Transcript Agricultural Trade Outlook August 2011 Philip Abbott USDA Ag Trade Forecast • • • • as of May, 2011 (new trade forecast 8/26) Exports -- $ 137 billion Imports.

Agricultural Trade Outlook
August 2011
Philip Abbott
USDA Ag Trade Forecast
•
•
•
•
as of May, 2011 (new trade forecast 8/26)
Exports -- $ 137 billion
Imports – $ 93 billion (also a record)
Ag Trade Balance -- $ 44 billion
2002
Fiscal years
2005
2006
2007
2008
Billion dollars
2009
2010
2011F
Agricultural
exports
53.3
62.5
68.6
82.2 114.9
96.3
108.7 137.0
Agricultural
imports
41.0
57.7
64.0
70.1
79.3
73.4
79.0
93.0
Ag Trade
balance
12.3
4.8
4.6
12.1
35.6
22.9
29.7
44.0
U.S. Agricultural Trade and the USDA Real Exchange Rate (RER)
140
200
Trade - $ Billions
120
150
100
80
100
60
40
50
20
0
0
Ag Exports
Grains, Feeds & Oilseeds
Ag Imports
Ag Trade Balance
RER
Ag Exports
Animals Live
Beef & Veal
Pork
Poultry & Prods
Dairy Prods
Grains & Feeds
Wheat, Unmilled
Corn
Fruits & Prep
Nuts & Prep
Vegetables & Prep
Oilseeds & Prods
Soybeans
Tobacco, Unmfg
Cotton, Ex Linters
Total
2005
$ billions
0.50
0.93
2.28
3.14
1.69
16.36
4.36
4.79
3.47
2.99
3.57
10.23
6.27
0.99
3.92
65.49
2010 % Change
10-11
05-10 (May data)
0.56
13%
28%
3.54
280%
46%
4.08
79%
25%
4.81
53%
14%
3.78
125%
36%
29.25
79%
51%
6.76
55%
161%
9.81
105%
46%
5.26
52%
16%
4.80
60%
18%
5.38
51%
9%
27.22
166%
17%
18.56
196%
26%
1.17
18%
-24%
5.74
46%
153%
130.72
100%
41%
Ag Imports
= $90.1 billion in 2011 based on May data
2005
2009
2010 % Change
10-11
09-10 (May data)
$ millions
Non Competitive
Bananas
Coffee
Cocoa
Tea
Rubber
Competitive
Beef
Pork
Poultry
Dairy
Grains
Oilseeds
Veg Oils
Fruits
Vegetables
Sugar
Wine and Beer
Total Imports
1,143
2,976
2,751
376
1,552
1,577
4,070
3,481
495
1,274
1,791
4,944
4,300
583
2,820
14%
21%
24%
18%
121%
17%
80%
-6%
4%
83%
3,651
1,281
390
2,686
4,527
2,998
2,505
4,626
6,410
2,494
6,858
59,317
2,725
978
388
2,556
7,435
4,802
3,879
8,215
8,041
3,075
9,195
64,302
2,828
1,185
500
2,621
7,788
5,398
4,426
9,172
9,319
4,043
9,785
73,883
4%
21%
29%
3%
5%
12%
14%
12%
16%
31%
6%
15%
7%
19%
16%
14%
12%
53%
57%
11%
8%
50%
13%
22%
World Prices, 2006-2011
Prices Up,
but Export demand is Inelastic
Fiscal year
Corn
Soybeans
Wheat
Pork
Cotton
Total
2008
V
57%
71%
87%
49%
11%
40%
Q
12%
2%
11%
52%
-5%
10%
2009
V
-34%
-5%
-51%
-7%
-26%
-16%
Q
-21%
14%
-31%
-9%
-7%
-14%
2010
V
-2%
22%
-2%
8%
35%
13%
Q
4%
19%
14%
3%
-2%
14%
2011 (Oct-May data)
V
Q
44%
-4%
23%
-1%
130%
57%
22%
11%
149%
49%
29%
6%
WASDE has 2011-12 US Exports (volume)
down somewhat in most recent report
2009-10 2010-11 2011-12
in million metric tons
US exports
Wheat
23.9
Coarse grains
54.7
Oilseeds
41.7
Cotton
12.0
World ending stocks
Wheat
198.9
Coarse grains
195.4
Oilseeds
71.0
Cotton
44.3
35.1
50.4
41.7
14.4
29.9
47.5
38.9
12.3
191.7
160.9
78.0
45.0
188.9
147.2
69.5
52.7
August forecast reduced exports from July– trade forecast due next week
U.S. Weekly Corn Exports - World Total
•
•
•
•
2010-11 corn exports (volume) at 6 year low
WASDE projects corn exports (volume) down further next year
ROW may feed wheat as a substitute
But advance sales of 2011-12 crop 68% larger than last year!
Chinese Policy & Soybean Imports
• Chinese stock holding (and trade) policy can have a major
influence on world prices –differs by commodity
• From 2006-07 to 2010-11, the Chinese stocks-to-use ratio for
soybeans went from 4% to 23%. This radical shift in stocks
accounts for much of the U.S. additional soybean area being
needed to satisfy Chinese imports.
• Implications:
– Food grain Price and quantity disconnected from world markets
– Income growth and dietary transition effects
– Relevance of world stocks
– Chinese shocks & world markets (wheat shortfall & drought
• Look at Chinese stocks when PS&D is updated!
Chinese policy for soybeans different from that for
other agricultural commodities?
Soybean imports continue to grow, but more slowly if stock-building is done
Corn imports small, at 1-2 mmt, relative to Chinese domestic and world markets
Exchange rates
• Volatility persists?
– $/Euro 2009 -–
2010 --
Jul
Jun
1.40
1.20
Nov
July
–
April
1.45
August 1.44
2011 --
1.49
1.29
• Trade deficit increasing recently
• Low interest rate policy of Fed persists
• Economic performance expected abroad?
– Weak in Europe, U.S.
– Stronger in emerging economies
•
•
•
•
$ is weak now, and sets a background for high agricultural prices
European debt crisis has kept $ stronger (but not so much)
Commodity boom stalled – weak dollar means higher commodity prices,
agricultural prices lag
$ is a proxy for other macroeconomic factors – global growth, inflationary
expectations
US $ Exchange Rates, 2000-2011
2.000
Euro
Chinese Yuan
1.750
Brazilian Real
IMF NEER
USDA Ag Index
1.500
1.250
1.000
0.750
Japanese Yen
Bilateral exchange rates matter
Chinese Yuan and Brazilian real appreciating
European Debt Crisis also matters to
world growth, Austerity measures likely
to exacerbate slowdown
Global Economic Growth
Growth stronger for
emerging economies than
Europe, Japan or US
Projections down
everywhere in 2011
Emerging economies
fighting inflation
Table 1. Overview of the World Economic Outlook Projections
2009
Projections
2010
2011
2012
World Output
–0.5
5.10
4.30
4.50
Advanced Economies
–3.4
3.00
2.20
2.60
United States
Euro Area
Germany
France
Italy
Spain
Japan
United Kingdom
Newly Industrialized Asian
–2.6
2.90
2.50
2.70
–4.1
1.80
2.00
1.70
–4.7
3.50
3.20
2.00
–2.6
1.40
2.10
1.90
–5.2
1.30
1.00
1.30
–3.7
–0.1
0.80
1.60
–6.3
4.00
–0.7
2.90
–4.9
1.30
1.50
2.30
–0.7
8.40
5.10
4.50
Emerging and Developing
2.80
7.40
6.60
6.40
Central and Eastern Europe
–3.6
4.50
5.30
3.20
Russia
Developing Asia
–7.8
4.00
4.80
4.50
7.20
9.60
8.40
8.40
China
India
Latin America and the
Caribbean
Brazil
Mexico
Middle East and North Africa
9.20
10.30
9.60
9.50
6.80
10.40
8.20
7.80
–1.7
6.10
4.60
4.10
–0.6
7.50
4.10
3.60
–6.1
5.50
4.70
4.00
2.50
4.40
4.20
4.40
Sub-Saharan Africa
2.80
5.10
5.50
5.90
Growth in Europe and Asia slower in
recent news
• Euro area – 2nd Quarter 0.2% Q/Q 1.7%Y/Y
– 1st Quarter 0.8% for EU
– Germany 2nd quarter 0.1%
• against expectations of 0.5%
– France at 0% Q/Q
– UK 0.2% in Q2, 0.5% in Q1, 0.7% Y/Y
• China 9.5% Y/Y in 2nd Q
– 10.3% in 2010, 9.2% in 2009 (recession)
• Japan -1.3% Q2 Y/Y- better than expected!
GDP has influenced trade volume, including
agricultural trade, more so than prices
World total exports:
1600
1400
1200
1000
800
600
400
200
0
EU
U.S.
Asia
China
U.S. Imports
EU Extra imports
Quarterly US exports – Total, Ag, Corn
and Soybeans – 2005 to 2011:I
Agricultural products
Corn
Soybeans
Meat and poultry
Exports
2005
2006
2007
2008
2009
2010
2011
Trade Agreements on Hold
• WTO negotiations stalled – no real
progress since 2008 Ministerial
– 2011 December Geneva Ministerial (and
2009) not about Doha
• US bilateral agreements with Korea,
Columbia, Panama still not ratified
– USDA/FAS, Obama administration have
recently pushed to move these forward
without success
WTO, Disputes and the Farm Bill
• Trucking dispute with Mexico (NAFTA) finally
resolved – benefits ag exports
• At high prices we are now in compliance with
WTO commitments
– But recent safety net policy conflicts with WTO
decoupling concept
• Brazil Cotton dispute led to payoff to Brazil,
commitments for reform in new Farm bill
– Technical assistance fund criticized in budget debate!
• Trade title in 2008 – focused only on export promotion
– SPS, Technical assistance, Market access, Capacity building
programs, Disputes
Closing Thoughts
• Strong (record) year for US ag exports, could be even
stronger if short crop in 2011
– Export demand has been inelastic
– WASDE cuts in export quantities may not happen?
• 2nd commodity boom stalled?
– Global recession would dampen export demand
– International economic performance impacts dollar, prices, US
exports, recovery
• Eventually trade deficit and low interest rates should
mean weak dollar
– European debt keeping $ “stronger” – but not so much?
– Bilateral rates show more effect (Brazil, even China)
• Brazil WTO cotton dispute may influence farm bill –
WTO not entirely ignored