It could take weeks or even months to reopen most ag facilities at the Gulf impacted by Hurricane Ida last month.
But that shouldn’t put a huge dent in export sales, despite weighing on the commodity markets in recent weeks. USDA forecast fiscal year 2021 ag exports could increase 24% to a record $173.5 billion before possibly setting another record in 2022 of $177.5 billion.
“America’s farmers, ranchers and processors are the world’s best and global demand for their products is a testament to their quality, safety and commitment to sustainability and has led to a projected new record in U.S. agricultural exports,” said Ag Secretary Tom Vilsack.
Key factors driving the stout export projections include record volume and value of corn exports, record volume of soybean exports, strong demand from China and reduced foreign competition.
Exports to China are forecast to reach a record $39 billion, keeping it the largest export market for the U.S., followed by Canada and Mexico.
Of course, infrastructure issues emerged in the wake of the devastating Hurricane Ida. Dan Basse, president of AgResource Company, believes it could be October before 70-80% of export facilities are back online at the Gulf, where about 60% of U.S. ag exports exit the country after traversing the Mississippi River.
“The Gulf is kind of a mess,” Basse told FarmWeek at the Land Pro fall seminar in Morris. “(Hurricane) Katrina in 2005, where we had levy failures, was easier to fix. This is electrical and structural (damage to facilities).”
Ongoing supply chain issues initiated by the COVID pandemic also could impede the process of reopening Gulf facilities.
“We know the supply of building material and labor are tight,” Basse said. “We’ll have some elevators be out for months.”
During that time, Basse looks for ag exports moving by unit trains to the Pacific Northwest to grow and possibly even double on some lines.
“It’s now about understanding ways to minimize the Gulf damage and get commodities out the door,” he said.
But, even with the infrastructure issues caused by Ida and consumer spending in the U.S. starting to wane as about 9 million Americans recently came off unemployment, Basse still sees a bright future for ag product demand and prices.
The analyst projects China will maintain an insatiable appetite for grain and oilseeds and the push for renewable diesel fuel in the U.S., which could be comprised of up to 80% soy oil as the main feedstock, will raise the need for U.S. crop acres out to 2025.
Near-term, production issues in Canada could spur sales of up to 250 million bushels of corn there while world competition could slip as drought decimated Brazil’s safrinha corn crop while food inflation caused Russia to put an export tax on wheat.
“We believe the corn and wheat market have real bull stories,” Basse said. “In spring we peaked corn at $7.75 per bushel. We don’t see any reason it can’t go back to $6.50 to $7.50 by spring of next year.
“Soybeans should hold between $12 and $14 and wheat may still gallop higher another $1 or $2 before the seasonal high the first quarter next year,” he noted.
Basse also looks for fertilizer prices to continue to go up due in part to the infrastructure issues in the Gulf, and for interest rates to remain near historic lows, which would continue to support farmland prices.