New farm bill want list growing while funding total unknown and may take months to unfold
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Abbreviated report today as I am heading to Oklahoma for a meeting with crop insurance clients of Kathy Fowler.
Global stock markets were mixed overnight. U.S. stock indexes are pointed toward slightly higher openings. In Asia, Japan +0.1%. Hong Kong -0.8%. China +0.7%. India -0.6%. In Europe, at midday, London -0.3%. Paris flat. Frankfurt flat.
Key outside markets this morning: The U.S. dollar index is near steady. Nymex crude oil futures prices are higher and trading around $77.00 a barrel. The yield on the benchmark U.S. 10-year Treasury note is presently fetching 3.943%.
Soybeans weaker, corn and wheat choppy. Soybeans faced followthrough selling overnight. Corn and wheat posted two-sided trade but have softened early this morning. As of 7:30 a.m. ET, corn futures were trading 1 to 2 cents lower, soybeans were 8 to 10 cents lower, SRW wheat was steady to a penny lower, HRW wheat was mostly 2 to 4 cents lower and HRS wheat was 1 to 3 cents lower. Front-month crude oil futures were more than $1 higher, and the U.S. dollar index is trading just above unchanged.
Initial small Phase 2 payment under the Emergency Relief Program (ERP) as of Feb. 26 was made with just one payment totaling $2,000 in Georgia for revenue — specialty and high-value crops. Payments under Phase 1 of ERP total $7.40 billion, steady with the prior week, which include non-specialty crop payments of $6.29 billion ($6.28 billion prior) and $1.12 billion for specialty crops ($1.11 billion prior). There was little change in Coronavirus Food Assistance Program 2 (CFAP 2) payments which now total $19.44 billion, up from $19.43 billion prior. The total includes original CFAP 2 payments of $14.53 billion (unchanged from prior) and $4.91 billion (unchanged from prior).
The new farm bill talk is just that for now: talk and requests. Until a firm decision is made regarding funding levels for the new bill, wheels are just turning. And it could take months for the final money tally to be announced. Meanwhile, farm-state lawmakers are ramping up their legislative requests, as usual, and various farm groups are doing the same. But until more is known about how much to spend, and how much the various proposals being thrown out cost, turn to other topics of note.
European bond yields climbed as investors saw hotter-than-expected inflation reports from France and Spain. The ECB deposit rate hit 4% for the first time, sending the yield on two-year German debt to the highest since 2008.
Details: France’s annual inflation rate reached a record high of 7.2% in February, up from 7% in January. Soaring food and service costs in particular pushed prices up. Spain’s inflation rate also ticked up, reaching 6.1% in February, up from 5.9% last month. The figures will put more pressure on the European Central Bank to further raise interest rates.
U.S. stocks rose more than 6% in January and are on track to lose more than 1% in February. That combination of a strong start followed by a reversal in February hasn’t happened since 1989, according to Dow Jones Market Data, when Federal Reserve interest rates were also rising. Of note: Back in 1989, as global optimism grew leading up to the fall of the Berlin Wall, stocks roared back to gain more than 16% between March and the end of the year.
USDA confirms HPAI in Illinois commercial turkey flock. USDA’s Animal and Plant Health Inspection Service (APHIS) confirmed highly pathogenic avian influenza (HPAI) in a commercial turkey meat bird flock in Wayne County, Illinois, with 18,200 birds. This is the first case of HPAI in a commercial operation in Illinois as prior cases in 2022 were all in either non-poultry or backyard flocks. In the last 30 days, there have been 29 flocks confirmed in 14 states.
Farm-state lawmakers and the Biden administration are increasingly being criticized for not aiding the poultry sector which has been negatively impacted by the influenza.
Germany, Poland report ASF cases. Another case of African swine fever (ASF) was confirmed on a small domestic hog farm in the eastern state of Brandenburg, Germany. Poland discovered ASF in five wild boars in the northern part of the country.
The Supreme Court is scheduled to hear arguments today in two challenges to President Joe Biden’s proposal to forgive up to $20,000 in federal student loans for 43 million borrowers. Republican-appointed judges have held up the program since it was announced in August. Biden proposed canceling $10,000 worth of federal student loans for individuals earning less than $125,000 annually or households earning less than $250,000. Pell Grant recipients could get $20,000 of their loans forgiven. Debt could be erased entirely for 20 million borrowers. Student loans are one of the biggest sources of consumer debt. Consumers had $1.60 trillion in outstanding federal student loans in the fourth quarter, versus $1.55 trillion in outstanding auto loans, and $986 billion in credit-card debt, according to the Federal Reserve Bank of New York. Justices are expected to issue a decision before the end of June. Student loan repayments that have been frozen since March 2020 could restart 60 days after their decision, or 60 days after June 30, whichever comes first, the Biden administration said.
Natural gas was the upside focus on Monday as futures rallied 6.99% on the session to settle at a new high for February. Colder-than-average temperatures showing up in the extended forecasts into mid-March for much of the country saw demand estimates rise and that prompted profit taking by shorts.
Treasury Secretary Janet Yellen visited Ukraine Monday to discuss economic support. In her visit to Kyiv, Yellen met with top Ukrainian officials and announced $1.25 billion in economic and budget assistance to the country. Yellen met with Ukrainian President Volodymyr Zelenskyy. Addressing the Russian economy, which has not buckled under an array of sanctions from the U.S. and other Western countries, Yellen said she expects it to grow weaker as the country loses foreign investment and runs through its reserves. “We will see an increasing toll on Russia’s economic trajectory over time,” she said. “And their ability to replenish the military equipment that’s been destroyed in their attacks on Ukraine, that’s been very greatly jeopardized.”
Russia is turning to China’s yuan in an alternative to the U.S. dollar. The Chinese currency’s rise inside Russia deepens ties between two countries that have long rivaled each other for global influence but have grown closer amid shared discontent with the West. It also serves China’s long standing but mostly frustrated campaign to make the yuan a more prominent feature of global finance and commerce, the Wall Street Journal reports (link/chart from WSJ). Russia’s sovereign-wealth fund, a war chest used to fund operations on the battlefield in Ukraine, is using the Chinese currency to store its oil riches. Russian companies have borrowed in yuan, also known as renminbi, and households are stashing savings in it. “It also serves China’s long standing but mostly frustrated campaign to make the yuan a more prominent feature of global finance and commerce,” according to the WSJ.
The U.S. Department of Energy reignited the debate over Covid-19’s origins after declaring with “low confidence” that coronavirus leaked from a lab, which Chinese officials quickly dismissed, pointing to a WHO report calling the theory “extremely unlikely.” Here is a link from Forbes that is a rundown of where different U.S. agencies stand on how the pandemic started.
Explaining the Biden administration’s trade policy is still an unanswered topic. We may find out more when U.S. Trade Representative Katherine Tai and Foreign Policy Editor-in-Chief Ravi Agrawal on Wednesday, at 1:00 PM ET, have a conversation on the Biden administration’s trade and economic policies and their global impact.
Meanwhile today, U.S. Trade Representative official Jayme White will participate in an event hosted by the Brookings Institution titled “USMCA: Building more integrated, resilient, and secure North American supply chains.” Aggies wonder if the ongoing GMO corn trade flap with Mexico will be raised.
Mexico: U.S. disagreement on GMO corn politically motivated. The United States’ disagreement with Mexico over its plan to limit imports of GMO corn is “politically motivated,” Mexico’s economy ministry said on Monday. The U.S. has threatened a trade dispute panel under the U.S.-Mexico-Canada Agreement (USMCA), which would ban GMO corn for human consumption. Mexico’s economy ministry said in a statement its position was compatible with the deal’s rules and if the U.S. wants to open a dispute panel, “it would have to quantitatively show something that has not happened: that the corn decree affects its trade imports.”
U.K. and EU reach Northern Ireland protocol deal. British Prime Minister Rishi Sunak reached a deal with the European Union over post-Brexit trade rules for Northern Ireland. Sunak said they had agreed to remove “any sense of a border.” Sunak called it a “decisive breakthrough” and “the beginning of a new chapter.” Former Prime Minister Boris Johnson is reportedly considering opposing the deal. Former Prime Minister Theresa May called on her peers to support the deal, known as the Windsor framework. The Biden administration, which has repeatedly stressed that it opposes any moves that jeopardize the Good Friday Agreement, said that it was “grateful” Britain and the European Union had reached a deal.
A must-read article on China’s agriculture comes via an analysis item in Foreign Policy. Link to article.
EPA’s Regan to make third trip to East Palestine, Ohio today. The only group wanting more attention from Regan is the ethanol industry. Regan today will announce new resources from the administration to deal with the train accident. This comes as Norfolk Southern Wednesday will start tearing up tracks and removing contaminated soil from the site. Residents have filed suit in federal court seeking a delay in the cleanup efforts as they maintain it could destroy evidence relative to Norfolk Southern’s potential liability in the wreck.
This is the best sign yet that EPA will soon announce something on year-round E15 sales. The sign: lawmakers are pushing for EPA emergency action to allow year-round E15. Lawmakers frequently sent letters on topics they expect to be announced shortly. In this case, the letter calls on EPA to repeat its emergency action from 2022 to allow year-round sales of E15 fuel, arguing the action will decrease U.S. reliance on foreign energy, lower fuel prices and provide climate benefits. The latest letter campaign is being led by Sens. Dick Durbin (D-Ill.) and John Thune (R-S.D.). This comes as EPA is poised to announce is proposed rule on whether to grant a waiver requested by eight states of the Reid Vapor Pressure (RVP) rules which prevent year-round sales of E15 fuel.
The Supreme Court has agreed to hear a case that could determine the future and the past of the Consumer Financial Protection Bureau — and may even provide a legal road map for limiting the power of independent government agencies, say observers. Trade groups representing payday lenders have challenged the bureau’s constitutional authority. They argue that the agency gets money from the Fed, not Congress, a violation of the Constitution’s Appropriations Clause, as the funding is not part of the annual congressional budget process. Three judges on the Fifth Circuit Court of Appeals concurred. Sen. Elizabeth Warren (D-Mass.), who championed the agency’s formation in the wake of the global financial crisis, has also urged the Supreme Court to strike down the lower court’s decision. A concern noted by some: If justices uphold the lower court’s ruling, it could lead to legal challenges to other agencies’ oversight powers.
Pennsylvania Sen. John Fetterman is “on a path to recovery,” and his staff said his hospitalization would be a “weeks-long process.” The senator visits daily with family and staff, who are keeping him informed on Senate business.
NWS weather outlook: Heavy snow to impact parts of the Northeast today... ...Heavy snow and strong winds will create extremely dangerous travel conditions across the Sierra Nevada... ...Swath of moderate to locally heavy snow possible across the Northern Plains and Upper Midwest through Wednesday morning... ...Increasing severe weather and Excessive rainfall concerns for parts of the Lower/Middle Mississippi Valley and Tennessee Valley through midweek... ...Critical Fire weather risk in the Southern Plains.
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