US agricultural exports may face $3 billion drop in 2019
Staff Writer |
Fiscal year (October/September) 2019 agricultural exports are projected at $141.5 billion, down $1.9 billion from fiscal year 2018 and $3.0 billion from the August 2018 forecast, largely due to decreases in soybeans and cotton, USDA said.
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Soybean export volumes are down because of declining Chinese purchases from the United States as a result of trade tensions, and as a record U.S. crop continues to pressure soybean prices lower.
Cotton exports are down $1.0 billion from the August forecast to $5.9 billion, primarily due to slowing growth in global demand.
Grain and feed exports are forecast up $700 million to $33.8 billion, driven by higher corn and wheat volumes.
Livestock, dairy, and poultry exports are down $200 million to $30.1 billion.
Declines in poultry and dairy products offset increases in beef and pork products.
Horticultural products are unchanged at $35.3 billion.
The forecast for exports to China is reduced by $3.0 billion to $9.0 billion, the lowest since fiscal 2007.
U.S. agricultural imports in fiscal year 2019 are forecast at $127.0 billion, up $500 million from the August forecast, primarily due to expected increases in horticultural, sugar, and tropical products.
The U.S. agricultural trade surplus is expected to decline by $3.5 billion to $14.5 billion in fiscal 2019.
Per capita world GDP growth is expected to be robust at 2.1 percent in 2018 and to remain healthy at 2.0 percent in 2019, led by a thriving U.S. economy.
In October, the equity market selloff and volatility may have lowered confidence, but it is not yet indicative of a larger issue that would have a sizable impact on the global economy.
Per capita GDP growth in the United States of 2.2 percent in 2018 is expected to be sustained in 2019.
In 2018, the U.S. economy is bolstered by strong consumer spending and favorable business investment.
Income growth is expected to slow during 2019 due to diminishing effects of fiscal stimulus, rising inflation, and slower economic growth outside the United States.
Prospects for the dollar’s value in 2018 are mixed.
After weakening during the first few months of the year, the dollar has strengthened since May, which is expected to continue into 2019 as U.S. interest rates increase relative to those in other major economies.
Expectations for higher U.S. interest rates are driven by a strong U.S.
economy, tightening monetary policy, and an expansionary domestic tax and spending policy.
The contrast between U.S. policy and expectations of relatively looser monetary policy and neutral fiscal policy elsewhere adds additional upward pressure to the dollar, as does its role as a safe haven for investors in a time of economic uncertainty.
On average, the dollar is expected to weaken slightly in 2018 relative to 2017 and then hold its value in 2019.
Brent crude spot prices are forecast to average about $73 per barrel in 2018 and $72 per barrel in 2019, according to the U.S.
Energy Information Administration (EIA).
Prices will stabilize as U.S. crude oil production continues to rise, with the EIA forecasting U.S.
output at a record 12.1 million barrels per day in 2019, and as world inventories are expected to increase slightly.
Per capita GDP growth in Mexico of 1.2 percent is expected in 2018 and 2019.
Business confidence has improved with the United States-Mexico-Canada Agreement (USMCA).
The next step will be trilateral legislative approval, and with reduced uncertainty affecting the Mexican economy, there should be a recovery in business investment moving forward.
Canadian per capita GDP growth is expected to be 1.4 percent in 2018, falling to 1.2 percent in 2019 with a slowdown in business investment and consumer spending as debt levels rise.
Eurozone economic growth in 2018 is expected to be strong relative to the post-European debt crisis era with per capita GDP growth of 1.9 percent.
Growth is expected to slow to 1.6 percent in 2019 with sluggish consumer spending and exports as well as uncertainty related to Brexit.
Per capita GDP growth in Asia and Oceania is expected to be steady at 3.8 percent in 2018 and 3.7 percent in 2019.
Chinese income growth of 6.2 percent in 2018 is expected to slow to 6.0 percent in 2019 with declining investment and domestic demand, as well as from effects of China’s trade conflict with the United States.
Strong income growth in India of 6.1 percent in 2018 reflects healthy consumption growth and infrastructure spending.
India’s per capita GDP growth in 2019 is expected to outpace China’s at 6.2 percent, though renewed stress in the financial sector poses a risk to business investments.
Per capita GDP growth in Latin America is expected to be 0.1 percent in 2018 and 0.9 percent in 2019.
Since last quarter, a currency crisis in Argentina has led to growing inflation that has now exceeded 40 percent over the past year.
The restrictive monetary policy to combat these conditions will weigh on the economy into 2019, thereby limiting consumer spending and resulting in a recession during 2018 and 2019.
Additionally, there is ongoing economic turmoil in Venezuela, which is expected to be in a recession until at least 2020.
Brazil, meanwhile, is expected to maintain slow, steady growth as equity markets show signs of optimism. ■