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Your Pro Farmer newsletter is now available... The Trump administration eased its rhetoric toward China, though Beijing denied President Donald Trump’s assertion the two sides were involved in active negotiations over tariffs. At the same time there seemed to be stronger-than-expected progress in trade talks with Japan, India and South Korea on technical terms of trade deals. Even so, it takes a long time to negotiate major trade deals – and even longer to implement them. However, it appears most countries are willing to make concessions on purchases of U.S. ag goods to get framework deals in place. Given the extreme trade policy uncertainty, the International Monetary Fund cut its global economic growth forecasts and warned of intensifying downside risks. On the crop front, the U.S. corn and soybean planting paces pushed ahead of average before major rains rolled across the central United States. We cover all of these items and much more in this week’s newsletter, which you can access here.
Trump doubtful on another tariff pause, wants China concessions... President Donald Trump suggested another delay to his higher so-called “reciprocal” tariffs was unlikely, raising pressure on nations to negotiate trade deals with his administration. Asked about the possibility of granting another 90-day pause, Trump cast that scenario as “unlikely,” while speaking to reporters on Friday. Trump also said that he would not drop tariffs on China unless Beijing offers “something substantial” in return.
Japan also considering more U.S. corn purchases... Japan is considering increasing its corn imports from the United States as part of trade negotiations over President Donald Trump’s sweeping tariffs, Nikkei reported. Earlier this week, Nikkei reported Japan would consider buying more U.S. soybeans. Japan is also reportedly weighing similar concessions for rice imports. Japan’s tariff negotiator, Ryosei Akazawa, is scheduled to visit the U.S. from April 30 to May 2.
Rains may impact planting... Many areas in the lower Midwest and northern Delta are still too wet for planting due excessive rain and flooding earlier this month and some periodic light rain since then. World Weather Inc. says all U.S. crop areas will receive rains through the end of next week, which will further impact planting efforts in wet locations. The rains will be welcome in the western Midwest, though not enough to end drought in some areas.
Food price outlook increases amid rising grocery costs... USDA forecasts prices for all food will rise 3.5% this year, down from the expected 3.2% increase last month. The monthly price increase was driven largely by food-at-home (grocery) prices, which are anticipated to rise 3.2%, up from the 2.7% gain forecast last month. Food-away-from-home (restaurant) prices are projected to increase 3.8%, up from 3.7% previously.
USDA projects a 54.6% surge in egg prices due to impacts from the outbreak of highly pathogenic avian influenza (HPAI) that has sharply reduced layer flocks and egg production. However, that’s down from the 57.6% jump projected last month. USDA projects price increases of 6.3% for beef/veal (up from 5.2% last month) and 1.8% for pork (up from a 1.5% decline) this year. Poultry prices are expected to increase 1.0% (up from a 0.4% decline) from year-ago.
NCGA urges farmers to lobby congress on key tax provisions... The National Corn Growers Association (NCGA) is urging farmers nationwide to contact Congress as lawmakers prepare for budget reconciliation. NCGA President Kenneth Hartman Jr. emphasized the need for farmer voices to support federal tax provisions critical to agriculture. Top tax priorities:
- Extension of 2017 tax cuts: NCGA backs the continuation of expanded estate and gift tax exemptions, the qualified business income deduction and 100% bonus depreciation. They also oppose changes to the stepped-up basis, which shields family farms from excessive inheritance taxes.
- Biobased product incentives: NCGA supports new tax credits to help commercialize renewable chemical and material technologies derived from U.S. feedstocks.
- Sustainable aviation fuel credit (45Z): Extension of this credit would increase demand for corn-based biofuels, boosting rural economies and job growth.
Of note: The budget reconciliation process allows these provisions to pass with a simple Senate majority, bypassing a filibuster and presidential veto.
U.S. consumer sentiment remains weak in April amid tariffs concerns... The University of Michigan’s Consumer Sentiment Index came in at 52.2 this month. While that was an improvement from an initial reading of 50.8 two weeks ago, the index was down 8.4% from March 32.4% below year-ago. The Current Economic Conditions Index fell 6.3% for the month and 24.3% from year-ago. The Index of Consumer Expectations plunged 10.1% from March and 37.8% from year-ago.
Surveys of Consumers Director Joanne Hsu said, “While the April decline in current conditions was modest, the expectations index plummeted with drop-offs in personal finances as well as business conditions. Expectations have fallen a precipitous 32% since January, the steepest three-month percentage decline seen since the 1990 recession. Consumers perceived risks to multiple aspects of the economy, in large part due to ongoing uncertainty around trade policy and the potential for a resurgence of inflation looming ahead. Labor market expectations remained bleak. Even more concerning for the path of the economy, consumers anticipated weaker income growth for themselves in the year ahead. Without reliably strong incomes, spending is unlikely to remain strong amid the numerous warnings signs perceived by consumers.”
Year-ahead inflation expectations surged from 5.0% last month to 6.5%, the highest since 1981. Long-run inflation expectations climbed from 4.1% in March to 4.4%.