OVERSEAS markets are vitally important to U.S. commodities; that is no secret and has been an underlying factor in the growth of net farm income over the past several years.
However, even in the face of increasingly competitive foreign markets, most U.S. farm export sectors are still performing extremely well.
Grain and oilseed exports have been very strong in recent weeks, with corn and soybean sales and shipments running well ahead of last year as prices are much more competitive. Having likely set harvest lows in recent days, corn prices are more than $2/bu. cheaper than they were a year ago and are now hovering near $4/bu.
Those lower prices have sparked strong sales of corn, with 37.2 million bu. from the 2013 crop and 1.48 million bu. from the 2014 crop sold last week. Export shipments remained steady at 29.774 million bu., according to the U.S. Department of Agriculture's weekly export report.
China, of course, continues to play a key role in the growth of U.S. exports, particularly in the grain markets. China is now the leading destination for U.S. agricultural exports, up from seventh place in the early 2000s, according to the Economic Research Service (ERS).
U.S. agricultural exports to China totaled $5 billion in 2003 and, by 2012, had grown to nearly $26 billion per year. China now accounts for 18% of U.S. export sales, up from 8-9% in 2003-07.
Among the largest beneficiaries in U.S. sales to China are soybeans, which hit $15 billion in 2012. Also, exports of corn and distillers grains for livestock feed last year tallied 4 million and 2 million metric tons, respectively, and sales of U.S. meat and dairy products reached $1.3 billion.
"Meat and dairy sales likely would have been higher if not for a decade-old Chinese ban on U.S. beef, antidumping duties on U.S. poultry and sanitary standards for pork that appear to be more strict for imports than for domestic meat," ERS noted in a recent article.
In fact, the U.S. Meat Export Federation (USMEF) recently noted that China's beef imports have grown 800% in recent years, and the U.S. beef sector has yet to realize the full potential of the Chinese market because of the lingering ban.
Meat, poultry soaring
While China remains something of a sticky wicket for U.S. beef exporters, overall beef exports continue to trend upward, according to USMEF. Strong performance in Japan and Hong Kong, coupled with a rebound in exports to Mexico, led to a nearly 5% rise in beef exports in September.
Sales to Japan grew 37% compared to the same month last year, while sales to Mexico grew 65% and exports to Hong Kong were up a stiff 102%. For the year, exports are up 1% by volume and 10% by value compared with last year's record pace.
U.S. pork exports, on the other hand, were a little sluggish in September. A notable decline in sales to Japan and Russia (the latter due to its ongoing issues with beta-agonist use in the U.S.) has led to a slight year-over-year decline of 5% in terms of both volume and value.
"We are continuing to face challenges from strong competition in Japan that is driving down our (pork) market share, and access issues with Russia continue to hamper our industry both in pork and in beef," USMEF president and chief executive officer Philip Seng, said.
Beef exports, despite record-high prices, have been a major success story for the industry. During September, exports accounted for 13% of total production and for $249 per head of fed slaughter.
Pork exports are even more significant in those terms, accounting for 25% of total U.S. production and for $53 per head of fed slaughter.
Perhaps the biggest export story, however, has been the success of U.S. poultry sales abroad. According to ERS data, the U.S. is the world's second-largest poultry meat exporter (behind Brazil), accounting for $4.2 billion and 20% of total production last year.
Global demand for poultry meat is expected to grow 1.56 million tons over the next decade, according to USDA projections, with U.S. exports expected to grow 11%. Strong growth is expected in Africa and the Middle East, including sub-Saharan Africa and Saudi Arabia (Figure).
ERS said rising consumer incomes, population growth, urbanization and the typically low cost of poultry meat all will serve as key drivers of projected export growth.