Economist: Tariffs impacted USDA trade export projections
February 20, 2019
SAN DIEGO — The tariffs that other countries, particularly China, imposed on U.S. soybeans and other farm products in retaliation for the tariffs that President Donald Trump imposed on foreign steel and aluminum "deeply impacted" the 10-year export sales projections that the Agriculture Department had made in 2018, a USDA economist said Tuesday at the Crop Insurance Industry Convention.
"This graph shows nobody wins in a trade war, which is the motto of most economists," Ashley Hungerford of the USDA Office of the Chief Economist said as she pointed to a graph displaying USD's original and revised projections.
Hungerford noted that soybean stocks-to-use ratios are now so high that USDA has projected it will take several years to "unwind" or sell off those stocks, which means soybean prices are likely to be low.
On another slide, Hungerford pointed out that the stocks-to-use ratio was only 5 percent when China imposed the tariffs on U.S. farm products and is now about 20 percent.
"For every five bushels of soybeans used, one bushel is left over," she said.
The cash price that farmers get in areas such as the Dakotas that were dependent on exporting soybeans to China have gone down in relationship to the futures price compared to the prices that farmers are getting in areas where soybeans are sold for domestic use, she said.
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Hungerford also presented a series of slides on farm sectors and their incomes, including a dairy slide that she described as "the most depressing." It showed the number of dairy operations going down while the total number of cows continues to go up.
Everyone is excited about the potential for hemp, Hungerford said, but she noted that Canada has produced hemp legally for years but it has only 200,000 acres in hemp compared to millions of acres in major commodity crops.
"Hemp doesn't have a major market established for it," she pointed out.