The August update to USDA’s trade outlook increased imports and exports for fiscal year 2024. Betty Resnick, an economist at the American Farm Bureau Federation, talks about what the numbers show.

“Increasing the overall forecasted exports to $173.5 billion and reduce the trade deficit by $1.5 billion to $30 and a half billion. Now this is the first time we’re also seeing fiscal year 2025 estimates, which are forecasting exports to fall and imports to increase, leading to a new record trade deficit of $42.5 billion, which will be the third year of record trade deficits.”

Resnick says there are multiple factors contributing to the deficit, but the main factor is commodity prices.

“A lot of this all boils down to falling commodity prices, wheat, corn, feeds, and fodders over two years all show drops in export value, but significant increases in volumes exported, and that’s those unit prices, those commodity prices. For soybeans, exports on both value and volume basis, are projected downwards between 2023 and 2025 based on increasing competition from Brazil. All exports continue to be hamstrung by the strong U.S. dollar, which also at the same time increases imports, which exasperates that trade deficit.”

She says the deficit is yet another indicator that farmers and ranchers may be looking at choppy financial waters ahead.

“I sound like a broken record, but on those commodity prices for grains, oil, seeds and cotton, as those products make up a little under half of our total exports by value. Some products, though, especially soybeans and cotton, are seeing both declining export volumes and values, which is really painful at this moment, and it’s again due to that increased global competition and geopolitical factors. The exports are vital to the farm economy and bring value to the American farmer, so it’s important that we pay attention.”