U.S. agriculture exports may be $1 billion more in value than the record $77.5 billion government officials forecast. That's according to estimates from Phil Abbot, agricultural economist, Purdue University.
Abbott says much of that added $1 billion will be for wheat. "In addition, these new forecasts show lower prices and decreased quantities of corn than the May forecast," he adds. Abbott specializes in international trade and ag development.
Most of that added value bump comes from higher grain and oilseed prices, but what might that mean in the longer term? Abbott points to a study by Iowa State's Center for Agriculture and Rural Development showing that the United States may eventually use 75% of the corn it produces to make ethanol.
"If you read between the lines, their study shows that the United States will have to import corn to accommodate this demand for corn to make ethanol," he notes. "We would flip from an exporting country to an importing country, if their study is correct."
Abbott doesn't think the market will eventually play out that way noting that the price of corn would have to increase dramatically more than the $4.05 the CARD model predicts. "The study assumes too much adjustment to price in foreign and domestic demand, and that's why their price doesn't go any higher than it does."