WOTUS Rule Now on Court-Directed Hold in 26 States

China’s yuan replaces dollar as most-traded foreign currency in Russia

Minutes of the Fed’s March FOMC meeting signaled officials appear on track to extend their run of hikes when they meet next month, while staff advisers forecast a “mild recession” later this year. Economists see the most likely outcome as a quarter-point increase in May, followed by an extended pause.

China’s exports unexpectedly rose in March as demand from most Asian countries and Europe improved and the nation’s factories resumed production. Exports jumped 14.8% in dollar terms last month from a year earlier, while economists had forecast a fall of more than 7%, resulting in the biggest divergence from expectations since at least 2018.

Another legal challenge to the Biden administration’s WOTUS rule succeeded, this time impacting 24 states, besides those already halted — Texas and Idaho. More in Policy section.

WTO Director General Ngozi Okonjo-Iweala said the current WTO Appellate Body may not return in its current form. More in Trade Policy section.

Equities today: Global stock markets were mixed overnight. U.S. Dow opened 50 points higher. In Asia, Japan +0.3%. Hong Kong +0.2%. China -0.3%. India +0.1%. In Europe, at midday, London flat. Paris +0.9%. Frankfurt -0.1%.

U.S. equities yesterday: The Dow ended down 38.29 points, 0.11%, at 33, 646.50. The Nasdaq fell 102.54 points, 0.85%, at 11,929.34. The S&P 500 was down 16.99 points, 0.41%, at 2,091.95.

Agriculture markets yesterday:

• Corn: May corn gained 5 1/4 cents to $6.56 1/4 and ended the session back above the 10-day moving average.
• Soy complex: May soybeans rose 7 cents at $15.04 1/4 and nearer the session high. May soybean meal gained $2.40 at $460.20 and nearer the session high. May bean oil fell 89 points at 54.00 cents.
• Wheat: May SRW futures settled 5 1/2 cents higher at $6.79 1/2, near the session high. May HRW futures fell 4 3/4 cents to $8.63 1/2 and May spring wheat futures fell 2 1/4 cents to $8.60.
• Cotton: May cotton fell 30 points to 82.45 cents, ending the session just above the 10-day moving average.
• Cattle: June live cattle gained 90 cents to $164.85, near the session high and hit another contract high. The expiring April contract posted a fresh record high at $174.325. May feeder cattle rose 75 cents at $208.575, nearer the session high and hit another contract high.
• Hogs: Nearby April hog futures, set to expire next Monday, April 17, fell 75 cents to $72.30 Wednesday. Most-active June futures slid 30 cents to $87.55.
  

Ag markets today: Soybean futures extended this week’s price gains overnight, while wheat traded lower and corn was mixed. As of 7:30 a.m. ET, corn futures were trading fractionally lower to 1 cent higher, soybeans were 7 to 11 cents higher, SRW wheat was 2 to 5 cents lower, HRW wheat was 7 to 11 cents lower and HRS wheat was mostly 2 to 3 cents lower. Front-month crude oil futures were modestly weaker while the U.S. dollar index is nearly 200 points lower.

Market quotes of note:

• Warren Buffett said more U.S. banks are likely to fail, but depositors should be confident they won’t lose any of their funds. “We are not through with bank failures,” the Berkshire Hathaway chairman and CEO said in an interview on CNBC Wednesday. “Dumb decisions” by bank managers shouldn’t be “panicking the whole citizenry of the United States about something they don’t need to be panicked about.” Buffett said the structure of the Federal Deposit Insurance Corp. — which collects assessments from the banks with deposits it insures — means the federal government won’t lose money as it resolves failed banks.
  
• “It’s time for [Feinstein] to resign,” Silicon Valley Rep. Ro Khanna said in a tweet Wednesday. “We need to put the country ahead of personal loyalty. While she has had a lifetime of public service, it is obvious she can no longer fulfill her duties. Not speaking out undermines our credibility as elected representatives of the people.” Feinstein late Wednesday issued a statement asking Senate Majority Leader Chuck Schumer to temporarily replace her on the Judiciary Committee. She had intended to return to the Capitol at the end of March, she said, but that was delayed by her health. She plans to return as soon as possible.
  
• Another Fed rate hike ahead? “While the full impact of this policy tightening is still making its way through the system, the strength of the economy and the elevated readings on inflation suggest that there is more work to do,” San Francisco Fed President Mary Daly said during a speech yesterday in Salt Lake City. While she’s not a voting member this year on the FOMC committee, New York Fed President John Williams (who is) said raising rates only one more time would be a “reasonable starting place” and is the “median we saw from my colleagues.”
  
• SPR flipflop. Secretary of Energy Jennifer Granholm said the U.S. government could begin buying oil later this year to replenish the Strategic Petroleum Reserve “if it is advantageous to taxpayers.” The comments at an energy conference in New York contrasted with her remarks to Congress.
  

On tap today:

• U.S. jobless claims are expected to rise to 235,000 in the week ended April 8 from 228,000 one week earlier. (8:30 a.m. ET)
• U.S. producer price index for March is expected to be unchanged from the prior month. (8:30 a.m. ET)

Minutes of last month’s FOMC policy meeting showed officials dialed back expectations of how high they’ll need to raise rates, but still raised their benchmark lending rate by a quarter point. They did so even after hearing from Fed staff advisers that they were forecasting a “mild recession” later this year.

The U.S. federal government’s budget deficit hit $1.1 trillion in the first half of the fiscal year, a 63% jump over a year ago, driven by higher outlays for education, health care benefits and debt interest payments.

Delta Air Lines on Thursday reported “record advance bookings for the summer” — the peak travel season — as passengers keep buying up tickets despite steep airfares and macroeconomic uncertainty. The carrier forecast second-quarter revenue growth of between 15% and 17% and earnings per share of between $2 and $2.25. That guidance was ahead of Wall Street’s projections for 14.7% revenue growth and $1.66 of earnings per share, according to Refinitiv consensus estimates.

Market perspectives:

• Outside markets: The U.S. dollar index was weaker, with the euro, British pound and yen all firmer against the greenback. The yield on the 10-year U.S. Treasury note was higher, trading around 3.43%, with a higher tone in global government bond yields. Crude oil futures were weaker, with U.S. crude around $83.05 per barrel and Brent around $87.05 per barrel. Gold and silver futures were higher ahead of inflation figures, with gold around $2,043 per troy ounce and silver around $25.71 per troy ounce. ·

• Ag trade: Taiwan purchased 52,850 MT of U.S. milling wheat. Japan purchased 78,548 MT of milling wheat in its weekly tender, including 21,750 MT U.S. and 56,798 MT Canadian. The Philippines tendered to buy 150,000 MT of optional origin feed wheat.

• NWS weather outlook: Widespread showers and storms with locally heavy rainfall to expand across the Southeast... ...Heavy snow possible across parts of the Intermountain West and central/northern Rockies through Friday... ...Threat of severe thunderstorms enter the Central/Southern Plains by the end of the week... ...Record-breaking warmth continues across much of the Great Lakes and Northeast.

Items in Pro Farmer’s First Thing Today include:

• Followthrough buying in soybeans.
• Strategie Grains cuts EU wheat production but raises export forecast
• France trims wheat export forecasts
• Choice beef prices continue to surge
• Pork cutout drops

— Judge blocks Biden’s WOTUS rules in 24 more states. A federal judge on Wednesday enjoined the EPA’s new waters and wetlands protection rule from being enforced in 24 states, issuing a preliminary injunction similar to a ruling in March blocking the rule in Texas and Idaho.

“An injunction at this early stage can avoid the massive waste of resources and delayed projects in pursuit of permits that may soon be legally irrelevant,” judge Daniel Hovland wrote in his ruling. “By contrast, the EPA will not suffer any real harm that would justify a denial of injunctive relief.”

Hovland pointed to the pending U.S Supreme Court decision in a WOTUS case, saying that “will likely address many of the unresolved legal issues and jurisdictional determinations at the heart of this lawsuit.”

States in the suit included West Virginia, North Dakota, Georgia, Iowa, Alabama, Alaska, Arkansas, Florida, Indiana, Kansas, Louisiana, Mississippi, Missouri, Montana, Nebraska, New Hampshire, Ohio, Oklahoma, South Carolina, South Dakota, Tennessee, Utah, Virginia, and Wyoming.

EPA said WOTUS would remain in effect in the states not covered by the injunctions. “Our goal is to protect public health, the environment, and downstream communities while supporting economic opportunity, agriculture, and industries that depend on clean water.”

Timeline for the Supreme Court decision is murky but some contacts signal the Supreme Court will issue some rulings this Friday.

Farm Bureau responds. “With the new WOTUS rule on hold in more than half the country, EPA & the Army Corps should do the right thing, listen to our concerns & rewrite the rule,” Zippy Duvall, president of the American Farm Bureau Federation, said on social media. The Farm Bureau is a lead plaintiff in the Texas lawsuit against WOTUS.

NCBA comments. “Cattle producers in 26 states now have some additional certainty while this rule is being litigated, and we are optimistic that the Supreme Court will provide nationwide clarity on the federal government’s proper jurisdiction over water,” said Todd Wilkinson, president of the National Cattlemen’s Beef Association.

— Former FDA official named to post at Chipotle. Former FDA food safety chief Frank Yiannas was appointed to Chipotle’s food safety council, joining a group of independent experts that oversee the restaurant chain’s food safety standards. “In order to make sure our food safety culture and programs are as robust as possible, it’s critical to supplement our internal expertise with independent external guidance,” said Kerry Bridges, vice president of food safety at Chipotle. “Frank’s vast experience with the FDA and other large brands will help guarantee Chipotle’s food safety standards continue to be best-in-class.” Yiannas served as deputy commissioner for food policy and response from 2018-2023 and resigned amid the turmoil of FDA’s handling of the infant formula crisis. Other food safety advisors for the quick-service chain include David Acheson, former FDA associate commissioner of foods, Elizabeth Hagen, former USDA undersecretary for food safety, Hal King, former CDC research scientist and director of food safety with Chick-fil-A, and James Marsden, former head of food safety at Chipotle.

— Exports from China unexpectedly surged 14.8% from a year earlier to an eight-month high of $315.59 billion in March 2023, rebounding sharply from a 6.8% drop in January-February combined, and beating market consensus of a 7% fall. This was the first increase in exports since last September and the strongest pace in eight months, amid efforts from Beijing to grow trade further with developed countries while exploring new possibilities with emerging economies.

By commodity, sales increased for steel products (53.2%), and refined products (35.1%). Among major trade partners, exports to ASEAN, China’s largest trade partner surged by 35.43%, while those to Russia and the EU by 136.43% and 3.38%, respectively. Exports also rose to Australia (23.7%) and South Korea (11.3%).

Conversely, exports fell to the United States (-7.68%), Japan (-4.8%), and Taiwan (-27.6%).

Imports fell 1.4% against a slump expectation of 6.4%. That left a trade surplus of $88.2 billion for the month.

— China’s soybean imports record large in Q1. China imported 6.85 MMT of soybeans during March, down 2.7% from February but 7.9% more than last year. Through the first three months of 2023, China imported 23.02 MMT of soybeans, up 13.5% from the same period last year and a record for the first quarter of the year. Strong imports are expected to continue in April and May but could slow after that unless demand for soymeal from the hog sector improves.

— China’s meat imports continue to climb. China imported 650,000 MT of meat in March, up 7.1% from February and 9.9% more than last year. China doesn’t break out meat imports by category in its preliminary trade data, but the increase was driven by stronger pork imports, which started to increase late last year. Through the first quarter of this year, China imported 1.95 MMT of meat, up 17.2% from the same period last year.

— China is set to release a plan requiring steelmakers, who contribute more than half of global production, to keep this year’s output from exceeding 2022 levels as it faces a tepid post-pandemic recovery. Iron ore sank to a four-month low.

— WTO chief warns WTO Appellate Body may not return in current form. WTO Director General Ngozi Okonjo-Iweala said the current WTO Appellate Body may not return in its current form. The appeals process has been stymied since December 2019 when the U.S. blocked appointment of new members of the panel. “There’s a strong desire amongst most of the membership for a two-tier system,” Okonjo-Iweala said during a trade discussion hosted by American University, where she received an honorary degree last year. “Now does the two-tier system mean it’s necessarily the Appellate Body recreated the way it was before? I’m not sure. Can there be ways to have a two-tier system that is somewhat different or more creative? Maybe.”

She said the conversations ahead on the matter would be “quite tough” but she also acknowledged that having a functioning dispute settlement process was key for the WTO to be seen as effective. “I believe that as long as we don’t deliver a reform of the dispute settlement system, we’ll continue to hear about a hobbled and non-functional WTO even while so many aspects of the organization are working well,” she said.

— Vilsack told top meat processors that the agency intends to take a hardline, zero-tolerance approach to combat child labor in meatpacking facilities. The warning came in a letter to the nation’s largest meat and poultry processing companies. In the letter, Vilsack outlined a new strategy to combat child labor in the industry that may include new regulations and the use of the department’s vast buying power. He recommended companies scrutinize their supply chains for child labor and develop new standards for their suppliers, subcontractors and vendors while making reporting violations easier.

— Abortion drug mifepristone will remain available nationwide for now, as an appeals court partially blocked a controversial lower court ruling that stopped the medication’s federal approval, ensuring restricted access to the drug while the appeals process plays out. The 5th Circuit Court of Appeals’ ruling put on hold U.S. District Judge Matthew Kacsmaryk’s controversial decision to suspend FDA approval of the drug. Kacsmaryk ruled Friday to block the Food and Drug Administration’s approval of mifepristone, one of two drugs used in a medication abortion, siding with anti-abortion rights challengers who argued the FDA did not have authority to approve the drug.

— Feinstein asks for Judiciary replacement after calls for resignation. Sen. Dianne Feinstein (D-Calif.) announced on Wednesday that her return to work in Washington has been delayed due to ongoing health complications and called on the Senate to appoint a temporary replacement for her on the Judiciary Committee. Feinstein has been sidelined since late February after being diagnosed with shingles. “I intend to return as soon as possible once my medical team advises that it’s safe for me to travel. In the meantime, I remain committed to the job and will continue to work from home in San Francisco,” Feinstein said.

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