By Julie Tomascik
Editor

The U.S. agricultural trade deficit is projected to reach a record $42.5 billion for fiscal year (FY) 2025, which begins Oct. 1.

The U.S. Department of Agriculture’s (USDA) latest Outlook for U.S. Agriculture Trade report showed exports are forecast to fall and imports to rise. The trend is fueled by growing consumer demand for imported fresh produce, coffee and sugar, according to USDA economists.

If realized, 2025 will be the third year of record trade deficits.

“The U.S. economy remains strong going into the final months of FY 2024, although that growth is expected to slow into FY 2025,” USDA said.

Agricultural exports are expected to decline by $4 billion, bringing the total to $169.5 billion. This decline is primarily driven by lower unit values of soybeans, corn and cotton, as well as lower volumes of beef, according to USDA.

Ongoing challenges in the U.S. agricultural trade landscape include falling commodity prices, changes in global demand and strong competition from international markets.

“A lot of this all boils down to falling commodity prices,” American Farm Bureau Federation Economist Betty Resnick said. “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 downward between 2023 and 2025 based on increasing competition from Brazil.”

Soybean exports are projected down $1.5 billion to $22.9 billion, and corn exports are forecast to fall $900 million to $12.2 billion.

Cotton exports are forecast $900 million lower to $4.5 billion, and beef exports are forecast at $8.4 billion, down $1 billion from FY 2024.

Overall livestock, poultry and dairy exports are projected at $38.6 billion, down $100 million from FY 2024, as the decline in beef exports is mostly offset by higher exports of pork, poultry, variety meats and dairy products.

USDA projects horticultural exports to rise by $1.2 billion to a record $41.5 billion, and ethanol exports are forecast at $4.3 billion, unchanged from the revised FY 2024 projection.

Another factor in the FY 2025 outlook forecast is the value of the U.S. dollar, which USDA anticipates will increase another 0.8% in the next calendar year. That’s on the heels of a 2.2% rise in 2024.

“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,” Resnick said.

Mexico and Canada are projected to remain the top two largest U.S. agricultural markets, respectively. China is expected to remain the third largest market.

“Uncertainty still looms as China’s economy shifts from growth based, mainly on production and exports, to domestic demand with slowing population growth leading to reduced production capacity,” USDA said. “Labor talks at U.S. ports on the East Coast and Gulf of Mexico are another risk for shippers already grappling with longer transit times and higher costs.”

Agricultural imports are expected to reach a record $212 billion, up $8 billion from the revised figure for FY 2024. The increase is largely contributed to rising imports of horticultural products, sugar and tropical products.

The trade deficit forecast shows increased concern for the farm economy and the need for new free trade agreements.

“The exports are vital to the farm economy and bring value to the American farmer, so it’s important that we pay attention,” Resnick said.