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READ the NAFB’s National Ag News for Wednesday, July 3rd
Which Farm Goods May China Purchase During the Trade Truce?
Now that President Trump and Chinese President Jinping have agreed to a temporary trade truce, Trump says China has promised to buy large amounts of ag products from U.S. farmers. A Politico report looked into what products that shopping list might include. Soybeans are likely to be on top of the list. Soybean farmers have been hit hardest by Trump’s trade war because China was once the top export market for U.S. soybeans. Beijing bought another 544,000 metric tons last week, its largest buy since March. Pork might be another key item on the list as pork producers have also been hit hard by the trade feuds, especially with China and Mexico. As African Swine Fever continues to ravage China’s once-giant herds, Beijing could now turn to U.S. hog farmers to fill in the country’s appetite for protein. Politico also says that ethanol exports to China could potentially grow. That would help ease some pressure on corn growers and biofuel producers, a key constituency that’s complained the administration’s trade policies are harming demand for ethanol. The only question is that China doesn’t maintain government reserves of ethanol and the tariffs are currently prohibitive. As of right now, there isn’t a lot of space for China to buy up huge amounts of the biofuel.
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Republican Senators Want Perdue to Back off EPA
Oil-state Republicans are asking President Trump to tell Secretary of Ag Sonny Perdue to basically “stay in his lane” when it comes to the Environmental Protection Agency. A DTN report says they want Perdue to stay out of the EPA’s decision-making when it comes to small refinery waivers under the Renewable Fuels Standard. Perdue recently said that he would be getting more involved with the EPA and how it approves those small refinery waivers. Those comments prompted 13 Republican senators to fire off a letter to Trump asking him to rein in his Ag Secretary. “We strongly oppose giving Secretary Perdue any role in the decision-making process over the petitions,” the letter says. The senators pointed out that the Clean Air Act doesn’t give the ag secretary any authority or role in granting the small refinery petitions. The biofuels industry and its supporters note that the exemptions have reduced ethanol use by approximately 2.6 billion gallons, all while 38 refiners are standing in line and waiting for the EPA to decide on a large list of new exemptions. A dozen senators representing ethanol states wrote the EPA earlier this month and asked the agency to stop granting the exemptions and to reallocate the fuel blending volumes that have been waived off because of the exemptions.
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Producer Sentiment Rebounds in June
Ag producer sentiment took a jump up in June as producers seemed to be more optimistic about the future of the agricultural economy. The Purdue University/CME Group Ag Economy Barometer increased its index reading to 126, a jump of 25 points from May. The index of Current Conditions saw a modest 13-point increase from May, coming in at 97 on the index scale. The Index of Future Expectations jumped 33 points to a reading of 141 in June. Producers in the survey were asked if the Market Facilitation Program announcement affected their decisions to take or not take prevented planting payment this year. Ten percent of corn and soybean producers said the announcement did impact their decision making. One of the biggest question marks in 2019 has to do with how many acres will be involved in prevented planting. Nearly one-third of the respondents who farm corn and soybeans say they intended to take prevented planting payments on some of their corn acres. Of those who intended to take a prevented planting payment, just over half of the respondents took prevent plant on more than 15 percent of intended corn acreage. Finally, farmers seemed more optimistic in the month of June about an eventual resolution to the trade dispute with China.
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Cover Crops on Prevent Plant Acres Are Eligible for MFP Payment
Farmers who were prevented from planting cash crops due to extremely wet weather will be able to stay eligible for the Market Facilitation Program by planting cover crops. The official announcement was made during a Monday press conference by Natural Resources Conservation Service boss Matthew Lohr. USDA has targeted a little over $14 billion in payments for the 2019 growing season in order to ease the impact the ongoing trade dispute with China is having on U.S. farmers. The first of three rounds of payments is due in either late July or early August. Risk Management Agency Chief of Staff Keith Gray says prevent plant filing has already been brisk, with a total of $151 million already paid out. “A billion dollars in payments in not out of the realm of possibility as we get the final notice of loss closer to the end of July,” Gray said. The Natural Resources Conservation Service has announced special signups in eight states for cost-share assistance to plant cover crops under the Environmental Quality Incentives Program. Those states include Kansas, Michigan, Minnesota, Missouri, Nebraska, Ohio, Oklahoma, and South Dakota. NRCS chief Lohr says he expects that number of states will likely grow in the near future.
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Pork Producers Cobbling Together New Customers
U.S. pork farmers have lost hundreds of millions of dollars in sales to China and Mexico thanks to trade disputes. Reuters says the pork industry is trying to offset at least some of those losses by piecing together smaller markets like Colombia and Vietnam. That’s according to a Reuters analysis of data from the U.S. Meat Export Federation and USDA. American farmers are waiting for the trade dispute between the U.S. and Trump to finally reach a conclusion. The pork industry stands out in avoiding the sharp reductions in sales that have hurt many other farm sectors, including soybeans and sorghum. Iowa hog farmer Dean Meyer told Reuters that “the boom in small-market sales has been a savior for the pork industry.” As China and Mexico were reducing their pork purchases last year, a subsequent drop in the price of U.S. pork led to other buyers ramping up their purchases. Those purchases were particularly notable from smaller markets that had trade agreements with the U.S., including Colombia and South Korea. The U.S. pork industry had relied on China and Hong Kong for about 20 percent of its exports before the trade war began. U.S. exports to Colombia, the Dominican Republic, Australia, Philippines, Vietnam, and South Korea rose 24 percent by volume in the 12 months ending in April when compared to a year earlier.
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July 4th Cookout Costs Almost the Same as Last Year
America has a long list of favorite foods for the Fourth of July, including hot dogs, cheeseburgers, pork spare ribs, potato salad, baked beans, lemonade, and watermelon, among others. A cookout of the traditional Fourth of July favorites will cost just a few cents more this year, coming in at less than six dollars per person. The American Farm Bureau’s survey reveals the average cost of a summer cookout for 10 people is $52.80, or $5.28 per person. The overall cost is just 11 cents higher than in 2018. “Strong consumer demand for beef and higher U.S. meat production has led to higher ground beef prices, but lower pork spare ribs for the Fourth of July,” says AFB Chief Economist John Newton. “Increased pork supplies and competition in the meat case at the grocery store contributed to lower spare rib prices.” Consumers will see lower cheese prices in time for the grilling season. A brand-new item on the list that Farm Bureau tracked is ice cream. Including 1.5 quarts of vanilla ice cream brings the total cost of the cookout to $56.38, still less than six dollars per person.
