The Agriculture Department is now forecasting that the U.S. agricultural trade deficit will fall from $43.7 billion in fiscal year 2025 to $29 billion in FY2026, according to data published Friday.
February’s Outlook for Agricultural Trade report revises last quarter’s projection for FY2026 downward from $37 billion.
All of the reduction in the trade deficit from FY2025 comes from reduced imports, not higher exports. Ag exports are set to hit $174 billion for FY2026, the USDA estimates – a contraction from FY2024, when they reached $175.6 billion.
The export picture is a slight improvement from December’s forecast, however, when they were estimated to reach $173 billion in FY2026.
Imports are projected to fall even more sharply than expected. Friday’s forecast has FY2026 imports sitting at $203 billion, $7 billion lower than December’s projections and more than $16 billion below FY2025’s figure.
USDA revised its estimates for corn exports upwards and is now expecting sales to hit $18.5 billion, up from the $17.6 billion projected in December’s release. It is more bearish on soybean sales, however – adjusting export forecasts down by $700 million, or 1.6 million metric tons.
Livestock exports get an improved outlook in the February report, mostly on better prospects for dairy, while exports of fruits and vegetables, tree nuts and sugar remain unchanged.
Export projections to China are unchanged from December’s report and are still set to contract by more than $4 billion from FY2025 levels. But exports to South Asia are now expected to grow in FY2026, although not to India, which is set to fall slightly.
Since the last quarterly outlook report the U.S. has inked a reciprocal trade deal with Bangladesh that included commitments to purchase $3.5 billion of U.S. wheat, soy, cotton and corn, according to a joint statement.
Exports to Europe and the Middle East are also now showing modest growth in FY2026 projections, after previously being expected to fall. But African sales are now likely to fall, after showing small upward projections in December’s release.
The largest import declines for FY2026 are for horticultural products, including fruits, distilled spirits, essential oils and wine. Horticultural imports are set to fall from more than $101 billion in FY2025 to around $91 billion in FY2026 – even more than previously anticipated.
Imports from Mexico and the European Union are both set to drop by more than $2 billion.
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