USA Rice meets with Trade Commission staff

As part of the USA Rice Federation’s continuing support of the U.S. International Trade Commission’s (USITC) investigation of the factors affecting the U.S. rice industry’s competitiveness, USA Rice members and staff met with USITC staff at their headquarters here yesterday.

Millers Carl Brothers of Riceland Foods, Keith Glover of Producers Rice Mill and Chris Crutchfield of the American Commodity Company were joined by USA Rice Federation Chairman and Arkansas rice producer Dow Brantley to answer questions about the structure of the domestic rice industry.

Topics of discussion included the history of rice milling cooperatives, as well as how both cooperatives and independent rice mills currently operate. The ITC staff asked questions regarding export markets for regional varieties of rice and methods of milling, and the members present gave an overview of domestic markets.

The Section 332 study on the global competitiveness of the U.S. rice industry is scheduled to be made public in April of 2015. USITC staff plans to reach out to other operations in the coming weeks to expand their familiarity with aspects of the domestic rice industry.

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International Trade On the Rise As Demand For U.S. Made Goods Increases

By  |  Market Overview
Advanced economies are projected to climb 1.8% in 2014 and 2.4% in 2015. These growth projections are considered crucial for global expansion as well as for the progress of emerging and developing nations. Emerging economies are predicted to grow by 4.6% in 2014 and 5.2% in 2015.

A chart displaying Gross Domestic Product (GDP) of the global economy as well as that of selected developed nations, including the U.S, Japan and the Eurozone, and emerging countries like China, India, Brazil and South Africa is provided below:

GDP Rates

GDP Rates

A spur in economic growth inducing more industrial activities is considered favorable for the expansion of the machinery industry. This direct correlation, right on the heels of the expected economic growth worldwide, makes us confident about the machinery industry. Across nations, the level of industrial activities is measured in terms of industrial production — output of the manufacturing, mining and utilities sectors.

A brief discussion on the prospects of the machinery industry in different nations has been provided below.

Prospects in the United States

International trade is on the rise. Export demand for U.S-made goods, especially automotive vehicles and parts, consumer articles, industrial supplies and materials, and food and beverages, increased by roughly $2 billion to $198 billion in July.

The world’s largest economy held nearly 16.5% of the global GDP on purchasing power parity (PPP) basis, in 2013. Over the last five years, the country’s GDP growth movement were in sync with its industrial production. With the IMF anticipating the economy to grow by 1.7% in 2014 and 3% in 2015, one can gather a fair idea about the growth prospects of the machinery industry.

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International Trade Deficit–Down This Month, Up This Year

By Bob McTeer

A graph of the U.S. international trade deficit in goods and services over the past two years by the Bureau of Economic Analysis shows no discernable change, although the surrounding commentary says that the deficit actually increase by $5 billion from June 2013 to June 2014. The latest month, however, showed a reduction of the deficit of $3.2 billion. That June change will help toward an upward revision in second quarter GDP.
That’s the way it’s been going for years now. We get monthly changes, some positive, some negative, but the changes always seem to offset so that the graph over time looks the same. By now we were supposed to be seeing some lasting improvement from our move in the direction of greater energy independence. Well, it hasn’t flowed through to the bottom line.
One reason, I assume, is that our more dynamic economy in terms of invention, innovation, and leading edge manufacturing and business practices, which should increase our net export balance is being offset by greater demand growth as our growth rate—pitiful as it is—exceeds the growth rate of many of our trading partners, especially European.
Perhaps a more fundamental reason is that exports and imports aren’t entirely independent of each other. More exports give us more money with which to import more. More imports give our trading partners more money to buy from us. Any lasting divergence would be corrected in part by internal economic adjustments and in part by small changes in the exchange rate.
It is probably a good thing that the international trade statistics go relatively unnoticed by the public lest calls to “do something about it” lead to foolish policies.

Iraqi Conflict: Rising Oil Prices for Economy & Investors

For much of 2014, equities advanced despite disturbing world news headlines . However, that changed last week, as U.S. stocks slipped amid news of the escalating violence in Iraq.

Why the different stock market reaction? The events in Iraq pose a greater risk for markets than earlier 2014 geopolitical turmoil because there is a clear link between the conflict in Iraq and the global economy: energy prices.

As I write in my new weekly commentary , oil prices spiked last week as sectarian violence escalated in Iraq, a country producing more than 3 million barrels of oil per day, at a time when production has already been falling in many other parts of the Middle East, neutralizing the benefit of surging North American oil production . West Texas Intermediate ( WTI ) , the U.S. oil benchmark, traded above $107 per barrel, while Brent Crude, the global benchmark, hit approximately $114 per barrel.

While a short-term spike in oil prices due to declining production in northern Iraq is not a major threat, a prolonged price rise would put additional pressure on the global economy, including on U.S. consumers, who are still operating in a mode of caution.

As of early this week, the violence in Iraq showed no sign of abating and it appeared that the crisis in the Middle East isn’t likely to be resolved quickly.

Perhaps even more importantly, in addition to the short-term impact on oil production, the insurgency in Iraq and civil war in Syria have the potential to dramatically alter national boundaries in the Middle East.

In other words, there may be longer-term implications and potentially significant changes to international borders. Under this scenario, energy prices may remain elevated for a prolonged period of time, which could add additional pressure to several major economies, including the United States, China and India.

As for what this means for investors, higher oil prices, coupled with still reasonable valuations in the energy sector, support a continued overweight to energy stocks . At the same time, higher oil and gas prices represent yet another headwind for a U.S. consumer already struggling with slow wage growth and high personal debt. In a world of modest growth and a strapped consumer, I believe a cautious view toward consumer stocks is warranted.

Sources: NASDAQ, BlackRock, Bloomberg

Russ Koesterich, CFA, is the Chief Investment Strategist for BlackRock and iShares Chief Global Investment Strategist. He is a regular contributor to The Blog and you can find more of his posts here .

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Global Economy Affects Americans

global economy

Sadly, most Americans seem to be more concerned about the latest troubles of Justin Bieber or the “twerking” of Miley Cyrus than the downward trip of the global economy. The mainstream media sees where the interest of the typical American is and feeds more gossip on celebrities which means Americans show more interest in the glitz, glamor and gossip of Hollywood than what is going on globally. That, in turn, makes mainstream media feed more pablum and helps the dumbing down of America.

While America has gone through a short period of relative financial calm, anyone that is willing to do a little online reading can see that the signs of instability in the global economy are not like anything that has been seen since the financial chaos that began in 2008. The problems are not just in a few, small countries, but are affecting countries everywhere. This is truly shaping up to be a global phenomenon.

During the past several years, the Federal Reserve has joined other global central banks and fueled inflation with unrestrained money printing. Much of the money printed has been dumped into emerging markets globally. Now that the Federal Reserve has started tapering off on the new money supply, investors everywhere are seeing it as a sign that the party is over. Investors are pulling out of emergingglobal markets at a pace never before seen and the resulting vacuum feeds the financial instability. The financial problems that have been growing over the past half decade in established economies continues to escalate. As the global financial problems continue to spiral downward, there are some key things for Americans to watch out for.

Australia Unemployment Jumps

Australia’s unemployment has climbed to the highest level in 10 years. Traders are pulling back and throwing the Aussie dollar into its biggest decline.

As the jobless rate rose, hopes that the Reserve Ban of Australia would switch to a tighter policy were foiled. Toyota Motor Corporation and General Motors are closing plants and shedding jobs because of the high costs of production. With the closing of the two plants, roughly 50,000 jobs in Australia’s auto industry will disappear.

Australian Prime Minister, Tony Abbott, won September’s election with a promise to restore consumer confidence in the economy. It is not a promise he has been able to fulfill. According to Bill Shorten, opposition leader from Canberra, over 60,000 jobs have been lost since Abbott was elected. Many in Australia are wondering what can be done to stop the flow of tens of thousands of jobs which are either disappearing or leaving the country.


In a February article about the economy in South America’s second largest country, the Associated Press stated the nation’s inflation rate stood at 44 percent. A day later, the AP printed a correction saying they had miscalculated. The actual rate is 55 percent. The AP’s correction is notable because it shows just how bad things have gotten in the land of tango.

Since 2007, the Argentine government has continually underestimated its inflation and overstated economic growth. Even formerly close allies to Argentina’s President, Cristina Fernandez de Kirchner, have abandoned the administration’s official data. In December 2013, desperate because of spiraling living costs, the police in 14 of the country’s provinces went on strike demanding pay raises. They demanded a 30 percent increase.

Many Argentines have lost faith in the economic system and are trading pesos for dollars as fast as they can get them. In January, the peso was devalued suddenly and sent economic shock waves through the entire supply chain. It is not uncommon to see the price of basic necessities such as toilet paper and milk rise between the time you take it from the shelf and get into the checkout line.

The economic future of America is tied closely to Argentina. The South American country owes $10 billion to the Paris Club, which includes the United States.


Tres Knippa, Kenai Capital Management owner, says that Japan will have an economic meltdown in 2014 resulting in a default on their debt. Knippa says that Japanese officials are accelerating the country’s debt problem in an attempt to protect the country from a bond crisis.

Japan’s Nikkei stock index dropped 14 percent recently and financial experts join Knippa in saying that a Japanese financial crisis is on the horizon. The catastrophe is driven by a stale economy and a population which is rapidly aging.

Meanwhile more Japanese investors are looking outside the country for a place to park their yen. In Mexico, Japanese are buying up land and energy sources to protect their weakening financial resources from the economic problems at home. To make it worse, Japan is expected to see a drop in productivity as its population ages. By 2030, Japan will have three retired people for every person working.

The worsening economic problems in Australia, Argentina and Japan reflect what is happening in today’s global economy. Greece, Italy, France and Germany are also warning signals that many Americans disregard as they continue to enjoy their bubble of imagined security. Some in America are beginning to see, understand and connect how the actions of other counties, regardless of how seemingly remote, can impact life in the USA.

By Jerry Nelson

Anchorage Daily News
The Economist