ERS Charts of Note
Monday, August 15, 2016
Macroeconomic factors, including the exchange rate of the U.S. dollar, played a key role in the strong growth of U.S. agricultural exports that began in the early 2000s, with exports peaking in U.S. fiscal year (FY) 2014/15 (October/September). While other variables, particularly robust income gains in developing countries, supported market growth, an extended period of dollar depreciation during FY2003-14 increased the competitiveness of U.S. exports. Since FY2014, however, U.S. agricultural exports have declined in real terms as global income growth has slowed and the dollar has strengthened against the currencies of many U.S. agricultural export markets and competitors. A stronger dollar tends to have the greatest impact on U.S. exports of bulk and intermediate goods that are more readily substituted for by exports from other suppliers. Exports of consumer-oriented products that are more differentiated from those of competitors tend to be less affected by a stronger dollar. The real trade-weighted dollar exchange rate is an indicator that accounts for both the change in each country?s exchange rate with the U.S. dollar and its share of U.S. agricultural exports. This is an updated version of a chart found in Global Macroeconomic Developments Drive Downturn in U.S. Agricultural Exports released on July 12, 2016.
Monday, September 22, 2014
Developing regions account for an increasing share of global gross domestic product (GDP)—a measure of total economic output—a trend that reflects their growing role in driving growth in consumer demand, including demand for agricultural products. Relatively high rates of GDP growth in developing regions, particularly China and other developing Asian countries, have boosted the developing country share of global GDP from 21 percent in 1990 to 27 percent in 2000, and about 38 percent in 2014. This ongoing shift in the world economy is a driver of food demand because developing country consumers tend to spend larger shares of additional income on food. China and Developing Asia together accounted for 34 percent of U.S. agricultural exports in fiscal 2013, while developing countries as a whole accounted for 65 percent. USDA long-term projections for agriculture, which assume continued income growth in developing countries, indicate that developing countries will account for more than 90 percent of the growth in world imports of meats, grains, and oilseeds over the next decade. This chart is based on data found in ERS’s International Macroeconomic Data Set.
Friday, March 21, 2014
The depreciation of the U.S. dollar against the currencies of U.S. agricultural trade partners contributed to the growth in U.S. agricultural exports since the early 2000s. When the dollar depreciates, U.S. agricultural exports tend to rise as they become cheaper in foreign currency terms, while periods of appreciation—such as 2009—tend to make U.S. goods more expensive and constrain exports. Between 2002 and 2011, the U.S. dollar depreciated 22 percent against the currencies of U.S. agricultural trade partners, while U.S. agricultural exports expanded by 156 percent. Since 2011, although the dollar has appreciated 7 percent, its value remains low relative to historical levels and U.S. agricultural exports have remained competitive. The U.S. dollar exchange rate index shown in the chart is based on the average exchange rate across countries, weighted by each country’s share of U.S. agricultural exports. This chart is based on data found in the ERS Agricultural Exchange Rate Data Set and Foreign Agricultural Trade of the United States.
Monday, September 23, 2013
Annual world real economic growth is expected to rise from 2.2 percent in 2013 to 2.9 percent in 2014, maintaining a strong global demand outlook for U.S. agricultural trade. All global regions are forecast to show stronger real GDP growth in 2014. Growth in Asia, which includes China—the largest U.S. export market in 2013—as well as a number of large and emerging U.S. markets, is forecast to rise to 4.3 percent in 2014. Asian growth is expected to be sustained primarily by domestic consumer demand, housing growth due to easier credit, and higher infrastructure spending. Growth in the North America Free Trade Agreement (NAFTA) region, which includes the second and third largest U.S. markets in 2013—Canada and Mexico—is expected to strengthen to 3 percent in 2014. In the NAFTA region, continued U.S. recovery is expected to drive higher regional growth in 2014, with real GDP growth in Mexico expected to reach 4 percent. European economies are forecast to recover in 2014 and, along with faster U.S. growth, are expected to strengthen trade and growth prospects for economies in the Middle East and Africa. Key risks to the outlook include the potential for inflationary pressures leading to more restrictive monetary and fiscal policies and slower growth in several emerging markets, as well the potential for slower financial recovery, credit expansion, and growth in the Euro zone countries. This chart is based on data found in the Outlook for U.S. Agricultural Trade: August 2013.
Thursday, June 13, 2013
China is the fastest growing major economy in the world and is now also the largest single country market for U.S. agricultural exports. Rapid growth in incomes and urbanization are key drivers of China’s growing demand for agricultural goods, and the appreciation of China’s currency—the renminbi—against the U.S. dollar is helping to make U.S. goods competitive in the Chinese market in recent years. During the 1980s and 1990s, China maintained an undervalued renminbi, a policy that supported China’s rapid export growth and accumulation of the world’s largest current account surplus and holdings of U.S. dollar reserves. Since 2006, however, China has followed a policy of modest rates of appreciation of the renminbi, which has become more pronounced since 2008. This chart is based on data found in the Agricultural Exchange Rate Data Set.
Friday, January 18, 2013
The real dollar exchange rate index, based on an agricultural trade-weighted average of exchange rates in U.S. export market countries, has fluctuated substantially since 1970. Nonetheless, since September 2001, the U.S. dollar has experienced the most prolonged period of depreciation against the currencies of agricultural trading partners since 1970. Because depreciation of the U.S. dollar tends to increase the global competitiveness of U.S. products, the trend towards a weaker dollar has been a contributing factor in the recent strong growth of U.S. agricultural exports. A second major factor behind U.S. agricultural export growth has been strong economic growth in developing countries, where consumers tend to spend a relatively larger share of new income on improving their diet. While the dollar may not continue to depreciate against other currencies at the same rate, current expectations are that the exchange rate will remain relatively low and support further growth in U.S. agricultural exports. This chart appears in "Economic and Financial Conditions Bode Well for U.S. Agriculture" in the December 2012 edition of ERS's Amber Waves magazine.
Wednesday, November 7, 2012
Improving agricultural productivity has been the world's primary safeguard against the needs of a growing population outstripping the ability of man and resources to supply food. Over the past 50 years, global gross agricultural output has more than tripled in volume, and productivity growth in agriculture has enabled food to become more abundant and cheaper. In inflation-adjusted dollars, agricultural prices fell by an average of 1 percent per year between 1900 and 2010, despite an increase in the world's population from 1.7 billion to nearly 7.0 billion over the same period. Nonetheless, food prices have been rising since around 2001. This has renewed concerns about the pace of agricultural productivity growth. If productivity growth slows, then more resources--land, labor, energy, fertilizers, and other inputs--would be needed to meet rising demand, raising the cost of food. This chart appears in "New Evidence Points to Robust But Uneven Productivity Growth in Global Agriculture" in the September 2012 issue of ERS's Amber Waves magazine.
Monday, October 22, 2012
While both developed and developing countries showed declines in economic growth during 2008 and 2009, developed countries went into a severe recession whereas the developing countries only had a growth slowdown. By 2010, both groups of countries were in recovery, but the difference in relative growth rates was around 4 percent per year. The growth difference between developed and developing countries has been increasing for some time, and the 2008-09 recession reinforced this pattern and likely will persist into the future. The growth differential prior to 2000 was almost half of what it has been since then. As shown in this chart, the longer-term effect of this growth differential will be a shift in economic activity from developed to developing countries. This chart is found in The 2008-09 Recession and Recovery Implications for the Growth and Financial Health of U.S. Agriculture, WRS-1201, May 2012.
Thursday, July 12, 2012
Gloomier economic prospects for Europe, China, and India are reverberating throughout the world. While growth of the U.S. economy is by no means robust, a loss of confidence in these countries precipitated a flight of capital into U.S. Treasury securities. As major foreign currencies have lost value against the U.S. dollar, the cost of U.S. commodities to foreign buyers has increased, putting downward pressure on demand for (and prices of) nearly all U.S. commodities (excluding gold). In May, market prices for soybeans and soybean products tumbled due to these macroeconomic factors. However, price declines for soybeans and soybean meal may be short-lived because their market fundamentals (related to yields, planted acres, harvested acres, weather conditions, etc.) have not really changed. This chart is found in the Oil Crops Outlook, OCS-12f, June 2012.
Monday, March 5, 2012
Projections for the agricultural sector through 2021 are based on assumptions about macroeconomic conditions. World GDP growth is projected to increase at an average annual rate of around 3.3 percent over the next decade. This return to long-run steady global economic growth supports gains in world food demand, global agricultural trade, and U.S. agricultural exports. The strongest economic growth is anticipated to occur in developing countries. This growth is important for agriculture because food consumption and feed use are particularly responsive to income growth in those countries, with movement away from traditional staple foods and increased diversification of diets. Developed economies of the world are projected to grow 2 percent annually, on average, from 2011 to 2021, with U.S. growth averaging about 2.5 percent. This chart is based on the macroeconomic assumptions that underpin the report, USDA Agricultural Projections to 2021, OCE-121, February 2012.