USDA Projects More Acres, Says China Still Weighs Heavily on Trade

Feb 19, 2021  | 3 min  | Ep4627

USDA issued its early acreage guess this week at its annual Agricultural Outlook Forum providing signals of reports ahead. The government agency also reported on headwinds U.S. producers are facing from weather and trade.

Josh Buettner reports on the meeting.

This week, USDA kicked off their annual Agricultural Outlook Forum, virtually, as a sign of the times.

Dr. Seth Meyer/Chief Economist – USDA: “Now in its 97th year, the forum continues to serve as a unique platform for our stakeholders to connect, exchange ideas, and discuss some of the most important issues impacting the agricultural sector.”

The agency projects the largest 3 crop total for wheat, corn and soybeans since 2016 at 227 million acres.  Those figures are up nearly 9 million acres from 2020 - which was impacted by the coronavirus pandemic and extreme weather events like August’s derecho windstorm. 

Economists expect a turning point for ethanol producers as COVID-19 vaccinations give way to a rebound in driving.

Dr. Seth Meyer/Chief Economist – USDA: “On the other side of that, we’ve had really pretty good domestic demand for livestock.  And pretty good trade demand for things like pork.  So again, those folks will feel the pinch of higher feed prices, but so far, demand has been pretty robust as well for those meat products.”

A forecast for increased feed demand as herds recover from African swine fever is one of the many reasons China remains a beacon for U.S. farm products.  Analysts see the EU and Brazil as the nation’s biggest rivals.

Jason Hafemeister/Secretary’s Trade Counsel/Trade and Foreign Agricultural Affairs/USDA: “Just a reminder – if we grow it in the United States, we are competitive.  So we look at exports as an opportunity and trade as a lifeline.  If we can’t sell it overseas, that will weigh down on the prices that our farmers receive.  That will have a negative economic effect in rural America.”

Even as the U.S. butted heads with its largest trading partner under the Trump Adminstration, and Phase One trade purchase agreements have fallen woefully short, pundits don’t expect big changes soon.

David Dollar, Senior Fellow - Foreign Policy/Global Economy and Development/Brookings Institution/John L. Thornton China Center: “Personally I think that the tariffs are not a particularly good instrument to use.  We’re basically shooting ourselves in the foot.  But President Biden is certainly not going to rush into removing the tariffs.  In general, the administration seems to be taking a pretty…wait and see attitude concerning its relations with China.”

While bitterly cold temperatures have sidelined much of the U.S. in recent weeks, increased snowpack could improve drought conditions.  But USDA number crunchers caution weather always gets the final say. 

For Market to Market, I’m Josh Buettner.

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