U.S. agricultural exports are projected to reach a record of $183.5 billion in 2022, up $34.4 billion from 2020 and $6.5 higher than 2021. This increase is primarily driven by higher exports of most commodity groups with oilseeds and products leading the way (ERS-FAS/USDA). Overall good commodity prices are the main reason for this record-setting value of exports with soybean exports reaching $31.3 billion. Overall grain and feed exports are projected to reach $42.9 billion led by higher wheat as well as feed and fodder forecasts. Horticulture product exports reaching a record of $38.5 billion is partly driven by tree nut export projection while cotton reaching its second-highest level at $8 billion. Finally, livestock poultry and dairy exports are forecast at a record $39.2 billion, with gains in beef and dairy more than offsetting declines in pork. Mexico is forecast to overtake Canada as the second-largest U.S. agricultural market with a projection of $27 billion, while Canada is projected at $26 billion. China is expected to remain the largest market with a forecast of $36 billion.
U.S. agricultural imports in 2022 are forecasted at $172.5 billion, up $25.8 billion from 2020 and $1.4 billion higher than 2021 due to expected increases in livestock and beef products, horticultural products and the new “Agricultural Products” definition and in this case distilled spirits. The U.S. agricultural trade surplus is expected to increase to $11 billion in 2022. Recent global events, mainly the Russia-Ukraine war could have significant impacts to these forecasts.
The Russian invasion of Ukraine has impacted financial and energy markets, as well as agricultural markets, increasing price volatility for major commodities. Russia and Ukraine are not major markets for US agricultural exports, ranking 56th and 80th, respectively. Before 2014, when Russia invaded Crimea, US exports of agricultural products ranged between $1.2 to $1.7 billion annually. Afterwards, US agricultural exports to Russia have been around $250 million annually, with animal products (e.g., beef, poultry) taking the largest hit (USDA, 2022). Moreover, neither Russia nor Ukraine are major exporters of agricultural products to the US; the US ranks 55th and 53rd, respectively. That said, both Russia and Ukraine are major players in the international wheat and corn markets. In 2020, Russia was the largest wheat exporter reaching almost $8 billion, while Ukraine was fifth with almost $3.6 billion in wheat exports. Moreover, Ukraine is the fourth largest corn exporter reaching almost $5 billion, while Russia is the 11th with $400 million in 2020 (UN Comtrade, 2022). Since Russia and Ukraine’s marketing year ends at the end of May, the impacts of the Russian invasion on their wheat and corn exports this marketing year could be minimal. On the other hand, it is unknown the extent of infrastructure damage for hauling and shipping, or the impact of shipping restrictions in the Black Sea that could slow down or increase the cost of trade. Finally, Russia accounts for 14 percent of the world’s nitrogenous fertilizer exports and is the leading supplier of urea to the US. Additionally, Russia and Belarus accounts for about 20 percent of US potash imports (USDA, 2022). The sanctions again Russia and Belarus (for supporting the Russian invasion) could hurt US agricultural producers as they are already experiencing record high fertilizer prices.
The Foreign Agricultural Service (FAS) of USDA sponsors international trade missions (to as many as six countries per year), opening doors for U.S. exporters and giving them the opportunity to forge relationships with potential customers, gather market intelligence, and generate sales in foreign markets. Since the pandemic, all trade missions have been canceled or postponed. Last week (February 15, 2022), FAS launched its first trade mission since November 2019 to the United Arab Emirates (U.A.E.). The delegation to the U.A.E. included nearly 40 representatives from agribusinesses, farm organizations, and state departments of agriculture interested in exploring export opportunities across the Middle East. Both the FAS Administrator, Daniel Whitley, and Secretary of Agriculture, Tom Vilsack were a part of the delegation kicking off the first USDA trade mission in over two years.
With annual agricultural exports averaging more than $1.2 billion during the last five years, the U.S. is the UAE’s fourth-largest supplier of food and farm products and is poised for further export growth according to USDA. How important is the U.A.E. to U.S. exports, particularly exports from the South? In 2021, agricultural exports from the Southern region to the U.A.E. were $357 million, which was an increase of nearly 50% when compared to the previous year (Table 1). Although this is relatively low when compared to countries like China (China purchased $15 billion in agricultural exports from the U.S. South in 2021), the U.A.E. was the South’s 41st largest market out of more than 200 countries (USDA-FAS, 2022). Interestingly, the South’s leading agricultural export to the U.A.E. in 2021 was distilled spirits ($74 million), mostly due to exports of spirits from distilled grapes (e.g., brandy) from Texas and whiskey from Tennessee. Other leading exports in 2021 included poultry products ($47 million), soups and other prepared foods ($26 million), corn ($24 million), and dairy products ($ 24 million). See Figure 1 for the top-15 exports from the U.S. South to the U.A.E.
Table 1. U.S. and Regional Agricultural Exports to the United Arab Emirates (U.A.E):2019-2021
Export Value ($ million)
Note: The values in the table include related products like forestry and seafood, which are less than 5% of total exports. Source: USDA Foreign Agricultural Service, Global Agricultural Trade System (2021)
Figure 1. Top-15 Exports from the Southern U.S. to the United Arab Emirates (U.A.E): 2021
US exports to China in 2021 reached almost $33 billion, a 24.6 percent increase from last year. As a matter of fact, China has been the largest market for US commodities in the last couple of years surpassing Canada and Mexico. Moreover, in 2021 China was the number one destination for soybeans, corn, sorghum, cotton, and nuts, accounting for 69 percent of all US commodities exported to China. Although year over year US exports to China have been higher, they still fell short of the agreed amount for 2021 under the Phase 1 agreement. The chart above shows the monthly cumulative amount of US exports to China for 2012, 2020, 2021, and Phase I 2020 and 2021. US exports to China in 2012 were the largest amount exported ever before the Phase 1 agreement, around $26 billion, while Phase 1 2020 and 2021 amounts were agreed at $32 and $39 billion, respectively. The red line represents 2020 exports and the yellow line 2021 exports and both years US exports fell short of reaching 83 and 85 percent of the agreed amount under the Phase 1 agreement (blue and black lines). Although 2020 and 2021 exports fell below the agreed amount, both years marked the largest amount of US exports to China. Hopefully, this trend continues for 2022 and beyond.
Monthly Cumulative Amount of US Exports to China for 2012, 2020, 2021, and Phase I 2020 and 2021.
Last November, I wrote an article for Southern Ag Today about the spike in fertilizer prices. Since that time, import prices have continued to rise. As mentioned in the previous article, U.S. fertilizer imports have averaged nearly $6 billion over the last five years (around 25 million metric tons), accounting for a significant share of total U.S. fertilizer use (USDA-ERS, 2019). Additionally, the global fertilizer market had already been tightening before plants were forced to cut production given the rise in the cost of natural gas, a key feedstock (Larkin, 2021). Given the continued rise in U.S. fertilizer prices, a more detailed look at imports could help explain why the price of some fertilizers have increased more than others.
In 2020, the U.S. imported about $6.5 billion in fertilizer. That year, the top imports included potassium chloride ($2.7 billion), urea ($1.3 billion), monoammonium phosphate ($590 million), urea-ammonium ($400 million), and diammonium phosphate ($400 million). In January 2020, import prices ranged from as low as $130 per metric ton (MT) for urea-ammonium to about $267/MT for and diammonium phosphate. In 2021, diammonium phosphate increased to over $1000/MT and monoammonium phosphate increased to over $700/MT; urea increased to over $500/MT. Interestingly, the price of imported diammonium phosphate fell in November 2021 to $625/MT, which was a significant decline from the $1,008/MT high the previous month. Other trends, however, suggest that fertilizer import prices will continue to increase.
U.S. Fertilizer Import Prices Significantly Higher in 2021 Due to Global Supply and Demand Issues
Tariffs, another form of taxes, are taxes or duties that a government charges on goods coming into or going out of their country. Import tariffs are taxes charged to imported products. On January 15, 2020, the U.S. and China signed the “Phase One” trade agreement, which eased two-year trade tensions between the two countries. In the Phase One trade agreement, China agreed to purchase no less than $12.5 billion U.S. agricultural products above the corresponding 2017 baseline amount in 2020, and no less than $19.5 billion above the 2017 baseline amount in 2021.
The cotton industry was caught in the middle of the trade war. Additional 25% Chinese import tariffs were implemented on U.S. raw cotton. After signing the Phase One trade agreement, China implemented a temporary lift of the retaliatory tariff for some U.S. products, including cotton (HS code 5201).
Since then, the purchase of U.S. cotton by China has increased. As shown in Figure 1, Chinese purchases of U.S. cotton in 2020 and 2021 exceeded the number of Chinese purchases for the five-year average between 2015 and 2019. Especially in 2020, the Chinese purchase of U.S. cotton supported cotton prices, and is one of the major reasons for cotton price recovery after the pandemic lockdown implemented in most Asian countries in the earlier months of 2020. The cotton purchases by China in 2021 from the U.S. were lower than what was in 2020, primarily due to the high cotton prices.
However, China’s purchase obligation of U.S. agricultural products under the Phase One Trade agreement only lasts until the end of 2021. The Phase One trade agreement stated that the trajectory of increases in U.S. agricultural goods purchased by China will continue in 2022 through 2025. However, producers need to be aware of the uncertainty of China’s future years’ cotton purchase and adjust their risk management strategies accordingly.
Figure 1. U.S. Cotton Export to China. Data includes cotton and cotton linters. Data Source: USDA FAS.