Financial Daily from THE HINDU group of publications
Wednesday, Dec 10, 2003
Agri-Biz & Commodities
Exports & Imports
US agri exports may increase 6% next year
Washington , Dec. 9
HIGH commodity prices are expected to drive US agricultural exports up to a new high in 2004.
In its forecast for next year, the US Department of Agriculture (USDA) has placed the value of exports at $59.5 billion, up 6 per cent from the current year's $56.2 billion.
Two commodities soyabean and cotton of which the US is a major exporter will contribute significantly to the gain in export value. Since October prices of both soyabean and cotton have risen sharply, for different reasons though. However, what is common to the price rally in both crops is the Chinese demand.
Higher soyabean prices are the result of smaller US soyabean crop. Following lower yields due to weather aberrations during the growing period, actual output is down to around 68 million tonnes (mt) from an initial expectation of 78 mt. This led to a sharp upswing in the market.
Added to this is the demand from China. To feed a large crushing industry with raw material and meet domestic demand of meal for the livestock sector, China is in the market for soyabean supplies. Current high prices are, however, expected to curtail demand and compress the volume of US soyabean export next year.
Higher prices and volumes are seen boosting cotton exports too.
World cotton prices are now higher because of tightening supplies. American cotton exports would be encouraged by available supplies in USA and higher demand emanating from China.
Prospects for export of US horticulture products have also improved. Higher export volumes are forecast for wheat, corn and cotton, which will partially offset loss of volume in soyabean exports. USDA has projected bulk commodity export volume at 111.6 mt for 2004, against 106.4 mt in 2003.
In terms of value, the US agri exports have been rising year after year. From $49.1 billion in 1999, exports increased to $50.7 billion in 2000, and then on to $52.7 billion the following year and even higher at $53.3 billion in 2002. In other words, USA exports no less than $1 billion worth of agricultural commodities every week of the year.
Improved economic outlook both for USA and the world is expected to drive commodity trade in 2004. In particular, Asia's growth rate driven mainly by significant growth in China and India may top 6 per cent.
US agri exports to Asia will show strong growth. China will fuel the export growth by taking more of US cotton and soyabean. Depreciation of the dollar is also seen as a favourable factor. According to USDA, the full effect of the depreciating dollar will be felt in 2004.
Fiscal 2004 US cotton exports are projected at 2.9 mt valued at $4.3 billion, while export projection for oilseeds and products is 31.7 mt worth $10.6 billion. Although soyabean export value will be up to a record $7.1 billion, the volume will drop to 24.2 mt.
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