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USDA supply/demand forecast could factor in Mexico, China tariffs
[WASHINGTON] The US Department of Agriculture will factor in China and Mexico's tariffs against American farm products in its global supply and demand crop report next month, if these tariffs do take effect, USDA chief economist Rob Johansson told Reuters in an interview on Friday.
The USDA crop report forecasts will assume that these tariffs, if implemented in the coming days against a slew of agricultural products, "are going to hold for the rest of the year," Mr Johansson said.
In a growing trade fight with top agricultural export markets, the United States has threatened to impose duties on up to US$450 billion of Chinese imports, with the first US$34 billion portion set to go into effect beginning July 6.
In a tit-for-tat response, Beijing says it plans to impose an extra 25 per cent import duty on more than 500 US goods, including soybeans, on July 6. China is the top buyer of US soybeans, the most valuable farm export.
"We would expect a lot to happen in the markets if these tariffs were still in place come the fall," Mr Johansson said. "We would expect China to be purchasing as much as possible from South America. Our soybeans for their buyers would be higher priced."
The United States would still sell some soybeans to China because it buys so much, he said, adding that US beans would "backfill" behind Brazil and Argentina.
In early June, Mexico put US$3 billion worth of tariffs on American products ranging from steel to pork and bourbon, retaliating against import duties on metals by Washington. Mexico is the top importer of American pork products.
The tariffs could effect USDA's estimates for agricultural exports and global use, Mr Johansson said.
Mr Johansson said that USDA would not be able to tell what the full economic impact of these trade fights will have on US farmers, until this fall when the producers harvest their crops and see what grain and livestock prices are.
The brewing trade war with China has driven grain prices sharply lower. Chicago Board of Trade's front-month corn futures fell about 11 per cent in June, while soybean futures fell nearly 16 per cent.
USDA has a model that shows how much of the recent market activity is caused by trade uncertainty, and how much by the strong start to the growing season and expectations of bumper soybean and corn harvests this fall, Mr Johansson said.
He declined to discuss the model's findings.