The value of U.S. agricultural goods sold on the export market is forecast lower in fiscal year 2015, and dairy won't be immune, according to USDAâs latest quarterly Ag Trade Outlook report, released Feb. 19.
Fiscal year 2015 (FY â15, October 2014 through September 2015) dairy exports are now expected to hit $6.5 billion, down $200 million from the November 2014 forecast, and down about $900 million from the record-high FY â14 total of $7.4 billion.
If realized, it would still be the third straight year dairy product exports topped $6 billion. U.S. dairy exports were valued at $6.12 billion in FY â13.
Meanwhile, the FY â15 U.S. dairy import forecast was raised about $200 million from November projections, at $3.4 billion. The forecast for FY â15 cheese imports was also raised $100 million, to $1.4 billion.
FY â14 dairy imports totaled just under $3.3 billion, with cheese imports estimated at $1.2 billion. FY â13 dairy product imports were estimated at $3.0 billion, with cheese at $1.1 billion.
Looking at agriculture in general, FY â15 exports are now forecast at $141.5 billion, down $2.0 billion from the November forecast and $11.0 billion less than FY â14. Especially hard hit are exports of high-value products (non-bulk), including livestock, poultry and dairy.
U.S. agricultural imports are forecast at a record $119.0 billion, up $3.0 billion from November, and $10.0 billion higher than in FY â14.
The U.S. ag trade surplus is forecast at $22.5 billion, down from $43.3 billion in FY â14, and the smallest since fiscal 2007.
From a regional perspective, the decline in ag exports is primarily due to reduced sales to Japan, China and the European Union (EU). Exports to North Africa are down because of a sluggish early-season pace of U.S. exports, especially of dairy in light of increased competition from the EU.
World economic growth is expected to accelerate in 2015, driven by faster economic growth in North America and continued solid growth in developing Asia. However, the strength of the U.S. Dollar is expected to be a significant damper on U.S. export growth into 2015.
The value of the U.S. Dollar is expected to rise by more than 6% compared to 2014 â the fastest appreciation since 1997. Since August, the U.S. Dollar has appreciated significantly in the largest U.S. agricultural export markets: up almost 13% against the Euro and 15% against the Yen. It has also strengthened relative to other competitors, by 15% against the Brazilian Real, and 12% against the Canadian Dollar.
Recent interest rate cuts in many countries add to the attractiveness of the United States as a destination for financial and business investment. These trends are expected to continue, and along with increases in U.S. interest rates expected in late 2015, support continued Dollar strength through 2015.
Lower energy prices and stronger world growth could mitigate the impact of a strengthening dollar on U.S. agriculture.