Jordan Leadership Vote Today Will Be Close; Still 8 to 10 Votes Shy of 217 Mark

Retail sales stronger than expected | Dairy policy issue surfaces with end of 2018 Farm Bill

MARKET FOCUS

• Wall Street banks continue to report strong results
• Yellen: Higher interest rates may persist; says U.S. economy ‘in a good place’
• U.S. retail sales surge 0.7% in September, defying inflation and high borrowing costs
• Rising ticket prices spark 'funflation' as Americans cut back on live entertainment
• Gold's resurgence fueled by Middle East tensions amid concerns of broader conflict
• Containerships at ports of Los Angeles and Long Beach 12 fewer than normal
• Ag markets today
• Ag trade update
• NWS weather outlook
• Pro Farmer First Thing Today items

ISRAEL/HAMAS CONFLICT 

• Biden set to visit Israel and Jordan
• Iran warns Israel that a ground offensive in Gaza would trigger ‘pre-emptive action’
• Lawmakers calls for aggressive financial sanctions on Iran re: Hamas attacks
   

RUSSIA & UKRAINE

• Ukraine strikes Russian airfields, raising concerns for Russian air force
   

POLICY

• Concerns mount as provisions in expired 2018 Farm Bill raise dairy policy issues
• USDA invests over $50 mil. in domestic fertilizer prod. and double cropping support
   

CHINA

• China tells banks to roll over local gov’t debts
   

ENERGY & CLIMATE CHANGE

• Treasury Dept. considers allowing firms to sell clean energy tax credits to individuals
• Ethanol advocates suggest diverse approach to transportation amid EV push
   

LIVESTOCK & FOOD INDUSTRY

• USDA advances final rule on updates to bioengineered foods list to OMB review
   

CONGRESS

• Rep. Jim Jordan (R-Ohio) edging closer to necessary 217 votes
• Jordan proposes unorthodox plan to prevent gov’t shutdown
• Jordan's voting history reveals stark differences from GOP caucus
• Aid to Israel.
   

OTHER ITEMS OF NOTE

• Biden administration reached a deal with thousands of migrants
• Taylor Swift's 'The Eras Tour' concert film reigns supreme at weekend box

— Equities today: Asian and European stocks were mostly higher overnight. U.S. stock indexes are pointed to slightly lower openings. In Asia, Japan +1.2%. Hong Kong +0.8%. China +0.3%. India +0.4%. In Europe, at midday, London +0.4%. Paris -0.1%. Frankfurt -0.2%.

     U.S. equities yesterday: The Dow gained 314.25 points, 0.93%, at 33,984.54. The Nasdaq rose 160.75 points, 1.20%, at 31,567.98. The S&P 500 was up 45.85 points, 1.06%, at 4,373.63.

— Wall Street banks continue to report strong results. Goldman Sachs and Bank of America both reported better-than-expected quarterly earnings this morning. Goldman was helped by a surge in trading revenues while Bank of America saw steady loan growth. Shares in both initially rose in premarket trading.

— Agriculture markets yesterday:

• Corn: December corn fell 3 1/4 cents to $4.90 and closed near the session low.  
• Soy complex: November soybeans rallied 6 cents to $12.86 1/4, closing nearer the session high. December soybean meal rose 20 cents and settled at $390.2, despite favoring the downside most of the session. December soyoil surged 152 points to 55.90 cents.
• Wheat: December SRW wheat fell 2 1/2 cents to $5.77 1/4 and nearer the session low. Prices hit a three-week high early on. December HRW wheat lost 1/4 cent to $6.68 3/4 and near mid-range. Spring wheat futures rallied 6 3/4 cents before settling at $7.28 3/4.
• Cotton: December cotton fell 91 points to 85.15 cents, marking a low-range close.  
• Cattle: December live cattle fell 20 cents to $186.55 and nearer the session low. November feeder cattle dropped $1.65 to $249.925 and nearer the session low.  
• Hogs: December lean hog futures fell $1.20 before settling at $68.30, nearer the session low.
   

— Ag markets today: Corn, soybean and wheat futures again held in tight trading ranges during the overnight session. As of 7:30 a.m. ET, corn futures were trading a penny lower, soybeans were mostly 3 cents higher, SRW wheat was 5 to 6 cents lower, while HRW and HRS wheat futures were 1 to 2 cents lower. Front-month crude oil futures were modestly firmer, while the U.S. dollar index is trading just below unchanged.

     Packers well positioned on slaughter needs. Packers bought 96,000 head of cattle last week as the average price firmed $1.58 to $184.30, the highest in three weeks. With packers well supplied on near-term slaughter needs, their urgency to actively bid for cattle this week will be reduced. As a result, packers will likely be slow to establish bids, which could push active cash trade until after Friday afternoon’s Cattle on Feed Report.

     Cash hogs drop, pork cutout firms. The CME lean hog index is down 51 cents to $81.60 (as of Oct. 13), the lowest level since June 2 and $11.49 below last year at this time. The pork cutout value firmed 72 cents to $91.22, which is more than $12.00 below last year.

— Quotes of note:

• Treasury Secretary Janet Yellen says higher interest rates may persist while insisting the U.S. economy is “in a good place.” The interest on U.S. debt, which stands at 98% of economic output, “remains manageable,” Yellen said Monday in an interview with Sky News. “Higher interest rates may persist although that’s not clear,” she said. “Our fiscal situation is by no means unsolvable. We have to be attentive to it.” The Treasury secretary also said the U.S. can “absolutely” afford to provide fresh aid to Israel as it battles with Hamas militants while continuing to offer significant assistance to Ukraine. “Americans can certainly afford to stand with Israel and to support Israel’s military needs,” she said. “And we also can and must support Ukraine in its struggle against Russia.”  
   
• “If we lose it, we will lose to the competition...We will lose factories.” — Ford Executive Chair Bill Ford, on the ongoing strike against U.S. automakers.
   

— U.S. retail sales surge 0.7% in September, defying inflation and high borrowing costs. In September 2023, retail sales in the U.S. exhibited strong growth, with a 0.7% month-on-month increase. This positive performance follows an upwardly revised 0.8% rise in August, surpassing expectations of a 0.3% advancement. The data underscores the resilience of consumer spending despite the challenges posed by high prices and borrowing costs.

     Notable increases were observed in sales at miscellaneous store retailers (3%), nonstore retailers (1.1%), motor vehicles and parts dealers (1%), and gasoline stations (0.9%). The data reflects retail sales figures without adjustment for inflation.

     Additional upticks were registered in sales at food services and drinking places (0.9%), health and personal care stores (0.8%), food and beverage stores (0.4%), and general merchandise stores (0.4%).

     However, certain sectors experienced flat sales, such as furniture stores and sporting goods, hobby, musical instrument, and book stores. Conversely, sales declined in the electronics and appliances (-0.8%), clothing stores (-0.8%), and building material and garden equipment (-0.2%) categories.

— Rising ticket prices spark 'funflation' as Americans cut back on live entertainment spending. The cost of attending live entertainment events, including concerts, NFL games, and Disney theme parks, has surged significantly this year, leading to a phenomenon dubbed "funflation, the Wall Street Journal reports (link). Families and friends, eager to enjoy post-pandemic experiences, spent substantial amounts of their savings on live events. However, a Wall Street Journal/Credit Karma survey reveals that nearly 60% of Americans have had to curtail their live entertainment spending due to these rising costs. Approximately 37% of respondents struggle to keep up with event prices, and over 20% are willing to take on debt to continue enjoying their favorite entertainment activities.

Market perspectives:

— Outside markets: The U.S. dollar index was weaker amid a firmer tone in the euro and yen against the greenback. The yield on the 10-year US Treasury note was higher, trading around 4.76%, with a higher tone in global government bond yields. Crude oil futures swung higher, with U.S. crude around $86.95 per barrel and Brent around $90 per barrel. Gold and silver futures were higher, with gold around $1,938 per troy ounce and silver around $22.89 per troy ounce.         

— Gold's resurgence fueled by Middle East tensions amid concerns of broader conflict. In recent weeks, gold has experienced a resurgence in popularity among investors. Initially, concerns about a strong economy leading to potential interest rate hikes by the Federal Reserve had deterred investors from gold. However, the conflict between Hamas and Israel has heightened worries about broader turmoil in the Middle East. As a result, safer assets like Treasurys, the U.S. dollar, and gold have regained favor. Since the Oct. 7 attack by Hamas, gold has seen a 5% rally and is up by 6% for the year.

— 56: The number of containerships arriving at the ports of Los Angeles and Long Beach the week ending Oct. 12, 12 fewer than normal at this time of year, according to the Marine Exchange of Southern California.

— Ag trade update: Japan is seeking 89,873 MT of milling wheat in its weekly tender. Indonesia plans to import 500,000 MT of corn through year-end, of which half will come from Latin American countries.

— NWS weather outlook: An Alberta clipper will bring very gusty winds and a round of rain across the northern Plains later today and Wednesday, spreading into the Great Lakes Wednesday night and early Thursday... ...A warming trend is in store for the eastern half of the country as an expansive cool airmass moderates... ...Warm and dry air across much of the western U.S. will spread into the Plains but rainy conditions remain over the Pacific Northwest.

Items in Pro Farmer's First Thing Today include:

     • Another quiet overnight session for grains
     • Consultant raises U.S. yields, but still lower than USDA’s
     • Crop progress report highlights

— President Joe Biden is set to visit Israel and Jordan to reinforce America's support for Israel and prevent the escalation of its conflict with Hamas in the region. During his visit to Jordan, Biden is expected to meet with Mahmoud Abbas, the Palestinian president. Antony Blinken, the U.S. Secretary of State, has announced the development of a plan to provide aid to the Gaza Strip, following a previous unsuccessful attempt. The World Health Organization has issued a warning that the Gaza Strip is on the brink of a humanitarian catastrophe, with only "24 hours" of essential resources like water, electricity, and fuel remaining.

     Blinken said Biden would hear directly from Israeli Prime Minister Benjamin Netanyahu and other top Israeli officials about what assistance the nation needs as the crisis unfolds, coordinate on hostage release efforts, discuss ways to minimize the impact on civilians in Gaza and send a message to any “actor trying to take advantage of this crisis to attack Israel: Don’t.” White House spokesperson John Kirby told reporters: “We are not dictating military terms and operational mandates to the Israeli military,” adding that appropriate security precautions would be taken.

— Iran’s foreign minister warned Israel that a ground offensive in Gaza would trigger “pre-emptive action.” In a broadcast on state television, Hossein Amirabdollahian suggested Iran would respond to the “war crimes” committed in Gaza and that “all options are open.” On Tuesday the Israel Defense Forces launched several strikes targeting Hezbollah, an Iran-backed Shia militia based in Lebanon.

— Bipartisan group of lawmakers calls for aggressive financial sanctions on Iran in response to Hamas attacks. Pressure is mounting on President Biden from both Democratic and Republican lawmakers to impose more stringent financial sanctions on Iran in the wake of the Oct. 7 Hamas attacks. Over 110 lawmakers, led by Reps. Josh Gottheimer (D-N.J.) and Don Bacon (R-Neb.), signed a letter to the White House demanding these measures, citing connections between Tehran and the militants responsible for the attack on Israel. The letter, supported by over 60 House Democrats, specifically recommends blocking Iranian oil sales to countries like China to cut off a significant source of funding for the regime.

     However, such a move against Iran carries the risk of escalating regional conflicts, which the Biden administration is working to de-escalate. Additionally, restricting Iranian oil sales could lead to a spike in global gas prices, particularly concerning ahead of next year's presidential election. The response of the administration will likely depend on the findings of U.S. intelligence agencies regarding Iran's role in the Hamas attack.

— Ukraine strikes Russian airfields near Luhansk and Berdyansk, raising concerns for Russian air force. Ukraine has reportedly carried out successful strikes on Russian airfields situated near the occupied cities of Luhansk and Berdyansk, as confirmed by officials in Kyiv. While a local Russian-installed official has downplayed the attack, a Russian military analyst has raised concerns that this could be a significant blow to Russia's air force, potentially the most severe since the conflict began. As of now, Russia's government has not issued any official statements regarding the situation. 

 

— USDA invests over $50 million in domestic fertilizer production expansion and double cropping support. USDA highlighted its efforts to enhance domestic fertilizer production and support double cropping practices. USDA announced awards totaling $52.6 million under the Fertilizer Production Expansion Program (FPEP), aimed at boosting domestic fertilizer manufacturing, advancing innovative fertilizer technologies, and reducing costs for farmers.

     Seventeen new projects will receive funding from a $900 million grant program created to expand U.S. fertilizer production in the wake of Russia’s invasion of Ukraine. Link.

     Through two rounds of awards, $121 million has been granted to 33 projects to begin or expand independent and innovative domestic production of fertilizer. More awards are expected in coming months, said the USDA. The maximum grant is $100 million. 

     The largest award on Monday was $5.5 million to Bionutrients Ag LLC, which announced plans in 2022 for a $50 million specialty fertilizer plant employing 45 people in Wabash, in northern Indiana. The plant will process chicken manure and other wastes from egg production into fertilizer for grain and fruit crops. 

     True Organic Products Inc. was awarded $5 million to expand production of organic fertilizer at its Boardman, Oregon, facility by 15,000 tons a year. The company converts local waste byproducts into pelleted fertilizer for producers in the Pacific Northwest. Pan American Grain Co. was offered $3.8 million to offset the costs of repairing facilities in Puerto Rico damaged by Hurricane Maria in 2017 and an earthquake.

     This initiative aligns with a commitment made in September 2022 to bolster production and address global food security. The FPEP program, funded by the Commodity Credit Corporation, is a response to increasing fertilizer costs attributed to the conflict in Ukraine.

      USDA has made substantial funding available for FPEP, with applications exceeding $3 billion from over 350 businesses. The latest announcement marks the awarding of 17 new projects, including initiatives in Minnesota, Oregon, and Wisconsin, focused on expanding organic fertilizer production and optimizing nutrient management. 

     Additionally, USDA is facilitating double cropping practices by expanding insurance coverage in approximately 1,500 counties where double cropping is feasible. This initiative aims to enhance food production and lower costs for American families, with significant increases in insured acres for second crops like grain sorghum and soybeans.

— China tells banks to roll over local gov’t debts. China told state-owned banks to roll over existing local government debt with longer-term loans at lower interest rates, as part of Beijing’s efforts to reduce debt risks in a faltering economy, two sources with knowledge of the matter told Reuters. The People’s Bank of China (PBOC) issued orders last week to major state lenders to extend terms, adjust repayment plans and reduce interest rates of outstanding loans to local government financing vehicles, according to the sources. Loans that were originally due in 2024 or before will be categorized as “normal” instead of non-performing loans if overdue, and that won’t affect banks’ performance evaluations, one of the sources said. To ensure banks do not incur heavy losses from the debt restructuring, interest rates on rolled over loans should not be below China’s Treasury bond rates, said one source, adding that loan terms should not exceed 10 years. China’s benchmark 10-year government bond is now yielding around 2.7%, while the benchmark one-year loan prime rate is 3.45%.

— Treasury Department considers allowing companies to sell clean energy tax credits to individuals. The Treasury Department is exploring the possibility of permitting companies to sell clean energy tax credits to individual taxpayers. Currently, the Inflation Reduction Act (Climate Bill) allows companies to sell these tax credits to third parties, but this option is largely unavailable to individuals. The Treasury is actively considering the removal of this restriction, acknowledging the challenges it presents, according to Sarah Haradon, an attorney-adviser at Treasury's Office of Tax Policy.  

— Ethanol advocates suggest diverse approach to transportation amid electric vehicle push. Ethanol advocates have proposed a diversified approach to the transportation sector, advocating for flex fuel vehicles rather than solely promoting electric vehicles. They argue that the government should explore a range of strategies to address transportation needs effectively. Link for details.

     Meanwhile, the Supreme Court has declined to hear a challenge to Minnesota's clean car rule, which mandates that new-car dealers increase their inventory of hybrid and all-electric vehicles to combat global warming. The clean car rule, set to take effect next year, was adopted by Minnesota, making it the first Midwest state to adopt California's tailpipe emissions standard. It does not apply to existing vehicle stocks or used car sales. Link for more.

     In comments submitted to the National Highway Traffic Safety Administration, ethanol proponents emphasized the importance of avoiding an exclusive focus on electrification when updating fuel efficiency standards. They pointed out that the current reliance on imported raw materials for batteries underscores the need to plan for fuel diversity within the transportation system.

     The Biden administration has set an ambitious goal for electric vehicles to constitute 50% of new vehicle sales by 2030.

— USDA advances final rule on updates to bioengineered foods list to OMB review. USDA’s Agricultural Marketing Service (AMS) forwarded the final rule regarding the 2020 annual update to the list of bioengineered foods to the Office of Management and Budget (OMB) for review. Earlier this year, AMS indicated its intention to consider comments on proposed updates to the list and publish a final rule in response to recommended amendments as part of the National Bioengineered Food Disclosure Standard. The anticipated timeline was for the final rule to be released in June 2023.

— Rep. Jim Jordan (R-Ohio) seems to be edging closer to the necessary 217 votes amid a pressure campaign by his allies to win support for the conservative Republican and ally of former President Trump. “My gut tells me we’re somewhere south of 10 who are still being recalcitrant,” Rep. Chip Roy (R-Texas) told conservative radio host Erick Erickson on Monday when asked about the opposition to Jordan. Former House Speaker Kevin McCarthy (R-Calif.) on Monday also expressed his optimism for Jordan’s prospects, according to The Hill. Jordan, 59, was able to recruit House Armed Services Committee Chairman Mike Rogers (Ala.) along with Reps. Ann Wagner (Mo.), Ken Calvert (Calif.) and Vern Buchanan (Fla.) to his cause, despite past statements indicating they would not do so. Rep. Marc Molinaro (R-N.Y.), declared, “We have to get back to governing.” In total, Jordan can only afford to lose four Republican votes, assuming full attendance.

     Lawmakers still opposed to Jordan include Reps. Mike Lawler (R-N.Y.), Carlos A. Giménez (R-Fla.), Mario Diaz-Balart (R-Fla.), Don Bacon (R-Neb.) and Ken Buck (R-Colo.). They all indicated Monday they still oppose Jordan, putting his math on shaky ground. And GOP sources told Axios there's a high possibility Jordan will lose more support if the vote goes to a second ballot.

     Of note: GOP lawmakers told Axios (link) that Jordan suggested he'd be willing to link votes on aid to Israel and Ukraine. Jordan's team says he made no specific promises. House Foreign Affairs Committee Chairman Michael McCaul (R-Tex.) said he would vote for Jordan after the two discussed introducing a potential supplemental funding package that would include aid for Israel, Ukraine, Taiwan and the U.S./Mexico border.

     A vote on the House floor is slated for around noon ET today. Even if he wins, it could take multiple ballots. As many as 12 people could vote against Jordan on the first round, reports note, but Jordan spent the evening making calls to the holdouts. Attendance could be an issue. At least one Republican, Gus Bilirakis (Fla.), said he’d be away from Washington until Tuesday night, attending a funeral. Rep. Tim Burchett, a Tennessee Republican, told Bloomberg Television’s “Balance of Power” on Monday evening that “I think he’s down to around eight votes.”

     Democrats would be quick to saddle vulnerable Republicans with Jordan’s record — from his history opposing abortion rights and pushing entitlement cuts to his links to the Ohio State University sexual abuse scandal. Already the DCCC is blasting swing-district Republicans as “spineless” and kowtowing to “a Trump-endorsed extremist.” Democrats think Jordan will cost Republican seats in 2024, opening up a path to the majority.

— Jordan proposes unorthodox plan to prevent government shutdown. Rep. Jim Jordan (R-Ohio), the nominee for Republican House Speaker, has put forth an unconventional proposal to avert a government shutdown scheduled for Nov. 17. The plan involves passing a stopgap bill to maintain existing funding levels beyond April. This move is intended to trigger an automatic 1% across-the-board budget cut, a provision recently embedded in a debt-limit law. Jordan believes that these automatic cuts could provide Republicans with leverage in negotiations for full-year funding bills. However, the proposal has received mixed reactions among his party members, with some advocating for passing individual funding bills instead. The plan's success would depend on approval in the Democratic-controlled Senate.

— Jim Jordan's voting history reveals stark differences from GOP caucus as he vies for leadership role. Rep. Jim Jordan (R-Ohio), a co-founder of the House Freedom Caucus, is facing a notable disparity in his voting history compared to the GOP caucus he aims to lead, according to a Bloomberg analysis. His voting record ranks as more conservative than any Republican speaker in at least thirty years, as indicated by ideology scores that evaluate legislators based on their voting patterns across the economic liberalism-to-conservatism spectrum.

— Aid to Israel. Senate Majority Leader Chuck Schumer (D-N.Y.) said Monday the Senate must take the lead in passing aid for Israel, adding he will work with the Biden administration to craft an emergency supplemental package to provide Israel with the “tools it needs to defend itself.” That includes “military assistance, intelligence assistance, diplomatic assistance” and humanitarian assistance.
 

— Biden administration reached a deal with thousands of migrants who were separated from their families at the U.S./Mexico border, which allows these migrants to live and work in the U.S. for three years, with mental health, housing and legal assistance.

     Under the settlement reached between the ACLU and the Biden administration, families separated under a policy implemented in 2018, or at any point during the Trump administration, will be allowed to apply for asylum again even if they were deported. The settlement will now go before a federal judge in California for final approval.

— Taylor Swift's 'The Eras Tour' concert film reigns supreme at weekend box office with $92.8 million domestically. Over the weekend, Taylor Swift's concert film, "The Eras Tour," took center stage at the box office, raking in an impressive $92.8 million domestically. This figure accounts for a remarkable 70% of the domestic industry box office, marking it as the second-best October domestic opening in history, just behind 2019's "Joker." On a global scale, Swift's film achieved a total of $123.5 million. What makes this success even more noteworthy is that Taylor Swift opted for a non-traditional distribution route, directly partnering with AMC Entertainment (AMC) rather than relying on conventional distributors. This success sets a precedent for concert-film releases, and it's worth noting that AMC has another concert film, "Renaissance: A Film by Beyoncé," set for distribution on Dec. 1.

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