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Farm Prices Fell In January; Baker Denies Dollar Pressure

January 31, 1987

Undated (AP) _ Prices farmers received for raw products in January fell an average 1.7 percent from December and were down 4 percent from a year earlier, the Agriculture Department reported.

Treasury Secretary James A. Baker III, meanwhile, denied news reports that the Reagan administration was trying to push the dollar lower in an effort to alleviate America’s trade problems.

The U.S. trade deficit did improve in December, narrowing to its lowest monthly level in nearly two years, the Commerce Department said in a report that helped the dollar rise in foreign exchange trading Friday.

But the nation still finished 1986 with a record trade imbalance of $169.8 billion.

The Agriculture Department said lower prices for hogs, cotton, eggs and corn contributed most to January’s decline in the agency’s price index. Higher prices were reported for cattle, tomatoes and lettuce.

Separate figures, released quarterly, showed prices paid by farmers to meet expenses increased 0.6 percent from October but still averaged 1.2 percent below a year ago.

Crop prices overall held steady at the December average but were down 12 percent from a year ago, reflecting lower government price supports and huge stockpiles of key commodities, including corn and wheat, the department said.

Baker, appearing before the Joint Economic Committee in Washington, said that ″contrary to published reports, the United States is not and has not been for a period of a year talking down the dollar.″

The reports had suggested that the administration wanted the dollar lower in order to pressure Japan and West Germany - whose exports to the United States would be more costly if the dollar fell - into improving their economies.

In this way, the reports said, Japan and West Germany would increase demand for U.S. goods and thus help the American trade deficit.

Baker also hinted that the United States may be preparing for a meeting with four of its top trading partners, although he said a meeting of the so- called Group of Five has not been scheduled. The other countries are Japan, West Germany, Britain and France.

Currency markets have been watching for signs that such a meeting might take place, believing it could result in the countries’ coordinated action to stabilize the dollar.

The deficit in U.S. trade - the difference between what the nation imports and exports - fell to $10.7 billion last month from a $19.2 billion shortfall previously announced for November, the Commerce Department said.

The November deficit was subsequently revised to $15.4 billion. But Commerce Department analysts said that, because of a change in accounting procedures, the November revised figures were not directly comparable to the initial December data in Friday’s report.

In any case, the deficit has declined in four of the last five months, and December’s deficit was the smallest since a $9.8 billion imbalance in March 1985. Yet it was not enough to prevent the nation from surpassing the previous full-year record trade deficit of $148.5 billion in 1985.

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