Senate GOP Leaders Say Stopgap Spending Measure Needed, Putting Pressure on House Speaker

Farm Journal
Farm Journal
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U.S. ag trade: Nov. exports fall, surplus achieved; FY 2024 outlook shows growing trade deficit


 

Today’s Digital Newspaper

 


Abbreviated format today as I am en route to a meeting in Florida with the American Soybean Association.



 

— Equities, Tuesday: The Dow lost 157.85 points, 0.42%, at 37,525.16. The Nasdaq rose 13.94 points, 0.09%, at 14,857.71. The S&P 500 was down 7.04 points, 0.15%, at 4,456.50.

— Ag markets Tuesday:

     Corn: March corn futures rose 4 1/4 cents at $4.59 1/4 and nearer the session high.

     Soybeans: March soybeans rose 2 cents to $12.41 1/2 after reaching a near seven-month low early on, while March soymeal fell 90 cents to $367.60. March soyoil rose 64 points to 48.45 cents.

     Wheat: March SRW futures rallied 13 3/4 cents to $6.10, settling nearer session highs. March HRW futures firmed 11 3/4 cents to $6.27. March spring wheat futures saw relative weakness, rising just 3 cents to $7.05 1/2.

     Cotton: March cotton rose 31 points to 80.73 cents but ended near the session low.

     Cattle: February live cattle futures led the complex higher Tuesday, rallying 82.5 cents to $170.775. March feeder cattle futures dropped 20 cents to $224.875, while nearby January feeder futures fell 10 cents to $223.775. Live cattle futures made up most of Monday’s losses but continue to struggle against overhead resistance.

     Hogs: February lean hogs rose $1.275 to $71.875 and nearer the session high. Prices hit a six-week high.  

— Congress faces gov’t shutdown risk as short-term bill looms amid spending agreement disputes. In less than two weeks, Congress may need to pass another short-term bill, known as a continuing resolution (CR), to prevent a partial government shutdown. This development could potentially force House Speaker Mike Johnson (R-La.) to go back on his vow to avoid such measures. Senate Minority Leader Mitch McConnell (R-Ky.) acknowledged the dwindling time left before the deadline and suggested that Congress would have to enact a stopgap CR to keep the government funded while they continue working on the full-year fiscal 2024 budget. Senate Minority Whip John Thune (R-S.D.) signaled a CR until March may be necessary. The current interim spending law funds some government functions (including USDA) until Jan. 19 and the rest until Feb. 2. Some House Republicans have expressed their opposition to short-term measures and have even threatened to revolt if faced with another one. During a meeting with top House Republicans, Johnson indicated that he was not interested in a short-term spending bill, despite McConnell's suggestion

— The federal budget deficit totaled $509 billion in the first quarter of fiscal year 2024, CBO estimates — $87 billion more than the deficit recorded during the same period last fiscal year.

— World Bank warns about the global economy's poor growth prospects for 2024. According to their projections, the global economy is expected to expand by just 2.4%, down from 2.6% in the previous year. This slowdown is attributed to higher borrowing costs and geopolitical tensions. The World Bank notes concern about the decade ahead if significant changes aren't made to address these challenges. Additionally, it mentions that global trade growth is expected to be only half of what it was in the decade before the pandemic, and developing countries have experienced lower growth rates since 2020 due to these factors. Advanced economies are also expected to see slower growth. Low-income countries are performing relatively better but still face challenges such as a significant debt burden. The World Bank emphasizes the importance of increased investment to improve living standards.

     Chinese growth is expected to slow to 4.5% this year from 5.2% in 2023. Outside the pandemic-induced downturn, that would be China’s slowest expansion in 30 years.

     Europe and the United States are also poised for another year of weak output in 2024.

     The World Bank projects that economic growth in the euro area will rise to 0.7% in 2024 from 0.4% in 2023. Despite easing inflation and rising wages, tight credit conditions are expected to constrain economic activity.

     Growth in the United States is expected to slow to 1.6% this year from 2.5% in 2023. The World Bank attributes the slowdown to elevated interest rates — which are at their highest level in 22 years — and a pullback in government spending. Businesses are expected to be cautious about investing because of economic and political uncertainty, including around the 2024 election.

— Cabinet members were ordered to notify the White House if they’re forced to delegate authorities, after Defense Secretary Lloyd Austin waited four days to tell senior officials he’d been hospitalized last week. The order from Chief of Staff Jeff Zients said Cabinet members must notify the administration when agencies are “preparing for a delegation of authority and again when the delegation occurs.

— Lawmakers consider ERC changes in $100 billion tax break negotiations. U.S. lawmakers are considering changes to the employee retention tax credit (ERC), a pandemic-era tax credit, as part of a bipartisan deal that could offer approximately $100 billion in tax breaks for both businesses and families. Senate Finance Committee Chairman Ron Wyden (D-Ore.) wants to address abuses of the ERC, a program designed in 2020 to incentivize employers to retain their workforce during the pandemic. However, the ERC's cost has surpassed initial estimates, leading to concerns about fraudulent claims and misuse. The Internal Revenue Service (IRS) has been combatting these issues through audits, investigations, and a voluntary payback program. Taxpayers can still claim the ERC until April 2025, and there are over one million unprocessed claims, potentially exceeding $240 billion, as estimated by Piper Sandler. IRS Commissioner Danny Werfel is expected to brief senators on this matter.

    Limiting the tax credit's scope could reduce the overall cost of a tax breaks package currently being negotiated by Wyden and Rep. Jason Smith (R-Mo.), Chairman of the House Ways and Means Committee. The proposed deal includes reversing certain business tax changes and expanding the child tax credit for some families.

     Timeline. Proponents want to finalize the deal in time for the IRS to adjust tax forms for the 2023 tax filing season starting on Jan. 29. However, there is uncertainty regarding the inclusion and approval of ERC changes, as the tax package might be attached to other legislation in Congress, which is already grappling with various proposals.

     Other topics under discussion include reviving expired or reduced business tax breaks, such as spreading deductions for research costs over several years and limiting deductions for interest and capital expenses. Democrats have requested an expansion of the child tax credit in exchange for supporting these business tax breaks. While it may not fully restore the 2021 child tax credit, Democrats seek changes that benefit low-income households.

— U.S. agricultural trade: November exports fall, surplus achieved; FY 2024 outlook shows growing trade deficit. In November, U.S. agricultural exports declined to $16.09 billion, a 3.3% decrease from October's $16.64 billion, but agricultural imports also fell to $15.99 billion, a more substantial 5.4% decrease from October. This resulted in a surplus of $99.0 million, ending a streak of eight consecutive monthly trade deficits in the agricultural sector.

     For fiscal year (FY) 2024, agricultural exports amounted to $32.73 billion, while imports reached $32.89 billion, resulting in a trade deficit of $160 million. USDA  predicts that agricultural exports for FY 2024 will reach $169.5 billion, a notable decrease from the $178.7 billion in FY 2023. Conversely, agricultural imports are expected to reach a record high of $200 billion, up from $195.4 billion in FY 2023. This projection would lead to a record trade deficit of $30.5 billion, a significant increase compared to the $16.7 billion trade deficit recorded in FY 2023.

— NWS weather: Major storm system will hammer the Eastern U.S. with widespread heavy rain, strong winds, and severe thunderstorms into early Wednesday... ...Unsettled weather will continue in the West while dangerously cold temperatures plunge into the Central U.S.

     NWS_011024


 

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WASDE | Crop Production | USDA weekly reports | Crop Progress | Food prices | Farm income | Export Sales weekly | ERP dashboard | California phase-out of gas-powered vehicles | RFS | IRA: Biofuels | IRA: Ag | Student loan forgiveness | Russia/Ukraine war, lessons learned | Russia/Ukraine war timeline | Election predictions: Split-ticket | Congress to-do list | SCOTUS on WOTUS | SCOTUS on Prop 12 pork | New farm bill primer | China outlook Omnibus spending package | Gov’t payments to farmers by program | Farmer working capital | USDA ag outlook forum | Debt-limit/budget package |


 

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