May 27, 2011

 

US farm exports may increase to record US$137 billion

 

 

US farm exports will jump to a record US$137 billion in the year ending September 30 as companies including Bunge Ltd. (BG) and Archer Daniels Midland Co. expand shipping capacity to meet rising demand.

 

The total would be 26% higher than last year's UAS$108.7 billion, and more than the previous record of US$114.9 billion in 2008, the department said today in a quarterly report. A February forecast was for US$135.5 billion. Imports are projected to rise to US$93 billion, also an all-time high, and 5.7% above the USDA's earlier prediction.

 

"Record agricultural exports should help support more than one million jobs across the nation," US Agriculture Secretary Tom Vilsack said at a congressional hearing. Overseas shipments of agricultural products totalled US$75 billion in the first six months of the fiscal year, according to the USDA.

 

US farm exports have been rising, especially to Asia, as world food prices broke records this year, contributing to unrest in the Middle East and northern Africa. A weaker US dollar - down 13% in the past year against a basket of six competing currencies - has also supported the surge in exports.

 

China is the top destination for shipments, projected at a record US$21 billion, followed by Canada at US$18.5 billion, the USDA said.

 

The increased sales are benefiting US agricultural exporters such as ADM, which has gained 26% in the past year. John Rice, the chief financial officer for the Decatur, Illinois-based company, said in  May 18 conference call that a "significant portion" of its capital expenditures in North America is going to expanding export capacity.

 

White Plains, New York-based Bunge is also adding to its trading capability, opening a new grain terminal in Longview, Washington, this year to export eight million tonnes of grains annually to Asia, Chief Financial Officer Drew Burke said on May 18.

 

The company is also building a grain terminal in Fairmont City, Illinois, with a million bushels of permanent storage capacity on the Mississippi River.

 

"Global trade in grains is rising quickly, and part of that is the ability to have the infrastructure to support it," Burke said. Bunge has risen 52% in the past year.

 

Exports are also increasing profit at Minneapolis-based grain shipper Cargill Inc., the largest closely-held US company, which reported a 30% jump in third-quarter profits on April 13.

 

Meat and dairy shipments from Tyson Foods Inc. (TSN) and other processors will rise 23% from last year to a record US$26.5 billion, the USDA said. Cotton shipments will reach US$9 billion, 89% more than in 2010, the USDA said.

 

Soy exports will bring in US$21.3 billion in the current fiscal year, 26 % more than in 2010 and little changed from the February forecast, as China depends more on U.S. supplies, the department said. Grain and feed sales will reach US$38.8 billion, up 42% from the previous year, the USDA said.

 

More than half of the increase in imports from the February forecast came from sugar and so-called tropical products. Coffee purchases will be US$2.2 billion higher than the previous estimate at US$7.4 billion, 68% more than last year. Futures of Arabica beans traded in New York reached a 14-year high on May 3 as adverse weather threatened global crops.

 

The USDA will update its farm-export forecast in August.