Trump Tariffs Target Top U.S. Ag Trade Partner
Successful Farming – 06/03/2019 Just months after retaliatory tariffs deposed China as the leading customer for U.S. farm exports, President Trump threatened import duties of up to 25% on Mexico, the No. 1 food and ag trade partner of the U.S. Farm groups fear the trade war will cut deeper into the shrinking global market for U.S. crops and livestock. Farm exports are forecast to drop by 4.5% this year, to $137 billion, the lowest total in three years, chiefly due to the collapse of sales to China. Together, Canada and Mexico account for one third of U.S. food and ag trade, with Mexico responsible for a slightly larger combined value of imports and exports than Canada — $46 billion vs. $45.2 billion, according to USDA estimates for this fiscal year…By coincidence, export-promoting U.S. Wheat Associates is spending USDA grant money on a conference this week to encourage Mexican food companies to buy U.S. wheat. The USDA funding comes from a specially created program to mitigate the impact of the trade war with China. “The potential fallout from new tariffs is like struggling to survive a flood then getting hit by a tornado,” said USW Chairman Chris Kolstad.
Mexico Plays an Important Role for U.S. Wheat Industry
AgInfo.net – 06/05/2019 Mexico continues to be a growing market for the U.S. wheat industry. And this week leaders of both countries are meeting in Cancun for a special Mexico Wheat Trade Conference hosted by the U.S. Wheat Associate’s. Vince Peterson is president of U.S. Wheat and says he looks for this trend to continue in the future, especially as the population continues to grow here in Latin America. “Mexico and south is a wheat deficient area” said Peterson. “They right now import about 25 million tons of wheat total. That’s about what we export in one year and they’re going to grow that up to probably 35 million tons over the next 20 to 30 years. So, it’s a dynamic place. It’s a growing market and someplace we need to be.” Over 50 percent of all U.S. wheat grown is exported. And for farmers like Kansas Wheat Commissioner Gary Millershaski of Lakin, their bottom line depends on important export markets like Mexico. “The biggest import for wheat for Mexico is hard red winter which is the majority of what we raise” said Millershaski. “And you produce it, take it to a local elevator and take what you get; or we like to say we’re trying to build up relationships with the buyers and the millers. Where we’re at, it’s a straight shot on the rail to Mexico. This is our this is our bread and butter is what it is.”
Australian APW Wheat Prices Rebound as Drought Persists
S&P Global – 05/31/2019 The weather forecast for the next three months indicates below average winter rainfall for much of eastern, southeastern and western Australia, according to the winter climate outlook issued May 30 by the Bureau of Meteorology. “With more cloud-free days and nights expected, there is an increased risk of frost in susceptible areas,” the bureau said in a statement. The rapid price increase has spooked market participants with domestic markets being bid up by panicked buyers, but offers were lacking as sellers are not willing to let go of cargoes in a rising market. In the export market, flour millers in Southeast Asia, that are now less reliant on Australian milling wheat, have remained on the sidelines. However, end-users in north Asia that have an inelastic demand for Australian wheat have emerged to procure, fearing further price rise in the future, market sources said.
Coming Off Year of Mexican Tariffs, President’s New Plan Hurts USMCA Prospects
The Progressive Farmer– 06/03/2019 Farm groups and political leaders on Friday raised concerns Mexico would react with new retaliatory tariffs on U.S. agricultural products, but Mexico’s president declined to escalate yet another trade dispute with President Donald Trump. Trump announced late Thursday that the U.S. would place a new 5% tariff on all products from Mexico because of illegal immigration. Mexican President Andres Manuel Lopez Obrador wrote President Donald Trump a two-page letter citing his country is doing what it can to reduce migrants from other Central American countries, but Lopez Obrador also pointed to the U.S. history as a nation of immigrants. Lopez Obrador added, “…the motto ‘United States first’ is a fallacy” and “social issues are not resolved through taxes or coercive means.” White House officials had said the tariffs would not begin until June 10 and would ratchet up to 10% in early July. The president said the tariff would increase to as much as 25%. Mexico dispatched its foreign secretary to Washington to discuss the tariffs and immigration challenges.On a press call, White House Acting Chief of Staff Mick Mulvaney said all Mexican export products would be subject to the tariffs.
Winter Wheat Harvest Begins (Oklahoma)
High Plains Journal- 06/04/2019 Oklahoma Wheat Commission announced May 30 that wheat harvest season had officially started, but wheat and canola were hindered by recent severe weather. Rainfall totals for the week ending June 2 averaged 0.94 of an inch throughout the state last week, with the Southeast district recording the highest precipitation at 1.88 inches, according to USDA’s National Agricultural Statistics Service, Southern Plains Regional Field Office, Oklahoma. Topsoil and subsoil moisture conditions were rated mostly adequate to surplus. There were 3.3 days suitable for fieldwork. Winter wheat harvested reached 1 percent, down 5 points from the previous year and down 7 points from normal.
Farmer Sentiment Hits 32- Month Low
Agri-Pulse – 06/04/2019 For the second month in a row, agricultural producer sentiment experienced a big decline, erasing all gains recorded following the November 2016 election and indicating weaker expectations for the future. That’s according to the Ag Economy Barometer, an index based on a survey of 400 agricultural producers each month by Purdue University and the CME Group. The barometer declined 14 points in mid-May to a reading of 101, down from 115 in April. But the results were captured as producers struggled with a soggy planting season and before the Trump administration announced plans to make a second round of market facilitation program payments. “Ag producers are telling us the agricultural economy weakened considerably this spring as the barometer has fallen 42 points (29%) since the start of this year,” said James Mintert, director of Purdue University’s Center for Commercial Agriculture. “Farmers are facing tough decisions in the midst of a wet planting season and a lot of uncertainty surrounding trade discussions.”
Source: US Wheat Associates