*EPF205 11/23/2004
U.S. Farm Trade Expected to Balance in 2005, Federal Agency Says
(USDA cites low prices, declining dollar as factors in loss of surplus) (370)

By Kathryn McConnell
Washington File Staff Writer

Washington -- The U.S. Department of Agriculture (USDA) estimates that in the fiscal year that began October 1 (FY05) the United States will cease to be a net farm product exporter for the first time since the late 1950s.

USDA November 22 revised downward its estimate of farm exports for FY05 to $56 billion, an amount matching the expected value of the year's agricultural imports.

The expected decline in the value of exports reflects lower prices for wheat, corn, soybeans and cotton that stem from record U.S. crop production and increased foreign competition, according to a USDA press release. Bulk exports, however, are expected to rise by 2.3 million tons over fiscal year 2004 (FY04).

Even though the FY05 export sale estimate is lower than the record $62.3 billion reported for FY04, if realized it would be the fifth-highest annual farm export figure, USDA said.

USDA's previous estimate, issued in August, was for a $2.5 billion farm surplus in 2005.

Canada will remain the top market for U.S. farm products at $9.7 billion followed by Mexico at $8 billion and Japan at $7.7 billion. Sales to the European Union (EU) are projected to be $6.5 billion and to China, $4.6 billion. Japan had been the United States' second largest agricultural export market.

The estimated value of farm imports continues a 40-year upward trend, according to USDA. Much of the increase is the result of U.S. demand for higher-value products such as essential oils used in food processing, snack foods, wine and beer, red meats, processed fruits and vegetables, and other grocery products, it said.

A weaker dollar and rising household incomes raise the value of U.S. food imports, the department said.

Key U.S. food suppliers are the EU, Mexico, Canada, China, Indonesia, Brazil and Australia.

The full text of USDA's revised "Outlook for U.S. Agricultural Trade is available at: http://www.ers.usda.gov/publications/so/view.asp?f=trade/aes-bb. The next agricultural trade forecast is scheduled for release in February 2005.

(The Washington File is a product of the Bureau of International Information Programs, U.S. Department of State. Web site: http://usinfo.state.gov)

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