According to the Commerce Department, the U.S. trade deficit rose by nearly 6 percent in February to $62.3 billion. Imports increased by more than 3 percent to an all-time high of $214 billion, paced by a surge of foreign car shipments. Exports also rose, but only by 2 percent to a record $151 billion. Those numbers reflect strong gains in sales of American-made heavy machinery, computers and farm goods.
DOMESTIC demand for agricultural commodities also is burgeoning. Coupled with tight supplies, the outlook for producer prices appears to be bright.
And on Capitol Hill, this week, Agriculture Department Officials expounded on the immutable law of "supply and demand."
Commodity prices and their relationship to the new farm bill were at the top of the agenda on Capitol Hill this week. USDA officials and Senators spent much of an agricultural budget hearing discussing how high commodity prices may affect rural America.
Joseph Glauber, USDA Chief Economist: "We have very low wheat stocks. We have very low corn stocks. Both near historic lows given the size of the economy and for that reason the markets will be very focused on weather this year."
Sen. Bob Bennett, R-Utah: "You talk about the wheat prices, is that driven by the desire to plant corn and take up acreage for wheat? We hear that theory?"
Joseph Glauber, Chief Economist: "I say that to a limited degree but a lot of the area for wheat is less suitable for corn. Now when corn gets to $5-6 per bushel that land start to look better."
Sen. Bob Bennett, R-Utah: "It's like oil"
Joseph Glauber, Chief Economist: "That's right. But we do expect wheat prices to come down as the world crop comes in."
Beyond commodity prices, USDA Secretary Ed Schaffer reiterated President Bush's request to reign in spending on the 2007 farm bill.
The omnibus spending package known as the farm bill appropriates funding on a variety of government programs like farm subsidies and food stamps. In separate meetings on Capitol Hill, lawmakers opened the first conference committee hearings between the U.S. House and Senate but little, if any, compromise had been reached by week's end. A 30-day temporary extension of 2002 farm legislation is set to expire April 18. President Bush has urged lawmakers to file a one-year extension if the April 18 deadline expires.