U.S. Ag Trade Deficit for April a Record

U.S. agriculture registered a record $387 million trade deficit in April as exports were valued at $9.496 billion against imports valued at $9.983 billion, according to USDA's monthly ag trade update.

This marks the second consecutive monthly trade deficit after a $35 million deficit in March, based on USDA data available back to the mid-1970s. The prior record trade deficit on a monthly basis was set in June 2004 at $199 million, and the last time that there were two consecutive monthly trade deficits was in Jan. and Feb. 1969, according to USDA.

This brings the cumulative value of U.S. ag exports to $76.926 billion so far in Fiscal 2016, with imports totaling $66.8 billion for a trade surplus of $10.126 billion. All three areas are below to well below year-ago when ag exports were valued at $90.069 billion against ag exports at $67.147 billion for a trade surplus of $22.922 billion.

For April, the value of ag exports declined 7% compared to March while the value of imports only declined 3.5%.

USDA adjusted its ag export forecast May 27, forecasting exports for Fiscal 2016 at $124.5 billion with imports at a record $114.8 billion resulting in a forecast trade surplus of $9.7 billion. That compared to a February outlook from USDA for exports valued at $125 billion against imports of $118.5 billion for a trade surplus of just $6.5 billion.

US Natural Cheese Stocks Highest Since 1984

The volume of natural cheese held in cold storage in the United States has grown to 1.214 billion pounds as of the end of April 2016, the highest level since March 1984, according to the Economic Research Service (ERS).

Unlike 1984, inventories today are almost exclusively privately held and reflect the needs of a growing market instead of the consequence of government policy.

In the 1980s, the Milk Price Support Program (MPSP) was very active in purchasing large quantities of cheese to support dairy prices. The U.S. government owned about 60% of cheese stocks, which it often distributed through food donation programs in the United States and abroad.

In recent years, government purchases of dairy products fell to zero as market prices exceeded support prices, and the MPSP was repealed by the 2014 Farm Bill. At the same time, commercial cheese stocks have grown to help meet the growing demand for cheese.

Total commercial use of cheese, which does not include government donations, grew from 4.6 billion pounds in 1984 to 11.9 billion pounds in 2015, due to population growth as well as increasing consumption per capita and higher exports.

Commercial cheese stocks have been growing particularly fast in recent months, reflecting an increasing milk supply, relatively low export demand, and anticipation of further growth in the domestic market.

Long Fight Ahead on EPA Atrazine Proposal

The Environmental Protection Agency draft risk assessment on atrazine says the herbicide is harmful to animals and plants, despite decades of research suggesting otherwise. Agriculture groups responded to the draft last week, saying the EPA risk assessment is based on misguided science. Politico reports a final ruling could lead to a de facto ban on the use of atrazine by U.S. corn, sorghum and sugarcane growers, but that decision is likely years away. Still, the draft assessment sets up a drawn-out fight over whether research backs up the EPA’s preliminary reports findings that current atrazine levels are harmful to humans and the environment. A comment period on the draft will be open this summer. EPA says the agency plans to convene what will be the 14th Scientific Advisory Panel on atrazine next year, finalizing the report.

Bayer Secured Funding for Monsanto Bid

Despite Monsanto rejecting a takeover bid by Bayer AG, Bloomberg reports Bayer has secured $67 billion in financing for the proposal. Bayer reportedly picked five individual banks to each provide about $12.5 billion in short-term loans to secure financing. The loan reportedly includes an option to be increased should the company bump its current offer of $122 per share. According to a report by Reuters, the loan totals 60 billion euros, or $67 billion, and can be expanded up to 75 billion euros. Monsanto has rejected Bayer’s initial $62 billion buyout offer, claiming the proposal was too low. Acquiring Monsanto would make Bayer the world’s biggest supplier of farm chemicals and seeds.

World Food Markets Likely to Remain Stable

The United Nations says global food commodity markets are likely to remain stable, even as prices rose for the fourth straight month. The UN’s Food and Agriculture Organization’s monthly food price report rose 2.1 percent in May to average 155.8 points. Rising prices for most main food commodities apart from vegetable oils resulted in the index’s fourth consecutive monthly rise after it hit a near seven-year low in January, according to Reuters. The FAO says solid output prospects and abundant stocks should keep prices and supplies stable, while lower prices than those seen last year are set to reduce the world’s food import bill. Meanwhile, dairy prices rose 0.4 percent in May partly due to continued demand for milk powder and butter, but are still down 24 percent since last year and expected to stay weak, according to the monthly index.

Cuba Wants Credit to Increase Food Production

Cuba’s agriculture minister says the country wants to increase food production to cut food imports in half. Cuba currently imports $2 billion of food per year, but it needs medium and long-term credit to buy U.S. equipment to achieve that goal of cutting food imports in half, according to the Hagstrom Report. Cuba needs new equipment as many farmers are using Caterpillar, John Deere and Massey Ferguson farm equipment that were imported before the 1959 revolution. Financing exports to Cuba, even of agricultural products, is prohibited under the 2000 law that allowed agricultural exports.

Russia Planning to Expand Food Import Embargo

Russia’s agriculture ministry is drafting a government decree that would extend the country’s embargo on imported foods including meat and chicken until the end of 2017. The current embargo against the European Union, the United States, Canada, Australia and Norway runs through August 5th. Russia implemented the embargo in mid-2014 and extended it last year in retaliation for sanctions related to the conflict in Ukraine. Meatingplace reports that even if Russia lifted its embargo, meat-exporting countries face additional obstacles to accessing the market. Access to the Russian market was already limited since the country closed its doors to U.S. beef and pork in early 2013. Russia also closed its market to EU pork products in January 2014 due to concerns over cases of African swine fever. A Russian news agency reports Russia’s domestic agricultural producers support the continuation of the embargo.