Daily Ag News Summary 12/04/2017

Canada initiates WTO dispute proceedings on US softwood lumber duties

Canada has requested World Trade Organization (WTO) consultations with the United States regarding US anti-dumping and countervailing duties imposed on imports of softwood lumber from Canada. The requests were circulated to WTO members last week. Canada considers the anti-dumping and countervailing measures to be inconsistent with provisions of the WTO’s Agreement on Anti-dumping, the Agreement on Subsidies and Countervailing Measures, and the General Agreement on Tariffs and Trade 1994.

This is not the first case involving the lumber industries of the neighboring countries. Back in 1993, Canada actually won a victory in a dispute resolution reversing duties on imported lumber as decided by a U.S. trade court. The U.S. is seeking changes to how the countries – and Mexico – handle anti-dumping and countervailing duties within the North American Free Trade Agreement (NAFTA). That agreement is being renegotiated and is a key point of discussion for the Trump administration.

U.S. Beef Exports Continue to Grow

In every month in 2017, U.S. beef exports exceeded the prior year’s exports, according to the latest trade data through September. Year-to-date beef exports through September total just under 2.1 billion pounds, compared with 1.8 billion during the same time in 2016, a 15-percent increase. Much of the growth in U.S. beef exports can be attributed to increased shipments to Japan, which has received 29 percent more beef so far in 2017, year over year. This rise has amounted to more than 140 million pounds of beef according to the Economic Research Service.

The growth in U.S. beef exports has coincided with stronger domestic beef production and lower prices relative to recent years. An additional factor that influences U.S. trade, is the relative strength of the country’s dollar compared with its competitors. Between January and September 2017, the U.S. dollar depreciated by roughly 8 percent, according to the St. Louis Federal Reserve’s Trade-Weighted U.S. Dollar Index. A depreciating dollar relative to a trading partner makes U.S. goods more attractive because more dollars can be purchased with the same amount of the partner’s currency.

Farm-Sector Profits Stabilize in 2017

After several years of decline, net farm income in 2017 for the U.S. farm sector as a whole is forecast to be relatively unchanged while net cash farm income is forecast to rise. According to USDA’s Economic Research Service (ERS), farmers will see the net farm income grow slightly to $63.2 billion in inflation-adjusted terms (up about $0.5 billion, or 0.8 percent), while inflation-adjusted net cash farm income will increase almost $2.0 billion (2.1 percent) to $96.9 billion.

Both profitability measures remain below their 2000-16 averages, which included substantial increases in crop and animal/animal product cash receipts from 2010 to 2013. Net cash income is a shorter term measure of cash flow, while net farm income is a longer term measure of a farm’s ability to survive as a viable income-earning business.