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Is a negative U.S. ag trade balance cause for concern?... The United States’ growing agricultural trade deficit has raised political alarm bells — especially with a projected record shortfall of $49.5 billion in fiscal year 2025. But in an article on the topic (link), former USDA Chief Economist and now a nonresident senior fellow at the American Enterprise Institute Dr. Joe Glauber urges perspective: “Comparing agricultural imports and exports is an exercise in comparing apples with oranges.”
Glauber contends that the recent deficits reflect structural changes in agricultural markets — particularly price divergence between bulk exports and consumer-oriented imports — not a loss of competitiveness. “Efforts to reduce the deficit by applying tariffs will only hurt consumers,” he writes, “and run the risk of hurting producers if other countries impose counter-retaliatory tariffs.”
Glauber notes that many U.S. imports — like bananas, pineapples, wine and spices — do not compete directly with American farm goods: “The products that the U.S. imports are mostly different from the commodities it produces and exports.”
Key factors driving the deficit
- Falling bulk commodity prices since 2022 have dragged down export values for crops like soybeans, corn, wheat and rice.
- Consumer-oriented imports, such as fresh fruits and packaged foods, have risen in value due to global inflation in processing, labor and shipping.
- Biodiesel mandates have diverted domestic soybeans away from export, shrinking U.S. outbound trade volumes.
- A definitional change in 2021 added distilled spirits and other products to USDA’s ag trade totals, nudging the deficit higher.
Glauber quantifies how price changes shaped the 2024 deficit: If 2022 price levels had held, exports would have been $20.1 billion higher and imports $12.7 billion lower, effectively halving the deficit.
President Donald Trump’s proposed 10% to 35% tariffs on agricultural imports “may reduce imports and will certainly impose costs on U.S. consumers,” Glauber warns. But retaliatory actions from key trading partners — such as Canada, China and the EU — could hit U.S. exporters hard. “The clear losers in the short run will be U.S. producers and consumers,” he writes.
“U.S. agricultural trade is largely complementary,” Glauber emphasizes, “and trade deficits are more about shifting global prices than poor trade policy.”
NOPA’s record June soy crush tops expectations... Members of the National Oilseed Processors Association (NOPA) crushed 185.7 million bu. of soybeans during June. While that was down 7.1 million bu. (3.7%) from May, it was up 10.1 million bu. (5.8%) from last year’s previous high for the month.
NOPA implies the full June crush of 197.3 million bushels. At that level, crush would stand at 2.042 billion bu. through the first 10 months of 2024-25, leaving 378 million bu. to reach USDA’s forecast of 2.420 billion bu., up 4.7% from the final two months of last year. Our crush forecast is 2.425 billion bushels.
Soyoil stocks held by NOPA members as of June 30 fell to 1.366 billion lbs., down 0.5% from the end of May and 15.8% below year-ago.
U.S. consumer inflation rises to five-month high... U.S. consumer inflation increased 2.7% from year-ago during June, the highest level since February. Core inflation, minus food and energy costs, increased 2.9% annually.
Food prices increased 3.0% from year-ago in June, up from a 2.9% rise the previous month. Food at home (grocery) costs increased 2.4% and food away from home (restaurant) prices rose 3.8%.
Bessent downplays China tariff truce deadline... Treasury Secretary Scott Bessent told Bloomberg TV that market participants should not worry about the looming Aug. 12 expiration of the U.S./China tariff truce, suggesting the deadline is flexible. Bessent said talks with China are in a “very good place,” and he hopes to meet Vice Premier He Lifeng soon—potentially before or after China’s early-August leadership conclave.
He confirmed that easing chip export controls, including the recent decision to grant Nvidia licenses to sell its H20 GPU to Chinese firm, was part of a broader negotiation framework developed during trade meetings in Geneva and London. “They had things we wanted. We had things they wanted,” Bessent said.
USDA opens enrollment for Grassland CRP... USDA announced that enrollment opened Monday for the Grassland Conservation Reserve Program (Grassland CRP), a voluntary initiative designed to help agricultural producers and private landowners protect and conserve grasslands. The sign-up period runs from July 14 to Aug. 8, 2025.
Grassland CRP, administered by USDA’s Farm Service Agency (FSA), aims to conserve grasslands while allowing participants to continue most grazing and haying activities. The program is specifically focused on: Supporting grazing operations by enabling continued agricultural use of enrolled lands; enhancing plant and animal biodiversity by protecting native grasslands and habitats; and safeguarding at-risk lands, especially those with shrubs and forbs, from being converted to other uses.
Currently, more than 25.8 million acres are enrolled in CRP, with nearly 9.7 million acres in Grassland CRP. On May 12, FSA opened General and Continuous CRP enrollment for 2025. FSA is currently reviewing submitted offers and will announce accepted offers later. Due to the 27-million-acre statutory cap, only 1.8 million acres are available for all CRP enrollment this fiscal year.
Bessent confirms search underway for Powell’s replacement... Treasury Secretary Scott Bessent said Tuesday that a “formal process” has begun to identify a successor to Federal Reserve Chair Jerome Powell. Speaking on Bloomberg Surveillance, Bessent emphasized the timeline will follow President Trump’s direction: “It’s President Trump’s decision, and it will move at his speed.”
Bessent also signaled support for Powell’s full departure from the Fed, warning that remaining on the Board after stepping down as chair would “cause confusion in the market,” and referencing concerns about a “shadow Fed chair.”
Russian wheat harvest progressing slowly... As of July 11, Russian farmers had harvested 11.0 MMT of wheat, according to SovEcon, compared with 24.8 MMT at this time last year. The 2025 wheat harvest is far behind last year’s level due to slow progress and low initial yields.
Russian farmers had cut 3.2 million hectares of wheat, roughly half last year’s pace at this point. The average yield across Russia stood at 3.4 metric tons per hectare compared with 4.0 metric tons per hectare a a year ago.