FarmPolicy

December 5, 2019

Multiple Food Price Issues, Doha Developments

Keith Bradsher and Andrew Martin reported in today’s New York Times that, “At least 29 countries have sharply curbed food exports in recent months, to ensure that their own people have enough to eat, at affordable prices.

“When it comes to rice, India, Vietnam, China and 11 other countries have limited or banned exports. Fifteen countries, including Pakistan and Bolivia, have capped or halted wheat exports. More than a dozen have limited corn exports. Kazakhstan has restricted exports of sunflower seeds.

“The restrictions are making it harder for impoverished importing countries to afford the food they need. The export limits are forcing some of the most vulnerable people, those who rely on relief agencies, to go hungry.

“‘It’s obvious that these export restrictions fuel the fire of price increases,’ said Pascal Lamy, the director general of the World Trade Organization.”

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Doha, High Prices and Ethanol

Doha

Alan Beattie, writing yesterday at the Financial Times Online, reported that, “The head of the World Trade Organisation has called a meeting of ministers for late July in a high-risk attempt to rescue the beleaguered Doha round of global trade talks.”

Mr. Beattie explained that, “Gordon Brown, the UK prime minister, said: ‘I believe this is the endgame for the trade talks … I think we are in touching ­distance.’

“But some trade officials warned that large negotiating gaps remained between the leading countries and said Mr Lamy’s decision to call a meeting was a gamble that could lead to a high-profile implosion.”

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Doha; Commodity Supplies and Biofuels; Farm Bill Implementation

Doha

James Kanter reported in today’s New York Times that, “Pascal Lamy, the director general of the World Trade Organization, has called a week-long meeting of ministers next month aimed at reaching a breakthrough deal on liberalizing global trade, officials and diplomats said Wednesday.

Mr. Kanter explained that, “The meeting is scheduled to be held over five days at the W.T.O. headquarters in Geneva starting July 21, with the goal of agreeing to specific tariff and subsidy cuts. Up to 40 countries are expected to attend.

“Sean Spicer, the assistant United States trade representative, warned that important differences remained between trading partners on the crucial areas of agriculture, industrial goods and services, the areas on which the talks would focus.

“But Mr. Spicer said there was ‘an opportunity for success’ if other countries ‘work with the same spirit’ and ‘make the same intensive efforts’ as the United States.”

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Fuel, Food Price Issues and Doha Developments

Marcia Zarley Taylor reported yesterday at DTN (link requires subscription) that, “Ethanol’s rapid expansion since 2006 has seriously exaggerated price increases in corn and jeopardized the domestic livestock industry, perhaps far more than the Bush administration has been willing to admit.

So concluded a new analysis by former USDA Chief Economist Keith Collins, a fixture in farm policy for the past 30 years and an authority who is lending credence to the request by Texas Gov. Rick Perry, a Republican, for a partial waiver of the Renewable Fuels Standard mandate in that state. Collins’ white paper, commissioned by Kraft Foods, was part of the public comments submitted to the Environmental Protection Agency as it considers whether it should grant the exemption. The public comment period ends June 24, and EPA is expected to issue its decision, in consultation with USDA and the Department of Energy, next month.”

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Doha Developments, Crop Conditions, Prices and Ethanol Implications

Reuters writer Laura MacInnis reported yesterday that, “French President Nicolas Sarkozy’s pointed criticism of the Doha free trade round were contradictory and did poor-country farmers a disservice, trade experts said on Monday.

“Sarkozy, a staunch defender of European Union farm subsidies that would be cut under a new World Trade Organisation (WTO) accord, called the deal being negotiated in Geneva ‘really counterproductive’ in light of the world’s food security crisis.

“‘One child dies every 30 seconds because they are hungry, and we should go and negotiate within the WTO framework a 20 percent cut in European agricultural production?,’ he asked in remarks directed at EU Trade Commissioner Peter Mandelson.”

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Speculation and Prices

As the market prices of some commodities have increased recently, issues associated with “market speculation” have arisen.

An academic report released this month by Dwight R. Sanders, Scott H. Irwin, and Robert P. Merrin, entitled, “The Adequacy of Speculation in Agricultural Futures Markets: Too Much of a Good Thing?” provided a more rigorous look at some of the variables surrounding this issue.

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Weekend Review: Crop Conditions Pressure Policy Makers

David Streitfeld, writing in Saturday’s New York Times, reported that, “Signs are growing that the government may allow farmers to plant crops on millions of acres of conservation land, while a chorus of voices is also pleading with Washington to cut requirements for ethanol production.

“The Midwest floods have washed out an estimated four million acres of prime farmland, crimping this year’s harvest as the world desperately needs more grain. With corn prices setting records and soybean prices not far behind, the Bush administration is under intense pressure to do what it can to bolster the food supply.”

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Crop Development Issues, Food Prices and Ethanol Concerns

Associated Press writer Stevenson Jacobs reported yesterday that, “Corn fell for the first time in two weeks Thursday as sunshine returned to the flood-battered Midwest and signs suggested that record-high prices were curbing demand for the grain to feed livestock and make biofuel.”

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Crop Supply Concerns Persist, Policy Options Discussed

Associated Press writer Stevenson Jacobs reported yesterday that, “Corn prices crept closer to an unprecedented $8 a bushel Wednesday on concerns that damage to cornfields from Midwest flooding is worse than previously thought, which could further drive up the price of food.”

The AP article explained that, “The U.S. Department of Agriculture will say how big this year’s U.S. corn crop will be later this month, but the agency has already hinted it also will do a special assessment of how many acres have been lost to massive flooding that struck the Midwest last week. Estimates of the toll vary widely, from 2 million to 5 million corn acres damaged or destroyed by floodwaters.

“‘There is a fear that this destruction may be worse than we think,’ and that’s driving corn prices higher, said Richard Feltes, senior vice president and director of commodity research for MF Global in Chicago.

“Corn for December delivery rose as high as $7.85 a bushel on the Chicago Board of Trade before easing back to settle at $7.80, up 4 cents. In the most-actively traded July contract, prices rose to $7.50 a bushel before falling back to settle 4 cents higher at $7.4625.”

Mr. Jacobs indicated that, “‘We are on the verge of a disaster if we have adverse weather in July,’ Feltes said. ‘The death knell scenario is for the rains to suddenly shut off and for us to go into a hot, dry pattern,’ which would significantly hurt corn yields.

“‘If the situation worsens, we could have $10 corn and $20 soybeans,’ Feltes added.”

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Commodity Developments; EU Farm Policy; Brazil Cotton Case

Commodity Developments

Ian Berry reported in today’s Wall Street Journal that, “Corn prices continue to climb on concerns about Midwestern flooding and crop damage but avoided taking out records.

“Nearby July corn at the Chicago Board of Trade rose 9.75 cents to $7.4225 a bushel Tuesday. It had previously hit highs for eight straight days, most recently at $7.60 intraday on Monday.”

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Commodity Concerns and Biofuels

Scott Kilman reported in today’s Wall Street Journal that, “The Midwest floods are raising the inflationary tide rippling through the nation’s supermarkets and restaurants — and meat prices may soon start rising along with prices for bread, eggs and breakfast cereals.

“Economists are again raising their forecasts of how much food prices will climb, and for how long, because heavy rains have washed out millions of acres of prime farmland at a time when soaring demand is draining U.S. grain supplies to low levels.”

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Doha Review, FAPRI report, Farm Bill, and Commodity Issues

Doha Review

On June 9, Reuters writers Paul Eckert and Doug Palmer reported that, “A global trade deal to cut farm subsidies and tariffs is within reach, a top New Zealand official said on Monday while a U.S. official warned India’s unwillingness to open its market could derail the talks.

“‘We have made progress in agriculture. We did have 175 outstanding issues … That’s been reduced down to 30,’ New Zealand’s trade minister, Phil Goff, said in a speech at the Peterson Institute for International Economics.

“Negotiators in Geneva have been working toward a possible ministerial meeting in late June or early July to try to bring the long-running Doha round of world trade talks to a successful close by the end of the year.”

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Key U.S. Crops: Conditions and Prices, Week in Review

A University of Illinois Extension article from Monday (“Rapidly Changing Crop Markets,” by Darrel Good) stated that, “Last week there began to be some discussion about the end to the higher price trend in corn and soybean prices. Ironically, that discussion was followed by a move to new contract highs in both markets.

The article added that, “What changed? Two developments last week dramatically altered the fundamental situation for corn and soybeans. One was the reversal in crude oil prices. After declining by more than $10 per barrel, crude oil prices rebounded to new highs on June 6. The reversal followed from forecasts of continued upward pressure on prices into the summer months. Sustained high crude oil and gasoline prices would likely keep ethanol prices moving higher and support corn demand.

“The second factor was the widespread heavy precipitation in major corn and soybean producing areas. The ongoing wet weather means further delays in the completion of planting. It now appears likely that not all of the acres intended for corn and soybean production will get planted or re-planted. At a minimum, significant acreage will be planted well beyond the optimum window for obtaining maximum yields. Whether from smaller planted acreage, smaller harvested acreage, or reduced yields expectations about corn and soybean crop size are being scaled back. With trend yields, the USDA has already forecast a sharp reduction in U.S. corn inventories by the end of the 2008-09 marketing year and the continuation of very tight soybean inventories. If production falls short of expectations, further reductions in corn consumption and rationing of soybean consumption would be required.”

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Prices Leap for Corn and Crude Oil

Chris Flood, writing on Friday at the Financial Times Online, reported that, “Torrential rain across parts of the Midwest pushed US corn prices to record levels on Friday, prompting concerns about the outlook for this year’s harvest.

“In Chicago, CBOT July corn jumped 20¾ cents to a record $6.63¼ a bushel, taking gains for this year so far to 45.6 per cent.”

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UN Conference Wraps Up- Biofuels; Doha Talks; Farm Bill; Crop Concerns; Climate Change Bill

UN Conference- Biofuels

Andrew Martin reported in today’s New York Times that, “A three-day United Nations conference on spiraling food costs concluded late on Thursday with the delegates calling on countries and financial institutions to provide more food for the world’s poor and increase agriculture production to ensure adequate supplies in the future.

“The final declaration, completed Thursday, sought ‘urgent and coordinated action’ to address the problems associated with higher food prices, to raise food production, to lower trade barriers and to increase research in agriculture.”

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UN Conference- Biofuels Discussed; WTO Issues; CFTC

(Note: FarmPolicy.com was not published yesterday, June 4).

UN Conference- Biofuels

Andrew Martin and Elisabeth Rosenthal reported in Wednesday’s New York Times that, “Faced with an immediate hunger crisis and the need to double food production in the next 30 years, world leaders meeting Tuesday to discuss soaring food prices were mostly in agreement on how the problem could be resolved. The questions were how to get there and who was going to pay for it.

“The steps needed? Immediately deliver more food aid to the world’s hungry. Provide small farmers with seeds and fertilizer. Scrap export bans and restrictions. And vastly increase agriculture research and outreach programs to improve crop production.

“The cost? Jacques Diouf, director general of the Food and Agriculture Organization of the United Nations and the host of the meeting, estimated it could run to $30 billion a year.”

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