Trade and Iowa Agriculture Dermot Hayes Iowa State
- Slides: 12
Trade and Iowa Agriculture Dermot Hayes Iowa State University Community Bankers of Iowa Ag Conference May 21 st
Importance of trade • In commodity markets the last unit sold set the price for all units sold at the same time • For Iowa agriculture, the last unit is almost always sold into an export market
Trade Agreements Peace with Mexico and Canada New Harvest deal with Japan, disaster averted Phase 1 Agreement with China Possible deals with the UK and EU The Phase One deal provides some room for optimism, China is required to import $36. 5 billion from the US by the end of the year, they imported just under $5 billion in the first quarter. Of this they would need to buy $17. 5 billion more soybeans in 2020 and significant volumes of corn and pork, market prices support these purchases • Market and USDA have discounted this possibility • • •
Breakdown in slaughter capacity • Many pork plants operating below capacity, industry was at 70% in early may and is now running at 90% it may never get back to 100% • Beef is at 75% capacity • One million cattle and three million hogs backed up • Pork producers have slowed down growth and double bunked feeder pigs, some have had to euthanize • We may have severe problems in the fall
Expected Profitability • December corn futures, basis adjusted at $3. 04, production cost for corn on soybeans $3. 23 of which $1. 1 is land cost • November soybean futures basis adjusted $7. 90 production cost $8. 72 of which $3. 91 is land cost • Lean hogs @ about $52/cwt carcass, production cost about $62/cwt carcass, CFAP payment of about $16. 35 up to $250, 000, limit hit at 800 sows • Fed cattle at about $102/cwt, production cost about $115/cwt, CFAP payment of $20. 58 up to $250, 000, limit hit at about 1, 200 cattle • Bottom line, crop growers who rent land large specialized livestock producers are in severe trouble
A Comparison of Negotiated Hog Price with the Carcass Cutout 120 100 80 60 40 20 0 01. 02. 20 01. 09. 20 01. 16. 20 01. 23. 20 01. 30. 20 02. 06. 20 02. 13. 20 02. 27. 20 Cutout 03. 05. 20 03. 12. 20 Negotiated Price 03. 19. 20 03. 26. 20 04. 02. 20 04. 09. 20 04. 16. 20 04. 23. 20 04. 30. 20
World Mexico China Japan Korea South Canada 7 t/ 1 8 t/ 1 17 9 t/ 1 18 18 1 s 19 0 t/ 2 19 h/ 4 t d/ 3 r d/ 19 1 s h/ 4 t d/ 3 r d/ 18 1 s h/ 4 t d/ 17 3 r 2 n 1 s 16 16 h/ 4 t d/ 3 r 2 n 6 t/ 1 15 15 d/ 16 1 s h/ 4 t d/ 3 r 2 n 5 t/ 1 14 14 d/ 15 1 s h/ 4 t d/ 3 r 2 n 4 t/ 1 13 d/ 14 1 s 13 d/ h/ 4 t 2 n 3 t/ 1 12 d/ 13 3 r 2 n 1 s 12 d/ h/ 4 t 2 n 2 t/ 1 d/ 12 3 r 2 n 1 s Quarterly US Pork Exports 1000000 900000 800000 700000 600000 500000 400000 300000 200000 100000 0
Beef Export Pace Source: USDA-FAS
Soybean Export Sales Source: USDA-FAS
Corn Export Sales Source: USDA-FAS
Corn Grind for Ethanol
- Dermot grenham
- Dermot donovan
- Trade diversion and trade creation
- Trade diversion and trade creation
- Which is the most enduring free trade area in the world?
- Trade diversion and trade creation
- Liner vs tramp
- Transition theory adams hayes and hopson
- Barbara douglas counselling psychologist
- The trade in the trade-to-gdp ratio
- Fair trade not free trade
- Triangular trade
- Iowa state bufkit