Biden, Congressional Dems Continue to Label GOP as Extremists, ‘Fiscally Demented’

USDA ups dairy payments | U.S. ag trade officials in Mexico issue warning | Senate 2024 races

A traveling format today as I am in Nashville, Tenn., attending and speaking at the Top Producer Summit.

Equities: Global stock markets were mixed overnight. U.S. stock indexes are pointed toward slightly lower openings. In Asia, Japan +1.5%. Hong Kong +1.8%. China +0.8%. India +0.1%. In Europe, at midday, London -0.4%. Paris -0.1%. Frankfurt -0.4%. On Monday, all three major U.S. indices finished with gains even as the Dow did initially dip into negative territory early in the session. The Dow ended up 254.07 points, 0.76%, at 33,629.56. The Nasdaq 223.98 points, 2.01%, 11,364.41. The S&P 500 was up 47.20 points, 1.19%, 4,019.81.

Outside markets: The U.S. dollar index was firmer, with the euro, yen and British pound all weaker against the greenback. The yield on the 10-year U.S. Treasury note was firmer, trading around 3.49%, with a mixed tone in global government bond yields. Crude oil futures moved higher, with U.S. crude around $82.05 per barrel and Brent around $88.40 per barrel. Gold and silver futures are higher, with gold around $1,937 per troy ounce and silver around $23.75 per troy ounce.

Corrective grain buying overnight. Corn, soybean and wheat futures recouped a portion of Monday’s sharp price losses during the overnight session. As of 7:30 a.m. ET, corn futures were trading mostly 3 to 5 cents higher, soybeans were 4 to 7 cents higher, SRW wheat futures were 3 to 6 cents higher, HRW wheat was 7 to 10 cents higher and HRS wheat was 7 to 9 cents higher. Front-month crude oil futures were around 35 cents higher and the U.S. dollar index was about 125 points lower.

Another winter storm hits the Plains. A third round of recent wintry weather has invaded the Plains, which will further slow cattle performance in feedlots. With packers still trying to restrict paying higher prices for cash cattle as they work to improve margins, signs point toward another extended cash standoff with lower-volume sales levels a distinct possibility. Cash sources expect steady to firmer cash prices compared with last week’s $155.32 average, but active trade may not come until late in the week.

Cash hog market a broken record. The CME lean hog index is down another 52 cents to $72.13 (as of Jan. 20), extending the prolonged seasonal decline from early August of last year to more than $50.00. With market-ready supplies ample to fill near-term slaughter needs, packers are focused on improving their margins ahead of a seasonal firming of cash prices into mid-summer. The pork cutout value firmed 93 cents on Monday to $80.92, though that’s down nearly $15.00 from last year at this time.

Bitcoin has surged to its highest levels since the November implosion of crypto exchange FTX. A weekend rally pushed its price to around $23,000, up more than 45% from November lows. Bitcoin’s price is up more than 30% in less than two weeks, and its march higher has accompanied, though outperformed, the rise in the Dow Jones Industrial Average and S&P 500. Traders are watching for Bitcoin to reach $30,000, a price level not seen since the beginning of the crypto credit crisis last June, when multiple lenders headed toward bankruptcy amid turmoil in markets.

The eurozone economy expanded in January for the first time in seven months, according to a purchasing managers survey, adding to signs that the region could face a milder-than-expected downturn this winter or even avoid a recession. The S&P Global Flash Eurozone PMI Composite Output Index, which gauges activity in the manufacturing and services sectors, increased to 50.2 in January from 49.3 in December, the highest level since June. By contrast, the U.K. economy contracted in January at its sharpest pace in two years. A reading above 50 points to an expansion in activity, while a reading below that level points to a contraction.

The U.S. gov’t has confronted China with evidence that suggests some state-owned companies may be providing assistance for Russia that feeds into its war effort in Ukraine. The concerns focus on non-lethal military aid and economic activity that stops short of direct evasion of the sanctions imposed on Russia by the U.S. and its allies. Upshot: Just another thorn in a contentious U.S./China relationship.

Meanwhile, China invoked the U.S.’ brinkmanship over its own debt limit as it hit back at Treasury Secretary Janet Yellen’s criticism of Beijing’s handling of debt issues in developing countries.

Apple wants to start manufacturing 25% of its products in India, a significant boost from the current 5% to 7% currently produced in the South Asian country, per Indian Commerce Minister Piyush Goyal. The remarks back up reports that the iPhone maker is eyeing moving large portions of manufacturing out of China after encountering disruptions last year.

Poland asked for formal permission to send German-made tanks to Ukraine, raising pressure on Berlin to allow the supply of heavier weapons to Kyiv.

The resignation of several senior Ukrainian officials was announced in Kyiv, with some of the departures linked to reported corruption allegations with President Volodymyr Zelenskyy pledging to root out corruption, according to reports. “There are already personnel decisions — some today, some tomorrow —regarding officials at various levels in ministries and other central government structures, as well as in the regions and in law enforcement,” Zelenskyy said in a video address. A deputy infrastructure minister was arrested Sunday, accused of taking $400,000 from contracts to buy generators with another official removed after reports the defense agency had overpaid for food bought for troops.

Meanwhile, the war in Ukraine has exposed widespread problems in the American armaments industry that may hobble the U.S. military’s ability to fight a protracted war against China, according to a new study. The problem: U.S. weapons inventories have fallen to a low level and defense companies aren’t equipped to replenish them rapidly.

An unruly GOP-led House Rules panel. House Speaker Kevin McCarthy (R-Calif.) issued the new GOP roster for the House Rules Committee Monday, and he made good on his pledges to give his conference’s hard right three positions on the powerful panel, which decides along with the speaker the bills going to the floor and the scope of amendments and debate. He named Reps. Thomas Massie (R-Ky.), Ralph Norman (R-S.C.) and Chip Roy (R-Texas) to the panel. All have track records of holding up major spending legislation, emergency disaster aid and forcing votes on divisive amendments against the wishes of GOP leadership. Norman and Roy were among those initially opposing McCarthy’s speaker bid, and Massie in the past has been a real pain for GOP leadership plans.

Key for the ag sector: Norman in the past unsuccessfully pushed crop insurance amendments that would have cut premium incentives/subsidies by 15% for producers with specified adjusted gross incomes. Another amendment, co-sponsored by Norman, would have effectively muted the harvest price option.

Bottom line: If Norman, Massie and Roy are in agreement, they can functionally block legislation, even bills McCarthy supports, from getting to the floor — unless McCarthy and his allies can garner Democratic votes on the legislation. But the minority usually votes no on the 9-4 split panel.

USDA announces more dairy payments, including coming organic dairy effort. USDA will make an additional round of payments to dairy farmers under the Pandemic Market Volatility Assistance Program (PMVAP) for production not originally covered under the effort with payments to total nearly $100 million. The initial phase of PMVAP payments totaled around $250 million and covered production up to 5 million pounds of sales, with payments covering 80% of revenue losses on fluid milk sales from July-December 2020. The next round will cover fluid milk sales between 5 million pounds and 9 million pounds.

USDA will soon introduce the Organic Dairy Marketing Assistance Program (ODMAP) aimed at smaller organic dairy producers to help them deal with challenges and higher costs they have faced in the last few years. Payments will cover up to 75% of marketing costs for 2023 and up to $100 million has been allocated. Final outlays will depend on enrollment and the projected production for each producer. Funding will come via the Commodity Credit Corporation (CCC) via monies left over from early pandemic aid efforts. Payments will cover up to 5 million pounds of a producer’s expected production and will be based on a national per-hundredweight payment.

Timing of the announcement again came when a dairy industry confab is underway in Orlando, Florida. USDA Secretary Tom Vilsack has a clear pattern of making such announcements during key industry meetings.

Another small rise in ERP, CFAP 2 payouts. Payments under the Emergency Relief Program (ERP) rose to a total of $7.35 billion as of Jan. 22, up from $7.33 billion the prior week. The total includes non-specialty crop payments of $6.25 billion ($6.234 billion prior) and specialty crop payments of $1.1 billion ($1.09 billion prior).

Payments under the Coronavirus Food Assistance Program 2 (CFAP 2) also increased as the additional payments announced by USDA earlier this month continue to move out to producers. Total CFAP 2 payments were at $19.34 billion as of Jan. 22, up from $19.31 billion the prior week. The total included original CFAP 2 payments of $14.45 billion ($14.44 billion prior) and top-up payments now at $4.89 billion ($4.87 billion prior).

There was essentially no change in CFAP 1 payments.

U.S. trade officials stress ‘grave concerns’ to Mexico over biotech corn effort, inform offered changes as insufficient. USDA Undersecretary for Trade and Foreign Agricultural Services Alexis Taylor and U.S. Trade Representative (USTR) Chief Agricultural Negotiator Doug McKalip were in Mexico Monday for meetings with officials on Mexico’s decree to phase out the use and importation of genetically engineered corn and other products by Jan. 31, 2024. The U.S. officials relayed “grave concerns” on the matter during the meeting and labeled proposed changes offered by Mexico as “not sufficient” with Mexico’s approach on biotech crops still “not grounded in science,” according to a statement released after the meeting.

The U.S. warned the situation “threatens to disrupt billions of dollars in bilateral agricultural trade, cause serious economic harm to U.S. farmers and Mexican livestock producers, and stifle important innovations needed to help producers respond to pressing climate and food security challenges.”

Welcoming Mexican efforts to resolve the situation, the U.S. officials warned if the matter is not resolved, the U.S. would consider “all options, including taking formal steps to enforce our rights under the U.S.-Mexico-Canada Agreement (USMCA).”

The trade topic will again surface Wednesday when Deputy USTR Jayme White will meet Wednesday with Mexico’s undersecretary of economy Alejandro Encinas in San Diego.

More than $60 billion may have been paid out in fraudulent unemployment insurance benefits during the Covid-19 pandemic, according to a new report released Monday by the US Government Accountability Office (GAO). The House Oversight Committee said it will launch an investigation into “the rampant waste of taxpayer dollars in Covid relief programs” starting on Feb. 1.

Biden’s green subsidies are attracting billions of dollars to red states. Republican-leaning states are attracting most of the clean-energy investments spurred by the Biden administration’s Inflation Reduction Act, a bill that passed the U.S. Congress without any Republican votes. The act, signed into law in mid-August, offers beefy tax credits and other support for clean-energy projects ranging from wind farms to factories that make batteries, solar components or hydrogen. Link for more via the Wall Street Journal.

82%: Capacity of utility-scale wind or solar farms and battery-storage projects in late-stage development that are in Republican-held congressional districts, according to an analysis by business lobby American Clean Power.

DOE’s Granholm: Biden would veto GOP plan to thwart SPR sales. Energy Secretary Jennifer Granholm Monday revealed President Joe Biden would veto a bill offered by House Republicans that would prohibit tapping of the Strategic Petroleum Reserve (SPR) without there being a plan to boost oil and gas leasing on federal lands unless the release is to address a severe oil supply emergency. “He will not allow the American people to suffer because of the backwards agenda that House Republicans are advancing,” Granholm told reporters. It seems unlikely the House legislation would garner enough support to clear both the House and Senate.

GOP this year faces the challenge of inexperience in writing a farm bill. In the four years since Congress enacted the current farm bill, more than 40% of the seats in the House have turned over. Nearly 200 of the 435 members may know little about the multiyear, far-ranging and sometimes contentious legislation, posing a challenge to House Agriculture Chairman Glenn Thompson (R-Pa.) as he writes a new farm bill. Link to Roll Call item.

Perspective: This type of story usually surfaces around the time of writing another major farm bill. With the coming farm bill debate, I have covered 11 of the 19 omnibus farm bills. Sometimes a fresh perspective on the often-complex farm programs is needed. Sometimes experience can work the other way in making lawmakers entrenched in their positions.

Supreme Court opinions issued Monday did not include WOTUS. The U.S. Supreme Court issued two opinions in minor cases on Monday, with neither being the case surrounding waters of the U.S. (WOTUS). Some like Bloomberg had speculated the opinion could be issued Monday as it is the oldest case the Justices heard as they started their current term.

President Biden is scheduled to host Democratic congressional leaders at the White House at 3 p.m. ET. Biden is set to host a reception for new members of Congress at 5:20 p.m. ET.

White House, Democrats’ strategy on GOP is now clear. Senate Majority Leader Chuck Schumer (D-N.Y.) dared House Republicans to propose and vote on the deep spending cuts they demand in exchange for lifting the debt ceiling later this year. Such a vote would tie Republicans politically to what Schumer called “draconian” reductions that conservatives want to make to popular federal programs. Speaking on the Senate floor, the New York Democrat said it isn’t clear what conservatives want, whether it be cuts to Social Security or Medicare, or to military pay raises or public health programs. “Frankly, I expect the House Republicans themselves will struggle to come up with a serious answer, because deep down they know that no matter what they propose their cuts are likely to be deeply unpopular with the American people,” Schumer said.

Meanwhile, President Joe Biden recently called Republicans “fiscally demented” and knocked GOP priorities during the keynote speech at the National Action Network’s (NAN) annual breakfast to mark Martin Luther King Jr. Day. “They’re gonna talk about big-spending Democrats again. Guess what? I reduced the deficit last year $350 billion. This year, federal deficit is down $1 trillion-plus. That’s a fact. And there’s gonna be hundreds of billions reduced over the next decade. But so what? These guys are the fiscally demented, I think. They don’t quite get it,” Biden said of Republicans. Biden will deliver a major economic speech this Thursday in Virginia spotlighting fringe economic proposals championed by House Republicans — including a controversial bill to abolish the IRS and replace it with a 30% national sales tax.

Bottom line: Painting Republicans as extreme has been core to Democrats’ strategy.

The Food and Drug Administration is weighing a new Covid-19 vaccination strategy that draws inspiration from the annual flu shot approach. Regardless of prior vaccination status, people would get the latest formulation each fall that’s developed to target whichever coronavirus strain is expected to be the most prevalent that year.

A former senior FBI official is charged with helping a Russian oligarch. Prosecutors accused Charles McGonigal, who oversaw some of the agency’s most sensitive counterintelligence operations, of taking money from Oleg Deripaska in exchange for helping to get him off the U.S. sanctions list. It’s a rare accusation against a senior FBI official.

Turkey has issued fresh threats to block Sweden’s bid to join NATO after a far-right politician publicly burned a copy of the Quran in Stockholm over the weekend. There is additional speculation that the U.S. could force Turkey’s hand via an F-16 jet purchase from Lockheed Martin, which is set to report Q4 earnings this morning. Finnish Foreign Minister Pekka Haavisto told Reuters via telephone that there needs to be a pause in negotiations with Turkey over the membership of Finland and Sweden to join NATO. “A time-out is needed before we return to the three-way talks and see where we are when the dust has settled after the current situation, so no conclusions should be drawn yet,” Haavisto said. “I think there will be a break for a couple of weeks.”

Senate 2024 elections. Sabato’s Crystal Ball released its initial Senate ratings and says “Democrats have a lot of defending to do… four seats in Democratic majority start as Toss-up or worse.” There are 34 Senate races slated for next year so far — 33 regular contests, plus a special election in Nebraska, where newly-appointed Sen. Pete Ricketts (R) will be back on the ballot to defend the unexpired term left behind by Ben Sasse (R), who resigned to become the president of the University of Florida. Democrats are defending 23 of these seats, while Republicans are defending just 11. That Democratic tally includes the three states with independents who caucus with the Democrats: Sens. Kyrsten Sinema of Arizona, Angus King of Maine, and Bernie Sanders of Vermont. Link for details.

Key points:

• Democrats are playing much more defense than Republicans.
• Of the current Democratic seats, West Virginia starts as the clearest Republican takeover opportunity, with Arizona, Montana, and Ohio as Toss-ups.
• The 11 current Republican seats all start in the Safe Republican category, with the exceptions of Florida and Texas. The GOP has no Toss-up or Leans Republican seats to defend at the starting gate.
• Despite the Democrats’ level of exposure, we view the overall race for the Senate as a Toss-up to start.
  

Sen. Jerry Moran (R-Kan.)’s re-election campaign was scammed out of $690,000, his office said. Link to details via the AP.

NWS weather outlook. A new storm system over the South expected to bring heavy snow to portions of the Southern High Plains, Mid- Mississippi Valley, Ohio Valley, Great Lakes and Northeast through midweek... ...Strong to severe thunderstorms and a threat of flash flooding can be expected across portions of the Gulf Coast states and Lower Mississippi Valley Tuesday through early Wednesday.

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