Washington - The Agriculture Department will cut its forecast of U.S. farm exports, now $56 billion, by at least $1 billion and perhaps as much as $5 billion due to softening sales, private analysts said. For the first half of the fiscal year, exports totaled $30.475 billion, lagging $766 million behind 1997's pace when sales totaled $57.3 billion.
Exports account for more than 20 cents out of every $1 in cash receipts by farmers.
Agriculture Secretary Dan Glickman signaled a week ago the forecast would be reduced although he did not say what the tally would be.
“Current projections for U.S. agricultural exports stand at $56 billion for this fiscal year, down $1.3 billion from last year, and this number could drop further,” Glickman told the House Agriculture Committee before suggesting “for fiscal 1999, the decline...could be even greater.”
The Food and Agricultural Policy Research Institute at the University of Missouri has projected ag exports of $54.5 billion for fiscal 1998.
During telephone interviews, analysts generally agreed USDA would switch to a forecast in the range of $51 billion to $55 billion.
Sales have been hurt by the economic crisis in Asia but more so by large grain supplies worldwide. The outlook was clouded further by the possibility of sanctions on India and Pakistan because of atomic bomb tests.
“Whatever number they put out, that won't be the end of it. It will be a step-down number,” said private consultant Randy Russell, who noted USDA tended to make incremental changes, rather than large adjustments, in its forecasts.
While exports of soybeans, soyoil and soymeal have boomed, said Greg Doud of World Perspectives, “The dead spots have been corn and, to a certain extent, wheat.”
“Demand has vaporized for wheat on the world market...The same is true for corn.”
Turmoil is Asia is a popular explanation for the drop-off in U.S. sales, Doud said, but the world also was awash with grain thanks to a record wheat harvest last season, abundant feed grain stocks and prospects of a large soybean crop.
“It would be a huge surprise if they don't adjust it down,” said Mark McMinimy of Schwab Washington Research.
FAPRI has attributed 10 percent of the downturn in U.S. exports to Asia. USDA originally forecast sales of $58.5 billion for fiscal 1998.
Glickman told lawmakers that sales to South Korea were down by $742 million and to Southeast Asia, down by $448 million.
For October through March, export sales of feed (coarse) grains, primarily corn, were down $1.4 billion compared to the same point in fiscal 1997.
Wheat was down $136 million, Cotton and soybean sales were steady but soymeal was up 60 percent, to $546 million, and soyoil up 30 percent, to $514 million. Red meat sales were up 10.5 percent, to $2 billion, but poultry meat exports fell nine percent, to $1.19 billion.
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