Friday, September 2, 2011

U.S. Agricultural Trade Balance is Projected to Lose Ground



Data Source: USDA Outlook for Agricultural Trade (fiscal years 2007-12, year ending September 30; 2011 and 2012 are forecasted amounts)

As we all know, every nation wants to increase its exports, and many think that agriculture is the gimme sector in which to do so. Interestingly, our corn export market share is decreasing due to high prices, at 65% higher than one year ago. In the 1990's, corn averaged 11% of the total value of U.S. agricultural exports. The U.S. provides approximately 50% of global corn exports, which is about 15% of its total corn crop, meaning that supply and demand within this country largely determines the global price. We use 15% of the global corn crop to produce our ethanol. We are facing increasing global competition in grain production and given today's high grain prices, some may have expected a more positive export dollar value report forecast.

In addition to reducing U.S. corn export demand, high corn prices have led to wheat being used as a feed substitute, wheat being used as a corn substitute for producing ethanol in rare cases, reduced cattle numbers, and decreased ethanol profitability.

If this USDA export/import forecast proves correct, we will be narrowing our agricultural trade surplus in 2012, not increasing it since imports are rising while exports are neutral.

Note that we are exporting more ethanol and DDGS product, which is not included in the above USDA numbers.
KM

source: usda

2 comments:

  1. I am wondering how we are going to prevent soil depletion while growing corn-on-corn, and at the same time not implementing crop rotation. Corn-on-corn and any other intensive corn cropping methods require fertilizers to replace the nutrients that corn consume. With fertilizer prices skyrocketing along with other soil amendments, how can we sustain this intense monoculture method of crop growth without replenishing the soil nutrients?

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  2. Anon
    In this post, I just reported what's happening and tried to stay off the soap boxes. I've not quite figured out how this will play out, yet, but a forced reduction in monoculture/corn farming may come sooner rather than later from the ever increasing input costs.

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