Editorial


EPA Counters California Labeling Requirement for Glyphosate

09/12/2019

EPA has issued a letter stating that the Agency would not approve any labels for products containing glyphosate that claim potential carcinogenicity. Recently California listed glyphosate as a potential carcinogen in terms of the 1986 Safety Drinking Water and Toxic Enforcement Act (Proposition 65).  As justification, California cited the now withdrawn WHO-International Agency for Research on Cancer report.  The IARC finding that glyphosate was “probably carcinogenic” was widely discredited by the scientific community.  A co-author of the IARC report subsequently emerged as an expert witness for plaintiffs’ attorneys suing Bayer alleging that glyphosate was responsible for non-Hodgkin lymphoma.  Bayer acquired Monsanto in 2018 and has lost three consecutive lawsuits decided by jury in California.  It is noteworthy that the conclusions of a study conducted by the Environmental Protection Agency were not submitted as evidence to defend Bayer-Monsanto.  Scientific opinion disfavors the role of glyphosate in the development of specific cancers.

 

The EPA letter clearly stated that label warnings in terms of Proposition 65 constituted a “false and misleading statement”.  The issue of a California label warning was raised in a 2018 Federal case in which a judge granted an injunction against California in favor of plaintiffs that used glyphosate in their farming operations, claiming that the label requirement would violate their First Amendment rights.

 

The California Office of Environmental Health assessment is apparently adhering to their policy of sanctifying a discredited, biased and retracted report from the IARC and characterizing the EPA letter as being “disrespectful of the scientific process.”  The Wall Street Journal correctly admonishes California and justifiably maintains that scientific evidence should determine the legal status of glyphosate.

 

In a letter to The Wall Street Journal published on September 12th Allan Hirsch, of the California Office of Environmental Health Hazard Assessment defends his Department’s decision, again invoking the discredited and “cherry picked” IARC report considered as justification to require a warning label. He claims that “warnings enable Californians to make informed choices about their use of products that could expose them to toxic chemicals” By the same token dihydroxy oxygen (or water to you and me) is harmful or even lethal if ingested in a sufficient quantity. Does California intend to label water as harmful? Californians are in no position to “make informed choices” over whether or not glyphosate plays a role in non-Hodgkin lymphoma since there is even contention among experts. By unjustly labeling glyphosate-containing herbicides as “potentially carcinogenic” a range of products are effectively demonized. This is all a result of Proposition #65, enacted by ballot, providing bureaucrats with job-security and contributing to the collective neurosis inherent to the State.


 

Egg Industry News


STOP PRESS

09/12/2019

U.S. Delays Increased Tariffs on Imports from China

                               

As a gesture to China the White House announced a delay in increasing import tariffs by 5% on goods to the value of $250 billion from October 1st to October 15th 

The concession was partly in response to a prior move by China and followed a request from the Vice-Premier Liu He. The “thawing” in the trade war is attributed to realization of the mutually inflicted damage caused by tariffs but also to facilitate bilateral talks at the ministerial level scheduled for early October in Washington DC.

China begins a celebration period on October 1st to mark the centenary of the Communist Party in China.


 

Egg Exports

09/07/2019

Export of Shell Eggs and Products January-July 2019.

USDA-FAS data collated by USAPEEC, reflecting export volume and values for shell eggs and egg products are shown in the table below comparing the first seven months of 2019 with the corresponding period in 2018:-

PRODUCT

Jan.-July 2018

Jan.-July 2019

Difference

Shell Eggs

     

Volume (m. dozen)

63.3

75.6

+12.3 (+19.4%)

Value ($ million)

75.2

59.7

-15.5 (-206%)

Unit Value ($/dozen)

1.19

0.79

-0.40 (-33.6%)

Egg Products

 

 

 

Volume (metric tons)

19,120

17,578

-1,542 (-9.6%)

Value ($ million)

69.0

56.2

-12.8 (-18.6%)

Unit Value ($/metric ton)

3,608

3,197

-411 (-11.4%)


 

Egg Week

09/11/2019

USDA Weekly Egg Price and Inventory Report, September 12th 2019.

  • Hen numbers in production up 0.4 million to 325.0 million.
  • Shell inventory up a moderate 2.8 percent, down from 9.6 percent last week.
  • USDA Midwest benchmark generic prices for Extra large and Large down 1.0 percent to 103.5 and 101.5 cents per dozen respectively. Mediums were down 6.2 percent to 59.5 cents per dozen.
  • Price of breaking stock unchanged at 47.0 cents per dozen and checks at 34.0 cents per dozen respectively. Both categories substantially below cost of production

 

COMMODITY REPORT September 12th.

09/12/2019

Corn was up 3.5 percent on CME trading at 15H00 following release of the September 12th WASDE. This reversed the 4.2 percent decline during the past week. Soybeans were up 2.5 percent and soybean meal was 2.8 percent higher.

Release of the September WASDE documenting lower corn supply but fractionally higher ending stocks resulted in an increase in futures prices as indicated in the table below.

Soybeans responded to a reduction in yield, production and ending stocks with higher prices on the CME. The price of Soybean meal increased proportionately with soybeans.

The absence of any substantial progress regarding negotiations with China has engendered pessimism over resolution of the trade conflict. Resumption of talks at the pre-agreement level are scheduled for late September with bilateral ministerial discussions to take place in early October in Washington. The recent series of on-again-off-again tariff announcements suggest intractability by both the U.S. and China. Current consensus is that there will not be any resolution of the trade dispute before the end of 2019. In the interim China has retaliated by banning all nearly all imports of agricultural products from the U.S. except whey. The White House announced new tariffs effective September 1st with a further escalation scheduled for mid-December. As of September 11th both parties have extended minor concessions in advance of the next round of talks. The Administration categorically denied a rumor that the U.S. would accept a partial agreement during the morning of Thursday 12th

The continuous stream of conflicting statements by White House and Government of China spokespersons over the months since the dispute began is disconcerting to the commodities market and has contributed to price fluctuation.

The following quotations were posted by the CME at close of trading on Thursday September 12th compared with values for September 6th (in parentheses).

COMMODITY

 

Corn (cents per bushel)

Sept. 354 (342)

Dec. 367 (355)

Soybeans (cents per bushel)

Sept. 875 (854)

Nov. 895 (857)

Soybean meal ($ per ton)

Sept. 296 (289)

Dec. 293 (288)

Changes in the price of corn, soybeans and soybean meal this past week were:-

COMMODITY CHANGE FROM PAST WEEK

Corn: Sept. quotation up 12 cents per Bu         (+3.5 percent)

Soybeans: Sept. quotation up 21 cents per Bu (+2.5 percent)

Soybean Meal: Sept. quotation up $8 per ton. (+2.8 percent)

  • For each 10 cent per bushel change in corn:-

The cost of egg production would change by 0.45 cent per dozen

The cost of broiler production would change by 0.25 cent per pound live weight

  • For each $10 per ton change in the price of soybean meal:-

The cost of egg production would change by 0.44 cent per dozen

The cost of broiler production would change by 0.25 cent per pound live weight

COMMENTS

Subscribers are referred to the comments on the weekly USDA Crop Progress Report and the September 12th WASDE posted in this edition.

In June some concessions were promised by China to reduce coercive trade practices and clarify dispute resolution. Subsequently U.S. negotiators claim that China backtracked on structural issues hence the threat of more stringent tariffs and embargos on trade with tech. companies in China.

Prices of commodities will be determined by estimates of ending stocks as influenced by the 2019 harvest, exports and domestic use.

The corn price was adversely affected by the August 9th decision by the EPA to grant 31 and to deny six waivers to refineries. This action, according to the Renewable Fuels Association decreased demand by 1 billion gallons of biofuel. This was reflected in a sharp decline in the value of a RIN from 20 to 11 cents. Ethanol value is languishing. The price was $1.35 per gallon on September 12th ($1.34 per gallon on August 30 th).

Unless shipments of corn and especially soybeans to China resume in volume, which is highly unlikely, the financial future for row-crop farmers in 2019 appears bleak despite the release of two tranches of support funding in 2018 amounting to $8 billion as "short-term" compensation for disruption in trade. On July 25th the USDA announced a $16 million package to support agriculture with Market Facilitation funds to be distributed in three tranches. The first payment of $2.5 billion has been made with the remainder for the third quarter through the Farm Services Agency under authority of the Commodity Credit Corporation. Payments will be based on a value corresponding to the higher of 50 percent of the Producer's calculated payment or $15 per acre, provided a cover crop is planted.

The magnitude of the second (November 2019) and third (January 2020) payments will be decided according to prevailing conditions. Regulations framed in terms of the Additional Supplementation Appropriations for Disaster Relief Act of 2019 enacted in June will determine eligibility.


 

USDA-WASDE FORECAST #592 September 12th 2019

09/12/2019

OVERVIEW

The September 12th 2019 USDA WASDE projections for the 2019 corn and soybean harvests are based on historical yield and pre-harvest data with progressive updating as the season has advanced. The corn acreage to be harvested was determined from planting completed in June at 90.0 million acres (81.8 million in 2018) unchanged from the August WASDE. In 2019 soybeans will be harvested from 75.9 million acres, unchanged from the August estimate (88.3 million acres in 2018)

The USDA projected corn yield was lowered 0.8 percent to 168.2 bushels per acre, (178.9 bushels in 2018) reflecting late planting and delayed development. Soybean yield was reduced 1.2 percent to 47.9 bushels per acre from August. (52.1 bushels in 2018). Yield values presume suitable growing conditions until harvest.

The August USDA projection of ending stock for corn was increased by 0.4 percent from the August WASDE to 2,190 million bushels. Ending stock for soybeans will be 15.2 percent lower than the August estimate at 640 million bushels. Ending stocks for both corn and soybeans have influenced recent CME price quotations. It is presumed that projections are based on the presumption that there will be no settlement of the trade dispute with China during the fourth quarter of 2019. China failed to commit to purchases following the June meeting between President Trump and Premier Xi at the G-20 Meeting in Osaka. No orders were forthcoming after the G-7 Summit in France in August. China banned all agricultural imports from the U.S. on August 4th following the announcement of a 10 percent tariff, effective September 1st on imports from China valued at $300 billion in 2019 and not already subject to duty.


 

Egg Monthly

09/12/2019

Review of August 2019 Production Costs and Statistics.

August 2019 USDA ex-farm blended nest-run benchmark price was up a noteworthy 93.9 percent from July 2019 to 57.6 cents per dozen 3.8 below the U.S. average benchmark cost of production. Low price is consistent with seasonal purchase trends but accentuated by oversupply.

  • August 2019 USDA average nest-run production cost was 4.5 percent higher than July 2019 at 59.9 cents per dozen.

  • August 2019 USDA benchmark nest-run loss decreased from July 2019 at 33.0 cents per dozen to 2.3 cents per dozen in August.

  • August national flock ( over 30,000 hens/farm) was down 1.3 million or 0.4 percent to 312.6 million.

INTRODUCTION.

Summary tables for the latest USDA August 2019 prices and flock statistics made available by the EIC on September 12th 2019 are arranged, summarized, tabulated and reviewed in comparison with values from the previous August 7th 2019 posting reflecting July 2019 cost and production data.


 

Salmonella Outbreaks Attributed to Improperly Cooked Eggs

09/04/2019

According to a Food Safety News posting on August 29th Public health authorities in Hong Kong identified two outbreaks of salmonellosis during May and June. In total 50 cases were confirmed. The vehicle of infection was undercooked scrambled eggs and in some cases investigations showed prolonged storage at sub-optimal temperature.

Even if eggs are contaminated with relatively low levels of Salmonella Enteritidis, (104 cfu)       adequate cooking should prevent infection. The contents of a contaminated egg will be rendered innocuous if thoroughly cooked to attain an internal temperature of 160F for at least one minute. High levels of contamination are associated with prolonged storage or thermal abuse or their combination.

The second aspect from these outbreaks is that the eggs supplied to markets including restaurants in Hong Kong are derived from flocks infected with Salmonella either a group D that infects consumers by the vertical route or by fecal contamination of the shell if eggs are improperly sanitized.


 

Vanderbilt University Eliminates Plastic Single-Use Water Bottles

09/04/2019

It is axiomatic that trends in ecology and environmental consciousness start in institutions of higher education. Vanderbilt University has established a program to eliminate plastic single-use water bottles on campus. Incoming and existing students, faculty and staff can purchase aluminum tumblers that can be refilled at stations throughout the campus. It is estimated that over a four-year baccalaureate program, the replacement initiative will displace 1.7 million plastic bottles used by the class of 2022.

The aluminum tumbler to be used by Vanderbilt is manufactured by the Ball Corporation. The Company will also extend availability to entertainment and sports venues. The statement from the company indicated “In addition to its sustainability and recycling strengths, the aluminum cup is sturdy, durable and cool to the touch and can be customized with logos and graphics”. The container is available in a 20-ounce size with additional volumes to become available based on demand.

Awareness of plastic waste and the problems of either recycling or disposal are becoming more prominent in mainstream and social media. Third-world nations that previously received compressed plastic waste are no longer accepting shipments placing the onus on industrialized countries to develop alternative packaging or recycling.


 

USPOULTRY Develops Training Module for Egg Washing

09/08/2019

Cooperation involving the USDA Agriculture Research Service, the Agriculture Marketing Service and USPOULTRY has lead to a new training module for inline egg washing.  The module includes justification for washing and the operational requirements to control pathogens.  The egg washing module complements the previously released module on egg refrigeration requirements and is recommended to orient and train supervisors and workers in egg packing plants.

 

The learning management system developed by USPOULTRY is available to members and can be accessed at www.uspoultry.org/training.  Additional information can be obtained from Rafael Rivera at rrivera@uspoultry.org


 

CDC Updates Salmonella Outbreak from Backyard Poultry

09/08/2019

In a September 3rd release, the CDC confirmed that a total of 1,003 diagnosed cases of salmonellosis have been made in 49 states attributed to contact with backyard poultry including day-old chicks and ducklings.  The 2019 cases have resulted in 175 hospitalizations and two fatalities. The number of cases in 2009 covering seven months is almost the same as the 1,120 incidence rate for entire 2017 suggesting that any recommendations by CDC or public health authorities have not diminished this national problem. 

 

It is known that small hatcheries distributing chicks and ducklings supply product infected with Salmonella.  Accordingly it will require the tort bar to resolve the issue since knowingly or negligently distributing infected poultry intended to be kept as pets represents disregard for public health.

 

The CDC advice concerning washing hands after touching poultry or preventing backyard poultry from entering homes appears to be of negligible value.  Why not simply recognize the danger and advise prospective and existing owners of poultry of the risks and consequences of salmonellosis. Banning interstate transport of live chicks and ducks other than from hatcheries complying NPIP Salmonella requirements would be beneficial.  In 1965 the CDC took action against producers of turtles responsible for extensive outbreaks of Salmonella infection.  The doyen of epidemiology Dr. Eugene Gangarosa in advocating for the ban on interstate transport of hatchlings emphasized that “turtles are inappropriate pets”. By the same token day-old chicks and ducklings fall into the same category.


 

Impact of Tariffs on U.S. Commodities

09/11/2019

Dr. Jay Rempe, Senior Economist for the Nebraska Farm Bureau has calculated the loss incurred by farmers in his state as a result of retaliatory tariffs imposed by China on U.S. agricultural commodities.  The report entitled Nebraska Farm and Ranch Losses from Retaliatory Tariffs-- 2019 Estimates was based on U.S. Department of Agriculture data.  The losses were independent of Market Facilitation Program assistance extended to farmers in 2018 and through 2019. 

 

Rempe calculated that Nebraska soybean producers will lose $589 million and corn producers, $251 million this season.  Pork producers in Nebraska will lose $40 million and collectively sorghum and wheat growers will lose $20 million with lesser amounts for alfalfa, dairy and dry beans.  Rempe did not take into account losses associated with beef, hides, skins, ethanol and DDGS that, if taken into account, would increase the loss to over $1 billion. The impact of the trade dispute with China at the local level is demonstrated in a projection that farmers in rural Cumming County will sustain a $48 million loss due to reduced exports corresponding to $5,300 per capita.

 

Steve Nelson, president of the Nebraska Farm Bureau acknowledged the assistance from the MFP but commented, “It is vital to eliminate trade barriers and security trade deals that allow farmers and ranchers to work freely to capture, develop and grow international markets.”  He added, “Congressional passage of the USMCA, securing a bilateral deal with Japan and resolution of the dispute with China would be good places to start.”

 

Echoing Nelson, perhaps ultra-Sinophobe Dr. Peter Navarro should follow John Bolton in exiting the White House also “as a good place to start”.


 

Argentine Farmers to Plant More Soybeans at the Expense of Corn

09/11/2019

Based on political considerations with the likelihood of a socialist government returning to office, farmers in Argentina are shifting five percent of their intended corn planting to soybeans.  The decision is based on the relatively higher cost of cultivating corn.  Agritrend a local consultancy estimates that 15 million acres would be planted to corn and 44 million acres to soybeans.


 

Food Marketing Institute Promoting National Family Meals Month

09/12/2019

Following the initiation in September 2015 of the National Family Meals Month, the annual event has grown with the support of the Food Marketing Institute. Leslie Sarasin, CEO of the FMI stated “We began with a simple concept – design a platform for food retailers and suppliers to support consumers in making family meals a reality and in turn help them reap the physical, social and psychological benefits of doing so”.

Studies have demonstrated that families that eat meals together are less likely to be obese and have children with higher levels of accomplishment. Over 230 partners in the project will stage promotions for their brands both with in-store offers and point-of-sale coupons.

Previously EGG-NEWS commented on the support for the program by Eggland’s Best joining national brands Lean Cuisine, Stouffer’s, Giant Food Stores, Hy-Vee and Nestle among others.


 

AEB Participation in Baking Expo

09/12/2019

The American Egg Board booth at the 2019 IBIE promoted real eggs for baking. On September 9th the AEB demonstrated the beneficial functional properties of real eggs on the exhibition stage.


 

Moba Managing Director Peters Steps Down

09/12/2019

After a six-year tenure, Michiel Peters announced his resign as Managing Director on November 1st. He stated “In May of this year I shared my intention to step down from my position at Moba with our shareholder TBG Europe. We have agreed that I will stay until November 1st so we have time to find a successor. That process is well underway”.

During his leadership, Moba revenue and profit have grown, and a firm foundation has been prepared for future growth. The company developed a strategic plan, enhanced innovation and acquired Pelbo, a manufacturer of egg-breaking and pasteurization equipment. The modernization and expansion of the headquarters in Barneveld is approaching completion.

Major shareholder, TBG Europe expressed their regret at the departure of Michiel Peters, but expressed gratitude for his past contributions and the successful development of Moba. Their statement included “Under the leadership of Michiel, Moba has succeeded in growing substantially and has built a platform for further innovation and growth. We thank him for what he has done for Moba and will continue with his successor on the chosen path”.

Moba was established in 1947 and is a leading producer of integrated systems for grading, packing and processing of eggs.

Further information can be obtained on the company website <www.moba.net>.


 

Courts Rules that EPA Definition of Obligated Parties Discriminated Against Refiners

09/12/2019

The U.S. Court of Appeals for the District of Columbia recently issued an opinion on Alon Refining Krotz Springs Inc. v Environmental Protection Agency (#16-1052, 2019 WL4123519, DC cir.org.302019).  The decision related to the regulations concerning the Point of Obligation in the chain of biofuel from producer through the oil refiner to consumer. In 2007 the EPA identified refiners and importers as Obligated Parties but excluded blenders.  The oil-refiners have consistently complained that the requirement to purchase RINs imposed a financial burden to be passed onto consumers.  In contrast blenders were absolved of the need to acquire RINs to demonstrate to the EPA their compliance with the RFS. They will now have to comply with the RFS and compete on a level field.


 

Supermarket Strike Averted in Southern California

09/12/2019

A last-minute agreement was reached between the United Food and Commercial Workers Union (UFCW) and supermarket chains Ralphs, Albertsons, Vons and Pavilions stores. The labor action would have involved 46,000 workers belonging to seven UFCW unions.  Ralphs is a Kroger Company banner while Albertsons, Vons and Pavilions have common private investment company ownership.

 

UFCW has recommended that grocery workers accept the new agreement.  John Grant, president of UFCW 770 stated, “We believe this agreement is a step forward towards our vision of what grocery jobs should be in the future.”  He added, “consumers and community leaders stood with us to show our value and the impact we have in our stores and communities.”

 

Grocery workers have been operating without a contract since March.  In late June UFCW locals authorized a call to strike unless a new three-year contract was successfully negotiated.

 

Both wages and health benefits were at issue. Ralphs and Albertsons contended that employer proposals were fair with respect to the current retail grocery market.  Ralphs pointed to the low margins of less than 1.5 percent of gross sales value. Employee costs amount to 13 percent, the second largest expense factor after the costs of good sold at 78 percent of sales value.


 

Kroger Company Reports on Q2 of FY 2019

09/12/2019

In a press release dated September 12th The Kroger Company Inc. (KR) announced results for the 2nd Quarter of Fiscal 2019 ending August 17th

The following table summarizes the results for the period compared with the values for the corresponding quarter of the previous fiscal year (Values expressed as $ x 1,000 except EPS)

2nd Quarter Ending August 17th

2019

2018

Difference (%)

Sales:

$28,168,000

$28,014,000

+0.6

Gross profit:

$6,161,000

$6,038,000

+2.0

Operating income:

$559,000

$549,000

+1.8

Pre-tax Income

Net Income

$380,000

$297,000

$628,000

$508,000

-39.5

-41.5

Diluted earnings per share:

$0.37

$0.63

-41.3

Gross Margin (%)

21.9

21.6

+1.4

Operating Margin (%)

1.9

2.0

+5.0

Profit Margin (%)

1.1

1.8

-38.9

Long-term debt and other obligations:

$20,458,000

$13,816,000

+48.1

12 Months Trailing:

     

Return on Assets (%)

4.0

   

Return on Equity (%)

23.6

   

Operating Margin (%)

2.1

   

Profit Margin (%)

1.5

   

Total Assets

$44,462,000

$36,957,000

+20.3

Market Capitalization

$20,250,000

   

52-Week Range in Share Price: $20.70 to $31.98

Market Close September 11th $25.57. Post-release September 12 th noon $25.60

Forward P/E 11.1


Comments from

In commenting on results, Chairman and CEO Rodney McMullen stated "The Restock Kroger framework is designed to reposition our core business by 2020 while continuing to deliver for shareholders. We are pleased with the improvement of trends in our supermarket business in the second quarter. Guided by our customer obsession, Kroger delivered our best identical sales, without fuel, result since the launch of our transformation plan. FIFO gross margin, without fuel and pharmacy, was stable in our supermarket business. Gross margin headwinds in pharmacy were offset by strong fuel performance during the quarter. He added "we continue to reduce costs and are on track to deliver $100 million in incremental operating profit through alternative profit stream growth. We delivered strong free cash flow and are now within our targeted net total debt to adjusted EBITDA range".


 

Paris Court Rules In Favor of Novogen in Patent Claim

09/12/2019

In 2014 Lohman Tierzucht sued Novogen NA for patent infringement.  At issue was the assay procedure to identify hens displaying a genetic defect associated with degradation of trimethyl ammonia. This problem in some lines of brown-feathered hens led to a fish-odor in eggs from flocks consuming diets containing canola meal.  Application of the assay procedure led to elimination of families carrying the defect and thereby eliminating the undesirable trait.

 

In 2017 the Paris County Court dismissed the Lohman claim which was appealed to a higher court.  The Paris Court of Appeal subsequently ruled in favor of Novogen, invalidating the Lohmann patent.

 

In commenting on the decision Mickael Le Helloco, managing director of Novogen stated, “Our customers remained supportive during the process of litigation allowing our continued expansion into fifty countries despite the time spent on cumbersome legal procedures.”


 

Listeria Outbreak in Spain Attributed to Raw Pork Product

09/12/2019

Over 200 diagnosed cases of listeriosis have been diagnosed in Spain with three fatalities and multiple miscarriages. The vehicle of infection is a pork loin product with condiments known as carne mechada served in the form of cold thin slices.

 

Listeria monocytogenes has been isolated from the product and from implements and the environments of the plant.  Magrudis the supplier of the product maintain that samples obtained from their plant were negative prior to the outbreak and that they were in compliance with good manufacturing practices.

This case illustrates the difficulty in preventing contamination of products with Listeria and the need for appropriate surveillance especially with high-risk food items consumed raw.


 

Commentary


The Trade War With China – Who is Winning?

09/12/2019

CNBC Morning Squawk on September 9th presented data from official sources in China indicating the country reported a trade surplus of $35 billion in August compared to $45 billion in July. Exports to the U.S. were 16 percent lower year-on-year in August but up from a 6.5 percent decline in July.  Imports from the U.S. to China were 22.4 percent lower in August 2019 compared to August 2018, reflecting the impact of the ban on agricultural products effective on August 4th together with previous high retaliatory tariffs.  Overall exports to China declined by 5.6 percent in August 2019 compared to the corresponding month in 2018 reflecting a drop in domestic consumption.

 

A principal of objective of the trade action taken against China, initiated in 2017 was to reduce the negative balance of trade.  For the first eight months of 2019 the difference between imports and exports favored China by $196 billion with the August deficit attaining $27 billion.

 

On Friday September 6th the Central Bank of China cut reserve requirements for banks for the seventh time since the beginning of 2018 to allow institutions to extend more loans to companies.  Additional support measures are anticipated to prevent an economic slowdown according to CNBC. Zhang Yi an economist at a financial management company stated, “Exports are still weak even the face of substantial Yuan currency depreciation, indicating that sluggish external demand is the most important factor affecting exports this year.”

 

Larry Kudlow, White House Economic Advisor also stated on Friday September 6th that the U.S. anticipates “near term” results from bilateral talks scheduled for October.  He indicated that the trade conflict could take years to resolve.  This is a retraction from the earlier Administration claim that “trade wars were easy to win and of short duration”.  Prospects of even a limited near-term resumption of agricultural imports are unlikely unless both nations make concessions with regard to recently announced additional tariffs. Resolution of the trade dispute is critical for the financial wellbeing of the agricultural sector as the 2019 harvest approaches

 

 The more basic conflicts relating to structural issues including intellectual property and coercive trade practices that were the justification for initiating the trade conflict by the U.S. in 2017 are unlikely to be resolved in October if at all. These practices are critical to achieving the “Made in China 2025” initiative essential for continued growth in GDP. We will never conclude a Grand Agreement over a dinner regardless of the deal making skills of the Negotiator-in-Chief. We could make steady but slow progress through diplomacy, application of tactical economic pressure and cooperation with our allies with whom we have converging interests with respect to China.


 

Sponsored Announcements


Summit Livestock Extends Project Capability

09/05/2019

Summit Livestock Facilities undertakes both renovation and conversion projects for the egg-production industry as noted in the posting below.

For additional information and to discuss project feasibility and cost contact

Bryan Culp bculp@summitlivestock.com or Sam Kaufman skaufman@summitlivestock.com


 

Visit our Companion Website
http://www.chick-news.com/


Dr. Simon M. Shane
Simon M. Shane
Contact     C. V.