Mexico again says no to GMO corn | Midterm election update | Russia decoy?
In Today’s Digital Newspaper |
An abbreviated dispatch today as I am in Kansas City for a speech to Farmers Mutual Hail.
The annual inflation rate in the U.S. slowed for a fourth month to 7.7% in October of 2022, the lowest since January, and below market forecasts of 8%. It compares with 8.2% in September. Compared to the previous month, the CPI rose 0.4%, the same as in September and below expectations of a higher 0.6% rate. The index for shelter contributed over half of the monthly all items increase, with the indexes for gasoline and food also increasing. Still, figures continue to point to strong inflationary pressures and a broad price increase across the economy, mainly in the services sector while prices of goods have benefited from some improvements in supply chains.
Georgia Senate race headed for runoff; House results still pending but point to modest Republican control. The midterm elections are not over yet as the race between incumbent Sen. Raphael Warnock (D-Ga.) and GOP challenger Herschel Walker will come down to a Dec. 6 runoff election.
The Nevada race between Sen. Catherine Cortez Masto (D-Nev.) and GOP candidate Adam Laxalt is also still undecided, with Laxalt holding a lead of less than 20,000 votes with 70% of ballots tallied.
The struggle for control of the Senate boiled down to three races in Georgia, Arizona and Nevada, with each party needing to win two of those states to secure a majority. Democrats need 50 seats to control the Senate with Vice President Kamala Harris’s tie-breaking vote, while GOP needs to capture 51. Republicans are currently locked into 49 Senate seats and Democrats at 48.
In the House, Republicans have gained 10 seats and captured 207 seats versus 184 for Democrats as of early this morning. There are still 44 seats where no winner has been declared with 22 of those in California. Republicans are still expected to win control (as of this morning, they’re 11 seats shy of a majority), but several races haven’t been called. One that was: Rep. Sean Patrick Maloney of New York, the chair of the Democratic Congressional Campaign Committee, conceded to his Republican opponent, Mike Lawler.
Election watchers signal Republicans will capture a narrow majority in the House, with David Wasserman of the Cook Political Report with Amy Walter signaling Republicans are on track to win 51% of House seats which would give them 221 seats, just three more than the 218 needed for control.
Republicans take aim at Donald Trump. With candidates backed by the former president largely underperforming, some in the party suggested a break from Trump: “I strongly believe he should no longer be the face of the Republican Party,” said former Representative Peter King of New York, a longtime Trump supporter.
President Joe Biden reiterated his desire to run for president again in 2024, saying he will make a final decision early next year. He hailed the “strong night” Democrats had in Tuesday’s midterm elections, but acknowledged voters’ frustration with the country’s direction.
The important inflation data is out at 8:30 a.m. ET, with expectations for a fall in the headline number, from 8.2% y/y to 7.9%. Nevertheless, inflation expectations data released on Friday may carry more weight with the Federal Reserve. Central bankers will be looking for signs inflation is becoming entrenched, in the University of Michigan’s measure of 5-10 inflation expectations.
Heartbreak hotel. Delayed renovations, labor shortages, supply-chain snarls and general wear and tear are colliding with record-high room rates at hotels, leaving some guests frustrated by what they feel are rooms undeserving of hefty price tags, the WSJ reports (link). Hotel rooms cost an average of 13% more compared with the same period in 2019, according to hospitality data and analytics company STR. Guest complaints regarding air conditioning, room maintenance, shower drainage and other issues have all risen during the same span.
EPA finally sends RFS plan to OMB. EPA sent the proposed levels under the Renewable Fuel Standard (RFS) for 2023 and beyond to the Office of Management and Budget (OMB) as it is facing a Nov. 30 deadline to propose the levels as part of a negotiated deal with Growth Energy which sued EPA for failing to deliver the proposed levels by the statutory deadline.
Details: Statutory provisions in the Clean Air Act for the RFS program provided target volumes of renewable fuel for the RFS program only through 2022 and the Set Rule is required to establish applicable volumes 14 months ahead of the first year (2023). “For years 2023 and thereafter, EPA must set those volumes based on an analysis of factors specified in the statute,” the agency said in the description of the proposed rule. “This rulemaking will establish volume requirements beginning in 2023.”
That leaves the door open for EPA to propose levels for multiple years via this rulemaking as prior reports indicated that the agency would propose levels for 2023, 2024 and 2025.
EPA has just three weeks to meet the already extended Nov. 30 deadline. Growth Energy said that will be the final extension for the EPA plan.
Threat of rail strike held off until at least Dec. 4. The National Carriers’ Conference Committee (NCCC) and the Brotherhood of Maintenance of Way Employees Division of the International Brotherhood of Teamsters (BMWED) have agreed to extend the current cooling off period until at least Dec. 4, according to an announcement Wednesday. The current period had been set to expire Nov. 19, and the statement issued indicated it “is subject to further extension to maintain alignment, if necessary, with other labor organizations. This extension eliminates the threat of a near-term freight rail service disruption.” The American Association of Railroads (AAR) has issued analysis that indicated a rail strike and nationwide freight railroad shutdown could cost $2 billion per day.
Seven of nine unions have ratified the proposed pact and two, including the BMWED and the Brotherhood of Railroad Signalmen, have not. The next votes are scheduled for Nov. 14 and Nov. 21.
Ukraine’s president, Volodymyr Zelenskyy, expressed skepticism about an announcement by Russia’s defense minister that Russia would withdraw troops from the occupied city of Kherson. Zelenskyy said that Ukrainian forces would be “moving carefully” in response. A high-level Ukrainian official said he saw “no signs that Russia is leaving Kherson without a fight.”
Meanwhile, America’s top general estimated that Russia has suffered more than 100,000 casualties since invading Ukraine Feb. 24.
Russian President Vladimir Putin will not attend the G20 summit in Bali next week, Russian officials confirmed. Western leaders and Zelenskyy had threatened to boycott the event if Putin took part. But Joko Widodo, the summit’s host as Indonesia’s president, resisted pressure to withdraw an invitation. President Joe Biden and Chinese leader Xi Jinping are expected to meet in person at the G20 for the first time as presidents. Biden said he planned to discuss ways to ease tensions between their countries.
China’s stringent lockdowns. Chinese authorities have partially locked down the southern megacity of Guangzhou as almost one-third of China’s new Covid-19 infections come from the city. Beijing’s harsh approach to stamping out the virus has stoked xenophobia.
Crypto prices crashed after Binance, the world’s largest crypto exchange, withdrew from talks to buy out FTX, the second largest. Binance said a liquidity crunch at FTX was “beyond our control or ability to help” and abruptly withdrew a tentative purchase offer — which destroyed what confidence its rival had retained. The Wall Street Journal reported that FTX needed to cover $8 billion in withdrawal requests. The S&P 500 was shaken, shedding 2.1%.
Today, bitcoin advanced as much as 7.4% after hitting a fresh low for the year. S&P 500 and Nasdaq 100 futures made modest gains.
Corn and soybean futures are lower and near their session lows this morning after two-side trade overnight. Wheat futures are mixed. As of 7:30 a.m. ET, corn futures were trading 3 cents lower, soybeans were 5 to 8 cents lower, SRW wheat was around a penny higher, HRW wheat was 1 to 2 cents lower and HRS wheat was 3 cents lower to 2 cents higher. Front-month crude oil futures were around 50 cents lower and the U.S. dollar index was more than 300 points higher.
Overnight demand news. South Korea purchased 134,000 MT of optional origin corn. Saudi Arabia tendered to buy 595,000 MT o MT of milling wheat. Tunisia tendered to buy 100,000 MT of soft milling wheat, 100,000 MT of durum and 75,000 MT of feed barley — all optional origin.
Mexican president: Gov’t can’t buy U.S. corn due to GMOs. Mexican President Andrés Manuel López Obrador made the remarks Wednesday without providing any details of a potential sale offer to the Mexican government. “There is a market for it, but the government cannot make a purchase because we do not want GMOs,” he said in a press conference, noting there is a lack of scientific investigation into the effects. “We are a sovereign free country,” he stated.
Obrador has signed a decree preventing the import of GMO corn from 2024. However, most of the U.S. corn sales to Mexico are conducted by private companies and not the government. Still the issue is raising questions about the 17 million tonnes of U.S. corn that Mexico purchases annually from the U.S.
Biden administration officials, including U.S. Trade Representative Katherine Tai and USDA Secretary Tom Vilsack, have raised the issue with Mexican officials, including the president.
More commercial poultry operations confirmed with HPAI. USDA’s Animal and Plant Health Inspection Service (APHIS) confirmed highly pathogenic avian influenza (HPAI) in additional commercial poultry operations, a Nov. 6 confirmation of a case in Wright County, Iowa, with 1,022,800 commercial table egg layers and Nov. 8 confirmations in Lehigh County, Pennsylvania, in a commercial turkey meat bird flock of 17,400 and an undetermined number in a commercial turkey breeder hen operation. A commercial upland game producer in Jefferson County, Wisconsin, with 180,000 birds was also confirmed Nov. 7. There have now been 262 commercial flocks affected with HPAI in 2022.
France issues ‘high’ alert for bird flu. France has put the country on “high” alert for bird flu, the agriculture ministry said on Thursday. The “high” risk level means all poultry should be kept inside on farms and additional security measures taken, including for hunting, to avoid a spread of the disease. Between Aug. 1 and Nov. 8, there have been 49 outbreaks of highly pathogenic avian influenza (HPAI) on French farms.
At COP27 in Egypt a group of 85 African insurance companies promised to create a $14 billion facility to help vulnerable communities pay for damage from climate-driven disasters, such as droughts and floods. And more than 50 African businesses — representing a combined $200 billion in annual revenue — pledged to drastically increase their renewable energy use.
Climate change regulation coming. The Biden administration will propose a rule today to make companies with at least $7.5 million in annual federal contracts set targets to limit emissions. The U.S. government is the world’s largest buyer of goods and services, and this rule would cover around 85% of emissions from its supply chain, officials said.
Hurricane Nicole hit Florida’s east coast this morning. It made landfall on North Hutchinson Island before being downgraded to a tropical storm. It’s bringing heavy rain, damaging winds and a dangerous storm surge. Nearly all of the East Coast should experience some impact as Nicole moves north in the coming days.
Here is one regulation I want… Travelers want the Federal Aviation Administration to force airlines to use wider seats.
KEY LINKS |
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 |