Southern Ag Today

Category: Trade

  • Global Fertilizer Market Affects U.S. Import Prices

    Global Fertilizer Market Affects U.S. Import Prices

    The recent spike in fertilizer prices will have a significant impact on U.S. crop production moving forward. The global fertilizer market had already been tightening before plants were forced to cut production given the rise in the cost of gas, a key feedstock (Larkin, 2021). In the U.S., this has resulted in a significant increase in fertilizer import prices. Over the last 5 years (2016-2020), U.S. fertilizer imports have averaged nearly $6 billion (around 25 million metric tons), accounting for a significant share of total fertilizer use in the U.S. (USDA-ERS, 2019).

    Most U.S. imports are either potassic fertilizer (potash) and nitrogenous fertilizer, as well as mixed fertilizers. Since 2017, potassic import prices have averaged less than $220 per metric ton (MT) but has increased to nearly $300/MT in recent months (August 2021), which is an increase of about 40% when compared to the average from 2017-2020. Nitrogenous fertilizer, which also averaged less than $220/MT over the last four to five years, is now more than $350/MT, an increase of about 71% when compared to 2017-2020. The price of imported mixed fertilizer has increased to nearly $700/MT, up 58% when compared to 2017-2020. Trends suggest that fertilizer import prices will continue to increase, resulting in significant economic strain for U.S. producers.

    U.S. fertilizer import prices significantly higher in 2021 due to global supply and demand issues

    Note: HS is the Harmonized System Classification, which is the nomenclature system used to track trade goods.
    Source: U.S. Department of Agriculture, Foreign Agricultural Service’s Global Agricultural Trade System (2021). https://apps.fas.usda.gov/GATS/default.aspx

    References

    Larkin, N. (October 15, 2021) Supply Lines Fertilizer Crisis Piles More Pressure on World’s Future Food Supply. Bloomberg. https://www.bloomberg.com/news/newsletters/2021-10-15/supply-chain-latest-warnings-mount-over-fertilizer-crisis

    U.S. Department of Agriculture, Economic Research Service (USDA-ERS) (2019). Fertilizer Use and Price. https://www.ers.usda.gov/data-products/fertilizer-use-and-price.aspx  

    Muhammad, Andrew. “Global Fertilizer Market Affects U.S. Import Prices.” Southern Ag Today 1(46.4). November 11, 2021. Permalink

  • US Agricultural Market Shares Fall, Despite US-China Trade Increasing in 2021

    US Agricultural Market Shares Fall, Despite US-China Trade Increasing in 2021

    Less than three months remain in the US-China Phase One Trade Agreement. Although China’s purchases of US exports overall are projected to fall short of the two-year, $200 billion target (Bown 20211), China’s purchases of US agricultural products have steadily increased. An important question, however, is whether increased Chinese imports from the US has translated into actual gains in US market share, relative to the 2017 pre-trade war benchmark? This figure plots changes in US trade values against changes in US market shares in 2021 (Jan-Aug) at the product level relative to the same period in 2017 (Jan-Aug). US corn exports are the big winner, with exports to China increasing over $3.5 billion compared to 2017, coupled with a nearly 40%-point gain in the US corn market share in China. US beef and poultry  exports to China also gain in value and market share thanks to the easing of China’s non-tariff prohibitions. 

    However, for a number of product categories, increasing Chinese imports from the US (moving east on x-axis) have not translated into market share gains relative to 2017 (moving north on the y-axis). US exports experiencing higher trade with China but a declining market share include pork, wheat, grain sorghum, feed and fodder, cotton, and to a lesser extent, soybeans, dairy, and tree nuts. Thus, for many US agricultural products, China’s increased year-to-date import values in 2021 has not necessarily resulted in higher US market share in China. Overall, US agricultural and seafood exports to China are up $7.4 billion through August 2021 relative to the same period in 2017, but down 4.8 percentage points in market share. Relatively speaking, this perplexing drop in agricultural and seafood market share suggests China is actually importing more from the rest of world compared to its imports from the US under the Phase One Trade  Agreement. 

    Year-to-date (Jan.-Aug.) trade value and market share changes for US ag exports to  China by-product: 2017 versus 2021

    Grant, Jason H. . “US Agricultural Market Shares Fall, Despite US-China Trade Increasing in 2021.” Southern Ag Today 1(44.4). October 28, 2021. Permalink

  • Strong Meat Export Totals in 2021

    Strong Meat Export Totals in 2021

    The latest estimates for meat trade were recently released by USDA ERS. These estimates include export and import data across many different meats including beef, pork, and broilers during the month of August. This article highlights beef export data as each sector is on track for record or near-record export totals in 2021.  

    Beef exports set a record at 325 million pounds during August and were 21 percent higher than in August  2020. Japan was the largest volume destination for beef exports during August followed by South Korea and  China. The year-over-year increases in beef exports to China have been large throughout 2021 as shown in the chart above. Exports to Hong Kong have declined. Combined, year-to-date beef exports to China and Hong  Kong are 163 percent above 2020 levels. 

    Pork exports during August were about the same as during August 2020. However, there were big shifts in volumes to particular destinations. Pork exports to China (the third largest volume destination) during August were 49 percent lower than during August 2020. However, exports to Mexico were 50 percent higher which offset the declines to China. Mexico was the largest volume destination during August followed by Japan. 

    Broiler exports were up 5.5 percent above August 2020. The biggest increases were in exports to Mexico (up  22 percent) and Cuba (up 80 percent) from August 2020. These countries were the top two export destinations during August. 

     

    Maples, Josh. “Strong Meat Export Totals in 2021.”. Southern Ag Today 1(44.2). October 26, 2021. Permalink

  • Exports to Canada and Mexico Provide Stability to Peanut Market

    Exports to Canada and Mexico Provide Stability to Peanut Market

    In a typical year, about a quarter of the U.S. peanut crop is exported to foreign countries with the primary destinations being Canada and Mexico.  As seen in Figure 1, these two closest neighbors to the U.S. have continued a steady growth of purchasing of U.S. peanut products.   This has provided a stable base to the peanut export market over the years, accounting for between 33% and 48% of the overall exports during the last five years.  This trend has continued in 2021, where the period of January to July has seen a 5% increase in exports to Canada and Mexico compared to the same period during 2020.  

    Alternatively, China has been a relatively new buyer of U.S. peanuts over the last decade.  Early in the decade, China had purchased U.S. peanuts through third-country agreements, The first substantial shipments directly to China came in 2016 when low priced in-shell peanuts were purchased for oil production.  After buying 30% of the U.S. exports in 2016, China pulled back in subsequent years, averaging roughly 13% of the U.S. export market from 2017-2019.  While this did result in a general upward trend in overall exports (excluding 2016), a combination of trade disputes, tariffs and higher prices played a factor in the decline of exports to China after 2016.  In 2020, China once again substantially increased their purchasing to a record level for that country.  However, from January to July 2021, exports to China have dropped 55% compared to the same period in 2020.  At the current pace, this will result in the third highest export quantity to China. 

    While it is promising in terms of trade with China, competition from India, higher prices, and the potential for current purchases being related to the Phase One trade agreement raise questions about the stability of peanut exports to that market.

    The European Union (E.U.) is another market of concern, with export quantities included in the rest of the world data in Figure 1.  Challenges with trade to the E.U. have focused on aflatoxin testing where standards target a four (4) parts per billion (ppb) aflatoxin level instead of the U.S. 15 ppb.  Furthermore, with at least 10% of the shipments being subject to testing and failed shipments being returned or requiring cleaning, there are concerns about sending peanuts to that market.  While peanut exports to the rest of the world are up 17% for the period of January to July 2021 compared to the same period in 2020, they are down 40% compared to the same period in 2019.  All things considered for the peanut market, trade to Canada and Mexico provides the stable foundation for what appears to be a changing landscape of export markets for the industry.

    Figure 1. Peanut Exports to Canada, Mexico, China, and the Rest of the World: 2010-2020
    Source: Data from the USDA Foreign Agricultural Service

    Rabinowitz, Adam. “Exports to Canada and Mexico Provide Stability to Peanut Market.” Southern Ag Today 1(43.1d). October 18, 2021. Permalink

  • Importance of Southeastern Ports for US Agricultural Exports

    Importance of Southeastern Ports for US Agricultural Exports

    The US is the largest agricultural exporter in the world reaching almost $150 billion in 2020 and the Southeastern ports are very important to get those commodities overseas.  In 2020, a total of $62.3 billion were exported through the ports in Alabama, Florida, Georgia, Louisiana, Mississippi, North Carolina, South Carolina, Texas, and Virginia.  Louisiana led the way with $25.6 billion in agricultural exports and its top five commodities exported were soybeans, corn, soybean cake, wheat, and DDG.  Exports from Florida and Texas ports seem to be the most diverse as their top five commodities exported accounted for 23.5 and 38.4 percent, respectively.  On the other hand, exports through Louisiana and Alabama ports seem to be more concentrated as their top five commodities accounted for 89.5 and 85.7 percent total ag exports, respectively.  The most common crops exported by these ports were cotton and soybeans, while the most common meats were frozen chicken and frozen pork.

    importance of southeastern ports for US ag exports

    Ribera, Luis. “Importance of Southeastern Ports for US Agricultural Exports.” Southern Ag Today 1(42.4). October 14, 2021. Permalink