New Spat in Lengthy Contract Negotiations for U.S. West Coast Dockworkers

Xi invites Putin to visit China as two leaders sign pacts and discuss war cooperation

USDA daily export sale: 136,000 metric tons corn to China during 2022-2023 marketing year.

Futures markets now see an 80% chance of another quarter point rate rise this week. They still price up to half a point of rate cuts from there to year-end, although that’s half of what was priced early on Monday.

U.S. officials are mulling whether they can temporarily expand Federal Deposit Insurance Corp. coverage to all deposits beyond the current cap of $250,000, Bloomberg reports (link). Treasury Department staff are reviewing whether federal regulators have enough emergency authority for such a measure, though they don’t yet view such a move as necessary, according to people with knowledge of the talks. “We will use the tools we have to support community banks,” White House spokesman Michael Kikukawa said.

Chinese President Xi Jinping and Russian President Vladimir Putin will hold a second day of meetings Tuesday in Moscow. The two leaders are working to increase ties between their two countries in the face of economic, diplomatic and military opposition from the west, led by the United States. Xi invited Putin to visit China some time this year, while the two are expected to sign a series of pacts and discuss cooperation over Russia’s war in Ukraine. More in Russia/Ukraine section.

As war in Ukraine grinds on, China helps Refill Russian drone supplies. China has shipped more than $12 million in drones to Russia since it invaded Ukraine, in an indication of quiet collaboration between the two. Link to more via New York Times.

President Biden issued his first veto, rejecting a bill to block an environmental, social and corporate governance (ESG) regulation. It protects a Labor Department rule allowing investment managers to include ESG concerns in their decisions. Democrats say Republicans are overreaching on this issue, saying there is no mandate for such action.

Bloomberg reports a new spat in the months-long contract negotiation for U.S. West Coast dockworkers comes at a critical time: Importers and retailers are negotiating service contracts with ocean carriers for the coming year, deciding not only how much cargo they’ll need to move on ships, but also which ports to route it through. On Monday, the Pacific Maritime Association (PMA), representing carriers and terminal operators, alleged that dockworkers are failing to stagger lunch breaks, causing delays for truckers at terminal gates. The International Longshore and Warehouse Union, representing 22,000 dockworkers from California to Washington, said trucks can form queues for lots of reasons and accused the PMA of using the queues to influence public opinion. The two sides had pledged when the talks began in May not to speak to the media during the negotiations and to continue port operations without delays or disruptions. High-level meetings are expected to resume today. Link for more.

China’s appetite for Moscow’s oil, gas and coal has soared since the invasion of Ukraine. Beijing’s spending on Russian energy — including crude oil and products, coal and natural gas — ballooned to $88 billion in the year through February from $57 billion a year earlier, according to Chinese customs figures. More in Russia/Ukraine section.

French government faces down two no-confidence votes. Two no-confidence votes on Monday failed to take down French President Emmanuel Macron’s government, helmed by Prime Minister Elisabeth Borne. This means that the government can now push through Macron’s deeply unpopular pension reform plan using special constitutional powers.

Equities today: Global stock markets were mixed to higher overnight. U.S. Dow opened up around 300 points higher. European banks rallied the most since early 2023 in Credit Suisse aftermath. Major equities in Europe were up more than 1% on Tuesday, extending Monday’s gains, and led by bank shares, as concerns over the health of the banking sector eased and investors’ focus shifted to key monetary policy decisions this week. Meanwhile, U.S. futures were also trading in the green and the Hang Seng was the top performer in the Asia-Pacific region. In Asia, Japan closed. Hong Kong +1.4%. China +0.6%. India +0.8%. In Europe, at midday, London +1.4%. Paris +1.7%. Frankfurt +1.6%.

U.S. equities yesterday: All three major indices scored gains to open the week, led by the rise in the Dow. The Blue Chip index was up 382.60 points, 1.20%, at 32,244.58. The Nasdaq was up 45.02 points, 0.39%, at 11,675.54. The S&P 500 gained 34.93 points, 0.89%, at 3,951.57.

Agriculture markets yesterday:

• Corn: May corn fell 1 1/4 cents to $6.33, near the session high.
• Soy complex: May soybeans rose 9 2/4 cents to settle at $14.86, near the session high. May soymeal fell $3.3 to close at $462.7, in the middle of today’s trading range. May soyoil closed 53 points higher at 57.99 cents.
• Wheat: May SRW wheat fell 9 3/4 cents at $7.00 3/4 and nearer the daily low. May HRW wheat lost 6 cents at $8.29 3/4 and nearer the session high. May spring wheat futures fell 9 1/4 cents to $8.51 1/2 and nearer the session low.
• Cotton: May cotton futures fell 61 points to settle at 77.22 cents.
• Cattle: April live cattle fell 30 cents to $162.025 and nearer the session low. May feeder cattle lost 80 cents at $199.15 and nearer the session low.
• Hogs: April lean hogs plummeted $2.10 to $77.775, nearer the session low.
  

Ag markets today: Light corrective buying has surfaced in some of the grain and soy futures early this morning after they faced pressure for much of overnight trade. As of 7:30 a.m. ET, corn futures were trading 2 to 3 cents higher, soybeans were 2 to 6 cents higher and wheat futures were steady to 4 cents higher. Front-month crude oil futures were posting modest gains, while the U.S. dollar index was more than 200 points lower this morning.

Technical viewpoints from Jim Wyckoff:

On tap today:

• U.S. existing-home sales are expected to rise to an annual pace of 4.2 million in February from 4 million one month earlier. (10 a.m. ET)
• FOMC: The Federal Reserve begins its two-day policy meeting, with Wednesday bringing a rate announcement, updated Fed forecasts and a presser by Fed Chair Jerome Powell.
• President Joe Biden is scheduled to speak at the White House Conservation in Action Summit at the Interior Department in Washington, 2 p.m. ET.
• Former House Speaker Nancy Pelosi (D-Calif.) joins the Wall Street Journal’s Editor in Chief Emma Tucker tonight for an interview about her career, the future of the Democratic Party and the state of American politics, as part of the Journal’s Women in the Workplace Forum. 8:40 p.m. ET.

Banking-sector turmoil and tighter financial conditions are the latest test for U.S. households grappling with inflation. Unrest in the banking sector could make it more difficult for some consumers to obtain loans to buy homes, cars and other big-ticket items, the Wall Street Journal reports (link). Economists say much of the near-term impact could depend more on Americans’ psychology.

White House releases 2023 Economic Report of the President. “This report demonstrates the robust economic progress we have made over the past year, and makes the case for the administration’s economic policy priorities,” said Cecilia Rouse, the chair of the Council of Economic Advisers. Link to report.

Market perspectives:

• Outside markets: The U.S. dollar index was slightly lower. The benchmark 10-year U.S. Treasury note yield is yielding 3.541% — up from levels seen Monday, which is an indication of less anxiety in the marketplace Tuesday. Gold prices are also weaker Tuesday, amid less safe-haven demand so far today. Crude oil has moved higher, with U.S. crude around $68.80 per barrel and Brent around $75 per barrel, as investors slowly return to riskier assets as worries about the recent banking turmoil started to fade.

• Global coal consumption will likely peak by next year as economics and climate strategies shift the world toward cleaner energy, but several wild cards could determine how long the dirtiest fossil fuel persists, according to BloombergNEF (link).

• Contract standoff at U.S. West Coast ports appears to be entering a new and more contentious phase. Port employers are accusing unionized dockworkers of slowing container handling at the ports of Los Angeles and Long Beach. The Wall Street Journal writes (link) the new barbs suggest that tensions in the long-running negotiations are getting worse and points to the potential for deeper disruptions at the nation’s busiest gateway for imported consumer goods. The details are that the employer group says dockworkers last week stopped staggering their meal breaks at the ports, creating one-hour mealtime gaps that have led to delays in box movements. The union says its workers have the right to take meals together. But the bigger issue is that cargo volumes at the ports are in steep decline. A showdown that ties up the flow of goods is likely to push more business to other gateways.

• S&P Global released their U.S. acreage intentions from their survey. They reportedly estimate corn at 90.9 million acres, up 2.3 million from 2022, and soybeans at 88.2 million acres, up 1.4 million. Most of the net acreage increase comes from North Dakota. The firm sees other spring wheat acreage at 10.6 million, down 235,000 acres from 2022, with all cotton acres at 10.892 million, down 2.87 million from 2022. USDA’s Planting Intentions report comes March 31.

• NWS weather outlook: Powerful storm system to spread high winds, heavy rain, and heavy mountain snow to parts of California and the Southwest... ...Widespread rain/heavy mountain snow expected to move across the Great Basin and the central/southern Rockies through Thursday morning... ...A couple quick rounds of light-to-moderate snowfall are expected across portions of the northern Plains and Upper Midwest through Thursday morning.

Items in Pro Farmer’s First Thing Today include:

• Mostly firmer grain market tone this morning
• Consultant again cuts Argentine crop estimates
• Cattle traders still watching outside markets
• Extended string of cash hog strength ends

— Xi Jinping met Vladimir Putin in Moscow, where they discussed strengthening ties and the Chinese leader’s proposals to end the war in Ukraine. It’s his most ambitious effort yet to play the role of peacemaker. Putin signaled openness to Xi’s 12-point plan to solve the war in Ukraine, “We’re always open for a negotiation process.” Western allies remain skeptical of any breakthrough over the war in Ukraine, with Washington calling the Chinese leader’s visit a “diplomatic cover” for Moscow. Secretary of State Antony Blinken called out Xi’s visit, saying it came days after the International Criminal Court in The Hague issued an arrest warrant for Putin.

• Why China and Russia are closer than ever. This week’s meeting between the leaders of China and Russia marks another key moment in the deepening relationship between the two powers. Link to New York Times item.
• A strike destroyed Russian cruise missiles in Russian-occupied Crimea, the Ukrainian defense ministry said, as both countries host world leaders this week. Ukraine did not directly claim responsibility for the strike, but said it will further “demilitarize Russia and prepare the Crimean Peninsula for de-occupation.” The strike comes as China’s Xi Jinping is holding talks with Russian President Vladimir Putin in Moscow and Japanese Prime Minister Fumio Kishida heads to Kyiv for an unexpected meeting with President Volodymyr Zelenskyy.
• Russia has surpassed Saudi Arabia to become China’s top oil supplier, according to government customs data, with imports rising 23.8% to 1.94 million barrels per day in the first two months of 2023. That may help shed some light on Xi Jinping’s visit to Moscow this week, though it also reflects the economics of cheaper Russian crude, with Western sanctions leading to steep discounts on Urals grade cargoes.
• Russian PM backs project to supply grain to China. Russia supports the New Land Grain Corridor project intended to supply grain to the Chinese market, Russian Prime Minister Mikhail Mishustin said. He said, like China, Russia “gives paramount attention to ensuring food security” at a meeting with Chinese President Xi Jinping on Tuesday. Russian President Vladimir Putin met with Xi on Monday.
• Ukraine’s grain harvest is thinning out as Russia’s invasion of the country takes a toll on production and disrupts exports. Kyiv expects farmers to harvest up to 15% less grain this year than last, the Wall Street Journal reports (link), a stark sign of how the war continues to disrupt critical food supplies even as a fragile shipping agreement keeps bulk trade moving through Black Sea ports. The transport hurdles are helping reshape the country’s agricultural supply chains. Officials say some farmers have switched to crops that are easier to transport abroad, like sunflower seeds and soybeans. Those crops produce lower yields than wheat, leaving less tonnage for export. To avoid relying on Black Sea ports, Ukraine is exporting more of its goods by land, which is more expensive and time consuming. The production pullback this year follows a steep reduction in the grain harvest a year ago.
• The European Union is activating a crisis reserve for farmers in three eastern nations handling an influx of Ukrainian crops that’s lowering local prices. The European Commission, the bloc’s executive, will provide €56 million ($60 million) to Romania, Bulgaria and Poland, Agriculture Commissioner Janusz Wojciechowski said. More from Bloomberg.
  

— WOTUS halted from being put in place in Texas, Idaho by U.S. District Court for the Southern District of Texas; remains in effect for 48 other states. A federal judge in Texas put the Biden administration’s WOTUS regulation on hold in two states while others wait until a Supreme Court ruling lands later this year. Judge Jeffrey Brown on Sunday handed the states of Texas and Idaho a victory in their fight to head off the new “waters of the United States,” or WOTUS, rule. Two separate lawsuits in the U.S. District Court for the Southern District of Texas had argued that EPA and the Army Corps of Engineers should have to wait for the upcoming Sackett v. EPA decision before implementing the new regulation. One was brought by state officials and one by industry members. Brown, appointed by former President Donald Trump, agreed stall the rule in the states before it was set to take effect Monday, but denied industry associations’ plea to stop the rule nationwide. The Supreme Court’s upcoming Sackett decision could potentially limit the reach of the Clean Water Act, in conflict with the Biden WOTUS rule. That decision is expected by early summer.

Reaction to the latest court ruling was in line with usual proponents and opponents of the WOTUS rule.

The National Cattlemen’s Beef Association (NCBA) expressed “strong disappointment” in the decision to deny a nationwide preliminary injunction. “This latest WOTUS rule will place more burdens on family farms and ranches, drive up costs, and prevent cattle producers like me from making investments in our land,” said NCBA President Todd Wilkinson, a South Dakota cattle producer. “While we appreciate the court’s injunction of the rule in Texas and Idaho, we are strongly disappointed in the decision to keep this WOTUS rule in place in 48 states and I am proud of NCBA’s efforts to continue the fight against this rule… The court’s decision to keep the Biden administration’s WOTUS rule in place is concerning and irresponsible,” said NCBA Chief Counsel Mary-Thomas Hart.

— President Joe Biden issued the first veto of his presidency over retirement investments. The move upholds a Labor Dept. rule allowing retirement fund managers to consider the environmental and social impacts (dubbed ESG) of their investments. Earlier this month, Congress passed a bill to scrap the rule, with Republicans calling it a “woke” policy. Now, Biden’s rejected the bill, saying Congress’s measure would have put the “retirement savings of individuals across the country” at risk. Any effort to override Biden’s veto is unlikely to pass in the House and Senate.

— Payments under three of USDA aid efforts changed little over the past week, according to data for the Emergency Relief Program (ERP), Coronavirus Food Assistance Program 1 (CFAP 1) and CFAP 2.

ERP payments were at $7.41 billion as of March 19 with non-specialty crop payments at $6.29 billion and specialty crops at $1.13 billion ($1.12 billion prior).

Payments under ERP Phase 2 now are reported at $9,302 ($2,000 prior week).

CFAP 1 payments were at $11.83 billion, including $10.63 billion in original payments and $1.19 billion in top-up payments, steady with the prior week. CFAP 2 payments stood at $19.44 billion, including $14.53 billion in original payments and $4.91 billion in top-up payments.

Totals under the ERP Phase 2 effort will continue to slowly increase while there could also be an increase in CFAP 2 payments as USDA has extended the deadline for producers to submit eligibility documentation under the CFAP 2 Underserved Producer (CFAP 2 UP) effort, which issues a payment equal to 15% of the previous CFAP 2 payment and CFAP 2 top-up payment. Those payments started Jan. 10 with USDA setting an initial deadline of Feb. 10 for producers to submit their eligibility documentation. That deadline has now been extended to March 31.

— You knew it was coming: USDA urged to extend Product of USA comment period. More than 50 comments have been received on the proposed rule from USDA’s Food Safety and Inspection Service (FSIS) to amend regulations relative to the voluntary Product of USA labeling effort. The proposed rule was published March 13 (link) in the Federal Register with comments due by May 12.

The proposed rule would require that single-ingredient products and multi-ingredient products if the components of the product are from animals born, raised, slaughtered, and processed in the U.S.

The North American Meat Institute (NAMI) filed comments March 14 requesting an extension of the public comment period of at least 90 days, saying the change that FSIS is proposing to extend the Product of USA labeling effort to processed products was involving new items being covered. NAMI said it also had embarked on survey work on origin claims that it started when FSIS denied petitions on the Product of USA labeling in March 2020.

— President Biden to protect more than a half-million acres in Nevada and Texas. President Biden today will put nearly 514,000 acres of public lands off-limits to development, using his authority under the 1906 Antiquities Act. The two sites include Castner Range, a former military training and testing area in El Paso, and a vast expanse of land in southern Nevada known as Avi Kwa Ame, which is sacred to a dozen different tribes.

— Indian Prime Minister Narendra Modi met with Japanese Prime Minister Fumio Kishida in India. Kishida announced new plans for an Indo-Pacific partnership, which is meant to counter China’s influence. India and Japan, together with the United States and Australia, constitute the Quad. Kishida also invited Modi to participate in the G7 summit in Japan in May. He told the press that he will also invite South Korean President Yoon Suk-yeol, another step toward improving Japanese-South Korean ties.

— Former Taiwan president to visit China. Ma Ying-jeou, former president of Taiwan, is going to visit China this month. This will be the first time a current or former leader of Taiwan has visited since 1949. Ma and his party, which is in the opposition, presented this as an opportunity to promote cross-strait exchanges at an otherwise tense time. However, the trip is also likely to exacerbate tensions between Ma’s party and the ruling Democratic Progressive Party. The trip was scheduled from March 27 to April 7, but local media reported that Taiwan’s Mainland Affairs Council had not yet received reports about the planned trip, which is a requirement for former presidents.

— Attaché expects slight uptick in Chinese soybean imports in 2023-24. The ag attaché in China forecasts the country will import 97 MMT of soybeans in 2023-24, which would be up 1 MMT from USDA’s official forecast for the current marketing year. The post notes, the “removal of Covid-related restrictions in December 2022 is expected to boost overall oilseed consumption. However, relatively high prices for soybean meal (SBM) and low returns in the swine and poultry sector continue to disadvantage SBM inclusion in feed.”

— Nikki Haley opinion: China wins if Russia conquers Ukraine. The war is no ‘territorial dispute.’ Vital U.S. interests are at stake, say Haley, a candidate for the 2024 Republican presidential nomination. She was served as governor of South Carolina (2011-17) and U.S. ambassador to the United Nations (2017-18). Link.

— Falling lithium prices are making electric cars more affordable. An unexpected decline in the price of an essential battery material, along with those of other commodities, is good news for buyers. But experts disagree on how long low prices will last. Link for details.

— Soybeans crushed. A nascent boom in the market for soybean oil is facing unexpected headwinds from the Environmental Protection Agency, the Wall Street Journal reports (link). The commodity is tied up in the meeting point between agriculture and fuel, leaving it subject to shifts in energy markets. Soybean oil futures tumbled after the EPA last December proposed to mandate less use of biomass-based diesel through 2025 than expected. The price of soybean oil has roughly doubled over the past three years, largely because of demand to make fuel for trucks and trains. Visions of soybean-powered truck fleets prompted a kind of green-oil boom in the Midwest, with bean-crushing plants in place of derricks and drills. But companies have little economic motive to make diesel from soybean oil without government incentives, which are aimed at reducing carbon emissions, so the EPA news has put some projects on pause, the article notes.

— U.N. panel report: Time is running out to curb global warming. A United Nations panel of scientists said there is a “feasible, but narrow pathway” to avoid the worst effects of climate change. To do so, the world’s nations must together cut greenhouse-gas emissions 60% by 2035 to limit warming to 1.5 degrees Celsius over preindustrial levels. That level of cuts would require a massive and rapid shift in the world’s energy supply that is under way in some countries, but has been stifled by the war in Ukraine, the global energy crisis and thirst for economic growth in countries like China and India.

— The secret behind Japan’s delicious strawberries. The New York Times reports (link) to recreate an artificial spring in the winter months, farmers grow their out-of-season delicacies in huge greenhouses kept warm by giant, gas-guzzling heaters.

— WHO urges China to share more data on possible Covid link to raccoon dogs. Health body says genetic sequences are not definitive and all origin theories, including lab leak, remain on table. Link for details. Link for more info.

— Moderna paid the U.S. back and more for vaccine, Moderna President Stephen Hoge said Monday. Moderna plans to tell lawmakers it more than adequately compensated the U.S. for its role in a Covid-19 vaccine partnership that brought the drugmaker billions of dollars, a central point in what’s likely to be a heated Capitol Hill hearing this week.

— A drug-resistant and potentially deadly fungus is spreading fast in U.S. health care facilities, according to a new study. Clinical cases of Candida auris, or C. auris, nearly doubled in 2021. There was also a tripling of the number of cases resistant to echinocandins, the first-line treatment for Candida auris infections, according to data from the CDC. The study found that clinical cases increased each year, skyrocketing from 53 in 2016 to 1,471 in 2021. Candida auris cases were initially confined to the New York City and Chicago areas, but they’ve now spread to over half of U.S. states.

Last year, the World Health Organization released a list of “fungal priority pathogens” that included Candida auris.

— French President Emmanuel Macron’s government survived two no-confidence votes. Now, his plan — which triggered nationwide protests — will gradually increase the retirement age by three months each year until it reaches 64 in 2030.

— Two candidates for an open seat on Wisconsin’s Supreme Court will debate today in Madison, the state’s capital. The election is being closely watched. At stake is a liberal or conservative majority on the highest legal authority in one of America’s closest swing states.

— Banks: from hold up to blow up. Gangs are blowing up ATMs in Germany to get cash. The flagrant cash grab happened nearly 500 times last year.

— Millions of fish found dead in Australia. Millions of dead fish have washed ashore in southeastern Australia. Scientists believe this is because of depleted oxygen, a result of floods and hot weather. Police have set up emergency operation centers to coordinate a massive cleanup.

— National Ag Day proclamation. President Biden signed a proclamation (link) celebrating National Ag Day, on Tuesday, and honoring “all the farmers, farmworkers, ranchers, fishers, foresters, and other agricultural workers who do so much to make our nation strong, fuel our economy, and steward our lands.”

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