapidly in
the coming year benefitting from reduced trade barriers under the North
American Free Trade Agreement (NAFTA) and strong economic growth across North
America. Canada is the largest market for U.S. horticultural products and
Mexico is the fifth largest and rising quickly. On the negative side, weak
Asian economies, a strong U.S. dollar, and strong competition in the Asian
and Pacific regions should slow U.S. exports to Asia.

Economic Outlook

The health of U.S. export markets began to worsen in fiscal 1998 because of
recessions in Asia, particularly in Japan. U.S. export growth to the Western
Hemisphere likely will be more than offset by lower export earnings from
Asia. Asia's downturn will cut overall foreign Gross Domestic Product (GDP)
growth from 3.2 percent in 1997 to 1.9 percent in 1998. The dollar's
continued appreciation against almost all currencies significantly weakens
U.S. export prospects. In real trade-weighted terms, the dollar is expected
to appreciate by almost 10 percent in 1998 over 1997's value, after
appreciating 7 percent in 1997 and 5 percent in 1996. Moreover, lower world
commodity prices are adding to dismal conditions for exporters.

The Asian Pacific economies, major markets for U.S. agricultural products,
are expected to remain in recession in 1999. Other world markets, except
Russia, are expected to post positive GDP growth over the short- to mid-term
but are nonetheless adversely affected by Asia's recessions. Canada and
Mexico will continue relatively robust growth in 1998 but will slow down in
1999 as the U.S. economy decelerates. World inflation will remain low due
largely to lower commodity and crude oil prices. Most foreign currencies'
purchasing power has been eroded by the dollar's strength, owing to capital
flight from emerging markets and attraction to the U.S. and European stock
and government bond markets.

Countries that compete with Asia for export markets have lost price
competitiveness against Asian products because of the sizable depreciations
of major Asian currencies. For countries that export to Asia, export earnings
have fallen because of Asia's substantial loss of purchasing power. Latin
American countries also are affected by the Asian fallout because of reduced
capital flows to emerging markets worldwide. The Middle Eastern countries and
other petroleum exporters are all generating lower earnings as crude oil
prices have plunged, partly as a result of reduced demand from Asia.

Russia
Russia's devaluation and financial crisis, in and of itself, will not have a
major impact on the world economy or trade. But it adds to the uncertainty in
international financial markets and has major impacts on other countries of
the New Independent States. Russia's share of U.S. exports is less than 1
percent of U.S. total trade and only 2 percent of U.S. agricultural exports
in 1997. But Russia is the largest U.S. market for poultry meat--45 percent
of 1997 U.S. poultry meat exports. Of the New Independent States, Ukraine,
Kazakstan, and the Central Asian countries in the Caspian region will be hit
hardest by the steep devaluation of the Russian ruble and the plunge of
Russia's economy into recession. Forty percent of Ukraine's export earnings
come from Russia. Countries in Central Europe--Poland, the Czech Republic,
Hungary, and the Baltics--will not be impacted as much since most of their
trade is now with Western Europe. The rest of Russia's neighbors--countries
around the Black Sea, including Turkey--will see reduced exports to Russia.

East & Southeast Asia
The 1997 Southeast Asian and Korean financial crisis is driving those
countries into recession in 1998. The return to former growth rates will take
at least from 2 to 3 years, reflecting the region's high interdependence in
trade and investment. In particular, Japan's inability to jump-start its
economy increases the uncertainty of a sustained recovery for the region.
Japan's contracting economy and weak currency are threatening Asia's
fledgling export drive toward recovery. 

A slow and protracted recovery is expected for most of Southeast Asia's
economies because of their high mutual dependence as export markets. They
also compete in the same foreign markets, particularly in the United States
and Japan. The pace of recovery in Southeast Asia will depend to a large
extent on Japan's financial reforms. Besides being a large export market,
Japan is also the region's major source of financial capital, whether in the
form of bank loans or direct investment. The value of the yen will determine
the relative competitiveness of Southeast Asian exports as well as Japanese
demand for those exports. Another critical factor is whether the Chinese yuan
is devalued, in which case the region's recovery may take even longer. 

China and Taiwan
The GDP growth forecast for China has been lowered to around 7 percent in
1998. This lower-than-expected pace reflects the increased competition and
diminished purchasing power in Asian markets, as well as increasing domestic
unemployment, as exports slow and as state-owned enterprises are privatized
or become profit-oriented. In addition, smaller inflows of foreign capital
will slow overall investment spending. Nevertheless, over the long-term,
continued inflows of foreign capital that take advantage of China's
relatively low labor costs and economic development in non-coastal provinces
will keep growth high relative to other Asian Pacific countries.

China has a large domestic sector which will help cushion any effects from
changes in the export sector (about 20 percent of the economy) which faces
increasingly competitive conditions. If China's export growth slows
significantly, there will be increased pressure for China to devalue the
yuan.

Along with China, Taiwan will likely escape a recession in 1998.
Nevertheless, like China, a significant slowing of export growth will reduce
Taiwan's GDP growth this year. A major concern is a further export decline to
the Japanese and Asian markets. In contrast to Korea or Southeast Asia,
Taiwan has relatively healthy banks and large foreign exchange reserves. 

Regional Highlights

Fiscal year 1999 forecasts of U.S. agricultural exports by region will be
made in the November 1998 issue of this report.

With slightly lower total U.S. agricultural exports forecast for 1998,
exports for regions have been shaved as well. As has been true throughout
this year, much of the decrease since May is in Asia. However, forecast
exports for the Middle East and Oceania also are lowered because exports to
date are slightly slower than had been previously projected.

Exports to Asia are forecast at $19.7 billion for 1998, $600 million less
than in May. Japan accounts for $300 million of this decline, with another
$200 million coming out of Taiwan. Projected exports to Japan drop to $9.5
billion, while exports to Taiwan are reduced to $2.1 billion.

The 11-percent year-to-year drop in exports to Japan is mainly in corn. But
while corn exports in the first 9 months of fiscal 1998 are down about 1
million tons from a year earlier, most of the reduction in value is due to
lower prices. Exports of hides to Japan also are down significantly, as are
exports of soybeans. The 19-percent decline to Taiwan is similar, with corn
the largest, followed by hides and skins, then soybeans.

At $2.4 billion, forecast exports to the Middle East are $200 million less
than estimated in May. Exports to the Middle East of live animals, barley,
sorghum, soybeans, and unmanufactured tobacco will all fall this year.

Partly offsetting these declines, however, are continued strong U.S.
agricultural exports to Canada, Mexico, and most of the rest of the Western
Hemisphere, as well as somewhat stronger than previously anticipated
shipments to the EU. Shipments to the EU have been nudged upward to $8.6
billion for fiscal 1998, $100 million above the May estimate.

Table 4--U.S. agricultural exports: Value by region, 1997-98
-----------------------------------------------------------------------
                            October-June    Fiscal        Fiscal 1998
Region                      1997    1998     1997          Forecast 
                                                           May   Aug.
-----------------------------------------------------------------------
                                      --Billion dollars--
Asia                        18.976  15.785   23.847       20.3   19.7
  Japan                      8.432   7.550   10.705        9.8    9.5
  China                      1.545   1.335    1.774        1.6    1.5
  Hong Kong                  1.204   1.232    1.640        1.7    1.7
  Taiwan                     2.055   1.624    2.588        2.3    2.1
  South Korea                2.692   1.776    3.287        2.0    2.0
  Southeast Asia             2.535   1.786    3.123        2.2    2.2
    Indonesia                0.629   0.397    0.768        0.5    0.5
    Philippines              0.703   0.562    0.898        0.7    0.7
    Malaysia                 0.487   0.248    0.580        0.3    0.3
    Thailand                 0.477   0.385    0.550        0.4    0.4
  South Asia                 0.511   0.475    0.728        0.7    0.7
Western Hemisphere          12.463  14.063   16.592       18.4   18.7
  Canada                     4.917   5.343    6.620        7.0    7.2
  Mexico                     3.812   4.486    5.077        6.0    6.0
  Brazil                     0.361   0.476    0.461        0.5    0.6
  Venezuela                  0.442   0.404    0.548        0.6    0.5
  Other Latin America        2.932   3.354    3.886        4.3    4.4
Western Europe               7.679   7.449    9.402        8.9    9.0
  European Union             7.297   7.184    8.785        8.5    8.6
Central and Eastern Europe   0.268   0.266    0.301        0.3    0.3
New Independent States 1/    1.210   1.169    1.593        1.2    1.4
  Russia                     0.988   0.929    1.281        1.0    1.1
Middle East                  1.947   1.823    2.506        2.6    2.4
  Turkey                     0.588   0.503    0.728        0.6    0.6
  Saudi Arabia               0.455   0.436    0.589        0.6    0.6
Africa                       1.456   1.612    2.231        2.3    2.4
  North Africa               0.857   1.107    1.457        1.6    1.7
    Egypt                    0.523   0.682    0.918        1.0    1.1
  Sub-Saharan Africa         0.599   0.505    0.774        0.7    0.7
Oceania                      0.375   0.408    0.534        0.6    0.5
     Total 2/               44.374  42.598   57.258       55.0   54.5
-----------------------------------------------------------------------
1/ New Independent States (NIS) are the former Soviet Union (FSU), including
the Baltic Republics. 2/ Totals include transshipments through Canada, but
transshipments are not distributed by country as previously.

Exports to the Western Hemisphere are forecast at $18.7 billion, 13 percent
above 1997 and up $200 million from May. Forecast 1998 exports to Canada are
increased to $7.2 billion, while prospective exports to Mexico remain
unchanged at $6 billion. Exports to Brazil and other Latin America also have
been raised slightly. Vegetables are dominating export gains to Canada this
year, followed by a wide range of other commodities, such as vegetable oil,
cotton, sugar, fruit juices, corn, and meats. To Latin America, exports of
meats, rice, vegetables, vegetable oils, soybeans, and cotton expanded this
season.

U.S. Agricultural Export Programs

The Export Enhancement Program and the Dairy Export Incentive Program
On June 30, 1998, USDA announced the Export Enhancement Program (EEP) and
Dairy Export Incentive Program (DEIP) allocations for July 1998-June 1999.
EEP allocations are for 16.2 million metric tons of wheat; 475,000 metric
tons of wheat flour; 1.49 million tons of barley and malting barley; 150,000
tons of barley malt; 131,796 tons of rice; 319,795 tons of vegetable oils;
30,475 tons of frozen poultry; and 16.3 million dozen eggs. As of August 21,
no EEP sales have been made under the June 30 allocations, although fiscal
1998 EEP bonuses facilitated sales of 25,000 tons of barley to either
Algeria, Cyprus, or Norway, and 1,500 tons of frozen poultry to Middle
Eastern countries. (New EEP sales announcements do not specify the country.)

Fiscal 1998 EEP bonuses totaled $2.1 million as of August 21, 1998. The EEP
barley sales in the past few months are the first since fiscal 1995. In the
past 2 years, high prices allowed exporters to sell EEP commodities without
EEP bonuses.

DEIP allocations are available for 1998-99 sales of 84,212 metric tons of
nonfat dry milk; 5,003 tons of whole milk powder; 29,854 metric tons of
butterfat; and 3,350 tons of Cheddar, Colby, cream, Gouda, Monterey Jack,
mozzarella, processed American and Swiss and Emmentaler cheeses. DEIP sales
in fiscal 1998 to date totaled 6,959 tons of butter and butterfat; 3,902 tons
of cheese; 97,871 tons of nonfat dry milk, which includes 16,357 tons from
reallocated tonnage; and 6,828 tons of whole milk powder, with a total DEIP
bonus of $95.8 million.

The announced EEP and DEIP allocations are consistent with the U.S. Uruguay
Round export subsidy commitments, which have moved into their 
fourth year. U.S. export subsidy commitments now reflect more than half the
full 21-percent reduction in quantities subsidized and 36-percent reduction
in export subsidies.

CCC Export Credit Guarantee Programs
Asia's financial problems have precipitated increased use of credit
guarantees. As of August 21, 1998, fiscal 1998 export credit guarantee
program sales (GSM-102, GSM-103, and Supplier program), based on exporter
applications approved by the Commodity Credit Corporation (CCC), were $3.44
billion, up 37 percent from fiscal 1997 sales for the same period. Importers
in the Republic of South Korea are the largest buyers under export credit
guarantee programs, accounting for one-third of approved sales. This has
enabled U.S. producers of corn, cotton, meats, soybeans, and wheat to
maintain sales to cash-strapped Korea. Importers in other Asian countries
also have purchased U.S. agricultural commodities under GSM-102.

Mexico has moved to second position with $930.2 million in exporter
applications approved in fiscal 1998. In addition to their use for bulk
products such as cotton, corn, and wheat, credit guarantees have facilitated
close to $300 million in U.S. meat sales to Korea, Mexico, and Russia in
fiscal 1998.

On August 20, USDA announced expansion of the $90 million allocation to
Southeast Asia for export credit guarantees under GSM-102 to include Vietnam.
On August 26, USDA also announced an allocation to South Korea of $4 million
for cottonseed oil products. The availability of other commodities, such as
wheat, to South Korea was also adjusted without altering the overall
allocation.

U.S. Food Aid Programs
In addition to the usual food aid programs, on July 18, President Clinton
announced a new Food Aid Initiative under section 416(b) of the 1949
Agricultural Act. Under this initiative, the CCC will purchase about 2.5
million tons of wheat from the domestic market for use as donations to
countries where food needs are greatest. On August 5, USDA and the U.S.
Agency for International Development (USAID) released an initial list of
countries eligible for this aid, including: Afghanistan, Albania, Bosnia,
Macedonia, Bangladesh, the Caucasus region, Ethiopia, Eritrea, Honduras,
Indonesia, Moldova, Mongolia, Nicaragua, Peru, the Sahel region of Africa,
southern Sudan, West Africa, and Yemen. These wheat donations can be
converted to wheat products, such as bulgur or flour, before donation. So
far, 500,000 tons of this wheat have been designated for delivery to
Indonesia.

As of August 11, under the U.S. Food for Peace Program, or Public Law 480
(P.L. 480), Title I agreements were signed with 16 countries, with
allocations totaling $168 million. These funds will provide more than 1
million tons of commodity assistance, most of which is wheat. Albania,
Bangladesh, Bosnia-Herzegovina, Kyrgyzstan, Mongolia, Mozambique, Russia, and
Tajikistan are receiving commodity donations totaling $73.3 million under the
Title I-funded FFP program.

Additional Title I allocations totaling $40 million are in formal
negotiations, but have not yet been signed. When all agreements are signed,
Title I and Food For Progress (FFP) programs are expected to provide roughly
2 million tons of commodity assistance to 24 countries.

Nearly half of Title II appropriations of $837 million are for Sub-Saharan
Africa, about 70 percent of which are emergency funds. Taken together,
Angola, Ethiopia, Rwanda, Sierra Leone, and Sudan are expected to receive
about two-thirds of the region's Title II emergency funds. Ethiopia and
Mozambique will receive the largest shares of the region's Title II
development funds. Eritrea, Ethiopia, Mozambique, and Haiti will receive
commodity assistance from Title III allocations of $30 million.

Import Highlights

Fiscal 1999 imports are projected to reach $39.5 billion, a 4-percent
increase from fiscal 1998. Horticultural products are expected to be the
fastest-growing import category in fiscal 1999. Projected fiscal 1998 imports
remain unchanged at $38 billion.

For fiscal 1999, live animal imports are expected to drop. Expansion of
Canadian packer capacity will increase demand for live hogs, leading to a
reduction in hog imports by the United States. Both Canada and Mexico
continue to rebuild cattle stocks, which will reduce live cattle supplied to
the U.S. market. Live animal imports for fiscal 1999 are projected at $1.5
billion, $200 million below the 1998 level. Animals and products are expected
to reach $6.8 million in fiscal 1999. Imports of animals and products for
fiscal 1998 remain at $6.9 billion, 7 percent higher than in 1997.

Imports of horticultural products for fiscal 1999 are forecast at $15.1
billion, up $800 million from 1998. Fiscal 1998 imports of horticultural
products are expected to reach $14.3 billion, $100 million less than the May
projection. Imports of bananas and beer and wine grew more slowly than
anticipated. Vegetables and preparations grew faster than expected, with the
year-to-date value reaching $3.4 billion, an 18-percent increase over the
same period in 1997. Projected fiscal 1998 vegetable imports are revised up
by $100 million to $4.4 billion.

Many of the factors affecting vegetable imports in 1998 will continue to
drive import growth in fiscal 1999. The primary sources for U.S. imported
vegetables are Canada, Mexico, and the European Union. The fastest growing
imports from Canada are potatoes, tomatoes, carrots, and peppers, which have
grown more than 50 percent in the past year. Contributing to this growth is
the stronger U.S. dollar against the Canadian currency. This has provided
Canadian producers with greater economic incentives for further investment in
hydroponic tomato production. Year-to-date 1998 tomato imports from Canada
increased 65 percent from fiscal 1997.

Another important component of vegetable imports is processed vegetables.
Processed potatoes from Canada are imported mainly in the form of frozen
french fries. The stronger U.S. dollar and previous contractual arrangements
between Canadian potato processors and U.S. food firms have fueled the growth
of imported potato products from Canada. The value of total fresh and frozen
potatoes increased 48 percent in fiscal 1998,  reaching a year-to-date total
of $269 million. Imports of other highly processed vegetable-based foods have
also grown rapidly, including soups, sauces, and other vegetable-based food
preparations.

Vegetable import growth from the European Union and Mexico is expected to
continue at a similar pace through fiscal 1999. An important factor driving
this import growth is the growing appeal among U.S. consumers for colored
peppers and hydroponically grown tomatoes. Peppers from the European Union
increased 26 percent from a year ago. Vegetable imports from the European
Union are expected to continue in fiscal 1999. Leading the growth in
vegetable imports from Mexico are tomatoes, cucumbers, onions, and peppers.

Table 5--U.S. agricultural imports: Value by commodity, 1997-1999
------------------------------------------------------------------------------
                               October-June  Fiscal   Fiscal 1998  Fiscal 1999
      Commodity                 1997   1998    1997   Forecast      Projected 
                                                      May   Aug.
------------------------------------------------------------------------------
                                                   --Billion dollars--

Animals & products             4.850  5.085   6.426   6.9   6.9       6.8
  Live animals                 1.139  1.285   1.525   1.7   1.7       1.5
  Red meats                    1.939  2.013   2.583   2.7   2.7       2.8
  Dairy products               0.961  0.968   1.273   1.4   1.4       1.4
                                                   
Horticultural products         9.853 10.772  12.673  14.4  14.3      15.1
  Fruits, inc. juices          3.326  3.183   4.138   4.2   4.1       4.3
    Bananas                    0.922  0.901   1.218   1.3   1.2       1.3
  Vegetables & preps.          2.890  3.408   3.604   4.3   4.4       4.6
  Nuts & preps.                0.408  0.474   0.547   0.7   0.7       0.8
  Wine & malt beverages        2.228  2.574   3.068   3.8   3.7       4.0
  Nursery & cut flowers        0.744  0.855   0.974   1.2   1.2       1.2
                                                   
Grains & feeds                 2.201  2.196   2.941   3.1   2.9       3.0
  Grains                       0.763  0.636   0.979   0.9   0.8       0.8
  Feeds & grain prod.          1.438  1.560   1.962   2.2   2.1       2.2
                                                   
Sugar & related prod.          1.286  1.161   1.869   1.6   1.6       1.8
Oilseeds & products            1.711  1.712   2.248   2.2   2.2       2.4
Tobacco, unmanufactured        0.872  0.591   1.179   1.2   1.1       1.1
Coffee, incl. prods.           2.691  2.902   3.698   3.7   3.9       4.0
Cocoa, incl. prods.            1.062  1.311   1.414   1.8   1.8       1.9
Rubber & allied gums           1.023  0.773   1.315   1.1   1.1       1.3
Other products                 1.527  1.820   2.026   2.0   2.2       2.1
                                                   
Total                         27.074 28.323  35.788  38.0  38.0      39.5
-----------------------------------------------------------------------------

Also important in the horticultural product total are wine and malt
beverages. Wine and malt beverage imports are expected to reach $4 billion in
fiscal 1999, an 11-percent increase over fiscal 1998. Imports of wine and
malt beverages for fiscal 1998 are reduced by $100 million from the May
projection. Lower import prices have not produced as high a volume increase
as expected. The import unit value for Canadian beer has fallen due to the
exchange rate change pushing the import value lower. Overall, there has been
a shift towards higher priced imported beer from the European Union. Wine
imports are increasingly sourced from Australia but at a higher unit value
than for total wine imports. These shifts are expected to continue increasing
the overall value of wine and malt beverage imports.

Fiscal 1999 imports of grains and feeds are projected to reach $3.0 billion,
up $1 million from 1998. This increase is largely imports of grain products
such as pasta, noodles, and bakery items. Grain imports are expected to
remain flat in 1999. Year-to-date volume of grain imports fell 15 percent
from a year ago. The 1998 projected volume for grains is revised downward by
300,000 tons.

Table 6--U.S. agricultural imports:  Volume by commodity, 1997-99
------------------------------------------------------------------------
                         October-June   Fiscal    Fiscal 1998  Fiscal 
       Commodity         1997    1998    1997       Forecast    1999  
                                                   May  Aug.  Projected
------------------------------------------------------------------------
                                     --Million metric tons--
Red meats                 0.858   0.900   1.140    1.2   1.2    1.2
Cheese & casein           0.190   0.190   0.254    0.3   0.3    0.3
Horticultural prod.       9.005   9.905  11.242   12.8  13.0   13.8
  Fruits & preps.         5.454   5.849   6.918    7.3   7.5    8.1
    Bananas               2.953   3.152   3.950    4.0   4.0    4.0
  Vegetables & preps.     3.395   3.880   4.122    5.1   5.1    5.5
  Nuts & preps.           0.155   0.176   0.203    0.2   0.2    0.2
  Wine & malt bev. 1/    14.588  16.415  20.426   22.0  22.0   23.8
  Fruit juices 1/        23.671  20.809  29.829   28.7  28.1   28.0
Grains & feeds            6.474   5.828   8.434    8.0   7.9    7.9
  Grains                  4.389   3.719   5.643    5.4   5.1    5.1
  Feeds & prod.           2.086   2.108   2.791    2.5   2.8    2.8
Sugar, cane or beet 2/    1.901   1.498   2.938    2.3   2.2     na
Oilseeds & products       2.775   3.333   3.780    4.0   4.2    4.3
Tobacco, unmanufactured   0.249   0.169   0.337    0.3   0.2    0.3
Coffee, incl. products    0.941   0.887   1.212    1.2   1.2    1.2
Cocoa, incl. products     0.597   0.676   0.767    1.0   1.0    1.0
Rubber & allied gums      0.815   0.834   1.075    1.1   1.1    1.2
-----------------------------------------------------------------------
1/ Million hectoliters not included in horticultural totals. 2/ NA = not
available; 1998 sugar forecast not available because tariff-rate quota not
yet announced.

Fiscal 1999 imports of oilseed and products are expected to reach 4.3 million
tons. Increased imports of Canadian rapeseed are expected as a result of
lower unit value and expanded production. For fiscal 1998, the volume was
revised upward by 200,000 tons. Rapeseed, rapeseed meal, and coconut oil
imports have increased faster than anticipated. Increased Canadian rapeseed
production and competitive prices have stimulated rapeseed imports from
Canada. Fiscal 1998 oilseed and product imports are expected to reach $2.2
billion, unchanged from the May forecast and reflecting lower unit values.

Fiscal 1999 coffee import volume is projected at 1.2 million tons, while the
value is expected to reach $4.0 billion. The coffee import unit value for
fiscal 1999 is likely to be slightly higher than fiscal 1998. Although world
coffee production is expected to increase, coffee stocks remain below
average, keeping upward pressure on prices. Coffee imports in fiscal 1998 are
expected to reach 1.2 million tons, unchanged from the May projection. But,
the value of 1998 coffee imports is revised upward by $200 million due to a
higher than expected import unit value and will equal $3.9 billion.

Table 7--U.S. agricultural imports: Value by region, 1997-98
----------------------------------------------------------------------------
                             October-June   Fiscal       Fiscal 1998
Region                       1997    1998    1997          Forecast
                                                         May    Aug.
----------------------------------------------------------------------------
                                        --Billion dollars--
Western Hemisphere          14.645  15.603  19.245      20.5   20.8
  Canada                     5.452   5.888   7.293       7.8    7.9
  Mexico                     3.276   3.852   3.941       4.9    5.1
  Brazil                     1.038   0.850   1.517       1.2    1.1
  Colombia                   0.973   1.088   1.349       1.5    1.5
  Chile                      0.655   0.645   0.755       0.9    0.9
  Central America            1.683   1.761   2.165       2.3    2.3
    Costa Rica               0.565   0.573   0.740       0.7    0.8
  Other Latin America        5.917   5.864   2.225       1.9    7.8
Western Europe               5.326   5.566   7.127       8.0    7.6
  European Union             5.198   5.435   6.943       7.3    7.4
Central & Eastern Europe     0.211   0.176   0.070       0.3    0.2
New Independent States 1/    0.052   0.032   0.252       0.1    0.1
Asia                         4.276   4.244   5.769       5.6    5.6
  China                      0.495   0.579   0.645       0.7    0.8
  Southeast Asia             2.809   2.589   3.795       3.5    3.5
    Indonesia                1.138   0.967   1.591       1.4    1.3
    Thailand                 0.666   0.588   0.897       0.8    0.8
  South Asia                 0.492   0.577   0.687       0.7    0.8
    India                    0.437   0.518   0.618       0.6    0.7
Oceania                      1.321   1.479   1.824       1.9    2.0
Africa                       0.664   0.798   0.871       0.9    1.1
  Ivory Coast                0.206   0.362   0.223       0.6    0.6
Middle East                  0.578   0.425   0.640       0.7    0.6
  Turkey                     0.477   0.322   0.509       0.5    0.4
Total                       27.074  28.323  35.798      38.0   38.0
-----------------------------------------------------------------------
1/ New Independent States (NIS) are the former Soviet Union, including 
the Baltic Republics.

END_OF_FILE