New Farm Bill in Slow Lane as Ag Sector Awaits House GOP Plan, with Senate to Follow

Farm Journal
Farm Journal
(Farm Journal )

Japan makes big moves | Gas prices surging | Food prices hitting Biden | FY 2024 deal


Headers_031924


 

Today’s Digital Newspaper

 

MARKET FOCUS

  • Japan ends eight-year period of negative interest rates
  • Unilever plans to spin off its ice cream unit
  • 280 banks face challenges from real estate exposure and rate hikes
  • Ukrainian drone strikes halt 600,000 barrels of Russia's daily oil refining
  • Vladimir Putin’s gold strategy explains why sanctions against Russia have failed
  • Ag markets today
  • Ag trade update
  • NWS weather outlook
  • Pro Farmer First Thing Today items

 

CONGRESS

  • Congress has funding deal, works out details

 

ISRAEL/HAMAS CONFLICT 

  • Israel will send team of officials to Washington
     

RUSSIA & UKRAINE

  • EU preparing to impose tariffs on grain imports from Russia and
  • Ukrainian grain shipments via port of Constanta amounted to 1.33 MMT
     

POLICY

  • Politico: Senate Republicans planning to release farm bill plan in coming weeks
  • Fact checking Stabenow and farm bill comment
  • ERP program sees light increase, reaching $8.64 billion as of March 17
     

CHINA

  • Reuters: Putin to visit China in May
  • Congressional hearing Wed. on China's threat to U.S. agriculture and land ownership
  • China expands list of GM soybean, corn approvals
  • China plans to increase efforts to attract foreign investments
     

TRADE POLICY

  • Senators celebrate victory for U.S. catfish producers re: Vietnamese trade
  • Report: 'Shaken, not stirred' analyses robust U.S./Europe trade amid tensions
     

ENERGY & CLIMATE CHANGE

  • DOE to soften proposed EV mileage rating cuts
  • Exxon conditions move on one of world’s largest, low-carbon hydrogen projects
  • Carbon Brief looks at Donald Trump’s ‘Drill, baby, drill’ slogan
  • Canada surpasses China to claim top spot lithium-ion supply chain ranking
     

POLITICS & ELECTIONS

  • High grocery prices concern Wisconsin voters, impact on Biden's popularity
  • Bloomberg report: Trump will not select Ramaswamy as running mate
     

MARKET FOCUS


— Equities today: Asian and European stock markets were mixed in overnight trading. U.S. Dow opened around 40 points lower and is now up around 75 points. In Asia, Japan +0.7%. Hong Kong -1.2%. China -0.7%. India -1%. In Europe, at midday, London -0.2%. Paris +0.2%. Frankfurt flat.

     U.S. equities yesterday: All three major indices scored gains to open the week but finished near their session lows at the closing bell. The Dow rose 75.66 points, 0.20%, at 38,790.43. The Nasdaq was up 130.27 points, 0.82%, at 16,103.45. The S&P 500 gained 32.33 points, 0.63%, at 5,149.42.

— 280 banks face challenges from real estate exposure and rate hikes; M&A difficulties ahead. According to an analysis conducted by consulting firm Klaros Group, over 280 banks are facing significant challenges due to their high exposure to commercial real estate and substantial unrealized losses resulting from the Federal Reserve's repeated rate hikes. These circumstances have placed these banks in a precarious position, potentially requiring private investment or consolidation to address their financial vulnerabilities. However, mergers and acquisitions (M&A) are currently difficult to execute, which suggests that these banks may soon face increasing pressure and potential difficulties.

— Unilever is separating its ice cream unit, including well-known brand Ben & Jerry’s. This division brought in 7.9 billion euros (approximately $8.6 billion) in revenue in 2023, representing about 13% of the company's total revenue for that year. Unilever believes that the ice cream unit will perform more effectively as an independent business. This announcement comes as part of Unilever's restructuring plan to streamline and focus its operations, which also includes cutting approximately 7,500 jobs.

— Ag markets today: Corn, soybeans and wheat held in tight ranges during quiet, two-sided overnight trade. As of 7:30 a.m. ET, corn futures were trading mostly a penny higher, soybeans were fractionally to 1 cent higher and wheat futures were narrowly mixed. Front-month crude oil futures were near unchanged, while the U.S. dollar index is around 500 points higher.

     Cash cattle nearing record high. Cash cattle averaged $187.47 last week, up $2.35 from the previous week and the second highest ever behind $188.75 for the week ended June 9, 2023. While packers purchased a strong 83,000 head last week, including 16,000 head “with time,” most cash sources expect steady/firmer prices again this week. But with USDA’s Cattle on Feed Report out Friday afternoon, cash negotiations will be slow to develop and active trade isn’t likely until late in the week.

     Cash hogs rise, pork cutout slips. The CME lean hog index is up another 20 cents to $82.54 as of March 15. While the daily gains in the cash index haven’t been strong, the seasonal increase has remained persistent. The pork cutout value slipped 31 cents on Monday as wholesale prices failed to sustain strong morning gains, pressured mostly by a $2.43 drop in primal hams.  

— Agriculture markets yesterday:

  • Corn: May corn fell 3/4 cents to $4.36, notching a near mid-range close.
  • Soy complex: May soybean futures fell 10 1/2 cents to $11.87 3/4, settling near session lows. May meal futures dropped $2.80 to $331.90. May bean oil futures plunged 72 points to 48.70 cents, settling nearer session lows.  
  • Wheat: May SRW wheat rose 14 cents 1/4 to $5.42 3/4 and near the session high. May HRW wheat closed up 7 1/2 cents at $5.73 3/4 and nearer the session high. May spring wheat futures rallied 4 1/4 cents to $6.50 3/4.
  • Cotton: May cotton rose 63 points to 94.57 cents, marking a low-range close.
  • Cattle: April live cattle rose $1.325 to $188.575. May feeder cattle gained $3.125 at $259.125. Prices closed near their session highs.
  • Hogs: April lean hog futures fell 10 cents to $86.825, settling directly in the mid-point of today’s $1.00 range. Lean hog futures traded on both sides of unchanged.  
     

— Quotes of note:

  • U.S. Energy Secretary Jennifer Granholm, a regular fixture at CERAWeek, offered the oil sector a reason for optimism. She told participants the administration’s pause on issuing liquefied natural gas export licenses is temporary, in a potential disappointment for the environmental movement. “As we sit here next year, you and I, this will be in the rearview,” Granholm said as a smattering of cheers rang out across the room, Bloomberg reports.
     
  • The global push to overhaul energy systems to slow climate change is “visibly failing” on most fronts, Saudi Aramco Chief Executive Officer Amin Nasser said on the opening day of the CERAWeek by S&P Global event.
     
  • Exxon Mobil Corp. CEO Darren Woods said: “We’re not on the path to meet net zero in 2050. One of the challenges here is that while society wants to see emissions reduced, nobody wants to pay for it.”
     

— Japan ends negative rates, scraps yield curve control. The Bank of Japan (BoJ) announced it would raise its key short-term interest rate to approximately 0% to 0.1%, a move that aligned with market expectations. This decision marked the end of an eight-year period during which the central bank maintained negative interest rates. Notably, this rate hike was the first since 2007. The central bank became the last major monetary authority to ditch a policy of negative interest rates -— first implemented in Japan in 2016.

     "We are going to set monetary policy like other normal central banks," BOJ Governor Kazuo Ueda said at a press conference following the two-day policy meeting. "Policy rates are going to be determined based on the economic and price situations."

     The decision to increase the interest rate came as a response to sustained inflation that had surpassed the BoJ's 2% target for over a year. Additionally, major companies in Japan agreed to implement a significant salary increase of 5.28%, marking the largest wage hike seen in the country in more than three decades.

     However, the BoJ's decision was not unanimous, with two of its nine board members, Toyoaki Nakamura and Asahi Noguchi, expressing dissent.

     Alongside the interest rate hike, the BoJ announced several other policy changes. It terminated yield curve control for 10-year government bonds and ceased the purchases of exchange-traded funds (ETFs) and Japan real estate investment trusts (J-REITs). Furthermore, the central bank revealed plans to gradually reduce its corporate bond purchases, with the aim of completely halting them within approximately a year.

     "This is a major policy shift, much more comprehensive than I had anticipated," said Hideo Kumano, chief economist at Dai-ichi Life Research Institute.

     Despite these changes, the BoJ emphasized its readiness to respond swiftly to any sudden increases in long-term interest rates. It stated that it would be prepared to adjust its strategies, including potentially increasing the volume of Japanese government bond (JGB) purchases, if necessary.

     Market impact: The Japanese yen sunk against the U.S. dollar after the Bank of Japan ended its era of negative interest rates.

     Japan moves

Market perspectives:

— Outside markets: The U.S. dollar index was firmer, with the euro, British pound, and Swiss franc all weaker against the greenback. The yield on the 10-year U.S. Treasury note was down, trading around 4.32%, with a negative tone in global government bond yields. Crude oil futures were pivoting around unchanged, with U.S. crude around $82.72 per barrel and Brent around $86.90 per barrel. Gold and silver were weaker, with gold around $2,159 per troy ounce and silver around $25.13 per troy ounce.

— About 600,000 barrels of Russia’s daily oil-refining capacity have been knocked out by Ukrainian drone strikes, estimates Gunvor Group Ltd. Chief Executive Officer Torbjörn Törnqvist.

— Vladimir Putin’s gold strategy explains why sanctions against Russia have failed, according to the Conversation (link). Russia is now the No. 2 bullion producer, and while the UK, US and Canada won’t touch it, others will.

— Ag trade update: Japan is seeking 119,345 MT of milling wheat via its weekly tender. Indonesia tendered to buy 300,000 MT of rice from unspecified origins.

— NWS weather outlook: Lake effect snow continues across the Great Lakes before a developing low pressure system spreads snowfall east into northern New England on Wednesday... ...Light to moderate snow enters the northern Plains midweek and pushes into the Upper Midwest on Thursday... ...Shower and thunderstorm chances return to the southern Plains and western Gulf Coast.

     NWS_031924

Items in Pro Farmer's First Thing Today include:

     • Quiet overnight grain trade
     • Cordonnier raises Argentine crop estimates, Brazil unchanged
     • El Niño near its end

 

CONGRESS

— House GOP and Biden administration negotiators have reached a deal on the fiscal 2024 Homeland Security spending, despite the potential for a brief appropriations lapse over the weekend due to time constraints. The final touches on the Homeland Security bill need to be completed, with the possibility of a short-term stopgap bill to keep agencies running for a few days. Lawmakers aim to start their Easter recess on time, and there's a desire to wrap up before the start of March Madness. Negotiators face pressure to maintain a DHS spending ceiling while accommodating various priorities. The package includes other measures besides Homeland Security, with both parties engaging in negotiations to avoid a shutdown. Past experiences with funding lapses suggest that shutdowns may be brief, with agencies quickly resuming operations once appropriations are in place.

 

ISRAEL/HAMAS CONFLICT

— U.S. said Israel will send a team of officials to Washington to discuss concerns over a full-scale military operation in Rafah.
 

RUSSIA/UKRAINE

— European Union (EU) is preparing to impose tariffs on grain imports from Russia and Belarus, as reported by multiple media outlets, initially by the Financial Times. According to the reports, the European Commission is considering proposing tariffs of 95 euros ($103.26) per metric ton on cereal grains from Russia and Belarus, along with 50% tariffs on oilseeds and related products. While these figures have not been finalized, Reuters cited them, noting they were "about right" according to sources. The tariffs would only apply to commodities intended for use within the EU, not those transshipped through the bloc to other countries. However, the impact is expected to be limited due to the relatively small volumes affected. Russia has stated it will analyze the proposed tariffs before responding.

— Ukrainian grain shipments through the Romanian Black Sea port of Constanta amounted to 1.33 million metric tons (MMT) during January-February, as reported by the port. However, there were no comparative figures from the previous year provided in the reports. In February alone, Constanta recorded 894,000 metric tons of Ukrainian grain leaving the port. The port achieved its highest grain exports in 2023, reaching 36 MMT, with approximately 40% of the total attributed to Ukraine. This record export level was facilitated by increased volumes from Ukraine and infrastructure upgrades funded by the European Union.
 

POLICY UPDATE

Politico reports that Senate Republicans are planning to release a farm bill plan in the coming weeks once House Republicans have done the same. The report said House Ag Committee Chair Glenn “GT” Thompson (R-Pa.) is aiming to drop a Chairman’s Mark possibly yet this month or in April, but a markup of that package is still a moving target. Prior reports had Thompson releasing a Chairman’s Mark shortly after lawmakers return from their Easter recess. Then attention will turn to the full House for floor time to consider the measure.

     Senate Ag Chair Debbie Stabenow (D-Mich.) is sticking with her stance on nutrition, conservation funding. She remarked at an event held by Agri-Pulse that she will not agree to a farm bill that cuts nutrition programs, and reiterated her stance against taking Inflation Reduction Act (IRA) funds earmarked for USDA conservation programs and adding those into the farm bill baseline for other purposes. Again, nothing new with that as she has signaled that for months.

     Fact check: Stabenow at Monday’s confab also said, “We need to be strengthening all parts of the farm bill, but what we have not done in the past is take from one title and give to another.” Perspective: The last Democrat-led farm bill (2008) cut Title 1 (-$671 million) and Title 12, Crop Insurance (-$6.807 billion) and plussed up Title 2 (Conservation) and Title 4 (Nutrition). See Table 2 for proof: Link.

— Total Emergency Relief Program (ERP) payments have seen a slight increase, reaching $8.64 billion as of March 17, up from $8.63 billion the previous week. This uptick is observed in both Phase 1 and Phase 2 ERP payments. Phase 1 payments have risen to $7.76 billion from $7.75 billion, while Phase 2 payments now stand at $883.94 million, up from $883.29 million previously.

 

CHINA UPDATE

— Reuters: Putin to visit China in May. Putin told reporters on Sunday that Russia and China shared a similar global outlook and enjoyed resilient relations in part due to his good personal relations with Xi. Link to Reuters item.

— Congressional hearing Wednesday on China's threat to U.S. agriculture and land ownership. A congressional hearing scheduled Wednesday will delve into the perceived threat posed by China to the U.S. agriculture industry, particularly concerning the increasing foreign ownership of American farmland. The House Ag Committee plans to address issues such as intellectual property theft, cyber infrastructure hacking, and foreign acquisitions of American farmland. The hearing, titled "The Danger China Poses to American Agriculture," will explore legislative options to counter these threats and bolster food and national security.

     House Ag Chairman G.T. Thompson (R-Pa.) highlighted concerns over China's activities, including intellectual property theft, cyber intrusions, and land acquisitions. “It’s no secret that China poses significant threats to our way of life, agriculture is no exception. We’ve seen China steal our intellectual property, hack our cyber infrastructure, and buy up American farmland,” said Thompson. “We will look to every available legislative vehicle, including the farm bill, to stop China in its tracks and strengthen our food and national security.” The committee aims to utilize available legislative tools, including the farm bill, to address these challenges and prevent China from undermining American interests.

     Testimony during the hearing will be provided by various officials, including South Dakota Governor Kristi Noem, who has implemented strict measures against foreign ownership of farmland in her state, as well as representatives from the Select Committee on the Chinese Communist Party.

     A report (link) released by the Government Accountability Office (GAO) in January revealed significant growth in foreign investment in U.S. agricultural land, reaching approximately 40 million acres in 2021, according to USDA estimates. The report, requested by Thompson and House Oversight Chair James Comer (R-Ky.), highlighted national security risks associated with foreign ownership, particularly when land is located near military installations.

     The GAO identified shortcomings in the USDA's sharing of timely data on foreign investments in agricultural land, emphasizing the need for improved transparency and real-time monitoring. While the Committee on Foreign Investment in the United States (CFIUS) is tasked with assessing potential national security risks, the GAO noted that the USDA's publication of relevant data is limited and infrequent.

     To address these gaps, USDA has requested funding to establish a real-time data system for monitoring foreign investments in U.S. agricultural land, with the goal of enhancing visibility and facilitating interagency cooperation. Thompson and Comer emphasized the importance of safeguarding American farmland and food security, pledging to collaborate with relevant agencies and committees to address the findings of the GAO report through legislative action.

     Of note: USDA faces several challenges in collecting Agriculture Foreign Investment Disclosure Act (AFIDA) data, including reliance on self-reporting, unclear processes, lack of verification and quality reviews, limited tracking capabilities, paper-based submission process, lack of clear instructions and guidance, data entry errors, incomplete and inaccurate data, limited data verification and monitoring, and insufficient funding for online submission process and public database. ​ These challenges contribute to the difficulty in obtaining accurate and timely information on foreign investments in U.S. agricultural land.

— China expands list of GM soybean, corn approvals. China’s ag ministry approved 27 genetically modified (GM) corn seed varieties and three GM soybean varieties, as it aims to increase the development and planting of higher-yielding crops. The approvals include seed varieties owned by Dabeinong and China National Seed Group, a unit of Syngenta Group. The list of approved varieties is open for public comment until April 17, according to the ministry notice. Once approved, “the actual planting area should also comply with the relevant arrangements for the national biological breeding industrialization,” according to the notice.

— China plans to increase efforts to attract foreign investments. China state council announced a plan to attract foreign investment, including expanding market access and relaxing the rules for overseas investors. China will expand the scope of foreign financial institutions’ participation in the domestic bond market and carry out pilot projects to relax requirements for foreign investment access in certain fields, including tech innovation, the plan issued by the cabinet showed. It will also expand access for foreign financial institutions to the banking and insurance sector. Link for details via Bloomberg.

 

TRADE POLICY

— Senators celebrate victory for U.S. catfish producers after Biden administration reverses plan on Vietnamese imports. Sen. John Kennedy (R-La.) and Cindy Hyde-Smith (R-Miss.), along with their colleagues, are celebrating a victory for U.S. catfish producers following the Biden administration's reversal of a plan that would have made it easier for Vietnam to flood the American catfish market. The Commerce Department initially proposed reducing antidumping duties for Vietnamese producers, but on March 14, it announced it would not proceed with this plan. Kennedy emphasized the importance of ensuring a level playing field for American catfish farmers, while Hyde-Smith highlighted the victory for both the U.S. catfish industry and consumers. The decision to rescind the review was welcomed by the senators, who had previously urged the Commerce Department to reconsider its preliminary decision.

— Report: 'Shaken, not stirred' analyses robust U.S./Europe trade amid tensions. The U.S. Chamber of Commerce, AmCham EU, Johns Hopkins SAIS, and the Transatlantic Leadership Network released a report (link/pdf) titled Shaken, Not Stirred, likening the enduring but strained U.S./Europe trading relationship to the famous James Bond catchphrase.

     Despite recent policy tensions between Brussels and Washington, the report emphasizes the crucial economic ties between the two regions, describing them as the most deeply integrated in the world.

     In 2023, U.S./Europe goods trade reached a record $1.22 trillion, with European countries surpassing China as the largest purchasers of U.S. goods. Additionally, Europe became the leading buyer of US crude oil and liquefied natural gas, while U.S. company affiliates in Europe earned $350 billion and European units in the U.S. made $190 billion.

     Bottom line: The report concludes that although globalization is evolving, the relationship between the US and Europe remains resilient and vital.

     Trade stir

 

ENERGY & CLIMATE CHANGE

— Department of Energy (DOE) is expected to announce today a final rule that will soften proposed cuts to mileage ratings for electric vehicles (EVs). Originally, the proposal aimed for a dramatic reduction of 72% in the compliance value of EVs by 2027. However, the final rule is anticipated to implement a gradual reduction of 65% in the petroleum equivalent fuel economy rating for EVs through 2030. This adjustment provides automakers with additional time to adapt. The miles per gallon equivalent (MPGe) levels for EVs have not been updated in over two decades.

— Exxon won’t move forward with one of the world’s largest, low-carbon hydrogen projects if the Biden administration withholds tax incentives for natural gas-fed facilities, the firm’s CEO said during an interview with Bloomberg (link).

— Carbon Brief looks at Donald Trump’s “Drill, baby, drill” slogan and speaks to U.S. politician Michael Steele, who originally coined the phrase and regrets its current use by the Republican challenger for the White House. Steele served as the first African-American lieutenant governor of Maryland and chair of the Republican National Committee, who came up with the slogan back in 2008. Link.

— Canada has surpassed China to claim the top spot in BloombergNEF's Global Lithium-Ion Supply Chain Ranking. This marks the first time China has been relegated to second place among the 30 markets evaluated. The ranking considers factors such as existing supply chain activities, the quality of industrial landscape and supporting infrastructure, innovation, and environmental, social, and governance (ESG) credentials.

     Canada and China

POLITICS & ELECTIONS

— High grocery prices concern Wisconsin voters, impact on Biden's popularity. The Washington Post conducted interviews with numerous Wisconsin voters and found that high grocery prices are a significant concern for them (link). Many voters view these prices as a major financial obstacle, with nearly a third stating that inflation has caused them to reassess their political preferences. Some individuals are even considering voting for the first time due to food prices. Although food prices are stabilizing, they remain a leading factor contributing to President Biden's declining popularity nationwide. Biden has struggled to persuade Americans that their financial situations have improved during his presidency, despite robust economic growth. The Trump campaign has capitalized on this sentiment, arguing that inflation was minimal, gas and grocery prices were low, and the American Dream thrived during the previous administration.

— Bloomberg report: Trump will not select Ramaswamy as running mate. Bloomberg reports (link) former President Donald Trump has “ruled out Vivek Ramaswamy as his running mate and is instead eyeing the entrepreneur for a Cabinet job, according to people familiar with the matter.” Trump “personally told Ramaswamy he won’t be his vice-presidential pick,” according to sources cited by Bloomberg.
 


 

KEY LINKS


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 | | Russia/Ukraine war, lessons learned | | SCOTUS on WOTUS | SCOTUS on Prop 12 pork | New farm bill primer | | Gov’t payments to farmers by program | Farmer working capital | USDA Ag Outlook Forum |


 

Latest News

H&P Report negative compared to pre-report expectations
H&P Report negative compared to pre-report expectations

Nearly every category topped the average pre-report estimates.

After the Bell | March 28, 2024
After the Bell | March 28, 2024

After the Bell | March 28, 2024

Pro Farmer's Daily Advice Monitor
Pro Farmer's Daily Advice Monitor

Pro Farmer editors provide daily updates on advice, including if now is a good time to catch up on cash sales.

PF Report Reaction: Bullish USDA data for corn
PF Report Reaction: Bullish USDA data for corn

Corn planting intentions and March 1 stocks came in lower than expected.

Report Snapshot: USDA shows lighter-than-expected corn acres and stocks
Report Snapshot: USDA shows lighter-than-expected corn acres and stocks

USDA reported corn acres of 90.036 million acres for 2024 and March 1 stocks of 8.347 billion bu., both well below trade estimates. Soybean acres were slightly lower than expectations, while stocks were higher.