Hog Prices-Markets

No Decision From President Biden on Lifting China Tariffs...Yet

Wed, 13 Jul 2022 20:32:31 GMT

President Biden says he has not made a decision yet on whether to lift some of the $370 billion of tariffs imposed on Chinese imports by the Trump Administration. Biden has been talking about rolling those duties back for weeks as a way to curb inflation while opening a new exclusion process for firms to win additional relief. However, there are mixed opinions on whether or not the cuts will take place, whether China will reciprocate, and what the impact will be on agriculture.

Farm Journal Analyst Jim Wiesemeyer tells us he is not optimistic about tariff relief materializing. And if it does, he says it won’t have much direct effect on ag imports into China.

“On the initial ones, I don’t see much because U.S. Trade Representative Katherine Tai wants some leverage,” he says. “Although China has clearly shown that it is not going to move them. So initially I don’t see it will be part of the $10 billion.”

One caveat is some targeted duties could be dropped which would lower farmers’ costs such as the 25% tax on semiconductors and other parts that go into farm machinery. Plus, crop protection product ingredients.

Frayne Olson, NDSU crop marketing economist says, “Some of the basic chemistry we import from China, we add in the specialized ingredients here and they’re sold in the U.S. So, this reduction or potential elimination of import tariffs may have an impact on the input side, the cost of inputs coming in.”

And while tariffs on soybeans imported from China were already under some import exclusions, officials with the American Soybean Association say any further movement on the 301 and 232 tariffs will be helpful.

Steve Censky, American Soybean Association CEO says, “Even though the tariff China has right now for a lot of these state-owned enterprises has been suspended on soy imports, they’re still hanging out there and it has a bit of a chilling effect.” So, Censky is optimistic about the impact at least a partial reduction of levies will have on the ag industry.

Wiesemeyer says the tariff reduction isn’t likely to lower inflation and is an admission that tariffs don’t work. Additionally, the White House has also been weighing a new investigation into Chinese subsidies and their damage to the American economy as a way to pressure Beijing on trade.

More Traffic Slowdowns At The Panama Canal

Fri, 03 Nov 2023 19:08:20 GMT

Low water levels continue to plague the Panama Canal after what’s reported as its driest October on record.

Daily ship transits through the Panama Canal will be cut in half this winter. Via the Wall Street Journal, Daily reservations slots will be cut to 25 this month, 22 next month, 20 in January and 18 in February. Last month the canal had 32 daily transits. On a normal day, the canal can handle 40 transits.

A prolonged period of elevated temperatures and limited rainfall had led to a significant drop in the water level of Gatun Lake, which supplies water to the canal’s locks.

Around 70% of vessels using the Panama Canal require a draft of 44 feet, which is the current limit, down from 50 feet at the beginning this year. If the draft is lowered further, most ships won’t be able to transit with full loads.

The Panama Canal handles approximately 7% of all global seaborne trade. Canal authorities say about 98 vessels are waiting to cross at both sides of the canal. It’s noted containerships that have fixed schedules and booked slots months in advance aren’t facing serious delays, but crude and gas tankers calling on short notice can be trapped for weeks.

Do A Risk Assessment to Gauge Your Farm's Technical Debt

Thu, 20 Jul 2023 20:57:47 GMT

Could agriculture face a Southwest-type meltdown?

Southwest Airlines faced a perfect storm last December when it was forced to cancel more than 15,000 flights. The primary cause? An antiquated software scheduling system with origins in the 1990s.

“Southwest lost all visibility into where their planes and people were,” says Steve Cubbage, founder of Longitude 94. “Reports indicate some employees — not customers — were on hold for 17 hours to report their location. Even when the planes and people were physically in the same place, Southwest still couldn’t put Humpty Dumpty back together.”

Southwest has a huge amount of “technical debt,” Cubbage says, which is a gap between what the technology needs to be and what it is today.

“ Agriculture also carries technical debt ,” he says “When one takes off agriculture’s rose-colored glasses, the reality is much of the industry’s technology is being held together with digital duct tape and baling wire.”

For example, Cubbage says, the precision agriculture revolution is now more than 30 years in the rearview mirror. Many of those legacy systems are still used on farms today.

As farming and agriculture have evolved, farmers have become increasingly dependent on three networks they can’t control, says Brian Watkins, on Ohio farmer and founder of CropZilla, a farm software provider. The networks are:

Internet
Mobile communication
GPS

“If any of those went down, especially GPS, where would we be? We could figure out how to get things done, but there would be some real gnashing of teeth,” Watkins says.

While farmers don’t have to worry about a meltdown on the Southwest level, they do face technological risks, adds Terry Griffin, agricultural economist and precision agriculture specialist at Kansas State University.

“We’re going to be subject to those types of issues, whether it’s a faulty system or an intentional data breach by extremists,” he says. “Humans built these systems and humans can break these systems.”

INVEST WISELY

Do a risk assessment of your farm, Watkins suggests. What key parts have the potential for failure? Is your data backed up ? Then you can determine how to narrow any gaps.

“We have so many types of technology marketed to us as farmers,” he says. “You have to have a strategy for testing and adoption. People have different strategies, such as being on the bleeding edge or being a late adopter. Most of us try to be in the middle.”

Your goal is to be proactive, as a reactionary approach to adopting technology makes it impossible to deliver what the marketplace demands today, Cubbage says.

“Carbon markets and the digital transparency involved in tracking food through the supply chain are all at risk,” he says. “Southwest rested on its laurels. Will agriculture do the same, or will we roll up our sleeves and get to work?”

Sara Schafer uses her Missouri farm roots to cover crop management, business topics, farmland and more.

Rabobank: Consumers pull back on spending after years of inflation fatigue

Fri, 28 Jun 2024 13:49:21 GMT

Inflation has battered consumers over the past four years, and a Rabobank analysis says U.S. consumers have finally hit the wall.

In a report on the cost of a Fourth of July barbecue, Rabobank analysts said consumers are trading down and eating out less often in response to long-running inflation.

“The consumer is waving the white flag on food inflation,” Tom Bailey, senior consumer foods analyst at Rabobank, said in a news release. “With an added 2% in price hikes in 2024 coupled with the cost disparity between dining out and cooking at home at its widest margin in history, we’re seeing heightened fatigue and frugality.”

The 2024 Rabobank BBQ Index, which measures the cost of staple ingredients for a 10-person barbecue, shows that it will cost $99 to host a cookout on the Fourth of July this year, up from $97 last year and $73 in 2018. Cookout ingredients are 32% higher food costs in 2024 compared with 2019, according to Rabobank.

The index showed that the average U.S. consumer has to work an hour to earn enough money for a six-pack of beer and a burger in 2024, up from 51 minutes in 2019, and they’ll have to work nine hours to pay for a barbecue this year, up 32% since 2019.

Produce prices for the BBQ Index are mostly tame compared with a year ago, Rabobank economists said. California’s drought in 2023 sent lettuce prices to more than $100 a carton, well above the average range of $15 to $20 per carton. Rabobank analysts said lettuce prices have come down significantly in 2024.

“We expect leafy greens to have steady supplies, good quality and decent prices,” Rabobank economists said in the release.

Potatoes, also hit hard by drought last year, have rebounded with greater supply based on expanded acreage harvested in the fall of 2023. Potato prices are about half of year-ago levels, the index showed.

On the other side of the ledger, Rabobank analysts said tomato prices have moved higher in 2024 as dry weather in Mexico has curtailed production and overall availability.

Rabobank analysts said a reported 68% of people polled by Vericast say they are switching from restaurants — where the tab is up 4.4% annually — to grocery stores, which have seen only a 1.1% price.

Consumers are pulling back all purchases because of tight budgets, Rabobank officials said. Retail sales were weaker than expected in May as higher borrowing rates and inflation discouraged purchase decisions, Rabobank economists said.

“Retail sales will likely remain soft throughout 2024,” Bailey said.

Wages have not kept up with inflation. Credit card debt, on average, sits at $10,479 per household in the U.S., up from $8,763 in 2021. Forty-one percent of Americans polled by WalletHub say they have more credit card debt now than they did 12 months ago, the release said.

Government aid, such as Supplemental Nutrition Assistance Program emergency payments, the child tax credit, increased unemployment benefits and a suspension of student loan payments have ended, the release said. People under the age of 35 have been hit the hardest; credit card delinquencies in this demographic are at their highest level since 2011, according to the Federal Reserve.

“Fiscal fitness is now more of a focus,” Bailey said. “Saddled with mounting credit card debt, waning savings, and lower real income, consumers are spending less.”

5 Transformations Happening in China That Will Affect Your Farm

Tue, 25 Jul 2023 14:17:49 GMT

China contains the largest population of any country in the world. All those mouths drive demand across the globe and for your farm’s products.

“Chinese domestic policies have consequences for the global market,” says Wendong Zhang , Iowa State University Extension economist.

Zhang grew up in rural northeast China (his rural county was home to more than 1 million people and more than 100 million people across the globe share his last name). To set the stage for what farmers should know about China to understand the trade war, he provides a few key facts.

Mainland China and the continental U.S. are about the same size and cover similar latitude ranges.

The U.S. is home to 329 million people, while China is home to 1.4 billion.
The U.S. has around 17% of all the arable land in the world, with 4% of global population. China has nearly 20% of the population and 11% of the world’s arable land.

During the online Top Producer Summit, Wendong Zhang presented “5 Transformations Happening in China That Will Affect Your Farm.” Learn more here .

Zhang says farmers should understand these facts and trends about China.

Transformation 1: Exports to China Are Losing Steam

While the sheer size of China’s population drives the global economy, Zhang predicts these trends will slow the country’s food demand from key trade partners, such as the U.S.

“Exports to China are very consequential; they’re actually one of the key factors why we started seeing $5 and $6 corn since the fall of 2020,” Zhang says.

China committed to purchases nearly $40 billion per year of U.S. agricultural products for the first two years (2020 and 2021) of the phase one agreement , which was signed on Jan. 15, 2020.

“Even though China has substantially increased their ag purchases they are still behind the very ambitious target of the phase one deal,” Zhang says. “The phase one deal left enough leeway to say purchases are contingent on market prices.”

Due in part to the COVID-19 pandemic and related impacts on global demand, China missed its commitment by about 30%.

In 2020, U.S. agricultural exports to China totaled $26.4 billion, up $12.6 billion from 2019. In 2021, ag exports hit a record $33 billion — up 25% from 2020.

“A lot of people would only attribute this increase to the phase one deal,” Zhang says. “But the bigger force is related to the hog recovery and rebuilding following African swine fever in China. As they were rebuilding, they needed more feed grain. So, they bought record amounts of corn from the United States. They were also having protein gaps, so they bought a lot more pork and beef, especially in the latter half of 2020 and early 2021.”

Transformation 2: China is Diversifying Its Trading Partners

Even though China has increased its business with the U.S. in terms of ag goods, the country is also building more trade linkages with competitors of the U.S., Zhang says. One key way is through tariffs.

“The average tariff on U.S. products rose from 8% in 2018 to an average of 20% today,” he says. “Likewise, U.S. tariffs on Chinese products rose from 3% in 2018 to today’s 19%.”

But, at the same time, China actually lowered tariffs for competitors of the U.S. The average tariff for other countries decreased from 8% to 6%.

(Farm Journal)

Zhang says China has also shown greater interest in expanding trade deals: “In a way this is China’s way of saying it embraces free trade.”

Transformation 3: China’s Population is Aging and Growing Richer

In 2020, China’s population hit 1.41 billion, with an average annual growth rate of 0.053% since 2010 (the lowest 10-year growth rate since its first population census in 1953).

In addition, China’s population structure is changing, Zhang says. A growing share of residents are older than 65 and the birth rate is declining.

(Farm Journal)

“With an aging population and a declining fertility rate, China’s population pattern increasingly resembles developed countries,” he says. “China’s population shift and income growth will increase demand for consumer-oriented products such as meat and vegetables, dairy and wine products versus bulk and intermediate products. It’s the income, not necessarily the population, that really drives the quantity and the configuration of the exports.”

In addition, consumers in China are slowly trading up their protein choices. The transition from vegetable proteins to animal-based proteins is now including more beef , which is creating more demand and value for U.S. cattle.

“Chinese people eat on average less than 10 lb. per person per year,” Zhang says. “But when you have 1.4 billion in population, just 1 lb. more could still lead to a substantial increase in the global market.”

(Farm Journal)

Transformation 4: The Focus on High-Speed Transportation

The Belt and Road Initiative was partially put on hold due to the pandemic, Zhang says. But China is still focused on creating a more efficient transportation system for the country and connecting it to its Asian neighbors.

Recently a high-speed railway was completed between Kunming and Loas. The project took around five years to complete, and it cut travel time from two days to three hours.

When Zhang left China in 2009 to attend college in the U.S., not a single mile of high-speed rail existed in country. Today China is home to15,500 miles of high-speed track — the largest high-speed railway in the world.

(Farm Journal)

Zhang says China is also improving its trucking system with cold-chain technologies and equipment so they can transport meat versus live animals.

Transformation 5: U.S. and Chinese Politics Will be Key in 2022

This year China and the U.S. will hold midterm elections around the same time, Zhang says. President Xi Jinping will likely earn his third term.

“A lot of the analysts will say that it’s the president, Xi probably will be here for at least a decade, if not more,” Zhang says. “The room for collaboration probably become narrower because of the upcoming elections.”

Zhang points out Xi and President Biden had their first meeting (which was virtual) last November.

“Because U.S. and China relations are so important the first meeting typically happens within the first two or three months of when a new U.S. president in office — not almost a year later,” he says. “When you look broadly at the U.S. and Chinese political relationship, were probably expecting a bumpy relationship for the next decade.”

If you want to learn more about China, Zhang recommends these three books:

“The Beautiful Country and the Middle Kingdom” by John Pomfret
“China’s Economy” by Arthur R. Kroeber
“Invisible China: How the Urban-Rural Divide Threatens China’s Rise” by Scott Rozelle and Natalie Hell

Visit Iowa State University’s China Ag Center

Read More
Why China’s Taste for Beef Is Growing

Population Peak: How China’s Demographics Could Impact U.S. Agriculture

Eyes Wide Shut? US Agriculture Faces China Reckoning

While America Slept, China Stole the Farm

You can still register for the Online Top Producer Summit , which gives you access to content through March 31. Use the code “VIRTUAL” to take 50% off your registration fee.

Read more coverage of the Top Producer Summit .

USDA Introduces First Market News Mobile App Providing Instant Access to Market Information

Tue, 01 Feb 2022 19:50:41 GMT

WASHINGTON, Feb. 1, 2022 – The U.S. Department of Agriculture (USDA) today announced a new USDA Market News Mobile Application, providing producers and everyone else in the supply chain with instant access to current and historical market information. The initial version of the free app includes nearly 800 livestock, poultry, and grain market reports, with additional commodities added throughout the coming year.

“USDA is focused on building more resilient and transparent markets and is taking steps to promote competition and fairer prices from farmers to consumers,” said Agriculture Secretary Tom Vilsack. “This new Market News app helps create a more level playing field for small and medium producers by delivering critical market information to them where they are, when they need it.”

Producers and other users can search for markets based on their location, by state, or by commodity. They also can add market reports to their favorites for easier access, share reports via text or email, subscribe to reports, and receive real-time notifications when a new report is published. For additional data analysis, the app lets you share the source data behind the reports via email as well.

“One of the best features of the app is its simplicity,” Under Secretary for Marketing and Regulatory Programs Jenny Lester Moffitt said. “The USDA Market News app was designed with small producers in mind. Regardless of whether you market livestock throughout the year or once a year, you can navigate through this easy-to-use tool and access the information you need on your mobile phone. Built-in tutorials help first-time users get the most out of their experience.”

There are both iOS and Android versions available to download through the Apple and Google Play stores. The iOS version is available now (download here) and the Android version will be available later this week. Search for “USDA Market News Mobile Application” to download the app and begin exploring its potential. USDA will continue to expand the features of the app, including adding market information for all other commodities in the future.

USDA Market News continues to expand its tools and resources to ensure producers benefit from the vast amount of market information available and understand how this information can provide actionable insight to inform marketing decisions at the farm and other points in the supply chain. This mobile app allows producers to access market data and reports, regardless of where they are, more effectively, efficiently, and on demand.