WASHINGTON Farm exports will set a sales record in the new marketing year due to high commodity prices that will magnify the value of dramatically smaller harvests amid the worst drought in half a century, the government forecast on Friday.
At $143.5 billion for the year that opens on Oct 1, it would be the second export sales record in three years. Farm exports were a record $137.4 billion in 2011, but will fall just short of it, at $136.5 billion, this marketing year, said the Agriculture Department.
High prices for corn, soybeans and wheat -- the three most widely grown U.S. crops -- as well as larger wheat tonnage will fuel the record, said USDA in its first forecast of the new year. Cotton, meat and dairy sales would decline from this year's level.
The United States is the world's largest agricultural exporter, shipping half of its wheat and soybeans and three-fourths of its cotton to overseas buyers. Exports account for 33 cents of every $1 in cash receipts for U.S. farmers. Farm exports are a consistent winner in the U.S. balance of trade.
China, the No. 1 market for U.S. farm goods this year, would slip to No. 2 behind Canada in the new year, said USDA. China is the world's leading buyer of cotton and soybeans and an emerging importer of corn.
"Tighter U.S. exportable supplies and high prices for corn and soybeans are expected to lead to greater shipments to China by Brazil and Argentina," said USDA. "In addition, an improved Chinese corn crop should lower overall demand for imported corn. Cotton exports are forecast down as the Chinese government's reserve policy is no longer stimulating import demand to build stocks."
Soybeans and soymeal prices will be record high in the new sales year, said USDA, and corn and wheat prices also will be up.
As a yardstick of the impact of higher prices on tight supplies, USDA estimated 104.6 million tonnes of major bulk products -- mostly grain, soybeans, meat, tobacco and cotton -- will be shipped in the new marketing year, down 7 percent from this year. But the exports would be worth 5 percent more.
Earlier on Thursday, Agriculture Secretary Tom Vilsack urged Congress to pass a new farm bill before the 2008 farm law expires on Sept 30, so export promotion programs will remain in operation. The House is deadlocked with no clear majority for a bill. The Senate has passed a bill but House Republican leaders say it is unacceptable.
"They have time, if it's a priority of the House leadership, to get it done," Vilsack told reporters.
(Reporting By Charles Abbott; Editing by Bob Burgdorfer)