Can U.S. Ag Exports Rally Again?

Like clockwork, U.S. agriculture every year runs a trade surplus with the rest-of-the-world, meaning the U.S. sells more agricultural goods to the rest-of-the-world than it imports. However, this year the clock is taking a licking and is struggling to keep ticking. Through the first seven months of the year, the U.S. is running an agricultural trade deficit of $3.5 billion. U.S. exports of agricultural goods are off 3 percent, or $2.7 billion; imports are up 1 percent, or $0.9 billion.

The net result—the disappearance of the U.S. agricultural trade surplus. The same pattern occurred in 2019. Through July, it looked like the U.S.’s 59-year streak of surpluses in agricultural trade might be broken but exports rallied, and the U.S. once again posted a surplus of $5.7 billion to continue the streak for a 60th year. The last time the U.S. ran an agricultural trade deficit was 1959 when Dwight Eisenhower was president. Since then, the U.S. has consistently sold more agricultural goods overseas than it has bought, reaching a surplus high of $40 billion in 2013.

Figure 1. U.S. Agricultural Trade Balance, 1959-2018

Source: USDA Economic Research Service

Figure 2 plots U.S. agricultural exports through July of this year compared to the same period last year for selected Nebraska commodities. Red meat (beef and pork), corn, and animal feed (ddgs) are greater compared to last year; soybean exports are below last year at 23 percent.

Can U.S. exports finish strong for a 61st consecutive year with a trade surplus? That will likely depend on one country—China. Reports have suggested a hefty amount of corn and soybeans were shipped to China in August, and purchases by China for shipment in the new crop year look promising. China has also been in the market for U.S. beef, pork, and wheat. These purchases need to continue. If not, 2020 might be the first year since 1959 the U.S. does not enjoy an agricultural trade surplus.

Figure 2. Percent Change in U.S. Export Value, January – July 2020 vs. 2019

Source: NEFB calculations using data from the USDA Economic Research Service