800 326 9054The Agriculture Department is projecting that the ag trade deficit will shrink in FY2026 even more than previously anticipated.
USDA expects the trade deficit to fall from $43.7 billion in FY2025 to $37 billion in FY2026, according to its quarterly trade forecast published Tuesday. In its previous report issued in August, USDA had projected a trade deficit of $41.5 billion this fiscal year.
The U.S. recorded trade deficits of around $32 billion in FY2024 and $17 billion in FY2023, respectively.
The quarterly trade forecast, published by the Economic Research Service, had been scheduled for publication last month, but was delayed due to the government shutdown.
Driving the adjusted outlook are larger-than-expected exports. USDA now expects $173 billion in ag exports for FY2026, up from the $169 projected in August. But even with the revision, exports are still set to contract year-over-year, after the U.S. recorded $175.6 billion in exports in FY2025.
Ag imports are also set to fall from $219.4 billion during the last fiscal year to $210 billion in FY2026.
The FY2026 outlook is buoyed by stronger grain and feed, oilseed and dairy exports than previously estimated. Corn exports, for example, were initially forecast to hit $15.2 billion, but projections have been revised to $17.6 billion for the fiscal year. Soybean export estimates were also revised up in Tuesday’s release from $18.3 billion to $19 billion.
U.S. dairy export projections grew by $400 million from August’s estimate. In the livestock category, pork’s estimates also increased by $100 million. Beef and veal projections fell slightly, while poultry estimates held steady at $6.9 billion.
A significant portion of the better outlook can be attributed to improvements in the Chinese market. USDA revised U.S. ag export prospects to China upwards by $3 billion from the August to December releases. Exports to South Korea, Japan, Mexico and Southeast Asia also all posted small increases from August’s forecast.
However, export projections to the European Union were revised downward from August by some $800 million.
Since the August report, the U.S. has announced a slate of tariff deals, including an October deal with China, which included commitments to buy U.S. soybeans, and pacts with several Southeast Asian counties.
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*Sourced from Agri-Pulse