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Starting early last year, the Dollar Index began a long, upward move that culminated with a 20-year high in September. It has since retreated and has given back a good portion of those gains. Despite a recovery move this week, it remains on-track for its first three-month losing streak since August 2020. It could also see significant declines during the first half of 2023.
The US Census Bureau provides monthly data on US commodity exports in their monthly International Trade in Goods and Services report, which includes the goods trade balance, which is measured by the value of the imports and exports in dollars. The global post-pandemic economic recovery and across-the-board inflation led to a surge in US goods exports this year. They reached $184.014 billion in August, which was a record for a single month. There were back-to-back declines in September and October, which were the largest since early 2020.
The Census Bureau divides US goods exports into six categories: 1) Industrial Supplies and Materials, 2) Capital Goods, 3) Automotive Vehicles and Parts, 4) Consumer Goods, 5) Foods, Feeds & Beverages, and 6) Other Goods. The grains, oilseeds and meats are covered in Foods, Feeds and Beverages. Petroleum, precious metals, industrial metals, cotton, and lumber are covered in Industrial Supplies and Materials, which has been the largest-valued category over the past two years.
Crude oil, petroleum products, and natural gas are the largest US commodity exports in dollar terms. The US has been a net exporter of crude oil and products combined for several years, with the ten largest weekly surpluses on record occurring since April. These items are priced in dollars in many parts of the world. Attempts to have them priced in other currencies have gained little traction in the global energy marketplace.
It may be in agricultural commodities that a weaker dollar will provide the biggest benefit to US exports. The US has a 25% share or higher of global exports in soybeans, cotton, corn, pork, and soybean meal exports. Those will become more competitive if the dollar continues to weaken. And while the US has only a 10% share of global wheat exports, there is room for expansion in the wake of the Russia/Ukraine war and if the dollar continues to lose value.
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Originally Published December 23, 2022
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