USDA projects rising ag imports for fiscal year 2023
A strong dollar is expected to slow U.S. farm exports and accelerate imports in the coming year, a new USDA trade outlook report says.
For the fiscal year 2023, starting Oct. 1 this year and ending Sept. 30 next year, the USDA projects U.S. agricultural imports at $199 billion, up $2 billion from the August forecast and up $5 billion from imports of $194 billion in fiscal year 2022.
That increase, the report said, is largely driven by higher imports of horticultural products, sugar and tropical products, and grain and feed products. “A strong dollar, while a headwind to the export forecast, is partially responsible for the higher import demand,” the report said.
The Nominal Broad U.S. Dollar Index, measuring the strength of the U.S. dollar against foreign currencies, has risen more than 10% since January 2022. A stronger U.S. dollar generally increases the affordability of imports and presents challenges for exports as real costs increase, the report said.
The forecast for horticultural product imports is adjusted upward by $1 billion over the August forecast to $100.3 billion — a new record over the fiscal year 2022 total of $97.2 billion, the report said.
“The largest change within the horticultural products group from the previous forecast is a $300-million increase for fresh fruit imports due in part to ongoing droughts in key fruit-producing areas of the United States, high production costs, and an ongoing decline in citrus production,” the report said. “In contrast, favorable production is expected in major exporting countries in South and Central America.”
The fresh vegetable-import forecast is increased $200 million due to the same market factors affecting fresh fruit imports, the report said.
Meanwhile, the USDA said U.S. agricultural exports for fiscal year 2023 are projected at $190 billion, down $3.5 billion from the August forecast and $6.4 billion off from fiscal year 2022 exports of $196.4 billion.
This decrease is primarily driven by reductions in soybeans, cotton and corn exports that are partially offset by gains in beef, poultry and wheat, the report said. Horticultural product exports are unchanged at $39.5 billion, the report said.
The USDA said U.S. exports of fresh fruits and vegetables for fiscal year 2023 are unchanged at $7.1 billion on stable shipments to top markets in Canada and Mexico.
Economic slippage
The report said the global economic outlook for 2023 is uncertain because of inflation, changing monetary policy conditions and trade disruptions caused by the Russian invasion of Ukraine.
“Previous growth projections are moderated due to tempered economic growth in Europe and North America,” the report said. World real gross domestic product (GDP) is projected to increase by 3.2% in 2022, but the outlook for 2023 calls for 2.7% growth.
There are mixed signals about economic indicators, the report said.
Supply chain pressures have largely abated, and spot shipping rates have declined substantially from their highs in September 2021, according to the report. “Inflation continues to be a global concern and central banks around the world are continuing their monetary tightening cycles to combat rising inflation rates, with the notable exception of China which has maintained a loose monetary policy,” the report said.
The projected growth for the U.S. real GDP in 2022 is lowered to 1.7% from the previous estimate of 2.3%, and the forecast for 2023 real U.S. GDP growth remains unchanged at 1%, the report said.
“Above-target inflation remains a significant concern,” the report said, noting that the October Consumer Price Index showed prices had increased by 7.7% over the past 12 months, down from the previous year-over-year mark of 8.2% in September. While slowing, that inflation is rate is far above the 2% target set by Federal Reserve, the report said.
