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Ag a major part of U.S., UK framework trade deal... President Donald Trump this morning announced the “first of many trade deals” with the United Kingdom (UK), opening $5 billion of opportunity for American exports. “The deal includes billions of dollars of increased market access for American exports, especially in agriculture, dramatically increasing access for American beef, ethanol and virtually all of the products produced by our great farmers,” Trump said at the White House. Trump said the deal is nearly complete, with remaining details still to be worked out.
USDA Secretary Brooke Rollins said the agreement will “exponentially increase our exports. I know our incredible trade team is looking at all the meats, all the produce, really, all of our agriculture exports,” Rollins said alongside the president.
After a BBC reporter noted the UK has objected to the standards under which U.S. beef and chicken are produced, Trump said that “Bobby is headed toward your system of no chemicals,” a reference to Health and Human Services Secretary Robert F. Kennedy Jr. Trump added that the U.S. is “a very big country, we have a lot of beef.”
Commerce Secretary Howard Lutnick said the trade deal will maintain the universal 10% tariff but will open U.K. markets to roughly $5 billion worth of U.S. exports, including beef, ethanol and machinery. He also stated that the existing 25% U.S. tariff on automobiles will be lowered to 10% for the first 100,000 vehicles. Additionally, Lutnick said that a British airline is expected to announce a $10 billion order for Boeing aircraft.
Several U.S. ag products have significant potential for expanded trade as the new trade agreement reduces tariffs and regulatory barriers.
Ethanol: A UK government official said Britain will remove the tariff on ethanol coming into the UK from the U.S. down to zero.
Beef: The U.S. currently has minimal access to the UK beef market, which is valued at around $2 billion annually. Eliminating tariffs and addressing regulatory restrictions could open this market to U.S. producers.
Pork: The UK imports about 630,000 MT of pork each year (worth $2.8 billion), but U.S. pork has almost no market share due to trade barriers. Improved access could allow U.S. pork exports to grow substantially.
Other meat products: Beyond beef and pork, other U.S. meat products could benefit from improved regulatory equivalency and reduced import checks.
Poultry: U.S. poultry faces restrictions related to food safety standards. Addressing these issues could enable greater U.S. poultry exports to the UK.
Dairy products: U.S. dairy exports are limited by both tariffs and EU-style geographic indications. Removing these barriers could expand U.S. cheese and other dairy sales in the UK.
Specialty crops and biotech products: U.S. specialty crops (like nuts, fruits and processed foods) and biotech products could see growth if the UK streamlines its approval processes and removes unjustified sanitary and phytosanitary restrictions.
U.S. feed exports to the UK are relatively limited compared to other ag products. Most U.S. feed exports are directed to other regions with larger livestock and feed industries. However, if trade barriers were reduced, there could be some potential for growth in U.S. feed ingredient exports, such as corn and soymeal, to the UK.
Trump says trade talks with China this weekend to be ‘substantive’... Trump said Thursday high-level trade talks between the U.S. and China this weekend in Switzerland will be “substantive.” He predicted, “I think we’re going to have a good weekend with China. I think they have a lot to gain. I do think they have far more to gain than we do,” Trump told reporters in the Oval Office after he announced the trade deal with Britain. He suggested tariff adjustments could follow: “Right now, you can’t get any higher than 145%. We’ll see how it goes.”
Drought footprint largely unchanged through western crop areas deserve watching... As of May 6, the Drought Monitor showed 56% of the U.S. was covered by abnormal dryness/drought, unchanged from the previous week. USDA estimated D1-D4 drought conditions covered 22% of the U.S. winter wheat crop (down one point), 20% of corn area (unchanged), 15% of soybeans (unchanged), 37% of spring wheat (unchanged) and 20% of cotton production areas (down one point).
Across major corn, soybean, wheat and cotton states, dryness/drought covered 51% of Iowa (no D3 or D4), 43% of Illinois (no D3 or D4), 17% of Indiana (no D3 or D4), 75% of Minnesota (no D3 or D4), 100% of Nebraska (8% D3, no D4), 100% of South Dakota (3% D3, no D4), 73% of North Dakota (6% D3, no D4), 84% of Kansas (no D3 or D4), 75% of Colorado (4% D3, no D4), 60% of Texas (26% D3 or D4), 25% of Oklahoma (no D3 or D4), 5% of Tennessee (no D3 or D4), 32% of Wisconsin (no D3 or D4) and 16% of Michigan (no D3 or D4). No measurable dryness/drought was reported for Ohio, Kentucky or Arkansas.
Dryness/drought is most prominent in the western Corn Belt and Plains, areas that will see above-normal temps and limited rainfall through at least mid-May, likely expanding and intensifying the drought footprint in those areas.
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China issues crop disaster prevention, mitigation plan... China issued a disaster prevention and mitigation plan to ensure a stable grain harvest, urging major efforts by local governments in response to drought, high temperatures and heat damage, national broadcaster CCTV reported. The plan, jointly issued by four government departments, also laid out tasks for agricultural disaster prevention and mitigation during the flood season, which demands work against flooding and waterlogging, typhoon, as well as pests.
China’s National Climate Center said drought is currently affecting wheat fields in several northern regions in China with insufficient irrigation.
Argentina’s soybean yields better than expected... The Buenos Aires Grain Exchange raised its forecast for Argentina’s 2024-25 soybean crop by 1.4 MMT to 50 MMT, saying yields are proving better than previously expected. Farmers have harvested 44.9% of the 18.4 million hectares of soybeans.
The exchange kept its Argentine corn production forecast at 49 MMT, but said yields are also better than expected. Corn harvest is 34.9% complete.