It also shifted the market balance relative to February, down from a positive $1.097 billion that reflected exports of $10.654 billion and imports of $9.558 billion.
In fact, monthly trade deficits are not that unusual even though the March number was the largest since April 2006 when it was $149 million, ERS noted. For U.S. ag overall, there were three monthly deficits in FY 2006.
Part of the cause of the March deficit was a rise in ag imports, ERS said. Overall trade data in March showed imports down 3.6% compared to February but Ag imports, by contrast, moved the other direction and rose 8.3%. During the same period, ag exports fell 3.2%. Overall US exports also fell, but only by 0.9%.
Ag trade is still in the black for FY2016, with cumulative sales of $67.239 billion while imports totaled $56.817 billion, bringing the surplus to $10.513 billion. However, that surplus is only about half of that of FY2015, when exports worth $78.791 billion were reported against imports of $56.808 billion for a surplus of $22.163 billion.
USDA continues to emphasize that it expects ag trade to generate a surplus for 2016 also. Its latest forecast in February called for exports to reach $125 billion and imports $118.5 billion for a $6.5 billion surplus. The agency will update its outlook at the end of this month, ERS said.
Interpreting changes in the ag trade balance is always difficult, especially since the export sales directly affect the value of domestic commodities—while imports tend to be products the United States does not produce advantageously, like coffee and seasonal vegetables, among many others--with less direct impacts on US producers.
Nevertheless, ag trade surpluses play an important role in offsetting the nation’s total trade deficits and there has been some expectation among analysts that overseas sales could become increasingly important as recent large U.S. crops make U.S. commodities more competitive. However, the more competitive prices also tend to diminish export revenues for any given quantity of sales.
Recent increases in global competition also make outlook estimates more difficult, especially since U.S. exports have fallen every month but February in Fiscal 2016. However, import values have tended to peak during March-April in recent years, market behavior some analysts suggest could lead ERS to reduce its import forecasts in its late May review and to boost its trade surplus estimate.
So, ag trade levels and balances reflects many things including global weather, geopolitics and policies, economic competition and currencies, among others. Because of the huge size of these markets, their volatility and the wide variety of crop and livestock products they include emphasizes the linkage between export sales and returns for US producers. Thus, USDA’s May trade balance review and forecasts should be watched closely as these estimates emerge, Washington Insider believes.