Push for Congress to clear another big disaster aid measure
Trump stiffened his stance on Saudi Arabia after days of mixed signals. The president said Saudi journalist Jamal Khashoggi is likely dead. Trump warned of “severe” consequences, with his administration awaiting the conclusion of investigations. But Trump has repeatedly said he opposes any economic punishment against Saudi Arabia, arguing sanctions by Congress to block arms sales or apply punishment in Riyadh would damage U.S. defense contracts and economic interests. The U.S. appears to be in a tight spot due to Riyadh's efforts to contain Iran, key oil sources, lucrative defense contracts and other business ties. Meanwhile, Saudi rulers are considering pinning blame for murder on Gen. Ahmed al-Assiri, a top intelligence official close to Crown Prince Mohammed bin Salman, according to the New York Times (link). Meanwhile, Treasury Secretary Steven Mnuchin called off plans to attend a Saudi investment conference. Oil, which had rallied after the crisis first hit, is holding below $69 a barrel this morning.
— Lawmakers are being urged to approve another hefty package of disaster aid for farmers in the Southeast in the aftermath of the recent hurricanes. “Current safety net programs we have for farms in the farm bill are not going to be adequate for this kind of devastation,” USDA Sec. Sonny Perdue told reporters Thursday. “We just want to make them where they can continue to farm and feed their families.” Perdue said USDA will need a supplemental appropriation similar to the $2.4 billion in agricultural disaster aid that Congress funded following the 2017 hurricanes. "I think Congress will have to look at this and look at a potential supplemental," Perdue commented.
From the Hill, House Appropriations Committee Chairman Rodney Frelinghuysen (R-N.J.) said in a statement last week, "Congress has a proud tradition of supporting our fellow Americans in their times of greatest need, particularly following a natural disaster of this magnitude, and we will ensure that resources are available to help with recovery and rebuilding efforts."
Georgia Agriculture Commissioner Gary Black estimated the state suffered between $1 billion and $3 billion in agricultural losses from the storm. Damage to more than 1 million acres of timber accounted for much of the total. Cotton damage was somewhere between $300 million and $800 million; pecan farmers took an estimated $560 million hit; and growers of produce like cucumbers, squash and tomatoes suffered about $480 million in losses, according to the state’s agriculture department.
Florida Agriculture Commissioner Adam Putnam has said at least 3 million acres of timber were affected by the storm, and other commodities suffered “severe damage.”
— U.S. suspends pork imports from Poland on ASF concerns. Poland has been wrestling with African swine fever (ASF) since 2014 but has until now been able to supply the U.S. with pork from regions unaffected by the disease. But USDA’s Animal and Plant Health Inspection Service (APHIS) said it was now suspending market access following a routine review of ongoing operations. “During these checks, it emerged that one Polish facility exporting pork to the U.S. had done so in contravention of the stringent requirements in place to prevent the spread of serious diseases of livestock, like ASF,” the agency explained.
APHIS said a preliminary assessment suggested there is minimal animal health risk posed by any pork products imported recently into the U.S. from Poland. There is no human health risk, as humans are not susceptible to ASF. APHIS said it is also reviewing the protocols for a second Polish facility.
Poland exported 68,649 tonnes of pork to the U.S. in 2017.
— Acting EPA Administrator Andrew Wheeler said his agency has the legal authority to expand sales of E15 ethanol fuel. “Yes we do have the authority to move forward on E15 and I hope that the oil industry will join us in helping to make the RFS program function better for the American public,” Wheeler told reporters at an event on food waste in Washington.
Opponents of year-round E15 sales are expected to challenge the authority in the courts.
— Other items of note:
The pork industry is vital to China while it is a key ingredient for the success of U.S. pork exports. The Wall Street Journal has an extended look at the boom in China’s domestic hog production, fueled by government efforts to consolidate smaller, family-owned farms into giant commercial operations, helped push pork prices to a four-year low in May. Outbreaks of African swine fever have since driven domestic pork prices in September near their highest level in a year. With the Trump administration’s clash with Beijing over trade, China’s tariffs on U.S. pork have climbed as high as 70%, making U.S. imports more expensive. “If the pork industry is going to be viable as a successful and growing industry, China’s critical,” said Steve Rommereim, a South Dakota hog farmer and president of the National Pork Board, who has traveled to China to meet pork buyers there. Link to article.
Droughts are hitting western ranchers hard. A decade-old federal drought-insurance program is helping, but farm communities are stunned by the Trump administration's plans to scale back the insurance program next year. Link to Wall Street Journal article.
Europe moves forward on trade deals with Asian countries. The EU is expected to sign a bilateral trade pact with Singapore and finalize details of another with Japan at the Asia-Europe Meeting in Brussels. This marks the bloc's first deal with a member of the 10-country Association of Southeast Asian Nations (ASEAN). "There are important themes on which we must work - first the fight against climate change, secondly we must push for fair and free trade, which has been cast into doubt by some in the world," said Austrian Chancellor Sebastian Kurz.
China has also filed a request with the WTO to establish an expert group to determine the legality of tariffs imposed by the U.S. on imports of steel and aluminum, stating the dispute settlement mechanism had failed to resolve its concerns. The U.S. separately requested for a WTO dispute resolution panel to get involved in a clash over international retaliation over its metal tariffs.
White House seeks to slow rollout of rules for cleaner ship fuels. The Trump administration is pushing to ease the rollout of new international rules to power commercial ships with environmentally cleaner fuels, fearing the measures will drive up costs for consumers and businesses. The measures taking effect in 2020 aim to slash the amount of sulfur in marine fuel, the Wall Street Journal reports (link), and already have maritime operators and their shipping customers sparring over the higher costs of cleaner fuel “scrubber” technology being added to ships. “The rising costs could send ripples across commodities markets just ahead of the U.S. presidential election,” the article noted. The White House is backing a proposal to gradually phase in enforcement of the new rules to avoid disruption to the shipping and energy markets and shield consumers from “the impact of precipitous fuel cost increases.” But “American energy companies that stand to profit from the rules oppose a slowdown, and the U.S. has yet to make a formal objection to the International Maritime Organization.”
Senate Polls: Donnelly, Manchin, Menendez leading; Heller Iin tie; Bredesen up by 1.
— Indiana: A Vox Populi Polling survey of 783 Indiana voters, taken Oct. 13-15, shows Sen. Joe Donnelly (D) leading businessman Mike Braun (R) 44%-36%. Among undecided voters, 11% are leaning towards Donnelly while 9% are leaning towards Braun.
— West Virginia: A Vox Populi Polling survey of 789 West Virginia voters, taken Oct. 13-15, shows Sen. Joe Manchin (D) leading state Attorney General Patrick Morrisey (R) 45%-40%. Among undecided voters 7% were leaning towards Manchin, while 8% were leaning towards Morrisey.”
— New Jersey: A Monmouth University poll of 527 New Jersey likely voters, taken Oct. 11-15, shows Sen. Bob Menendez (D) leading ex-Celgene CEO Bob Hugin (R) 49%-40%. The Washington Examiner reported interrnal polling shared with the Washington Examiner shows Hugin narrowly trailing Menendez. “With just over three weeks until Election Day, our latest internal campaign survey continues to show Bob Hugin and Bob Menendez in a statistical dead heat,” reports a polling memo prepared by National Research Inc., “with Hugin at 40% and Menendez at 42%.” That result comes after a telephone survey of 600 likely voters — a pool of 31% Republicans, 45% Democrats, and 24% unaffiliated voters.
— Nevada: A Vox Populi Polling survey of 614 Nevada voters, taken Oct. 13-15, shows Sen. Dean Heller (R) and Rep. Jacky Rosen (D) tied at 44%. The poll showed 7% of undecided voters leaning towards Rosen and 5% towards Heller.
— Tennessee: A Vanderbilt University poll of 800 Tennessee voters, taken Oct. 8-13, shows ex-Gov. Phil Bredesen (D) leading Rep. Marsha Blackburn (R) 44%-43% in the race to succeed retiring Sen. Bob Corker (R); 8% were undecided. The poll is the first survey in more than a month to show Bredesen with an edge over Blackburn. Five of the last six publicly released polls, which include ones from Fox News, CBS, the New York Times and Reuters, have shown Blackburn with varying edges over Bredesen. A RealClearPolitics average of polls in the race shows Blackburn with a 9-point advantage.”
Cotton AWP rises but stays under 70 cents per pound. The cotton Adjusted World Price (AWP) increased to 69.09 cents per pound, effective today, up sharply from the prior week but still below the 70-cent-per-pound mark for a fourth week. This also broke a string of four weeks where the AWP declined. USDA also announced that Special Import Quota #26 for upland cotton would be established Oct. 25 for 58,822 bales of upland cotton. The import quota will apply for upland cotton purchased not later than Jan. 22 and entered into the U.S. not later than April 22.
— Markets. The Dow on Thursday ended down 327.33 points, 1.27%, at 25,379.45. The Nasdaq lost 157.56 points, 2.06%, at 7.485.14. The S&P 500 fell 40.43 points, 1.44%, at 2,768.78.
Today marks 31 years since the 1987 stock market crash. The date this year falls on a Friday. But in 1987, it was a Monday that came to be known as Black Monday, when the Dow cratered 22.6% in its largest single-day percentage loss ever.
China’s third quarter economic expansion slowed to 6.5%, its weakest pace since the first quarter of 2009 and down from 6.8% in the first half of this year. Growth in industrial output and consumption weakened in the quarter, while exports held up despite the country’s bruising trade fight with the U.S. People’s Bank of China Gov. Yi Gang, banking and insurance regulatory chief Guo Shuqing and top securities cop Liu Shiyu all issued statements urging investors to remain calm. Guo said recent “abnormal fluctuations” in Chinese stock markets don’t reflect the country’s economic fundamentals and “stable financial system.” While Chinese equities initially tumbled in response to the GDP figure, the central bank further pledged targeted measures to help ease firms' financing problems and encourage banks to boost lending to private firms, pushing the Shanghai Composite up 2.6%. Liu sought to dispel worries about the impact of the simmering trade conflict with the U.S. on China. “Frankly, the psychological impact is bigger than the actual impact,” he said. “Right now, China and the U.S. are in contact.”
China officials seek to downplay potential reduction in soybean supplies. Some Chinese officials continue to downplay the potential impact of the U.S./China trade frictions when it comes to soybeans, with officials at a press briefing signaling that the country will have plenty of soybeans which should mean big price fluctuations should be unlikely. An official from the Ministry of Agriculture and Rural Affairs told reporters that Brazil has accounted for almost 70% of China soybean imports over the January-August period. Plus, the country has increased soybean plantings and is expected to have a bumper harvest of soybeans and have ample soybean supplies, the official said. The comment in the wake of trade speculation that China's imports of soybeans will decline by some 25% in the fourth quarter of this year.
Besides the latest GDP figures, China released a slew of other economic data. Growth in industrial output weakened in the quarter, retail sales held their ground, while growth in fixed asset investment expanded. Exports provided an unexpected bright spot in Q3, with Chinese companies' overseas shipments rising an average of 11.7% from a year earlier vs. 11.5% in the prior quarter.
This morning's report on existing-home sales for September will be watched for additional evidence that the U.S. housing market is cooling.