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China Stops Purchases of U.S. Ag Products

4 years, 7 months ago AFBF

China has reportedly told its commodity buyers to stop all imports of U.S. agricultural products. The move is in response to Trump's planned tariff increase announced last week. Trump is using the tariffs to place pressure on China to reach a trade agreement. China also announced the devaluation of its currency Monday, an action a Rabobank researcher told Bloomberg News is "among the worst-case scenarios." China appears to be waiting out the upcoming November 2020 U.S. elections to see if the political climate in the U.S. will change. The announcement Monday by China follows news that it was buying U.S. ag products, as promised in prior talks, just not at expected levels due to "market conditions." China claims demand for soybeans is weak in the nation as African swine fever has reduced its hog herd and need for feed ingredients. Trump administration officials claimed over the weekend that significant ag purchases may keep the U.S. from enacting the next round of tariffs, before China halted all purchases.

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Trade War Escalation Prompts Recession Fears

Trade war worries sent Wall Street retreating Monday as some experts fear the rest of the U.S. could join agriculture in a depressed economy. Experts from Morgan Stanley predict a global recession if the trade war escalates through Trump's threatened additional 25 percent tariffs on China. Trump intends to implement 10 percent of the tariffs next month, the cause for China's stoppage of U.S. ag purchases and devaluing its currency. Trump accused China of using the devaluation of its currency to retaliate against the U.S., but China's central bank denied it made the move as an intentional response to the trade war. China still plans to retaliate against the U.S. tariffs that will start in September. Morgan Stanley representatives told CNBC Monday the firm believes a global recession will come in about nine months if the trade war further escalates. U.S. negotiators met with Chinese officials late last month and plan an additional round of talks at the beginning of September.

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Farm Futures Survey Shows 2019 Planting Declines

Farmers report a significant decline in corn and soybean plantings in the 2019 annual Farm Futures crop production survey. Farm Futures announced the findings Monday, noting that farmers planted 83.5 million acres of corn this year, the lowest acreage since 2006. Meanwhile, estimated soybean acreage is down 15.3 million acres, or nine percent from last year, to 79.6 million total acres. The latest estimates form the Department of Agriculture predicted corn production at 14.42 billion bushels on 89.1 million acres. Farm Futures estimated corn yield at 167.2 bushels per acre, totaling a 12.7-billion-bushel crop, the smallest since 2012. Soybean yield is estimated at 48.4 bushels per acre, with total production of 3.8 billion, off 16 percent compared to USDA numbers. Farm Futures surveyed more than 1,150 farmers this summer online to gather its numbers. USDA will update its crop production numbers next Monday, when releasing the August World Agriculture Supply and Demand Report, and Pro Farmer will host its popular crop tour later this month.

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US-EU Beef Deal Provides Opportunity

A new agreement between the European Union and the United States regarding beef trade presents an opportunity for U.S. ranchers. The Friday afternoon announcement allows sales of 35,000 metric tons of U.S. beef to the European Union. Current terms allow for only 18,500 metric tons. American Farm Bureau Federation President Zippy Duvall says ranchers welcome the opportunity, but adds "it's important for U.S. negotiators to remain committed to reaching a broad trade agreement with the EU." National Cattlemen's Beef Association president Jennifer Houston joined President Trump during the announcement and signing ceremony. Houston says of the announcement its "exciting to know European families will enjoy more" U.S. beef. The country-specific quota will benefit U.S. beef producers who participate in USDA's non-hormone treated cattle program that was established in 1999. The Trump administration estimates that the quota will increase annual U.S. beef sales in Europe from $150 million to $420 million in year seven. In 2018, the U.S. exported $12.7 billion in agricultural products to the European Union.

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Study Shows Beef Checkoff Impact on Demand

The combined benefit of Cattlemen's Beef Board programs is 11.91 times more valuable than their costs, according to new research. A third-party assessment by Cornell University announced Monday details of the return on investment. Completed in June 2019, the study is based on a model which quantifies the relationship between the Cattlemen's Beef Board's marketing activities and domestic and international demand. It also compared the costs and benefits of those activities relative to producer and importer investments in the national portion of the Beef Checkoff program. Under existing U.S. law, the organization is required to have an independent analysis of the program's economic effectiveness conducted at least once every five years. Chairman Chuck Coffey from Oklahoma says the results "tell us that we're achieving" the goal of increasing beef demand worldwide. The study also found the activities have increased beef demand by 2.6 billion pounds per year between 2014-2018. Without a national checkoff, U.S. beef demand would have been 14.3 percent lower than levels seen in 2018.

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AEM Partners with SkillsUSA to Tackle Skills Gap

The Association of Equipment Manufacturers recently announced a partnership with SkillsUSA to lessen the manufacturing skills gap. The partnership seeks to engage member companies with their communities and school children to develop opportunities in the skilled trades of equipment manufacturing. Julie Davis, AEM director of workforce development, says the partnership allows participants to "secure a bright future for the industry." The Student Research Foundation says 64 percent of students enrolled in technical education after high school say their own interests and experiences have the strongest impact on what career path they choose. The partnership asks member companies to engage with students and show them what interests they may have in skilled labor trades, specific to equipment manufacturing and repair. SkillsUSA provides educational programs, events and competitions that support career and technical learning in classrooms across the nation. More than 345,000 students and advisors join SkillsUSA each year, and there are more than 19,000 local chapters across the nation introducing their members to skilled trades.

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The U.S.-Mexico-Canada Trade Agreement worth billions in expected new U.S. farm exports now faces a long Congressional recess and narrow window for still-uncertain action in September.

USMCA is now in limbo, with Congress gone for recess until after Labor Day, and a narrow 'political window' for September action, before campaign season swings into 'high gear.'

American Farm Bureau trade advisor Dave Salmonsen says negotiations will continue this month on Democrats' call for tougher enforcement of labor and environmental standards…

"I think a lot of it, of course, depends on how these talks go…the negotiations between the group that Speaker Pelosi appointed and USTR—again, directly with Ambassador Lighthizer."

 Lighthizer has reportedly built trust with the Speaker and Democrats, and differences are said to be narrowing…

"If they can come to some accommodations, agree on an implementing bill, then I think they can move it…and September would be good."

However, farm and other groups are not waiting, spending time now to lobby Democrats in the House, where action must start.

The coalition "Trade Works for America," formed by Vice President Pence's chief of staff plans to spend $8-million this month in more than 50 House districts—many held by Democrats.

Separately, Salmonsen says President Trump could still withdraw plans for a new 10-percent tariff on all remaining untaxed Chinese exports to the United States…

"This whole process started in June and then, was halted. So, this is redoing what had begun back in June."

And unlike the difficult China talks, trade talks with Japan, a huge but threatened U.S. market, may now speed up, based on a recent agreement.

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