President Joe Biden’s administration believes that the strong dollar is likely to have held back agricultural exports such as soybeans, cotton and corn in 2022.

In fact, exports in the Bureau of Economic Analysis‘ (BEA) broad end-use category of food, feed, and beverages, which includes these agricultural commodities, fell to their lowest level in real terms since 2015, another period of dollar strength.

The BEA classifies traded goods into six broad end-use categories: consumer goods; food, feed, and beverages; industrial supplies and materials; capital goods; automotive vehicles, etc.; and other goods.

Agricultural exports

Since agricultural products tend to have relatively few intrinsic differences between countries of origin, it is especially attractive for buyers to substitute U.S. varieties when a strong dollar increases their relative prices.

Indeed, research suggests that exchange rates are a particularly relevant factor for buyers of less differentiated commodities, and U.S. agricultural exports tend to decline in periods of real dollar strength.

Foreign trade

Real exports grew faster than global Gross Domestic Product (GDP) during the four quarters of 2022, at an annual rate of 5.2%, reflecting the continued reopening of the global economy.

Although real imports grew more slowly than real exports during the four quarters of the year, at a 1.8 percent pace, that import pace outpaced real GDP growth by 0.9 percentage points.

Due to stronger growth in real exports relative to imports, real net exports partially recovered from their pandemic-induced decline in 2022, contributing 0.3 percentage points to overall real GDP growth.

U.S. trade in goods and services (exports plus imports) increased 8% over 2021 in inflation-adjusted real terms, surpassing the record set in 2019.