USDA has started figuring the president’s tariffs against China and the resulting retaliation into this month’s grain and livestock reports. Chief Economist Seth Meyer says USDA included the tariff effect in the hogs and pigs and grain stocks reports that go into the monthly World Ag Supply and Demand Estimates.
“We assume ‘policy in place.’ So, tariffs that China has placed on us in retaliation, and the tariffs we have placed on them, are assumed to continue throughout the remainder of this marketing year and into next marketing year.”
Starting with two major commodities.
“We’re incorporating the tariff effects that are in place. We primarily see that in cotton and pork in these balance sheets.”
But despite the China tariffs, Meyer says other effects have depressed hog prices so far.
“I would have said that supplies in the hogs and pigs report should have been supportive of hog prices, and yet, we made some downward revisions—a significant part of that being trade effects.”
It’s largely weaker overall export demand expected to knock off two or three dollars from average hog prices in each of the remaining three quarters.
As for corn, Meyer says there were no changes.
“Part of this is because we don’t have any corn on the books going to China. We haven’t sold corn to China this year, and at the same time, we’re two-thirds to three-quarters marketed for that crop.”
USDA also notes soybean exports for oil are forecast higher on slower domestic use for biofuel. But tariffs hitting imports of other feedstocks like cooking oil from China are seen boosting domestic soy oil use in the fourth quarter.
-NAFB