An increasing demand in developing economies has boosted US agricultural exports in 2008… and likely beyondBy Gene Linn, AJOTThe US economy is sagging toward a recession under the weight of tight credit, a housing industry crisis and other problems. However, American agricultural business exports are surging to new heights. All major agricultural commodity groups will hit record high export sales in 2008, according to the Foreign Agricultural Service (FAS) of the USDA. After reaching an all-time high of $81.9 billion in 2007, the FAS said, total US agricultural exports will leap to $91.0 billion in 2008. Some of the gains result from cyclical or temporary trends, but the long-term rise in demand from increasingly richer overseas populations promises strong export growth not only through 2008… but beyond. The positive trends are clear in feed grain exports, barley, corn, grain sorghum and related products. The livestock and poultry that consume these products are growing in numbers as people gain purchasing power. “There’s a steady rise in demand worldwide,” Ken Hobbie, president of the export developing organization US Grains Council, told the AJOT. “I don’t see anything causing it to stop, especially since the population worldwide is coming into its own as consumers of meat, milk and eggs. An economic downturn could slow down growth, but it will pick up rapidly.” The fastest growth in exports comes from areas with rapidly expanding economies, Hobbie said, Asia, Mexico and South and Central America. “We’re starting to see glimpses of the same type of growth in the Middle East,” he said. Egypt, with its relatively stable economy, has become a substantial importer of feed grains. “We think the same thing could happen in other parts of the Middle East if economies stabilize and they get beyond political disturbances.” Some of the growth in feed grain exports is due to relatively short-term developments, including poor harvests in Australia, Europe, Canada, Russia and the Ukraine. In addition, the US dollar continued to fall, which tends to improve American competitiveness by boosting foreign demand and reducing comparative US export costs. However, the role of the sinking dollar is not clear-cut, according to Hobbie. “There’s a lot of debate about the effect of the dollar,” he said. “The dollar is significantly weaker in some countries, but there’s not that much devaluation in some.” One issue that is not helping exports of the feed grains and other agricultural products is the transportation situation. “There are record high bulk freight prices,” Hobbie said, “and there’s also port congestion.” And the US economic slowdown is stifling the recent positive move toward shipping to Asia by container instead in bulk. This trend arose because many thousands of containers that brought clothes, consumer electronics and other goods to the US were going back to Asia empty. It made economic sense to fill some of those containers with grains or oilseeds, and gave shippers more choices for export transportation. “We’ve seen containerization rise in the last three years, but it’s flattened out because the economy has slowed,” Hobbie said, “which means a slowdown in imports and fewer boxes coming into the US” All in all, the value of exports of the coarse grains that are used as feed grains is set to rise $1.4 billion in 2008, according to the FAS. The main reasons for the increase are a jump of eight million metric tons exports on. the back of ample US supplies and higher demand by the European Union. However, the FAS said, higher prices for corn might dampen demand for that commodity. One big factor affecting the supply and price of corn is increasing use of the crop to produce ethanol for fuel. As a part of this trend, Archer Midland (ADM) will complete one corn-fed ethanol plant in 2008 and another in 2009 in the US that will produce 1.65 billion gallons of ethanol a year. As corn prices rise in the face of surging demand for ethanol production, it is likely that