Agricultural Products

Total trade in agricultural products increased in 2014, with imports rising faster than exports. Much of the 4.6 percent increase in total exports in the U.S. agricultural sector can be attributed to record harvests of soybeans and corn—two of the leading U.S. agricultural products.¹ Record-high corn production resulted in lower corn prices, which contributed to increased exports of ethanol. The value of U.S. exports of beef also rose, as strong demand from Asian markets (mostly for frozen cuts) supported high prices. At the same time, cotton exports declined, mainly owing to weaker demand in China, a major market for U.S. cotton.

The U.S. import increase was driven by higher imports of cattle and beef, shrimp, and soybeans. Demand for imported beef for processing was high because of low domestic supplies, resulting in increased imports of both live cattle for processing and beef. Meanwhile, shrimp prices remained relatively high, but demand was strong, resulting in higher import values. The United States imported soybeans in large volumes in the first half of the year, before the record U.S. crop was harvested. Corn and ethanol imports, by contrast, declined. This was because of ample domestic supplies, relatively low prices, and, in the case of ethanol, policy factors as described below.

Trade with Canada and Mexico, the United States’ partners in the North American Free Trade Agreement (NAFTA), continued to account for a large share of U.S. trade in agricultural products. In 2014, NAFTA trade accounted for 27.1 percent of U.S. agricultural exports and 34.9 percent of U.S. agricultural imports. Agricultural exports to Canada and Mexico rose 2.5 percent and 6.7 percent, respectively, while imports from Canada and Mexico rose 5.8 percent and 9.8 percent, respectively (table AG.1). On a product-specific basis, increased exports to Canada were primarily ethanol, while increased exports to Mexico were primarily corn and soybeans.² The largest increases in imports from Canada were in live cattle, beef, and pork, while beer and fruit were the main drivers of the increase in imports from Mexico.³

U.S. Exports⁴

Increases in U.S. agricultural exports were driven by higher exports of oilseeds (up 12.1 percent to $24.6 billion) and cereals (up 12.7 percent to $22.4 billion) (table AG.2). Soybean and corn exports drove these shifts, growing in both value and volume. The increase in exports was largely because of higher U.S. supply, following record harvests in 2014 in response to favorable weather and high yields throughout the major growing areas.⁵

Demand for U.S. exports also grew in most markets. U.S. exports of oilseeds to the two largest markets, China and Mexico, grew by 11.2 percent and 17.1 percent, respectively. Oilseed exports also grew rapidly in some smaller markets, most notably Taiwan, South Korea, the Netherlands, and Turkey. U.S. corn exports grew even more quickly than exports of soybeans, with the two largest markets—Japan and Mexico—importing 49.0 percent and 21.0 percent more corn from the United States than in 2013, respectively. Growth in smaller markets was even more rapid, with U.S. corn sales to South Korea, Colombia, Egypt, Peru, and Taiwan more than doubling.⁶ U.S. exports of cattle and beef grew 12.1 percent by value, to $6.8 billion. This increase in value was entirely attributable to higher prices; the quantity of beef exported was just slightly lower than in 2013. High prices for U.S. beef were driven by strong demand from markets in Asia, including Hong Kong, Taiwan, and, most notably, South Korea.⁷ The factors behind increased beef exports to South Korea are discussed below.

Another significant export increase was in ethyl alcohol. U.S. domestic exports of ethyl alcohol (ethanol) for non-beverage purposes totaled $2.1 billion in 2014, up 32.7 percent. The increase in 2014 represented a rebound from declines that occurred in each of the previous two years. Trends in U.S. non-beverage ethanol exports are driven by fuel ethanol.⁸ The rise in the value of U.S. exports of non-beverage ethanol resulted entirely from a 35 percent increase in the quantity exported, as the unit value declined by 2 percent.⁹

The increase in the quantity of exports was driven by, first, the availability of surplus domestic production reflected in relatively low corn prices; second, flat domestic demand resulting from the ethanol blend wall;¹⁰ and third, uncertainty about certain standards.¹¹ In addition, the demand for fuel ethanol is rising in nontraditional markets, particularly in Asia and Latin America, as many of these markets are establishing renewable fuel programs. Substantial increases were registered in U.S. exports to Canada (8 percent) and Brazil (117 percent), typically the leading U.S. markets, as well as to newer markets, including the Philippines (18 percent), and South Korea (539 percent).¹² U.S. corn ethanol exports held a significant price advantage in 2014 in these markets and in many others, in terms of both ethanol¹³ and gasoline.¹⁴

A decline in cotton exports was the most notable among U.S. agricultural export declines: cotton exports fell 21.4 percent by value and 22.4 percent by volume. Much lower U.S. exports of cotton to China (down by almost one-half) accounted for 90 percent of this decline.¹⁵ China imported 40.9 percent less cotton from all sources in 2014¹⁶ because of a combination of Chinese government policies. These included changes to direct support programs for cotton farmers, the large public stocks the government has accumulated over the last few years, and an announcement of reduced quota volumes for cotton imports.¹⁷ Demand from Chinese textile mills was also low in 2014, owing mainly to the high price of cotton in China compared to other fabrics.¹⁸

On a country basis, U.S. agricultural exports to South Korea grew 28.7 percent and to India by 24.2 percent. Growth in agricultural exports to South Korea was driven by strong sales of corn (described above), beef, and pork. The primary reason for increased beef and pork shipments from the United States was that South Korean meat production in 2014 was lower than in 2013;¹⁹ in 2013, particularly high South Korean production served to limit U.S. meat exports to the country. Increased exports to India were driven by tree nuts (typically the largest U.S. agricultural export to India) and dried beans.

Agricultural exports to Brazil, by contrast, fell 16.8 percent. The decline was due mainly to a 39.1 percent drop in the value of wheat exports. However, this drop was partly driven by relatively low prices (the decline was somewhat greater in value terms than in volume) and partly because in 2013, U.S. wheat exports to Brazil had been unusually high. (Argentina—normally a key supplier to Brazil—banned wheat exports in that year.)²⁰

U.S. Imports

Increases in U.S. agricultural imports were partly driven by a 48.7 percent increase in the value of cattle and beef imports, to $8.1 billion. Domestic supplies of cattle were low because of the lasting effects of drought in the major producing regions in preceding years,²¹ increasing demand for imported beef for processing. Major beneficiaries of this demand growth were Australia, which slaughtered more cattle than usual because of drought conditions there, and Canada, which benefited from a weaker Canadian dollar and thus a price advantage when exporting to the U.S. market.²²

The 19.3 percent rise in the value of U.S. shellfish imports, to $10.9 billion, was mostly attributable to increased imports of frozen shrimp. Such imports grew 29.9 percent by value and 15.5 percent by volume.²³ Similar to 2013, shrimp prices remained high in 2014 (particularly in the first part of the year), as recovery from a disease, Early Mortality Syndrome, continued in several major shrimp-producing countries. U.S. demand for shrimp, however, remained strong despite the relatively high prices.²⁴ Much of U.S. demand comes from the restaurant sector, which does not consider other proteins readily substitutable for shrimp.²⁵ The top three suppliers of frozen shrimp to the United States in 2014 were India, Indonesia, and Ecuador, and all increased their exports above 2013 levels.

As mentioned, the United States produced record crops of both soybeans and corn in 2014. The U.S. import market for these two crops, however, showed divergent trends, with oilseed imports (led by soybeans) up 44.4 percent to $2.1 billion, while cereal imports declined by 17.1 percent to $2.8 billion. This cereal import decline was driven by an 81.9 percent reduction in corn imports.

For soybeans, most of the increase in imports occurred during the first half of the year, before the record crop was harvested. The additional imports came mainly from Brazil, which harvested a very large crop in 2013, resulting in low prices that made such imports more competitive relative to domestic supplies (especially in the southeastern United States).²⁶ As a result, the value of Brazilian soybean shipments to the United States was up 203.1 percent in 2014, compared to 2013.²⁷ All of these shipments occurred between April and August of 2014, before the U.S. harvest. For corn, high U.S. production resulted, more predictably, in lower import demand. The sharp decrease in U.S. imports affected the two major U.S. suppliers, Canada and Brazil, with imports from Canada down by 81.4 percent and from Brazil down by 99.9 percent.

Another U.S. agricultural import that significantly declined was ethanol. U.S. imports of non-beverage ethanol totaled $620 million in 2014, a decrease of 56 percent compared with 2013. The drop in 2014 continued a trend that began in 2012. As with exports, recent trends in imports of non-beverage ethanol have been driven by demand for fuel ethanol.²⁸ However, in 2014, this pattern shifted, as non-beverage ethanol for non-fuel use accounted for 64 percent of the total value of imports.²⁹

The substantial decrease in the value of U.S. imports of non-beverage ethanol in 2014 resulted from lower import volumes and unit values.³⁰ Most of the decline was in imports from the leading sources, Brazil (59 percent) and Canada (15 percent). Undenatured fuel ethanol accounted for most of the drop.³¹ The decline in the quantity of imports resulted mainly from the same issues with blend walls and the Renewable Fuel Standard/ California Low Carbon Fuel Standard that affected exports. An extra factor was Brazilian prices that were high relative to U.S. prices (thereby limiting demand for imports from Brazil).³²

On a country basis, notable changes in U.S. agricultural imports were a 27.4 percent increase in imports from Indonesia and a 21.7 percent increase in imports from Vietnam. Increased imports from Indonesia were partly attributable to the increase in U.S. demand for imported shrimp (as mentioned above), as well as increases in imports of Indonesian palm oil and coffee. Shrimp and coffee also accounted for a large share of the increase in imports from Vietnam, along with cashews.