Those Missing USDA Corn Planting Number Still Thinking More Acres Ahead, But…

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USDA finally releases disaster aid details for livestock producers | Jobs report | Trade policy

 

                                                In Today’s Digital Newspaper

Ukrainian helicopters attacked an oil depot in Russia, U.S. stock indexes ended their worst quarter in two years with another down day, mortgage interest rates are the highest in more than three years, and USDA finally released some details on a livestock disaster aid program that they are no longer calling WHIP+. As for equities, Wall Street on Thursday ended its worst quarter since the first three months of 2020, which included the Covid pandemic lows in late March of that year. Bottom line: From Covid-19 to Putin-22.

Ukrainian attack helicopters executed a low-flying predawn raid today on Russian territory, a Russian official said, eluding air defenses to strike an oil depot. Negotiations between the two sides are set to continue today by videoconference. On Thursday, Russian forces handed control of the Chernobyl nuclear-power plant back to Ukraine, ending a five-week occupation.

Ukraine will need fast help from other countries to get the fertilizer and seeds needed to restore its farming output and crucial exports to the rest of the world once Russia’s invasion is over, according to the head of the World Bank.

Russia aims to keep supplying gas to European customers even as it demands they shift to payment in rubles, President Vladimir Putin said, easing fears that the shift could lead to disruptions from the continent’s biggest supplier.

European leaders plan to tell China in a virtual summit today that the country will hurt its global stature if it hands Russia an economic or military lifeline. Chinese President Xi Jinping will join EU officials for the European afternoon session.

U.S. non-farm payrolls increased 431,000 in March, down from upwardly revised figures of 750,000 in February and 504,000 in January. The unemployment rate dropped 0.2 point to 4.6%. Average hourly earnings rose 13 cents (0.4%) in March and jumped 5.6% over the past 12 months. The bond market is pricing in a series of 50-basis-point interest rates amid a strong jobs market and surging inflation.

Headline inflation in the euro area accelerated to 7.5% in March from a revised 5.9% in February, calling into question the European Central Bank's inflation projection of 5.1% for the year.

USDA daily export sale: 136,000 MT of corn to unknown destinations during MY 2021-2022.

Ag market analysts finally know the impact of all those farmers’ complaining about the high price for fertilizer: USDA surprised them with much higher-than-expected U.S. soybean planting intentions this year, and less-than-expected corn plantings. No one was surprised more than Dr. Scott Irwin at the University of Illinois, now dubbed Mr. Zero for reasons noted below.

Soaring costs for food staples in import-dependent Middle Eastern and North African countries are putting people’s resilience at a “breaking point,” according to the United Nations’ World Food Program (WFP).

Avocado prices jumped to the highest in more than two decades amid tightening supplies in Mexico, the world’s biggest exporter of the fruit, signaling pricier guacamole. Meanwhile, caviar is about to get even more expensive, with rising costs and a global supply deficit to blame, according to a senior executive at a Uruguayan exporter. As for Russian consumers, most of the hearty ingredients needed to make borscht, considered comfort food in Russia, saw double-digit price increases in a single week, with onions soaring more than 18%. Finally, European packaged food companies may need to raise prices as much as 7%-10% in 2023 if cost of goods sold keeps rising on the war in Ukraine, Bloomberg Intelligence said.

The Justice Department moved to dismiss charges against five of the 10 defendants in its chicken-industry price-fixing case, two days after a second mistrial.

USTR Katherine Tai faced some bipartisan questions about the Biden administration’s trade policy during a Senate Finance panel hearing Thursday.

The Senate blocked David Weil’s nomination to a top Labor Department job, the first Biden nominee to lose in a floor vote.

New York lawmakers must redraw boundaries of congressional and state legislative districts after a state Supreme Court justice agreed with Republicans that the maps are unconstitutional.

 

MARKET FOCUS

Equities today: Global stocks markets were mixed but mostly firmer overnight. The U.S. stock indexes are pointed toward higher openings. Asian markets ended mixed despite seeing pressure in early action. The Nikkei shed 155.45 points, 0.56%, at 27,665.98. The Hang Seng Index gained 42.70 points, 0.19%, at 22,039.55. European equities are seeing gains, with the Stoxx 600 up 0.6% and most regional markets seeing gains of 0.2% to 0.9%.

     U.S. equities yesterday: The Dow fell 550.16 points, 1.56%, at 34,678.35. The Nasdaq declined 221.76 points, 1.54%, at 14,220.52. the S&P 500 was down 72.04 points, 1.57%, at 4,530.41.

     The S&P 500 fell 4.9% in the first quarter, snapping a seven-quarter winning streak, while the Dow slid 4.6% and the Nasdaq 9.1%.

U.S. bonds, a traditional haven during turbulent times, had their worst quarter in more than 40 years.

Commodities, by contrast, had their best quarter in more than 30 years, with Russia’s invasion of Ukraine supercharging a rally in markets from oil to wheat and nickel.

Agriculture markets yesterday:

  • Corn: May corn futures closed up 10 3/4 cents at $7.48 3/4 today and near mid-range.  December corn gained 27 3/4 cents at $6.83 3/4 and hit a contract high.
  • Soy complex: May soybean futures fell 45 3/4 cents to $16.18 1/4, while November beans plunged 49 3/4 cents to $14.20 1/2. May soymeal dropped $5.60 to $467.50. May soyoil plunged 228 points to 69.94 cents.
  • Wheat: May SRW futures ended Thursday down 18 1/4 cents to $9.72 3/4, while May HRW dropped 14 3/4 cents to $10.29 3/4. May HRS futures surged 21 1/2 cents to $10.79 1/2.
  • Cotton: Futures set back, with the May contract falling 4.15 cents to 135.69 cents per pound.
  • Cattle: June live cattle closed down 87 1/2 cents at $137.125 and nearer the session low. April cattle lost 80 cents at $139.375. May feeder cattle closed down $2.35 at $166.55 and nearer the session low.
  • Hogs: April hogs dropped $2.775 to $101.75. June hogs plunged $3.60 to $120.625.

Ag markets today: Wheat futures were trading sharply higher this morning, while soybeans and the soy product markets are lower on followthrough selling from Thursday’s losses. Corn is caught in the middle. As of 7:30 a.m. ET, corn was trading 3 cents lower to 2 cents higher, soybeans were 8 to 12 cents lower, winter wheat futures were 13 to 19 cents higher and spring wheat was 21 to 26 cents higher. Front-month U.S. crude oil futures were trading around 50 cents lower, while the U.S. dollar index was around 150 points higher.

Technical viewpoints from Jim Wyckoff:

     April 1 Corn

     April 1 soybeans

     April 1 Crude

     April 1 Bonds

     April 1 Gold

On tap today:

     • U.S. nonfarm payrolls are expected to increase by 490,000 in March and the unemployment rate is forecast to fall to 3.7% from 3.8% one month earlier. (8:30 a.m. ET) UPDATE: U.S. employers added 431,000 jobs in March, the Labor Department said this morning, and the jobless rate fell to 3.6%. See details next item. 
     • Chicago Fed President Charles Evans speaks on the economy at 9:05 a.m. ET.
     • IHS Markit's manufacturing index is forecast to hold at 58.5 in March, unchanged from a preliminary reading. (9:45 a.m. ET)
     • Institute for Supply Management's manufacturing index is expected to increase to 59 in March from 58.6 one month earlier. (10 a.m. ET)
     • U.S. construction spending for February is forecast to rise 1% from the prior month. (10 a.m. ET)
     • Baker Hughes rig count is out at 1 p.m. ET.
     • CFTC Commitments of Traders report, 3:30 p.m. ET.
     • International Energy Agency holds an emergency meeting over oil supplies. Major consumers will discuss the U.S. decision to tap into its strategic oil stash, while OPEC will stick to its modest output strategy.

U.S. jobs growth slightly below expectations as unemployment falls with many readings close to pre-pandemic marks. Nonfarm payrolls increased by 431,000 in March, below expectations for an increase closer to 500,000. The unemployment rate declined to 3.6% as the number of jobless Americans declined. The number of unemployed persons fell to 6 million, and that combined with the unemployment rate are readings that are now close to the level seen in February 2020 when unemployment was 3.5% and there were 5.7 million that were unemployed.

     Several other readings in the update also are near pre-pandemic levels, including the level of permanent job losers, temporary layoffs and the number of long-term unemployed. The labor force participation rate was at 62.4%, up from 62.3% in February and well above the 61.5% in March 2021. Wage increases were also seen rising 5.6% from year-ago, meaning that workers were not keeping up with rising costs at stores.

     Revisions were made for both January and February, with a net increase in nonfarm payrolls of 95,000 for the two months combined. Biggest job gains in March were seen in leisure and hospitality, professional and business services, retail trade, and manufacturing. Also, only 10% of those employed were tele-working in March, down from 13% in February.

     Upshot: The U.S. economy has made the long slog back from the pandemic, but now the focus will be on whether price pressures will derail the progress as wages still are not keeping up with inflation.

Eurozone inflation hits another record high of 7.5%. Headline inflation in the Eurozone came in at 7.5% for March on an annual basis, according to preliminary data from Europe’s statistics office Eurostat released today. Inflation jumped as energy and food prices soared and core inflation advanced to 3%. It will increase pressure on the European Central Bank to raise its key interest rate. It was the fifth straight month the inflation rate hit a new high in a data series that goes back to the start of 1997, two years before the euro was launched

     EZ inflation

U.S. farmers are poised to plant more soybeans than corn for just the third time ever as the highest fertilizer prices on record prompt growers to turn away from the cost-intensive grain. First let’s take a look at USDA’s survey results:

     Corn: 89.490 mil. acres; trade expected 92.001 mil. acres

               — compares to 93.357 mil. acres in 2021

     Soybeans: 90.955 mil. acres; traders expected 88.727 mil. acres

               — compares to 87.195 mil. acres in 2021

     All wheat: 47.351 mil. acres; traders expected 47.771 mil. acres

               — compares to 46.703 mil. acres in 2021

     Other spring wheat: 11.200 mil. acres; traders expected 11.801 mil. acres

               — compares to 11.420 mil. acres in 2021

     Durum: 1.915 mil. acres; traders expected 1.727 mil. acres

               — compares to 1.635 mil. acres in 2021

     Cotton: 12.234 mil. acres; traders expected 12.007 mil. acres

              — compares to 11.220 mil. acres in 2021

     One of the most surprised analysts was Dr. Scott Irwin of the Univ. of Illinois. Here is what the economist tweeted minutes before USDA shocked him:

     Irwin miss

Food price ‘breaking point’ near for Middle East, North Africa: U.N. Soaring costs for food staples in import-dependent Middle Eastern and North African countries are putting people’s resilience at a “breaking point,” according to the United Nations’ World Food Program (WFP). Russia’s invasion of Ukraine, a major crop exporter, has added to surging costs for flour and vegetable oil, which are central to the region’s diets, it said in a statement Thursday. “We are extremely concerned about the millions of people in this region who are already struggling to access enough food because of a toxic combination of conflict, climate change and the economic aftermath of Covid-19,” said Corinne Fleischer, WFP regional director for the Middle East and North Africa. “This crisis is creating shock waves in the food markets that touch every home in this region. No one is spared.” Saudi Arabia this week pledged $15 billion in support to Egypt, the latest Gulf state to back an economy under increasing pressure from the war.

     Costly food bills have shaken investor confidence in Egypt, which imports two-thirds of the wheat it consumes, forcing the country to turn to the IMF for assistance. Sri Lanka, where troops have been deployed to calm restive crowds queuing for fuel, may be close behind. The World Bank estimates that a dozen countries may find themselves unable to service their debts over the next twelve months. And even those which remain solvent can expect slower growth, higher inflation and anxious citizens.

     Food facts
     Egypt wheat

Indonesia to issue cash payments to households to buy cooking oil. The Indonesian gov’t will distribute cash to 20.5 million households and 2.5 million food operators to buy cooking oil, according to an announcement from Indonesian President Joko Widodo. The payments of 100,000 Indonesian rupiah ($6.96) per month will be made for three months, with reports saying the amounts will be paid up front in April. Indonesia has been grappling with rising prices for cooking oil and has tried several different efforts to assure domestic supplies by trying to limit imports of palm oil.

U.S. mortgage rates hit a four-year high. The average rate for a 30-year fixed mortgage rose to 4.67%, its highest level since 2018, according to Freddie Mac. While rates had been expected to rise, they have accelerated more than anticipated. Analysts said, however, that this was unlikely to deter buyers for now.

     Mortgage rates update

Market perspectives:

     • Outside markets: The U.S. dollar index is higher as the euro and British pound are both weaker against the U.S. currency. The yield on the 10-year U.S. Treasury was trading above 2.40% before the jobs report. Gold and silver futures were under significant pressure ahead of the U.S. jobs update (see related item), with gold under $1,934 per troy ounce and silver under $24.85 per troy ounce.

     • Pressure on crude oil continues, with U.S. crude trading around $98.80 per barrel and Brent around $103.50 per barrel. Prices were weaker in Asian action with U.S. crude around $99.90 per barrel and Brent around $104.65 per barrel. Both were lower in U.S. Thursday trading.

     • Perspective on diesel prices: Even a five-cent drop in average diesel prices in the past week left the pump price for the fuel more than $2 up on the year-ago level.

     • Impact of Biden’s latest tapping of SPR: Goldman Sachs cut its price forecast for Brent crude by $10 to $125 a barrel for the second half of this year due to the release. President Biden on Thursday ordered the release of an “unprecedented” 180 million barrels of crude from the Strategic Petroleum Reserve (SPR) over the next six months ((roughly 1% of global demand) in an attempt to offset supply disruptions triggered by Russia’s invasion of Ukraine and push down fuel prices for American motorists. It is the biggest-ever drawdown from the country’s emergency stockpile of roughly 568 million barrels. Oil prices settled lower after the SPR announcement, with international benchmark Brent down 5% to $108 a barrel but still almost twice the level a year ago. U.S. average gas prices sat at $4.23, according to the American Automobile Association, up roughly 50% in the past year and just below record levels hit in recent weeks.

        Perspective: Taking an additional 180 million barrels out of the SPR, which is already somewhat depleted after two recent drawdowns, could leave around 300 million barrels in reserve, according to calculations from RBC Capital Markets. That leaves no effective cushion. Because International Energy Agency member countries are required to hold 90 days of net import cover in reserves, the U.S. must hold 315 million barrels, the RBC report noted. The obvious concern about such a large drawdown is that the market’s attention could shift to an impending loss of this shock absorber.

        SPR history
        SPR EIA

     • Indonesia, Malaysia to set palm oil prices together. The two biggest palm oil producers agreed to set prices together instead of competing against each other, said Malaysian Prime Minister Ismail Sabri Yaakob after meeting with Indonesian President Joko Widodo in Jakarta today.

     • USDA to resume weekly national Crop Progress reports. Monday will see USDA's National Ag Statistics Service resume weekly publication of the Crop Progress report, covering the period ending April 3. The initial focus will be on ratings for winter wheat and how the level of the crop rated good/excellent compares with marks the agency last released in November 2021. Some states have been publishing monthly updates in the intervening time and some in the Southern Plains have resumed releasing weekly updates, but the release Monday will mark the return of a national rating covering the 19 major U.S. winter wheat states.

     • NWS weather: Snow squalls possible from the Great Lakes and Ohio Valley into the interior Northeast today following the departure of showers and thunderstorms early this morning... ...Mixed rain and snow will move from the central Rockies today and then across the northern tier and New England during the weekend... ...Another system will bring rain/snow from the Pacific Northwest to the northern High Plains during the weeweekend,t dry and warm conditions prevail farther south.

        NWS

Items in Pro Farmer's First Thing Today include:

     • Wheat firms, soy complex futures face followthrough selling
     • Soy crush, corn-for-ethanol expected to drop from January but rise sharply from year-ago
     • China’s fertilizer supplies, deliveries impacted by Covid restrictions (details below)
     • China auctions state-owned soybean reserves
     • Still waiting on cash cattle trade in northern market
     • Bearish reaction to bullish data in hogs

 

RUSSIA/UKRAINE

Summary: Talks between Russia and Ukraine are set to continue today, as fighting continues on Ukrainian soil. NATO said Russian troops are repositioning — not withdrawing — in Ukraine. Russian leader Vladimir Putin said the time is not right for a ceasefire, according to Italy, which means a war of attrition. Russian forces are now likely to concentrate on eastern regions of Ukraine. Observers say the move could presage an attempt to split the county in two and to give Russia a route to Crimea, which it seized in 2014, and a path through Ukraine to the Black Sea. Ukraine and Russia could be locked in fighting for months if not years.

  • “Russia maintains pressure on Kyiv and other cities, so we can expect additional offensive actions, bringing even more suffering,” the NATO secretary general, Jens Stoltenberg, said at a news conference.
  • Russia has launched attacks on Ukrainian grain storage, according to U.S. gov’t images seen by Reuters. The images showed damage to grain storage facilities in eastern Ukraine that were intact in January before the Russian invasion, with a U.S. official telling the news service, “As of late March, at least six grain storage facilities had been damaged as a result of these attacks.” The official said that the reliance on Ukrainian wheat exports by African and Mideast countries, “the destruction of these food stocks and storage facilities could result in shortages and drive up prices in already vulnerable economies.”
  • A Russian regional governor said that Ukrainian helicopters attacked a fuel depot in the Russian oblast of Belgorod, just north of the countries’ shared border,. If true, the sortie would mark Ukraine’s first intrusion of Russian territory since the war began five weeks ago.
  • Support for Putin has surged among Russians following the invasion, according to the country’s leading independent pollster. Even those offering lukewarm support in general for the president agreed that “he’s doing the right thing” in Ukraine because they accepted the official argument that Russia is under threat from NATO, said Denis Volkov, Levada Center’s director.
  • Russia agreed to hand back control of the highly contaminated Chernobyl nuclear plant to Ukraine. Most of the soldiers, who seized the site last month, made for Belarus. Ukraine said the Russians retreated after suffering radiation exposure. The International Atomic Energy Agency said it could not confirm that claim.
  • Russian officials scoffed at U.S. claims that subordinates of Putin were misleading him about how the war was going. “They do not understand President Putin,” said the Kremlin spokesman, Dmitri Peskov. “They do not understand the decision-making mechanism, and they do not understand the efforts of our work.”
     
  • Thousands of Russia-linked ship containers pile up in Rotterdam, Bloomberg reports (link). Sanctions on Russia are snarling thousands of steel shipping containers, the boss of the port said in an interview.
     
  • Australia starting April 25 will apply an additional tariff of 35% to all imports from Russia and Belarus. Australia also said it will issue formal notification to strip the countries of their most-favored-nation, or MFN, tariff treatment. MFN is a key principle of the World Trade Organization that requires member countries to guarantee equal tariff and regulatory treatment to other members.

— Market impacts:

  • Ukrainian farm leader expects at least 30% plunge in spring plantings. Spring planting of corn, soybeans and sunflowers will drop “at least 30%” in Ukraine because of the war, said Leonid Kozachenko, president of the Ukrainian Agrarian Confederation. Overall production of the spring-planted crops will drop “at least 40 to 45%” and depend on supplies of fertilizer, pesticides and diesel fuel, all of which are in short supply, he added. The war’s impact will not be as great on winter wheat, which already has been planted, with production down “not more than 20%” versus last year. Mining of farmland by Russian troops is also hindering planting. “About 50,000 hectares is closed because of mines put there by Russian troops. Every day they place more,” he detailed. Kozachenko spoke during a Zoom call on the war’s impact hosted by the U.S./Ukraine Business Council.
     
  • Russian state-owned energy giant Gazprom said it was continuing to supply Europe with natural gas, Reuters reported. It comes as European countries face a deadline to start paying for gas in rubles today or have existing contracts with Russia halted. Russian President Vladimir Putin signed a decree on Thursday that said foreign buyers would have to pay in rubles for Russian gas from April 1. But after speaking with the Russian leader, the prime minister of Italy, Mario Draghi, said that the Russian president would grant a “concession” to European countries.
     
  • A European bank forecast that Ukraine’s economic output would contract by 20% this year and Russia’s by 10%. Those figures represent a stark reversal of the development bank’s forecasts in November 2021, months before the invasion, which predicted that Ukraine’s economic output would grow by 3.5% this year, and Russia’s by 3%. The war’s economic impact will also extend far beyond the immediate zone of conflict, the bank said in a statement (link).
     
  • Friend and colleague Shaun Haney interviewed a former high ranking Canadian combat engineer about the war in Ukraine on leadership and logistics in combat zones. Link to listen to the interview.   

 

POLICY UPDATE

— USDA announces updated livestock disaster aid; to launch new crop-related disaster effort. USDA Thursday (March 31) announced the launch of the Emergency Livestock Relief Program (ELRP) which will address increases in supplemental feed costs in 2021. The ERLP will use data from the 2021 Livestock Forage Disaster Program (LFP) to make payments to affected producers — producers do not have to apply for the aid if they were approved for an LFP payment.

     Phase 1 of the payments is expected to total $577 million, basing the payments on percentage of an eligible producers’ gross 2021 LFP payment — 90% for historically underserved producers and 75% for all other producers. And, the payments will be subject to a payment limit.

     Phase 2: USDA said it was evaluating impacts of 2021 drought and wildfires on livestock producers as it develops the Phase 2 component.

     Funding background: The ELRP is being funded under aid included in the Extending Government Funding and Delivering Emergency Assistance Act signed into law in September 2021. That included $10 billion in assistance to agricultural producers with $750 million specifically for livestock producers for losses due to drought and wildfires in calendar 2021. USDA doesn’t use the term WHIP+, but this is the program most producers will know it by.

— USDA also announced it was setting up a two-phase approach for diversified, row crop and specialty crop operations affected by an eligible natural disaster event in calendar 2020 or 2021.

     First phase of the assistance will use existing crop insurance or noninsured crop disaster assistance program data to calculate payments with funds and will issue details in the coming weeks.

      Second phase will fill additional gaps in assistance for eligible producers who did not participate in risk management programs.

     There was no expected total amount for payments under the crop-related effort.

     USDA also said it will provide additional relief through the Emergency Assistance for Livestock, Honeybees and Farm-raised Fish Program (ELAP) to help producers will above-normal cost of hauling livestock to forage. USDA pointed out the ELAP compensation will be retroactive for 2021 but will be available for losses in 2022 and subsequent years.

— Senators strike a deal 'in principle' on Covid-19 funding. The Senate is nearing a deal on a $10 billion Covid aid package. That is less than half the White House’s original request but would advance the stalled legislation after President Biden asked for more money to fund vaccinations and therapeutics.

 

PERSONNEL

— Senate confirmed Alan Estevez, President Biden’s choice to oversee the Commerce agency that’s a key player in the administration’s strategy to limit Russia and China’s access to cutting-edge technology. Estevez is a longtime Defense Department official and former Deloitte logistics consultant. The titles will be undersecretary to lead the Bureau of Industry and Security. The agency is key to crafting and enforcing export controls, including sweeping restrictions announced last month to prevent Russia from accessing products based on U.S. technology.

— Senate Dems help defeat David Weil, the Biden administration’s pick for chief wage and hour regulator. The Senate March 30 voted 47-53 on a procedural motion to advance Weil as the Labor Department’s Wage and Hour Division administrator, turning back the nominee. The vote was a public blow to the administration and its labor agenda.

 

CHINA UPDATE

— China and the EU will hold a virtual summit attended by officials including Chinese President Xi Jinping and European Commission President Ursula von der Leyen. It is the first EU/China summit since June 2020 and was planned before the war in Ukraine.

— Solomon Islands said that it would not allow China to build a military base on its territory, despite the two countries having signed a draft security agreement. Several countries, especially Australia, were alarmed at the prospect of China’s acquiring a new base in the Pacific.

— China’s fertilizer supplies, deliveries impacted by Covid restrictions. China's Covid-19 curbs are disrupting the supply of fertilizer to the country’s main northeastern crop production region. Fertilizer producers, dealers, analysts and associations said rules requiring truck drivers to take Covid tests every 24 hours, a need to obtain special passes to deliver goods and factory suspensions due to local Covid cases are all contributing to tight supplies. The bottleneck comes on top of record fertilizer prices, driven up by strong global demand, high energy costs and sanctions on major producers Russia and Belarus. Despite efforts by Beijing to cool prices, China’s wholesale fertilizer index is 40% higher than a year ago.

— China’s factory activity contracts at sharpest rate in more than two years. China’s factory activity slumped at the fastest pace in more than two years in March due to Covid restrictions and economic fallout from the war in Ukraine. The Caixin/Markit Manufacturing purchasing managers index (PMI), which measures activity by smaller, privately owned factories, fell to 48.1 in March from 50.4 in the previous month – the steepest rate of contraction since February 2020. On Thursday, China’s official PMI showed contraction in larger, state-owned factories for the first time since October 2021.

 

TRADE POLICY

— Senators from both parties criticized Biden’s trade agenda on Thursday, faulting a shortage of ambition for negotiating new agreements and countering China in Asia. In a hearing of the Senate Finance Committee, U.S. Trade Representative Katherine Tai faced Democratic and Republican senators concerned that the Biden White House’s proposed Indo-Pacific Economic Framework, or IPEF, is insufficient for boosting exports and countering China.

     On ag trade, Tai faced questions about moves to hold Canada and Mexico to their commitments under the U.S.-Mexico-Canada Agreement (USMCA) — which includes enforcement mechanisms that Tai helped shape in her previous role as House Ways and Means trade counsel. Tai sought to soothe lawmakers’ concerns but was clearly on the defensive at many points. Sen. Chuck Grassley (R-Iowa) raised the problem of Mexico’s treatment of ag biotech products, saying it is “blatantly violating the commitments made under USMCA,” and asked Tai how she planned to resolve the issue. Tai said that like potatoes, she is working closely with USDA Secretary Tom Vilsack and said USTR is “looking at all of our tools” under the trade deal as it maps out a strategy.

     Ranking Member Mike Crapo (R-Idaho) invoked President Ronald Reagan’s dogged pursuit of new FTAs, saying they helped the country break out of a period of stubbornly high inflation. “It seems President Biden's trade policy takes the opposite stance at a time when inflation has soared to 7.9%,” he remarked. He questioned the focus on domestic policy and criticized new spending as likely to exacerbate — not soothe — rising prices.

     As she did during the House session Wednesday, Tai pushed back by pointing to the $20 billion in duties recently suspended or lifted thanks to agreements to resolve disputes with key trade partners. “So we are — we are —opening markets. We are also opening markets in other ways in our work with our trading partners through Trade and Investment Framework Agreements (TIFAs),” she said, but acknowledged there is “more work to do.”

     Sen. Maria Cantwell (D-Wash.) questioned Tai’s recent comments describing FTAs as “20th Century tools,” favoring instead TIFAs and other new formats for bilateral and multilateral engagement in the trade policy space. “That really is just a statement of fact,” responded Tai on FTAs, noting the high volume of FTAs inked from the 1980s through the early 2010s. “There is a place for free trade agreements in our toolbox. But even there, I feel like our approach to free trade agreements needs to be updated,” she continued, stressing the need for such deals to consider broader economic issues.

     On the issue of Trade Promotion Authority (TPA) — which allows “fast-track” negotiation of new trade deals and an up or down vote with no amendments by Congress — Sen. John Thune (R-S.D.) asked whether Tai was interested in requesting a renewal as that has not happened. Tai responded, “with all due respect in terms of Trade Promotion Authority, that is legislation,” adding that she was happy to work with him on the issue. “Typically, what happens is that an administration requests it,” Thune replied, before moving on in his questioning.  

 

ENERGY & CLIMATE CHANGE

— President Biden wants to exact financial penalties on drillers for unused federal permits, leaving oil executives less inclined than ever to invest the proceeds from $100-per-barrel crude into new wells. The U.S. gov’t has limited options to impose fees on idled oil wells on federal land to boost production amid high prices, lawyers say, and some of those options will come with environmental and logistical problems. “It would require a change in the Mineral Leasing Act” for the Interior Department to levy fees on non-producing federal lands that has been leased for oil and gas production, Angela Franklin, partner at Holland & Hart, told Bloomberg. Top White House officials said Thursday they want Congress to impose a “use it or lose it” policy.

 

LIVESTOCK, FOOD & BEVERAGE INDUSTRY

— U.S. drops charges against five of 10 defendants in chicken price-fixing charges. The move comes after jurors deadlocked in the case on Tuesday, causing a second mistrial after a different jury failed to reach a verdict in December. Justice Department lawyers asked U.S. District Judge Philip Brimmer to dismiss charges against the five defendants “to streamline the case and conserve the resources of the court, the parties, and the public.” The judge agreed. The government plans to go forward with a third trial against the remaining five, including former Pilgrim’s Pride chief executive officers Jayson Penn and William Lovette. Also to be tried are Roger Austin, a former Pilgrim’s vice president; Mikell Fries, president of Claxton Poultry, and Scott Brady, a Claxton vice president. If convicted, the remaining defendants face prison time and fines.

     The decision to drop the charges removes from the case Timothy Mulrenin, a Perdue executive who previously worked at Tyson; William Kantola, a Koch Foods Inc. executive; Jimmie Lee Little, a former Pilgrim’s sales director; Gary Brian Roberts, a Case Farms employee who had worked at Tyson; and Ric Blake, a former director and manager at George’s Inc.

     The case is U.S. v. Penn, 20-cr-00152, U.S. District Court, District of Colorado (Denver).

— U.S. closing in on 100 HPAI cases. USDA’s Animal and Plant Health Inspection Service (APHIS) has confirmed 95 cases of highly pathogenic avian influenza (HPAI) with 55 in commercial poultry operations and 40 in backyard/non-commercial operations. Confirmations on March 29 in commercial operations were in Minnesota (40,000 commercial turkeys in Kandyohi County; 44,000 commercial turkeys in Lac Qui Parle County); South Dakota (51,000 commercial turkeys in Bon Homme County; 46,300 commercial turkeys in Spink County); North Carolina (32,137 commercial turkeys in Johnston County); with March 30 confirmations in Iowa (35,500 commercial turkeys in Buena Vista County); and South Dakota (55,219 commercial turkeys in Brule County).

     Turkey losses to bird flu jump by one-fifth in new outbreaks. More than 1.6 million turkeys have died in outbreaks of HPAI in two months. USDA listed eight new outbreaks, affecting 275,465 turkeys and boosting the U.S. total by 22%.

 

CORONAVIRUS UPDATE

Summary: Global cases of Covid-19 are at 488,506,017 with 6,143,649 deaths, according to data compiled by the Center for Systems Science and Engineering at Johns Hopkins University. The U.S. case count is at 80,103,795 with 988,627 deaths. The Johns Hopkins University Coronavirus Resource Center said that there have been 560,823,729 doses administered, 217,639,435 have been fully vaccinated, or 66.30% of the U.S. population.

— Experts are split on how important it is to get a second booster in light of the low Covid rates in the U.S. and evidence of high protection against death and hospitalization following the first booster.

 

POLITICS & ELECTIONS

New York lawmakers must redraw boundaries of congressional and state legislative districts after a state Supreme Court justice agreed with Republicans that the maps are unconstitutional. The decision by Justice Patrick McAllister was a setback for Democrats, who had cheered the partisan tilt of New York’s map to offset GOP-favoring gerrymanders in other states. Bottom line: Democrats had hoped to net between three and four seats in New York — neutralizing GOP gains in other states. Says David Wasserman, House editor for the Cook Political Report with Amy Walter: “Early read on NY lower court judge blocking Dems’ 22D-4R gerrymander: ruling likely to be stayed on appeal, so Dems believe map will remain in place, at least for 2022. Huge stakes here, as a ‘neutral’ map could cost Dems 3-4 seats and erase their nationwide remap gains.” Wasserman also notes that “after a string of state court victories in North Carolina and Pennsylvania, Democrats finally suffered several setbacks this past week. On Friday, a Maryland judge invalidated their gerrymander of the Old Line State. And on Tuesday, the Ohio Supreme Court scheduled a trial over the GOP-enacted map for well after the May 3 primary date, likely leaving that gerrymander in place for this fall.”

     Amy Walter writes: “Every metric we use to analyze the political environment — the president's approval rating, the mood of the electorate, the enthusiasm gap — all point to huge gains for the GOP this fall. But, those metrics are bumping up against an increasingly 'sorted' House."

 

CONGRESS

— Senate passes Ocean Shipping Reform Act. The Senate Thursday (March 31) on a voice vote approved the Ocean Shipping Reform Act (S 3580) setting the stage for a conference committee between the House and Senate to iron out differences in the two versions of the legislation. Federal Maritime Commission rules and addressing congestion at ports. The House passed a similar bill, 364-60.

     Under the Senate bill, carriers would have to prove that they are acting reasonably when they levy late fees for cargo. The bill would also prohibit carriers from unreasonably refusing to load cargo at U.S. ports and authorize the Federal Maritime Commission to launch investigations on its own of a carrier’s business practices. Co-sponsor Sen. John Thune (R-S.D.) said the bill would help consumers by “promoting fluidity and efficiency of the supply chain.”

     USA Rice member Chris Crutchfield said, “U.S. rice exporters continue to deal with untenable ocean shipping costs, disruptions, and fees, all while fighting to keep markets around the world,” and urged lawmakers to quickly work out differences between the two pieces of legislation.

     This will be one of the first conference committees between the House and Senate during this session, underscoring the lack of legislative agreement between the two chambers. 

— The House passed a bill to cap what insured Americans pay for insulin, moving forward a key component of President Biden’s drug pricing agenda. Lawmakers voted 232-193 in favor of a modified version of the bill. Its future remains uncertain for now, as a group of senators work to craft a separate insulin proposal that could achieve bipartisan support.

— Rep. Filemon Vela’s (D-Texas) retirement from Congress is effective. Vela will be joining the lobbying firm Akin Gump. Rep. Jeff Fortenberry’s (R-Neb.) resignation also went into effect. Adding these two latest vacancies to the recent passing of Rep. Don Young (R-Alaska), the number of the House will be 430 – 221 Democrats and 209 Republicans.

— Free school meals at a cost of $11 billion. Senate Agriculture Committee chair Debbie Stabenow (D-Mich.) and Sen. Lisa Murkowski (R-Alaska) filed a bill to allow schools to serve free meals to all students through September 2023, at a cost of $11 billion. The spend happy bill is not expected to become law.

 

OTHER ITEMS OF NOTE

Scientists introduce the first fully mapped human genome. The new results, announced this week, fill in gaps and correct errors in the initial 2003 map. The accomplishment, made possible by advances in genetic sequencing technology, could lead to future breakthroughs in medical research. It provides fresh insights into cancer, birth defects and aging. The limits of DNA-sequencing technology had left significant gaps in earlier maps. Scientists said they hoped the technique used to create this new one would fuel other projects, including a “pan-genome reference” based on DNA from hundreds of individuals of different ancestries to better reflect the world’s genetic diversity. Link for details.

— The Justice Department’s new antitrust chief, Jonathan Kanter is planning an aggressively activist approach to his new job. His mission: to reverse decades of lax enforcement that he said has allowed companies to dominate industries and thwart competition. “We’re not just bringing a few big cases, we’re changing the way it’s done,” said Kanter in his first interview since taking over in November. Sitting around a large conference table with his team, Kanter said they’re “turning the page on a failed experiment,” referring to decades of laissez-faire merger policy. Link for details.


— Biden administration will make an additional 35,000 seasonal-worker visas available — the largest summer release since Congress changed the rules in 2017. The administration views these visas as a way to provide would-be migrants with alternative paths to the U.S. Roughly one-third of the visas will be set aside for applicants from El Salvador, Guatemala, Honduras and Haiti, four countries with historically high proportions of illegal migration to the U.S.


 

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