Trade and biotech corn
The Department of Agriculture released its monthly U.S. Agriculture Trade Update.
New monthly trade data from the Department of Agriculture shows a record monthly trade deficit for agriculture. Signaling what could be a downturn in commodity prices.
The new trade data puts us out through August of 2023. And in August, we had the largest monthly trade deficit that we've ever had in US agricultural trade. We had almost 12 and a half billion dollars in exports, a little over 16 billion in imports, which means we had a trade deficit of over $3.6 billion in a single month.
The strong U.S. dollar is behind the deficit. The strong interest rates that we've seen in the United States over the last year and a half trying to combat inflation is really leading to a strong U.S. dollar. And that strong U.S. dollar makes imports relatively less expensive, but it makes it difficult for our exports to compete globally because our products are priced in a relatively expensive dollar. The strong dollar means agriculture export values are lower, and an increase in some imports.
Overall, U.S. ag export value is down by about nine percent. But when we break it out, what we see is that the vast majority of that decreases in major bulk products which are down 16 percent relative to the same time last year, whereas high value products are only down by four percent. When we look at imports and where we're seeing those import numbers pop is in fresh and frozen vegetables, which are up over 15 percent this year compared to last year.
This bears keeping a close eye on as we move through the harvest season and into the Spring as lack of trade demand will weigh heavily on commodity prices received.
The U.S. Trade Representative’s office is moving forward regarding Mexico banning the import of U.S. biotech corn. The Office of the U.S. Trade Representative, under procedures within the U.S. Mexico-Canada Agreement, has established a dispute resolution panel regarding Mexico’s biotech corn bans.
The panel will deal with the issues brought up by Mexico's decrees which seek to stop the import of U.S. corn products produced with biotechnology. The U.S. believes this is a violation of the sanitary standards provisions of the USMCA and has brought this case.
The issue revolves around Mexican decrees against U.S. corn products produced with biotechnology, specifically glyphosate.
Recent decrees earlier in 2023 said that they were going to move ahead to stop the import of white corn but would allow the imports of U.S. yellow corn until they could find some alternatives. The U.S. has objected to these decrees all along, saying that they're not scientifically based, and has been talking with the Mexican government all along, but especially ramped up the discussions last year. A resolution could come early next year, following technical consultations this year.
The time for that under procedures in the U.S.-Mexico-Canada Agreement has run out, so the Trade Rep’s office is establishing a dispute panel. This will hear evidence from the two countries and make a final decision. Given the procedures governing such panels, a decision really can't be expected until sometime in early 2024.
Considering Mexico is one of the largest importers of US corn a decision upholding a ban could have devastating implications to the US corn market and trade balance.
Since we are talking trade I will leave you with this:
And in today’s stock news…Helium was up, feathers were down. Paper was stationary. Fluorescent tubing was dimmed in light trading. Knives were up sharply. Pencils lost a few points. Hiking equipment was trailing. Elevators rose, while escalators continued their slow decline. Weights were up in heavy trading.
Mining equipment hit rock bottom. Diapers remained unchanged. The market for raisins dried up. Balloon prices were inflated. And toilet paper touched a new bottom.
Ron Kern is the manager of the Ogle County Farm Bureau.