Source: Rita Jane Gabbett, MEATINGPLACE, 12/1/16



Fiscal year 2017 agricultural exports are projected at $134.0 billion, up $1.0 billion from the August forecast, largely due to expected increases in dairy and livestock byproduct exports, according to USDA’s latest Outlook for U.S. Agriculture Trade report.

USDA raised its fiscal 2017 livestock, dairy, and poultry exports by $700 million to $26.5 billion, largely due to dairy and livestock byproducts. The beef export forecast was unchanged at $5.3 billion as higher volumes offset weaker prices. The pork export forecast was unchanged at $4.7 billion on stable volumes and values.

Forecast higher oil prices are expected to spur a rise in prices for lard, tallow, and grease, buoying the value of shipments. USDA raised its variety meat export forecast by $100 million higher to $1.6 billion on increased supplies of pork variety meats and strong export demand.

USDA forecast poultry and products slightly lower to $4.7 billion, as a decline in both broiler meat quantity and value is only partially offset by gains in other poultry meat and egg and egg products. The reduction in broiler meat is driven by lower prices. Rising volumes and prices bolster gains by other poultry meat and egg and egg products.

New administration
“The election of Donald Trump as U.S. President has introduced an element of uncertainty as the emphasis of the next administration’s economic policy agenda is unknown,” the report noted, adding, “A change in the U.S. trade relationship with China and Mexico is of particular concern for agricultural competitiveness.”

Together, these two countries were the destination for almost one-third of total U.S. agricultural exports from 2013-2015. China alone was the destination for roughly 60 percent of U.S. soybean exports during this period.

President-elect Trump as stated he opposes the North American Free Trade Agreement. Changes there could impact exports to Mexico. He also opposes the Trans-Pacific Partnership Agreement, which the U.S. Congress has yet to approve and will not put to a vote before the new administration takes charge in January.

USDA also noted the U.S. dollar strengthened over 10 percent relative to the Mexican peso in the 2 days following the election. In general, emerging market currencies lost considerable value against the dollar over expectations that higher U.S. interest rates would trigger capital outflows.

The agricultural exports-weighted dollar value index is expected to reflect a 2.6-percent appreciation in 2016 and maintain strength with a further 2.1-percent appreciation in 2017. The strong dollar is thus expected to continue to weigh on U.S. agricultural export competitiveness.

But not now
Recent beef and pork exports, however, have been strong.

USDA data showed exports of beef muscle cuts in the past two weeks have averaged 16,808 metric tons, the highest two-week average at any point this year or last year, according to the Daily Livestock Report.

Beef exports in the last four reported weeks have averaged 15,750 metric tons, 28 percent higher than the same four-week period a year ago.

“Extremely strong demand from a number of Asian markets continue to drive exports of U.S. beef this fall,” the DLR analysts wrote.

U.S. pork exports also have recovered in recent weeks, particularly to Mexico. USDA data showed pork exports to Mexico in the last four weeks averaged 9,705 metric tons, 48 percent higher than a year ago.

“There is speculation that Mexican buyers have accelerated their purchases due to the expected change in the U.S. administration in January,” the DLR analysts wrote.

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