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READ the NAFB’s National Ag News for Thursday, June 20th
Fed Signals Economic Uncertainty, Future Interest Rate Cuts Could Follow
The Federal Reserve bank left the benchmark interest rate unchanged following a Wednesday meeting, but amid economic uncertainty, signaled that future cuts could be warranted. During a news conference following the meeting, Fed chairman Jerome Powell stated that due to uncertainties in the economic outlook, the Committee will “closely monitor” the economy and “act as appropriate to sustain the system.” The central bank left the target range for the federal funds rate at 2.25 to 2.5 percent. Worrisome factors include the uncertainty in trade with China and others, as the Trump administration works through crafting and implementing new trade agreements. President Trump has previously argued that the Fed should cut rates, even considering removing Powell from his position, which Trump nominated him for. Trade could improve, however, lessening the worry, as hopes are growing Trump and China’s President can resume negotiations next month starting with a meeting at the G20 Summit. Unchanged, or lower interest rates, may reduce worry in farm country, regarding the depressed farm economy, as well.
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China Blocking More Canadian Pork Shipments
China is blocking more Canadian pork imports, prompting more trade frustration between the two nations. China recently announced it would block pork imports from a third Canadian firm after China claimed a shipment contained ractopamine, according to Reuters. China does not accept pork that contains the banned feed additive. China will also strengthen inspection for ractopamine residue in all pork imports from Canada. China previously halted imports from two other Canadian firms over labeling concerns in April, and has also blocked imports of Canadian canola. Canadian Agriculture Minister Marie-Claude Bibeau (Bee-boh) says food inspectors are investigating the latest case, telling exporters to “be very vigilant” to “respect all the rules” regarding exports to China. In the first four months of 2019, China was Canada’s third-biggest pork export market, worth $310 million, according to Statistics Canada. China is also facing the lingering effects of African swine fever in its domestic pork market. Last month, China warned Canada that inspection would increase after “recent cases of non-compliance” in pork shipments.
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Trade Groups Claims Americans Have Paid $22 Billion in Tariffs Through Trade War
New data released by Tariffs Hurt the Heartland shows Americans have paid nearly $22 billion in additional tariffs since the trade war with China began. The data, which is broken down by individual tariff action, shows American businesses and consumers have paid $15 billion in higher costs due to tariffs on Chinese imports. The data runs through April 2019, the most recent month available through the U.S. Census Bureau. A spokesperson for the pro-free trade group says the tariffs are “erasing the benefits of tax reform,” and raising costs for U.S. businesses and families. The data shows more than 70 percent of the additional tariffs collected during the trade war have come from Section 301 tariffs on China. Many of those tariffs increased from 10 percent to 25 percent in May. Through April, more than $15 billion in all tariffs has come from China 301 tariff actions. The data also shows exports generally decreased by 2.5 percent from April 2018 levels.
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Cobank: Poultry Well Positioned to Withstand Profit Pressure
Poultry profitability is coming under pressure as prices decline amid growing supplies. A new report from CoBank says the U.S. chicken industry has experienced an unprecedented run of historic profitability since 2012 and responded by significantly increasing production and processing capacity. Six new poultry processing plants are expected to be operating by 2020, while production and supplies of competing animal proteins are expanding. Current projections for chicken production growth are 1.5 percent, which is well below the 2.5 percent average rate in the last five years. However, CoBank economist Will Sawyer says lessons learned from the last market downturn have driven important changes, strengthened the industry and made it more resilient to a potential market slide. Many chicken companies found themselves with burdensome levels of debt that became unsustainable when corn prices more than doubled in 2008 and 2009. Today, the average chicken producer has almost as much cash on hand as debt on their balance sheet, making them far more resilient to any downturn in chicken prices and margins.
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Seth Meyer to Depart Ag Outlook Board, to Join MU FAPRI
The Department of Agriculture Wednesday announced Seth Meyer will depart the USDA World Agricultural Outlook Board chair position. Effective July 13, Dr. Mark Jekanowski will become the chair of the board that coordinates, reviews, and approves the monthly World Agricultural Supply and Demand Estimates report, and long-term agricultural projections. Meyer was named chairman in May 2014 after joining the USDA Office of the Chief Economist as chief economist for domestic agricultural policy in 2013. He will be returning to the faculty of the University of Missouri’s Department of Agricultural Economics. Pat Westhoff, Director of the Food and Agricultural Policy Research Institute, or FAPRI, at the University, said via Twitter that Meyer will join the staff in August as associate director. Before joining the World Board, Jekanowski was with USDA’s Economic Research Service, first as chief of the Crops Branch, and more recently as deputy director for the commodity outlook program. Previously, Jekanowski was a senior vice president and head of the Washington office of Informa Economics.
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EPA Grants Sulfoxaflor Exemption Approval for Sorghum
The U.S. Environmental Protection Agency recently granted exemptions under the Federal Insecticide, Fungicide and Rodenticide Act for use of sulfoxaflor (so-fox-uh floor) on cotton and sorghum. The exemptions were originally granted earlier in 2019 and late 2018 for the 2019 growing season. National Sorghum Producers Chairman Dan Atkisson says sorghum growers are “grateful the EPA is standing by U.S. farmers,” as sulfoxaflor is critical for sorghum crop protection. The invasive sugarcane aphid, first confirmed in the U.S. in 2013, has had a devastating impact in many sorghum-producing states. In just the Lower Rio Grande Valley, Texas A&M calculated sugarcane aphid infestations reduced farmer profit by $20.3 million, or $64.29 per acre, in 2014 and $11.21 million, or $36.17 per acre, in 2015. Sulfoxaflor is vital to control of the invasive pest and is the best tool to avoid devastating impacts, according to National Sorghum Producers. The EPA first acknowledged the emergency exemption in 2014 and has approved the use of sulfoxaflor in grain sorghum each subsequent year.
