Last week China issued a list of 106 U.S. products and goods, 37 of which are agricultural, that will face additional tariffs in retaliation to the April 3 announcement by the Trump Administration that the U.S. intends to enact tariffs on $50 billion of imports from China. The latest Chinese list includes soybeans, corn, and beef, the top three exports commodities from Nebraska, and are in addition to a list announced earlier which included added tariffs on pork and ethanol. Last Friday, it was revealed President Trump has instructed administration officials to investigate whether tariffs on another $100 billion of Chinese goods is warranted. Thus, it appears the U.S. and China are rapidly escalating to a full-fledged trade war. Continue reading →
The value of Nebraska’s 2017 corn crop is $5.55 billion and the soybean crop is $2.95 billion according to recent USDA National Agricultural Statistics Service (USDA-NASS) estimates. The corn production value is third-highest in the nation, falling behind Iowa at $9 billion and Illinois at $7.7 billion, and the soybean crop value is the fifth-largest. The figure below shows the values of Nebraska’s corn and soybean crops since 2010. The 2017 corn crop value is lower compared to 2016, but the soybean crop value is slightly higher. The corn crop value exceeded $9 billion in 2011, but has since fallen to where it has been around $6 billion or less in recent years. On the other hand, the value of the soybean crop has consistently hovered around $3 billion through the years. The drop in corn prices and acres in production are both reflected in the lower crop values for corn. Soybean prices have also come down, but increases in acres and higher yields have mitigated the effects on overall crop value. Continue reading →
The U.S. trade deficit with the rest of the world has been getting a lot of attention lately. In January, the deficit was estimated to be $56.6 billion, the highest level in nearly a decade. President Trump believes the trade deficit is bad and argues the U.S. is losing to other countries with which it trades. Accordingly, he believes the U.S. must renegotiate trade agreements and enact tariffs on imported goods to rectify the large deficits. The President’s arguments raise two questions: Are trade deficits inherently bad? And, is the U.S. losing to the rest of the world by having such large trade deficits? Continue reading →
A contemplated change in how the Renewable Fuel Standard (RFS) is implemented could cost Nebraska corn producers $421 million. A policy brief by the Iowa State University, Center for Agriculture and Rural Development (CARD), suggests the policy change, a cap on the prices of Renewable Identification Numbers (RINs), could result in a price loss for corn of 25 cents per bushel. A 25-cent loss in price would equate to a loss in the value of Nebraska’s corn crop of $421 million, or 7.6 percent, based on the 2017 estimated crop value of $5.5 billion.
“The Big Mac and the Dollar” may read a bit like the title of a children’s fairy tale (i.e. Jack and the Beanstalk), but it isn’t. Instead, it’s an agricultural economist’s not-so-clever way of introducing a discussion on the value of the dollar. Nebraska agriculture relies on exports, and the value of the dollar is a key determinant in determining the competitiveness of Nebraska agricultural products in international markets.
Nebraska crop producers received $646 million in Price Loss Coverage (PLC) and Agriculture Risk Coverage—County (ARC-CO) payments last fall for the 2016 crop year. In total, the USDA distributed $6.9 billion in payments to participating producers under these two programs.
The USDA expects prices for corn, cattle, and soybeans to be off a bit in 2018. Prices for wheat and hogs are expected to be higher. Given the large production levels of all these commodities in recent years, prices, while soft, have been stable due to relatively strong demand, boosted in part by robust export markets. The strong demand needs to continue, and, thus far, signs point to demand remaining strong. For example, Jim Robb, director of the Livestock Market Information Center, recently said the average American is expected to eat 219 pounds of red meat and poultry this year, the highest level since 2007.