Tariff Threats No Longer Just Bluster

Economic Tidbits 12.18.17

Last week marked a new extreme in the trade tensions between the U.S. and China as President Trump moved forward with tariffs on $34 billion of imported Chinese machinery, auto parts, and medical devices.  China responded immediately with tariffs on several U.S. products including soybeans and pork.  Several U.S. trading partners have now imposed tariffs on U.S. commodities and processed foods in response to tariffs imposed by the U.S.  With all the threats and tariffs imposed, it’s difficult to stay abreast of where things now stand.  Table 1 summarizes recent tariffs enacted by other countries on U.S. agricultural products which will affect Nebraska.  Continue reading

Sometimes Timing is Everything . . .

Economic Tidbits 12.18.17

Some Nebraska farmers have said they aren’t too concerned with the ongoing trade tensions with China, the largest customer for U.S. soybeans.  If the tensions were bad for the soybean market, they state, soybean prices would have dropped.  Price haven’t dropped, so the Chinese trade tensions are not a problem.  Sometimes, though, timing is everything—could it be the timing of rising Chinese trade tensions coincided with other market happenings which mitigated any price response?
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Nebraska Soybean Yields vs. Corn Yields

Economic Tidbits 12.18.17

Does the exceptionally high soybean yields in recent years mean soybean yields are increasing relative to corn yields?  Gary Schnitkey, an agricultural economist at the University of Illinois, recently examined this question.  Using state yield data from the National Agricultural Statistics Service for 1972 to 2017, Schnitkey examined corn and soybean yield trends across the Corn Belt to see if soybean yield increases are outpacing those in corn.  For Nebraska, Schnitkey found the state average corn yield increased an average of 2.0 bushels per year between 1972 and 2017.  At the same time, the average soybean yield increased by .65 bushels per year.  The soybean yield-to corn yield ratio averaged .30 over the period and did not exhibit any trends. (see Figure 9 below).  The soybean-to-corn yield ratio was .34 in 2016 and .32 in 2017.  Continue reading

Trade Tensions Rise . . .

Economic Tidbits 12.18.17

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

Nebraska Crop Values . . .

Economic Tidbits 12.18.17

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

Trade Deficits: Good or Bad?

Economic Tidbits 12.18.17

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

2016 Farm Program Payments . . .

Economic Tidbits 12.18.17

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.

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