House Republicans Agenda Today: Pass Critical Rules Package

Biden visits Mexico, whose president says corn GMO issue is on agenda

Link to House rules package.

President Biden will be in Mexico City today to meet with Mexican President Andrés Manuel López Obrador and Canadian Prime Minister Justin Trudeau. Biden is expected to focus on immigration, security and regional supply-chain problems — issues on which the U.S. and Mexico have had some differing views. Also of note Mexico’s president said the GMO corn trade issue will be on the agenda. More in Trade Policy section.

Thousands of people stormed Brazil’s government buildings. Rioters breached and vandalized the presidential office, Supreme Court and Congress yesterday in the capital, Brasília. More than 400 were arrested. hey were supporters of far-right ex-president Jair Bolsonaro. The attack came a week after his successor, President Luiz Inácio Lula da Silva, was inaugurated. Lula, who was visiting flood victims in the state of São Paulo, called the protesters “fanatic fascists,” and decreed a state of federal intervention in Brasília. He accused Brasília’s military police, which counts many supporters of Bolsonaro among its ranks, of not acting to contain the protesters, many of whom had marched for more than an hour to get to the presidential palace. Bolsonaro denounced his supporters’ actions Sunday and his office previously said it would cooperate with the transition of power, but he has not explicitly conceded.

Russia-Ukraine War: Ukraine’s forces are resisting the six-month Russian assault on Bakhmut, Ukrainian President Volodymyr Zelenskyy said, cementing how the small eastern city has become a key symbolic prize in the war.

Tens of thousands of travelers began to fly in and out of mainland China on Sunday as Beijing removed almost all of its border restrictions.

Wall Street analysts have already begun trimming their earnings forecasts. According to FactSet, analysts last quarter cut their full-year 2023 earnings-per-share forecasts by 4.4 percent, to $230.51. That represents the biggest downgrade since 2014.

Deere agrees to let farmers repair their own equipment. The farming tech giant said yesterday that its machines can now be repaired by individuals or independent shops, after being accused of making it too costly for farmers to make fixes on their own. It’s the latest example of the growing popularity of the right to repair movement. More in Markets section and in The Week Ahead.

Deal close on U.S., Canada travel dispute. Canada and the U.S. are close to resolving a dispute over a program that would allow swift passage for travelers through airports and border crossings, according to officials.

President Joe Biden visited the U.S./Mexico border on Sunday amid record levels of border crossings, but he did not appear to see or meet with migrants, including during a trip to a migrant respite center. The visit to El Paso, Texas, marked Biden’s first to the southern border since he took office and appeared largely focused on enforcement issues and speaking with border enforcement personnel.

Several California communities are bracing for another round of likely flooding and power outages today. More than 34 million people were under flood watches across much of California Sunday night, while more than 30 million were under moderate risks for excessive rainfall. About 28 million people across the West were also under wind alerts. This storm is arriving on the heels of a powerful cyclone that flooded roads, toppled trees and knocked out power to much of California last week.

Equities today: Global stock markets were mostly higher overnight. U.S. stock indexes are pointed toward firmer openings. In Asia, Japan +0.6%. Hong Kong +1.9%. China +0.6%. India +1.4%. In Europe, at midday, London flat. Paris +0.2%. Frankfurt +0.4%.

The earnings season officially kicks off on Friday with major banks and financial institutions stepping into the earnings confessional. Wells Fargo, JPMorgan Chase, Morgan Stanley, Citigroup and PNC Financial Services Group are scheduled to release quarterly results. Meanwhile, Delta Air Lines will lead off the airline earnings season at the end of the week.

U.S. equities Friday: All three major indices snapped their string of losing streaks and posted gains for the week, with the Dow up around 1.5%, the Nasdaq around 1% and the S&P 500 up 1.4%. On Friday, The Dow rose 700.53 points, 2.13%, at 33,630.61. The Nasdaq gained 264.05 points, 2.56%, at 10,569.29. The S&P 500 was up 86.98 points, 2.28%, at 3, 895.08.

Agriculture markets Friday:

• Corn: March corn futures settled 1 1/4 cents higher at $6.54 but fell 24 1/2 cents for the week. New-crop December futures slipped 1/4 cent to $5.91 and dropped 19 3/4 cents for the week.
• Soy complex: March soybeans futures rose 21 3/4 to $14.92 1/2 but were down 31 1/2 cents for the week. March soymeal rose $12.70 to $477.60, a $6.60 increase over last week, while March soyoil firmed 75 points to 63.17 cents.
• Wheat: March SRW wheat futures fell 3 1/4 cents to $7.43 1/2 cents, which was down 48 1/2 cents for the week. March HRW wheat futures dropped 7 3/4 cents to $8.32 and fell 56 cents for the week. March HRS futures declined 7 1/4 cents to $9.01 3/4 and dropped 37 cents for the week.
• Cotton: March cotton rose 310 points to 85.68 cents, marking a high range close and finishing 277 points higher for the week.
• Cattle: Live cattle futures declined Friday, with nearby February live cattle dipping 57.5 cents to $156.775. That marked a weekly slide of $1.125. Most-active March feeders fell 90 cents to $185.65, which represented a weekly decline of 57.5 cents.
• Hogs: Continued cash losses kept hog futures under pressure Friday, with nearby February diving $2.25 to $80.275 at the close. That represented a weekly drop of $7.425.
  

Ag markets today: Soybeans and wheat mildly favored the upside in quiet overnight trade, while corn traded on both sides of unchanged. As of 7:30 a.m. ET, corn futures were trading narrowly mixed, soybeans were 2 to 4 cents higher and wheat futures were 1 to 3 cents higher. Front-month crude oil futures were around $2.50 higher and the U.S. dollar index was more than 300 points lower.

Technical viewpoints from Jim Wyckoff:

On tap today:

• Fed President Raphael Bostic speaks on the economy and monetary policy at 12:30 p.m. ET.
• USDA Grain Export Inspections report 11 a.m. ET.
• Fed releases consumer credit data for November at 3 p.m. ET, with analysts expecting an additional $25 billion, or slower than the $27.1 billion pace than October, according to FactSet.
• President Biden is scheduled to attend a welcome ceremony at Mexico’s National Palace at 5:15 p.m. ET, after which he will meet with Mexican President Andrés Manuel López Obrador. At 7:45 p.m. Biden and López Obrador will have dinner with Canadian Prime Minister Justin Trudeau.

World economy transitions to higher rates, greater uncertainty. Officials and analysts who met this weekend in New Orleans at the American Economic Association meeting warned of trouble ahead as the global economy enters a new era of higher interest rates, growing geopolitical strife and rising uncertainty. The gathering, including ex-Treasury Secretary Lawrence Summers and ex-International Monetary Fund chief economist Kenneth Rogoff, noted the world’s transition away from low interest rates and rapid Chinese growth. The Federal Reserve is likely to raise interest rates more than the markets now expect, London School of Economics’ Ricardo Reis told MarketWatch at the conference. “All the risks are on the upside,” he said. “A rate of 5.5% is the minimum.”

The World Bank is worried that additional “adverse shocks” could push the global economy into recession this year, adding some small countries are especially vulnerable, Bloomberg reported, citing the abstract for the bank’s twice a year report due out Tuesday.

Right-to-repair movement is making its way through the ag sector, with Deere and Co. giving its U.S. customers the right to fix their own equipment. The company is one of the world’s largest makers of farming equipment, which has increasingly been relying on software and sensors in machinery to boost harvests and planting. Up until now, Deere had required customers to use its parts and service divisions, and only recently allowed authorized dealers rather than cheaper independent repair options.

The memorandum of understanding (link) signed with the American Farm Bureau Federation states that owners and independent technicians cannot risk any safety controls or protocols on the equipment. Deere’s intellectual property, like copyrighted software, will also be protected from infringement, while federal and state emissions requirements cannot be compromised because of modifications or changes made to the machinery. “This will enable you and your independent mechanics to identify and fix problems,” Farm Bureau President Zippy Duvall said. “You will have access to the diagnostic tools and information you need. And you’ll get it at a fair and reasonable price.”

Market perspectives:

• Outside markets: The U.S. dollar index was weaker amid strength in the euro, yen and British pound. The yield on the 10-year US Treasury note was higher, trading around 3.59%, with a generally firmer tone in global government bond yields. Solid gains for crude oil, with U.S. crude around $76.20 per barrel and Brent around $81 per barrel. Gold and silver futures registered gains, with gold around $1,879 per troy ounce and silver around $24.05 per troy ounce.

• A bulk carrier holding corn got caught up in the Suez Canal this morning after it suffered an engine failure, the canal authority said. The carrier, Glory, loaded 65,970 metric tons of corn from a port in Ukraine on Dec. 25 and was bound for China, according to the Black Sea Grain Initiative Joint Coordination Center, which facilitates humanitarian maritime exports of grain, other foodstuffs and fertilizers from Ukraine. “The authority’s marine rescue team dealt professionally with a sudden technical failure of the machines of the bulk vessel GLORY,” the Suez Canal Authority (SCA) said on Twitter, according to a translation. “Work is now underway to tow the idle ship.” The disruption should cause “only minor delays,” said shipping agency Leth. The SCA said traffic has returned to normal.

• Tensions between freight railroads and their shipping customers remain high even as rail networks appear to operate more smoothly. The latest issue for rail service is a dispute between Union Pacific and poultry giant Foster Farms. The Wall Street Journal reports (link) the conflict has reached federal regulators, with the Surface Transportation Board ordering the railroad to deliver five trains to avert significant loss of livestock in California. Freight rail service has largely improved over the past year, after pandemic disruptions to supply chains, staffing shortages and demand spikes disrupted the flow of goods. Shippers are still on edge over service issues, however, and have complained to regulators that efficiency efforts including staffing cuts and an operating plan known as precision railroading have undermined service. Union Pacific says severe weather triggered its latest woes, but Foster Farms says things have deteriorated because of “systemic problems.” Meanwhile, a federal judge blocked CSX from pursuing antitrust claims alleging Norfolk Southern cost it hundreds of millions of dollars in lost customer contracts. Link for more via Reuters.

• Weekend ag demand news: Turkey tendered to buy 565,000 MT of optional origin milling wheat. Taiwan tendered to buy up to 65,000 MT of corn to be sourced from the U.S., Brazil, Argentina or South Africa.

• A start-up in California is trying to manipulate the climate by sending particles high into the atmosphere, trying to reflect sunlight and cool the Earth. The first experiment was last year, and there are more tests planned this month. The idea of “stratospheric solar geoengineering” has been around for years but is considered a last resort. This company is testing those limits. Link for more via the Washington Post.

• California is bracing for continued storms with the potential for flash flooding and mudslides. Despite weeks of heavy rain and snow, researchers and officials said it would take several more winter storms to make a dent in the drought.

• NWS weather: Two major episodes of heavy precipitation expected to impact California today and Tuesday... ...Periods of mountain snow spread across the Intermountain West and into the northern and central Rockies... ...Well above average temperatures build into the southern Plains.

Items in Pro Farmer’s First Thing Today include:

• Quiet price action to start the week
• Limited relief in Argentina, southern Brazil this week
• Indonesia, Malaysia agree to fight ‘discrimination’ against palm oil
• Bullish cash cattle hopes
• Cash hog index continues to drop

— Summary: Russia’s self-declared cease-fire in Ukraine expired with little letup in the fighting as Russian forces continued shelling across eastern Ukraine during the 36-hour cease-fire. Ukrainian officials reported casualties across front-line regions on Saturday, including the eastern city of Bakhmut, the northeastern Kharkiv region and the southern Kherson region. Ukraine’s forces are holding out against all odds amid the Russian assault on Bakhmut, Ukrainian President Volodymyr Zelenskyy said Sunday. Meanwhile, Moscow-installed officials accused Ukrainian forces of bombing a power plant in the occupied Donetsk region, where Bakhmut is located.

• Russia’s government backed a legislative amendment that would classify maps that dispute the country’s official “territorial integrity” as punishable extremist materials.
  

— Many travelers began to fly in and out of mainland China on Sunday as Beijing removed almost all its border restrictions, bringing an end to pandemic measures that effectively sealed off the world’s most populous nation from the rest of the world for three years. China’s decision to restore a freer flow of movement across its borders ends one of the most tangible symbols of China’s Covid-era isolation, brings hope to economies that had come to rely on spending by Chinese tourists, and allows foreign executives to visit the country, check on their operations and consider new investments.

— Mexico’s president says U.S./Mexico GMO corn issue is on agenda as Biden in Mexico. President Biden will be in Mexico the next two days for meetings with Mexican President Andrés Manuel López Obrador and Canadian Prime Minister Justin Trudeau. A White House summary of the trip did not include Mexico’s planned ban on biotech corn but López Obrador said he will discuss the corn trade matter.

Meanwhile, USDA Secretary Tom Vilsack late last week was asked if there was any U.S. response to Mexico’s plan to ban GMO corn. Vilsack: “It’s in the process of being reviewed. The U.S. Trade Representative’s Office, USDA and others are in the process of making sure that we fully understand and appreciate exactly what has been offered. I did have a conversation with Ambassador Tai, and I think we are on track to provide a response at some point in time in the near future to Mexico. And then based our final analysis in their response, we will take next steps as appropriate. But we’re not quite there yet.”

— SPR, climate panel in House rules package. The House of Representatives today begins debating the rules package which will provide a modified open rule for a bill (HR 21) that would require a plan for increasing oil and gas production as part of a drawdown of resources in the Strategic Petroleum Reserve (SPR). It would also sunset the Select Committee on the Climate Crisis created by Democrats. Meanwhile, the Energy Department would be barred from drawing down and selling petroleum products from the SPR to any entity owned, controlled, or influenced by the Chinese Communist Party under HR 22, which is set to be considered by the House this week. It would allow an exception if the petroleum wasn’t being exported to China. A simple majority would be required for passage.

— U.S. rejects oil offers in first attempt to replenish stockpiles. The Biden administration is delaying the replenishment of the nation’s emergency oil reserve after deciding the offers it received were either too expensive or didn’t meet the required specifications, according to reports. The Department of Energy rejected the several offers it got for a potential purchase in February.

— Summary:

• Global Covid-19 cases at 664,352,926 with 6,707,420 deaths.
• U.S. case count is at 101,244,386 with 1,096,504 deaths.
• Johns Hopkins University Coronavirus Resource Center says there have been 665,076,272 doses administered, 268,546,218 have received at least one vaccine, or 81.50% of the U.S. population.

— Deal close on U.S., Canada travel dispute. Canada and the U.S. are getting close to resolving a dispute over a program that allows swift passage for travelers through airports and border crossings, according to officials. Canadian Prime Minister Justin Trudeau departs today for the North American leaders’ summit in Mexico, and the Nexus program will be a key item of discussion between Canadian and U.S. representatives, said officials. Negotiations could continue past the summit, the officials cautioned. But officials from Canada said they are seeing progress toward the framework of a deal. Nexus is a program that allows pre-screened travelers to pass through airport security lines and land border crossings with less waiting. A huge backlog of applications has built up since Nexus service centers in Canada were shuttered at the start of the Covid pandemic in March 2020, and they have yet to reopen. Main contention is a U.S. request that American officers working at Nexus enrollment centers in Canada be granted the same legal protections as U.S. customs officers working in airports and at border crossings. Those protections allow a U.S. customs officer accused of an on-duty crime to be prosecuted in the U.S. instead of Canada, for example.

— Food and Drug Administration conditionally approved a new Alzheimer’s treatment that may slow the disease’s progress, following an 18-month clinical trial that showed promising results. The regulator directed the drug, called Lecanemab, to be labelled for patients in early and mild stages of Alzheimer’s. In 2021 the FDA approved a different Alzheimer’s drug and was widely criticized for doing so prematurely.

— Britain’s government announced a plan to support research into mRNA vaccines for cancer treatment, in partnership with BioNTech, a German company that used the technology to create a Covid-19 vaccine. The plan aims to accelerate clinical trials for the vaccines, with the goal of delivering treatments to 10,000 patients by 2030. BioNTech’s co-founder, Ozlem Tureci, said that Britain was a “great partner” for the project.

— First lady Jill Biden on Wednesday will undergo a procedure to remove a lesion that was found during a routine skin cancer screening, according to her press secretary. The outpatient procedure, known as Mohs surgery, will be performed at Walter Reed National Military Medical Center in Bethesda, Maryland.

— Sen. Ben Sasse’s (R-Neb.) retirement was official at noon Sunday. The current Senate ratio is 51 Democrats (including three Independents), 48 Republicans and one vacant seat. Nebraska’s GOP Gov. Jim Pillen will appoint a replacement who can serve through 2024. Both the Sasse seat (for the final two years of the 2020 term) and Nebraska Sen. Deb Fischer (R) will be up for re-election then.

— House Republican Steering Committee will meet on contested chairs today, including these key panels: Ways and Means, Education and the Workforce, Homeland Security and Budget. The ag sector is particularly watching Ways and Means. Reps. Jason Smith (Mo.), Vern Buchanan (Fla.) and Adrian Smith (Neb.) all want the tax-writing gavel. Jason Smith and Buchanan are the favorites, with many saying the race is too close to call.

— Transportation Research Board is holding its annual meeting in Washington, D.C. this week with speakers including Transportation Secretary Pete Buttigieg and Energy Secretary Jennifer Granholm. Buttigieg and Granholm will sit for a fireside chat on Wednesday to talk about the Joint Office on Energy and Transportation. Other department officials are expected to talk in policy in panel discussions, including Deputy Secretary Polly Trottenberg, who is presiding over a panel on Monday about the infrastructure law and its next steps.

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 | Election predictions: Split-ticket | Congress to-do list | SCOTUS on WOTUS | SCOTUS on Prop 12 | New farm bill primer | China outlook | Omnibus spending package |