Thompson Continues to Take Key Steps Ahead of May 23 New Farm Bill Markup

CPI report | Fed speakers | House farm bill details, briefings | Biden to act on China

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May 13, 2024 06:41 AM

CPI report | Fed speakers | House farm bill details, briefings | Biden to act on China

Washington Focus

The House and Senate are in session Tuesday through Friday.

Continued focus on the new farm bill will continue this week with additional briefings about the House farm bill proposals. The Ag Committee on Friday released a more extensive summary of key titles of the farm bill.

House Ag Committee Chairman GT Thompson (R-Pa.) on Friday released a more detailed, title-by-title overview of his farm bill proposals.

Links:

To view the 2024 Farm Bill Title-by-Title Summary, click here.
To view additional details as they become available, click here.
To view Chairman Thompson’s open letter, click here.

The farmer-friendly House version includes many key provisions, such as:

increases statutory reference prices by 10%to 20% for all covered commodities in Title I,
increases the Agricultural Risk Coverage (ARC) guarantee to 90% of the benchmark revenue and expands the maximum payment band to 12.5% for both ARC-IC and ARC-CO,
increases marketing loan rates for most loan commodities,
expands base acres,
enhances standing disaster programs and expands eligibility for assistance,
provides investments in conservation by expanding access to funding — funds for conservation from the Inflation Reduction Act would be redirected to programs including feral swine eradication and forest conservation. Democrats have framed using IRA dollars for practices that don’t directly address climate change as a non-starter in the farm bill. The House bill proposes expanding existing programs receiving reallocated IRA money, such as the Environmental Quality Incentives Program, to include practices like precision agriculture.
increases premium support and maximum coverage levels for SCO,
expands premium support for beginning and veteran farmers,
significantly increases funding for MAP and FMD,
makes calculation of the Thrifty Food Plan, cost neutral.

While the exact reference prices in Thompson’s plan aren’t public, a 10-20% increase for all commodities is clearly superior to Senate Ag Chair Debbie Stabenow’s (D-Mich.) proposal to only raise cotton, rice, and peanuts by 5%. Stabenow’s section-by-section alludes to some revisions to the effective reference price formula but is short on details. Thompson appears to not change the effective reference price formula, however the boost in statutory reference prices will increase the ERP cap, allowing it to provide more protection at the start of a downturn.

There is enough information available to make a comparison on Agriculture Risk Coverage (ARC) changes in the two plans. Stabenow proposes to raise the ARC guarantee to 88% of benchmark revenue and appears to leave the payment band alone at 10%. Meanwhile, Thompson boosts the guarantee to 90% of benchmark revenue and expands the payment band to 12.5%.

In a real-world example using projected prices from CBO, here is how the two bills stack up in Carroll county Illinois, assuming no fluctuations in yield.

Illinois – Carroll County

Olympic average yield = 230.30 bu./acre

Olympic average price = $5.13/bu.

Actual Yield = 230.30 bu./acre

Projected 2025 MYAP = $4.20/bu.

Of note: Last week, Rep. Angie Craig (D-Minn.) was quoted by Politico saying, “I will say that certainly, Senator Stabenow’s bill looks a lot more like the priorities of a Midwestern representative.” As more details emerge, the congresswoman might want to rethink that assertion. Thompson’s bill certainly appears to put the “farm” back in the farm bill and gives a meaningful boost in the safety net for all commodities, versus just a select few. It doesn’t take a rocket scientist, or especially a lawmaker up for re-election, to guess which proposal Minnesota farmers will prefer.

What’s next: Thompson plans to publish the full legislative text soon, before the May 23 markup. “The chairman’s mark is near finalized” and will bolster the farm safety net while avoiding “indiscriminate expansion of our nutrition safety net,” Thompson wrote in an open letter accompanying the summary. We continue to await release of CBO scoring of House and Senate farm bill proposals… those will provide additional insight into analyzing which bills are truly reflective of production agriculture.

— On China, Biden is preparing to extend and increase Trump’s tariffs on some $300 billion in Chinese goods, with an announcement expected Tuesday.

The president wants to triple tariffs on Chinese steel and aluminum. He also aims to dramatically raise tariffs on clean-energy goods — quadrupling those fees on Chinese electric vehicles, the Wall Street Journal reported Friday.

— On border issues, President Biden s preparing an executive order to try to stem illegal border crossings. He will rely on the same section of the Federal Code, known as 212(f), that Trump used to slow immigration and impose a so-called Muslim ban.

Other Events & Hearings

Monday, May 13

Federal Reserve. Fed Vice Chair Philip Jefferson speaks on Communicating About Monetary Policy at a Cleveland Fed conference. Cleveland Fed President Loretta Mester (2024 voter) is also scheduled to speak.
Federal lands. House Natural Resources Federal Lands Subcommittee field hearing on “Improving Access and Opportunities for Hunting, Fishing, and Outdoor Recreation on America’s Federal Lands.”
Taiwan outlook. The Wilson Center’s Indo-Pacific Program holds a discussion on “The Way Ahead to Secure Taiwan’s Resilience.”
FERC meeting. Federal Energy Regulatory Commission (FERC) holds a meeting for agency administrative matters, customer matters, reliability, security and market operations, building for the future through electric regional transmission planning and cost allocation.
Grid technology. Center for Strategic and International Studies (CSIS) holds a virtual discussion on “The Strategic Value of Modern Grid Technologies.”
Overseas disease outbreaks. Center for Strategic and International Studies (CSIS) holds a discussion with leaders of the Centers for Disease Control and Prevention (CDC) on “Today’s Threats, Tomorrow’s Health,” focusing on overseas disease outbreaks.
Federal debt. American Enterprise Institute for Public Policy Research (AEI) holds a discussion on “Federal Debt: The Baseline and Options for Reform.”

Tuesday, May 14

Federal Reserve. Fed Chair Jerome Powell takes part in a moderated discussion with De Nederlandsche Bank (DNB) President Klaas Knot in Amsterdam. Fed Governor Lisa Cook speaks on Growth and Change at Community Development Financial Institutions.
Mexico outlook. Hudson Institute discussion on “Mexico After Andres Manuel Lopez Obrador.”
Biden Indo-Pacific strategy. Brookings Institution’s Foreign Policy Program discussion on “Two Years into the Biden Administration’s Indo-Pacific Strategy.”
Infrastructure. U.S. Chamber of Commerce discussion on “United for Infrastructure: Invest. Permit. Build.”
Historic landmarks. National Park Service holds a virtual meeting of the National Historic Landmarks Committee of the National Park System Advisory Board to evaluate nominations of historic properties to make recommendations regarding the possible designation of those properties as National Historic Landmarks to the board at a future meeting.
Kenyan leader visit preview. Center for Strategic and International Studies conference call briefing on “the upcoming state visit of Kenyan President William Ruto.”
Election impacts. FiscalNote virtual discussion on “The Global Impacts of the 2024 U.S. Election.”
Precision agriculture, other technologies. National Institute of Standards and Technology virtual meeting of the Internet of Things Advisory Board for smart traffic and transit technologies, augmented logistics and supply chains, sustainable infrastructure, precision agriculture, environmental monitoring, public safety and health care
U.S./India relations. Hudson Institute discussion on “The Defining Partnership of the 21st Century: U.S./India Relations.”
China and Covid-19. Heritage Foundation holds a discussion on “Holding China Accountable for Its Role in the Most Catastrophic Pandemic of Our Time: Covid-19.”
Covid-19 origins. Brookings Institution virtual discussion on “Biosafety and the origin of the Covid-19 pandemic: Evidence and policy implications.”
Small business issues. Small Business Administration virtual meeting of the National Small Business Development Center for annual plan/white paper and outreach and engagement with the SBDC state directors.
Red Sea situation. Center for Strategic and International Studies discussion on “Operations in the Red Sea: Lessons for Surface Warfare.”
Methane regs. United States Energy Association virtual discussion on “Understanding the EPA’s New Methane Waste Emissions Fee & Advanced Methane Leak Detection Technologies.”
President elections. No Labels virtual discussion on “the historical significance of the presidential debates, how they can help shape public opinion and how this year could be different.”
Organic Trade Association’s Organic Week, through Thursday, Washington, DC.
Farm Foundation Forum, “Global Ag Trade and Sustainability: Gaps and Opportunities.”

Wednesday, May 15

Federal Reserve. Fed Governor Michelle Bowman speaks on Innovation and the Evolving Financial Landscape. Minneapolis Fed President Neel Kashkari scheduled to speak.
Francis Scott Key Bridge collapse. House Transportation and Infrastructure Committee hearing on “Reviewing and Examining the Francis Scott Key Bridge Federal Response.”
FY 2025 Budget: EPA. House Energy and Commerce Environment, Manufacturing, and Critical Materials Subcommittee hearing on “The FY 2025 Environmental Protection Agency Budget.” EPA Administrator Michael Regan testifies.
FY 2025 Budget: Commerce. Senate Appropriations Commerce, Justice, Science, and Related Agencies Subcommittee hearing on “A Review of the President’s FY 2025 Budget Request for the Department of Commerce.” Commerce Secretary Gina Raimondo testifies.
FY 2025 Budget: FTC. House Appropriations Financial Services and General Government Subcommittee hearing on “FY 2025 Request for the Federal Trade Commission.” FTC Chair Lina Khan testifies.
FY 2025 Budget: U.S. Army Corps of Engineers. Senate Appropriations Energy and Water Development Subcommittee of Senate Appropriations Committee hearing on “A Review of the 2025 Budget Request for the U.S. Army Corps of Engineers and the Bureau of Reclamation.”
FY 2025 Budget: BLM. House Natural Resources Committee hearing on “Examining the President’s FY 2025 Budget Request for the Bureau of Land Management and National Park Service.”
Agricultural worker health. Health and Human Services Department; Health Resources and Services Administration virtual meeting of the National Advisory Council on Migrant Health to discuss migratory and seasonal agricultural worker health; runs through Thursday.
China cybersecurity threat. House Oversight and Accountability Cybersecurity, Information Technology, and Government Innovation Subcommittee hearing on “Red Alert: Countering the Cyberthreat from China.”
Blockchain summit. Chamber of Digital Commerce holds its 2024 Blockchain Summit with several lawmakers and a session with Caroline Pham, commissioner of the Commodity Futures Trading Commission (CFTC); and SEC Commissioner Hester Peirce on “Working Together: CFTC and SEC.”
Climate and financing. Center for Strategic and International Studies conference on “The Red Zone: Charting Paths to Resilience in the Climate-Conflict Nexus,” focusing on the intersection of climate change, conflict and finance.
China and Taiwan. Hudson Institute’s China Center conference on “The Pernicious Impact of China’s Anti-Secession Law,” focusing on “Taiwan’s right to self-determination.”
China and global trade. Peterson Institute for International Economics virtual discussion on “How does China view the current state of global trade relations?”
Grain inspection issues. Agricultural Marketing Service meeting of the Grain Inspection Advisory Committee for general program updates, discussions about cybersecurity, standardizing protein moisture basis certification, grain inspection technology, establishing a technology subcommittee, and emerging grain export issues; runs through Thursday.
SBA program review. House Small Business Committee hearing on “Under the Microscope: Reviewing Key SBA Programs with Associate Administrator Frost.” Associate SBA Administrator for Capital Access Katie Frost testifies.
Building resilience conference. U.S. Chamber of Commerce 13th annual Building Resilience Conference; runs through Friday.
Mexican elections. Brookings Institution virtual discussion on “Ballots and Bullets: Mexico’s 2024 Elections.”
Weaponization of the federal government. House Judiciary Select Weaponization of the Federal Government Subcommittee hearing on the “Weaponization of the Federal Government.”
Climate change and the budget. Senate Budget Committee hearing on “Budgeting for the Storm: Climate Change and the Costs to National Security.”
HHS priorities. House Education and the Workforce Committee hearing on “Examining the Policies and Priorities of the Department of Health and Human Services.” HHS Secretary Xavier Becerra testifies.
Decarbonizing transportation. Washington Post Live holds a virtual discussion on “Decarbonizing Cities and Transportation to Tackle Climate Change.”
Climate risks and insurance. National Association for Business Economics virtual discussion on “Climate Change, Risk, and Insurance: How the Landscape for Risk Is Evolving and Implications for Commercial Real Estate Investors/Owners.”
College campus unrest. House Judiciary Constitution and Limited Government Subcommittee hearing on “Antisemitism on College Campuses.”
Foreign threats to U.S. elections. Senate Select Intelligence Committee hearing on “Update on Foreign Threats to 2024 Elections.”

Thursday, May 16

Federal Reserve. Fed Vice Chair for Supervision Michael Barr testifies on regulating financial institutions before the Senate Banking, Housing and Urban Affairs Committee. Philadelphia Fed President Patrick Harker, Cleveland Fed President Loretta Mester (2024 voter), and Atlanta Fed President Raphael Bostic (2024 voter) to deliver remarks.
New farm bill. House Ag Committee briefings for reporters on the next farm bill ahead of markup of the legislation set to start May 23.
FY 2025 Budget: FCC. House Appropriations Financial Services and General Government Subcommittee hearing on “FY 2025 Request for the Federal Communications Commission.” FCC Chair Jessica Rosenworcel testifies.
FY 2025 Budget: CEQ. House Natural Resources Committee hearing on “Examining the Council on Environmental Quality FY2025 Budget Request and Related Policy Matters.” CEQ Chair Brenda Mallory testifies.
FY 2025 Budget: Forest Service. Senate Energy and Natural Resources Committee hearing on “The President’s Proposed Budget Request for the US Forest Service for FY 2025.” Foreign Service Chief Randy Moore testifies.
FY 2025 Budget: Various agencies/offices. House Natural Resources Water, Wildlife and Fisheries Subcommittee hearing on “Examining the President’s FY 2025 Budget Proposal for the US Bureau of Reclamation, U.S. Fish and Wildlife Service, National Oceanic and Atmospheric Administration, and the Power Marketing Administrations.”
Chinese illegal immigration. House Homeland Security Oversight, Investigations and Accountability Subcommittee hearing on “Security Risk: The Unprecedented Surge in Chinese Illegal Immigration.”
China development offensive. House (Select) Strategic Competition Between the U.S. and the Chinese Communist Party Committee hearing on “All Roads Leading to Beijing? The CCP’s Global Development Offensive.”
SEC issues. Securities and Exchange Commission conference on “Emerging Trends in Asset Management.” SEC Chair Gary Gensler delivers a keynote address.
Covid vaccines. Food and Drug Administration virtual meeting of the Vaccines and Related Biological Products Advisory Committee to discuss and make recommendations on the selection of strain(s) to be included in the 2024-2025 Formula for Covid-19 vaccines.
EV supply chains. Bipartisan Policy Center (BPC) holds a discussion on “Charging Up EV Infrastructure Deployment and Clean Tech Supply Chains.” Deputy Assistant Energy Secretary for Sustainable Transportation and Fuels Michael Berube; Debra Phillips, president and CEO of the National Electrical Manufacturers Association; Evan Belser, managing counsel and policy strategist at Ford Motor Company; and Barry Powell, head of Siemens Electrical Products, North America to participate.
NIH oversight. House Oversight and Accountability Select Coronavirus Pandemic Subcommittee hearing on “Overseeing the Overseers: A Hearing with NIH Deputy Director Lawrence Tabak.”
Critical minerals. International Energy Agency embargoed virtual discussion on a new report, “Global Critical Minerals Outlook 2024.”.
Drones and emergency response uses. House Homeland Security Emergency Management and Technology Subcommittee and Counterterrorism, Law Enforcement, and Intelligence Subcommittee joint hearing on “Unmanned Aerial Systems: An Examination of the Use of Drones in Emergency Response.”
Rural health care. Senate Finance Committee hearing on “Rural Health Care: Supporting Lives and Improving Communities.”
Non-citizen voting. House Administration Committee hearing on “American Confidence in Elections: Preventing Noncitizen Voting and Other Foreign Interference.”
BLS statistics. Bureau of Labor Statistics virtual meeting of the Data Users Advisory Committee, including reports on quarterly census of employment and wages wage dynamics; Labor market data on managers and supervisors; Reaching new users: BLS language access work; Touchpoints: BLS.gov customer satisfaction survey; and Discussion of future topics and concluding remarks
Conservation issues. Brookings Institution’s Center on Regulation and Markets holds a discussion on “How Can Markets Better Value Nature and Price the Benefits of Conservation?”

Friday, May 17

Federal Reserve. Fed Governor Christopher Waller to speak on Payments Innovation, Technical Standards and the Federal Reserve’s Roles. Fed Chair Jerome Powell scheduled to deliver commencement remarks at Georgetown University on Sunday, May 19.
NATO summit preview. Atlantic Council virtual discussion on the upcoming 2024 NATO Summit, allied strategies to counter renewed Russian retaliation amid Moscow’s ongoing war in Ukraine and efforts to modernize the alliance’s capabilities.
Drones. Center for a New American Security virtual discussion on “Developing Drone and Counter-Drone Capabilities.”
Homeland security issues. Economic Club of Washington, DC discussion on homeland security issues.

Economic Reports and Events for the Week

Inflation data will be the focus this week on the economic front with the Consumer Price Index (CPI) data on Wednesday and the PPI-FD data on Tuesday. With the Fed noting inflation as a key ahead, traders will key off consumer-level data and whether or not the info shows easing from the level seen in March Retail Sales figures are also coming and that will provide more information on consumers along with initial housing data, regional manufacturing readings and small business attitudes.

Monday, May 6

Federal Reserve. Fed Vice Chair Philip Jefferson speaks on Communicating About Monetary Policy at a Cleveland Fed conference. Cleveland Fed President Loretta Mester (2024 voter) is also scheduled to speak.

Tuesday, May 7

NFIB Small Business Optimism Index
PPI-FD: The Labor Department’s Bureau of Labor Statistics is expected to report that the Producer Price Index (PPI) for final demand rose 0.3% in April after gaining 0.2% in March. In the 12 months through April, the PPI is expected to increase 2.2%, after adding 2.1% the month before. Excluding the volatile food and energy components, PPI likely edged up 0.2% in April after having advanced by the same amount the month before.
Federal Reserve. Fed Chair Jerome Powell takes part in a moderated discussion with De Nederlandsche Bank (DNB) President Klaas Knot in Amsterdam. Fed Governor Lisa Cook speaks on Growth and Change at Community Development Financial Institutions.
Home Depot is expected to report a decline in first-quarter revenue as U.S. customers reduce spending on big-ticket purchases and home renovation projects due to high inflation. Investors will look out for comments on the demand recovery and any change in the fiscal 2024 outlook.

Wednesday, May 8

MBA Mortgage Applications
CPI: The Consumer Price Index (CPI) data is likely to show a rise of 0.4% in April after a similar gain in March. On a yearly basis, the CPI likely increased 3.4% after rising 3.5% in the previous month. For April, the core CPI is expected to gain 0.3%, after it posted a rise of 0.4% in the month before. The core CPI likely advanced 3.6% on an annual basis in April, slowing down from the 3.8% rise in March.
Empire State Manufacturing
Retail Sales U.S retail sales likely increased 0.4% in April after advancing 0.7% in March. Core retail sales are forecast to have risen 0.2% in April after gaining 1.1% in the previous month.
Business Inventories likely remained unchanged, after gaining 0.4% in the
previous month.
Housing Market Index: U.S. homebuilder confidence, as measured by the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index, likely remained unchanged in May at a reading of 51.
EU: Spring economic forecast for inflation, GDP, employment and public finances, plus a preliminary Q1 GDP estimate.
Russia: Q1 GDP estimate.

Thursday, May 9

Jobless Claims likely will show initial claims for state unemployment benefits fell 12,000 to a seasonally adjusted 219,000 for the week ended May 11.
Housing Starts: The Commerce Department’s Census Bureau is expected to report housing starts likely rose to a seasonally adjusted annual rate of 1.420 million units in April, gaining from 1.321 million units recorded in the previous month. Separately, the building permits number is expected to rise to 1.480 million units in April from 1.467 million units reported in March.
Philadelphia Fed Manufacturing
Import & Export Prices
Industrial Production: A report from the Federal Reserve is expected to show industrial production likely rose 0.1% in April.
Fed Balance Sheet
Money Supply
Japan: preliminary Q1 GDP estimate.
Walmart’s first-quarter earnings performance.
John Deere is expected to post a slump in second-quarter revenue, as demand for its tractors and combines take a hit from a softening agriculture sector, with farmers pulling back on spending due to lower crop prices and farm incomes. Investors will be watching for the company’s forecast, its comments on dealer inventories, production and margins.

Friday, May 10

Leading Indicators
China: April retail sales and industrial output figures, plus April House Price Index.

Key USDA & international Ag & Energy Reports and Events

The ag sector will continue to focus on South American production and new-crop prospects in the United States.

Monday, May 6

Ag reports and events: