Attack drone reportedly gets within 70 miles of Moscow
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Abbreviated report today as I am in Oklahoma to give a speech with crop insurance clients of Kathy Fowler. Meanwhile, I picked up news that in some spots around the country, Ford Motor Co. is insisting that Lincoln dealers must sell all EV cars and if not, no Ford license.
Special note to Signal to Noise podcast viewers and listeners: With my speaking schedule nearing a short-term end, and likely six weeks of staying at home to recuperate from a left leg surgery (“complex torn muscle) on Tuesday, the podcast should be back on its usual Monday morning timeline.
Global stock markets were mixed overnight. U.S. stock indexes are pointed toward firmer openings when the New York day session begins. In Asia, Japan +0.3%. Hong Kong +4.2%. China +1%. India +0.8%. In Europe, at midday, London +0.8%. Paris +0.7%. Frankfurt +0.6%.
On Tuesday, all three major indices finished with losses as the Dow was never able to get into positive territory and the Nasdaq and S&P 500 ended lower on a late sell off. The Dow was down 232.39 points, 0.71%, at 32,656.70. The Nasdaq lost 11.44 points, 0.10%, at 11,455.54. The S&P 500 declined 12.09 points, 0.30%, at 3,970.15.
Key outside markets this morning: U.S. dollar index was solidly lower. Nymex crude oil futures prices are lower and trading around $76.25 a barrel. The yield on the benchmark U.S. 10-year Treasury note is presently fetching 3.92%.
Elon Musk takes center stage at Tesla today. At the carmaker’s first investor day, its billionaire CEO is expected to announce new products, including updated solar panels and its forthcoming pickup truck. But shareholders and analysts may also ask about a recent recall tied to Tesla’s autonomous vehicle software and growing competition in electric vehicle sales.
Mostly firmer grain market tone overnight. Modest corrective buying was seen in the corn, soybean and winter wheat markets overnight following recent, sharp price losses. As of 7:30 a.m. ET, corn futures were trading fractionally higher, soybeans were 6 to 10 cents higher, SRW and HRW futures were 1 to 2 cents higher and HRS wheat was steady to a penny lower. Front-month crude oil futures were around 50 cents lower, and the U.S. dollar index was about 700 points lower.
Spring crop insurance prices set. The average closing levels for December corn futures and November soybeans during February set the spring crop insurance prices for those crops. The spring crop insurance price is $5.91 for corn (up a penny from last year) and $13.76 for soybeans (down 57 cents). That’s the second highest spring price for both crops.
Ukraine’s February grain exports top year-ago. Ukraine exported 5.2 MMT of grain in February, topping the year-ago total of 5.05 MMT. Through the first eight months of 2022-23, Ukraine exported 32.3 MMT of grain, down 26% from the same period last year. That total included 18.6 MMT of corn, 11.3 MMT of wheat and about 2 MMT of barley.
New farm bill update. Not much to report other than House Ag held its first hearing without anything really new. Republicans on the panel took aim at the Biden administration’s regulations on food production, previewing the panel’s oversight priorities as it writes this year’s farm bill legislation.
Meanwhile, the House Ag panel staff is auditing various USDA programs/accounts to see how much approved funding has not yet been spent. This is likely the first of several attempts to find more funding for a new farm bill. Key continues to be whether Ag panel leaders can convince others to include some of the billions of dollars spent the past few years on ad hoc aid into Title 1 spending. For now, though, all that funding is not in the farm bill baseline. The additional around $20 billion in conservation spending signed into law last year will eventually be part of the new farm bill baseline, contacts continue to signal. If so, that will aid the case in pumping more funding to improve a very weak Title 1 program that cannot keep up with current ag sector happenings.
USDA officials will be called to testify at the next House Ag Committee farm bill hearing. to review different areas of the farm bill.
USDA offers some signals on rice aid approved in the fiscal year (FY) 2023 spending plan. USDA announced Tuesday that rice producers will be able to get aid payments from $250 million that was set aside for the payments under the Fiscal Year (FY) 2023 omnibus spending package approved in December. However, there still are no real details on the aid based on 2022 planted and prevented planting acreage.
USDA plans to make an initial payment once producers have enrolled and then potentially issue a final payment once the signup for the effort has ended. USDA will mail prefilled applications to farmers later this year utilizing a process it has deployed for other aid efforts. However, the signup will not begin until USDA has published a notice of funding availability which is expected this spring.
FDA, FSIS withdraw proposed rule on food standards modernization. The Food and Drug Administration and USDA’s Food Safety and Inspection Service (FSIS) withdrew a proposed rule first released in 2005 after the agencies reopened the public comment period in 2020 on the proposed rule that was never finalized. The rule, “Food Standards; General Principles and Food Standards Modernization,” first published May 20, 2005, was labeled as “a first step” in a process for FDA to modernize definition and standards of identity under the Federal Food, Dry, and Cosmetic Act, and for FSIS definitions and standards of identity under the Federal Meat Inspection Act and the Poultry Products Inspection Act. The agencies reopened the comment period in 2020 after FDA held public meetings in 2018 on its Nutrition Innovation Strategy and in 2019 on its Horizontal Approaches to Food Standards and Identity Modernization. During the reopened comment period, the agencies received feedback that the rule should be withdrawn, and the general principles be revised and consolidated. FDA and FSIS said they agreed with the public comments and withdrew the rule.
Christopher Wray, Director of the FBI, said that the bureau believes Covid-19 probably originated in a Chinese government-controlled lab. It is the first public confirmation of the FBI’s classified assessment of the virus. China has denied the allegations. Wray told Fox News that China had been “doing its best to try to thwart and obfuscate” attempts to find out how Covid emerged.
BTW, several readers have wondered why the U.S. Energy Department has commented on this topic. Answer: The Energy Dept. weighed in because it oversees a network of U.S. labs. The U.S. Energy Department reportedly concluded with “low confidence” the coronavirus leaked from a lab, reigniting a debate over the origins of the pandemic.
Upshot: The White House has said there is still no consensus on the origin of the outbreak.
China’s manufacturing activity grew at its fastest rate in more than a decade in February, with the manufacturing purchasing managers’ index reaching 52.6, the highest reading since April 2012. Anything over 50 represents growth. Factories have reopened and demand has recovered since China abandoned its costly zero-covid policy. Meanwhile, Japanese factory activity contracted at its fastest pace in more than two years in February. “It will be hard to keep up this brisk pace, with global growth slowing and pent-up demand after Covid reopening likely to fade,” said Chang Shu and Eric Zhu of Bloomberg Economics. “Still, with policy swinging toward growth support, the recovery should sustain momentum into the second quarter.”
The upbeat Chinese figures come ahead of next week’s National People’s Congress, where a new growth target will be disclosed. In the run-up to the event, President Xi Jinping moved to consolidate the Communist Party’s hold over the economy and said it would roll out plans for “deepening structural reform” in the financial sector and exercise more control over science and technology work.
It’s not all good news for China. For the first time in about 25 years, China is not a top three investment priority for a majority of U.S. firms, with geopolitical tensions and domestic economic issues driving businesses to increasingly focus elsewhere, according to a new report.
Would you drink the tap water in East Palestine, Ohio? Scientists say tests in East Palestine, Ohio, show unusually high levels of some chemicals in the aftermath of a toxic train wreck last month. Nine of the dozens of chemicals that the EPA has been monitoring are higher than would normally be found in the area, according to a group of scientists from Texas A&M and Carnegie Mellon University. The highest levels found in the area were of a toxic chemical called acrolein, the analysis says. Acrolein is used to control plants, algae, rodents and microorganisms. It can cause inflammation and irritation of the skin, respiratory tract and mucous membranes, according to the CDC. In response to angry residents, the EPA said it will continue to monitor the air quality in the area and in people’s homes.
Argentina suspended its poultry exports. The country has recorded its first case of bird flu in industrial poultry. Argentina has confirmed about 25 cases of HPAI, mainly in wild birds. About 10% of Argentina’s poultry production is exported, with China being its top market taking roughly three-quarters of all shipments. Link for more via Reuters.
Speaking of Argentina, there is at least a possibility that USDA, Argentina and private analysts are all still too high on the size of the country’s soybean crop, with the chance the final crop tally could be 30 MMT or lower.
China’s sow herd contracts a bit. China’s sow herd shrank 0.5% at the end of January compared with the prior month, according to ag ministry data. However, the herd at 43.67 million head was 1.8% bigger than January 2022.
USTR Katherine Tai to discuss Biden trade agenda today with FTAs a potential topic. We alerted Tuesday that Tai will have a discussion with Foreign Policy Editor in Chief Ravi Agrawal today to discuss the Biden administration’s trade agenda. Tai is expected to signal that Free Trade Agreements (FTAs) are not permanently removed from the Biden administration’s trade plans based on comments she made to Politico in an interview.
Tai continues to try to defend the Biden administration’s trade policy approach that has even come under criticism from some Democrats. “In this time and place and in this current situation, the traditional approach to free trade agreements — which isn’t just that they do tariff cuts, but that they do tariff cuts on a fully comprehensive basis — isn’t what we need right now,” Tai said. “That neither puts workers at the center of our trade policy, nor does it solve the challenges that we have with respect to resilience and sustainability.”
Tai also said she was “open minded” on FTA talks with the U.K, but said no decision has been made, commenting that “nothing is off the table.”
Regarding tariffs imposed by the Trump administration on China, Tai acknowledged she faces regular questions on what it will take to get tariffs removed and whether they will ever be removed. Tai simply said, “If you take a couple steps back and you look at the policy landscape, I think that better question is, What has China done to deserve our dialing back the tariffs?”
Tai also said the tariffs need to be viewed as a tool and that they should be useful.
Bottom line: The continued go-slow approach of the Biden administration’s trade policy the first two years of Biden’s term remains unchanged. Not much there, there.
China rebuts WTO compliance report released by Biden administration. The Office of the U.S. Trade Representative (USTR) recently published its 2022 report to Congress on China’s WTO compliance, with USTR Katherine Tai stating that China “still embraces a state-led economic and trade approach that runs counter to the open, market-oriented principles endorsed by all members of the organization.” She labeled China’s actions as keeping them as an “outlier” and maintains that China continues to use “non-market policies and practices.”
For agriculture, the report noted that China committed to bring its domestic wheat and rice supports in line with its WTO commitments but has yet to do so with the U.S. requesting clearance to hit China with retaliation, a request China objected to, sending the matter to the WTO arbitration process which is currently suspended.
China’s Ministry of Commerce disputed the U.S. report, saying it lacks a legal and factual basis. The ministry also said the U.S. report does not give China credit for its WTO commitments and called on the U.S. to follow WTO rules and commitments.
Drone attacks in Russia? Russian officials today accused Ukraine of launching a spate of attempted drone strikes targeting infrastructure deep inside Russia, including near its capital. Following the alleged attacks, Russia’s second-largest city of St. Petersburg closed its airspace and briefly banned incoming flights on Tuesday, according to state media.
Ukraine has not claimed responsibility for such an attack, but Anton Gerashchenko, advisor to Ukraine’s ministry of internal affairs, tweeted out a photo of the drone along with the words, “It is more than 500km away from Russian border with Ukraine. Soon Putin might get very afraid to show himself in public as drones can reach far distances.” Putin, for his part, said Tuesday, “We need to beef up our counterintelligence in general, because Western special services have traditionally been very active in relation to Russia.”
Build the wall… this time in Finland. Finland has started building a 124-mile fence on its border with Russia, a security upgrade from the light wooden fences it has currently. Finland apparently decided to build the fence as a result of a reported increase in Russians trying to flee the country to avoid conscription in their country’s war in Ukraine.
We told you it was coming… E15 announcement ahead. The Biden administration is preparing to advance a fuel policy shift demanded by Midwest governors that would encourage filling stations to sell higher-ethanol E15 gasoline and offer it year-round. Ben Hengst, deputy director of the agency’s Office of Transportation and Air Quality, is set to address the matter and other renewable fuel policy issues during a presentation today at the industry’s National Ethanol Conference in Florida. At issue is a push by some governors from corn-producing Midwestern states to stop giving conventional E10 gasoline a partial waiver from volatility limits meant to curb air pollution. That would put E10 and E15 on the same regulatory footing in their states — and potentially encourage more sales of the higher-ethanol variety.
Biden official: Automating ports doesn’t have to cost jobs. The White House’s supply-chain envoy said the ports and logistics industry must move toward automation, a sticking point in protracted contract talks between U.S. West Coast dockworkers and their employers. Automation is inevitable and the industry should “move there deliberately as opposed to getting dragged,” Stephen Lyons said Tuesday. Lyons, along with outgoing Labor Secretary Marty Walsh, have been involved in negotiations between the International Longshore and Warehouse Union that represents 22,000 West Coast dockworkers and the Pacific Maritime Association — which speaks for companies — over a new labor agreement to replace one that expired in July.
The White House picked a successor for labor secretary Martin J. Walsh. Julie Su, the deputy labor secretary who enjoys support among unions, was nominated for the role.
Eli Lilly slashes insulin prices up to 70% and caps out-of-pocket costs to $35. The company says that it will be cutting the list price of its most commonly prescribed insulin product, Humalog, by 70% as of the fourth quarter 2023. Its product Rezvoglar, which is a biosimilar to Sanofi’s insulin product Lantus, will be launching April 1 at a price point 78% lower than Sanofi’s product. Lilly also said that it’s cutting prices of its non-branded insulin to $25 a vial. Lilly’s involvement with the manufacturing of insulin dates back over a century
If you allowed your passport to expire following the pandemic, you’re not alone. Unfortunately, “unprecedented” demand is leading to longer wait times at the State Department. For standard renewals, plan on eight to 11 weeks turnaround time. You might want to get on that now for an international trip this spring or summer.
During oral arguments yesterday, the Supreme Court’s conservative justices questioned the legality of President Joe Biden’s student loan forgiveness program. Chief Justice John Roberts suggested that Congress needed to be more involved in such a drastic action — a concept known as the “major questions doctrine.” The court’s conservative majority yesterday cast doubts on the legality of the White House’s plan to cancel about $400 billion in student debt, suggesting that the move represents an overreach of the president’s executive power.
Chief Justice John Roberts rejected the argument that the debt forgiveness amounts to a mere “modification” of the federal loan program. “We’re talking about half a trillion dollars,” he said, adding that “if you’re going to affect the obligations of that many Americans on a subject that’s of great controversy,” most observers would think that was something for Congress to decide.
But wait… The New York Times says the cases may come down to standing — whether the six Republican states and two students who have pushed to nullify the debt-forgiveness plan can challenge it at all. If the court finds they can’t sue because they aren’t really harmed, the justices could resolve the separate cases without addressing questions about the president’s powers. “That’s what the federal government is hoping for.” A decision on the student debt cases is due in June.
High five for WOTUS rule. At least five federal lawsuits challenging the EPA’s new waters of the U.S. (WOTUS) rule are expected to continue even if the U.S. Supreme Court undermines the basis for the rule in an opinion coming this term. Link for more.
Chicago Mayor Lori Lightfoot lost her re-election bid Tuesday night as two other candidates — Paul Vallas and Brandon Johnson — advanced to a runoff, after the incumbent mayor faced criticism for her handling of rising crime in the city and the fallout of the Covid-19 pandemic. Lightfoot finished third place with 17.1% of the vote, while none of the other candidates secured more than 50% of the vote needed for an outright victory. Paul Vallas, a former public schools executive who has the backing of the city’s police union, finished with 33.8% and advanced to a runoff election on April 4. Cook County commissioner Brandon Johnson, whose candidacy is supported by the Chicago Teachers Union, also progressed to the runoff with 20.3% of the votes. Lightfoot is the city’s first mayor to lose a re-election bid since 1983, when incumbent Jane Byrne lost the Democratic primary.
Global cases of Covid-19 are at 675,354,644 with 6,872,022 deaths, according to data compiled by the Center for Systems Science and Engineering at Johns Hopkins University. The U.S. case count is at 103,422,566 with 1,119,914 deaths. The Johns Hopkins University Coronavirus Resource Center said that there have been 671,582,379 doses administered, 269,459,752 have received at least one vaccine, or 81.78% of the U.S. population.
NWS weather outlook: Dangerous Excessive Rainfall and Severe Weather to impact portions of the ArkLaTex, Midwest and Southeast over the next few days... ...Heavy snow in the southern Sierra Nevada, Transverse/Peninsular Ranges today; Southwest and Central Plains through Thursday... ...Heavy snow in the Cascades and Northern Rockies beginning on Thursday... ...Critical Fire Weather concerns persist for the Southern Plains.
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WASDE | Crop Production | USDA weekly reports | Crop Progress | Food prices | Farm income | Export Sales weekly | ERP dashboard | California phase-out of gas-powered vehicles | RFS | IRA: Biofuels | IRA: Ag | Student loan forgiveness | Russia/Ukraine war, lessons learned | Russia/Ukraine war timeline | Election predictions: Split-ticket | Congress to-do list | SCOTUS on WOTUS | SCOTUS on Prop 12 | New farm bill primer | China outlook | Omnibus spending package | Gov’t payments to farmers by program | Farmer working capital | USDA ag outlook forum |