The quick pace of U.S. soybean and corn sales – particularly to China – is one of the biggest factors behind a new USDA forecast that shows U.S. ag exports rising to $140.5 billion in fiscal year 2021, which starts Oct. 1.
USDA’s initial prediction for the upcoming fiscal year is $5.5 billion higher than the latest forecast for FY 2020, which was also published Wednesday and is a reduction from previous forecasts. U.S. ag exports for FY 2020 are now predicted to be just $135 billion, down from USDA’s May forecast of $136.5 billion.
That would make exports in this fiscal year the lowest since 2016. USDA highlighted weak sales of horticultural and meat exports in its calculations for cutting the FY 2020 forecast, and the impacts of the COVID-19 pandemic on countries like Mexico and Canada are largely to blame, according to the report from the Foreign Agricultural Service and the Economic Research Service.
U.S. beef exports to Mexico have dropped sharply in recent months, corresponding to the weakening economy and to the shuttering of restaurants and food service operations.
“Canada and Mexico are projected to experience significant declines in GDP in 2020, down 6.3% and 8.4%, respectively,” according to the analysis.
But Chinese demand is growing and U.S. exports of soybeans, sorghum and corn to the country are pushing up expectations for FY 2021.
“The export forecast for China is $18.5 billion, $4.5 billion higher than the revised FY 2020 estimate,” USDA said in the report. “Demand for soybeans is expected to grow while Brazilian supplies are forecast to decline, boosting U.S. soybean export prospects. Continued strong demand for corn, sorghum, and tree nuts also contributes to the higher forecast.”
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That rationale comports with an unusually quick pace of Chinese contracts to buy U.S. soybeans for delivery in the 2020-21 marketing year, which begins Sept. 1. The USDA announced Wednesday that Chinese buyers purchased another 400,000 metric tons of U.S. soybeans, which follows a Tuesday report that China purchased 408,000 metric tons of new crop corn and 204,000 tons of new crop soybeans.
U.S. soybean exports in FY 2021 “are forecast up $4.2 billion from FY 2020 to $20.4 billion,” according to the new USDA report. “Corn exports are projected up $700 million to $9 billion on expectations of higher export volume.”
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