Evening Report

Posted on Tue, 12/10/2019 - 14:41

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Pelosi says USMCA deal reached… House Speaker Nancy Pelosi (D-Calif.) announced today that the White House and lawmakers have finally reached an agreement on the U.S.-Mexico-Canada Agreement (USMCA) and that she would allow the House to vote on the measure. The announcement is a long time in the making as the trade deal was initially signed off on by the three nations more than a year ago and both U.S. chambers have been said to have the votes for passage for months. But Pelosi refused to bring the measure up for a vote until some changes were secured that satisfied U.S. labor unions. The head of the powerful AFL-CIO labor union now supports the trade measure—the first such ok in two decades. This will help get democratic votes.

Pelosi’s announcement hands President Donald Trump one of the biggest wins of his presidency, but it came at an odd time—just an hour after she announced the articles of impeachment against Trump.

The changes to the deal must now be worked into implementing legislation that the House and Senate will vote on. The House could vote on the measure as early as next week, and a Senate vote could also come before Christmas, though that’s a bit of a long shot. Mexico and Canada are expected to sign off on the changes.

 

Reports signal Dec. 15 tariffs to be pushed back… U.S. and Chinese trade negotiators are laying the groundwork for a delay of a fresh round of U.S. tariffs set to kick in on Dec. 15, according to officials from both countries. Both sides continue to haggle over how to get Beijing to commit to massive purchases of U.S. farm products Trump is insisting on for a near-term deal.

In recent days, officials in both Beijing and Washington have signaled that Sunday is not the final date for reaching a so-called Phase 1 deal—even though that is the date Trump has set for tariffs to increase on $165 billion of Chinese goods. The reports today signal that date is likely to be extended, as has happened several times when the two sides thought they were on the verge of a deal. Those prior deals, though, never held and tariffs continued to mount.

Chinese and U.S. officials involved in the talks say they don’t have a hard deadline for the initial phase of the trade deal.

 

Ho-hum December WASDE Report… USDA made no change to its 2019-20 ending stocks forecasts for corn (1.910 billion bu.) or soybeans (475 million bu.), nor did it alter its usage or supply projections for either commodity. The department did lower its wheat ending stocks forecast by 40 million bu. to 974 million bu., which was a bigger cut than anticipated. Its cotton crop and carryover estimates also came in smaller than expected at 20.206 million bales and 5.5 million bales, respectively.

Find more highlights from today’s reports here or give our report reaction a read here.

 

General, continuous CRP signup update… The general signup for the Conservation Reserve Program (CRP) started yesterday. Contracts enrolled via the general signup that runs through Feb. 28, 2020, will have an Oct. 1, 2020, start date. Some lawmakers had been pushing USDA to allow entry into the program prior to Oct. 1, 2020 under the general signup, but it appears USDA will not go that route.

There is a maximum rent of $240 per acre on land offered during the general signup.

The continuous signup also opened on Monday. Those with contracts that expired Sept. 30, 2017, Sept. 30, 2018, or Sept. 30, 2019 can submit offers to re-enroll from Dec. 9 through Aug. 21, 2020. Those with contracts that mature Sept. 30, 2020 can submit offers to re-enroll starting April 1 through August 21 only.

The maximum per acre rate for all continuous non-CREP (Conservation Reserve Enhancement Program) signup offers is $300 per acre. Contracts under the continuous signup for land not currently in the CRP will be effective the first day of the month following approval by the FSA County Committee, but a producer could defer that up to six months. Those contracts approved on or after April 1 could have an effective date of after Oct. 1, 2020. For those that have contracts that expired in 2017, 2018 or 2019 and are eligible re-enroll, those will have an effective date of no later than Oct. 1, 2020. For those with contracts expiring Sept. 30, 2020, that want to re-enroll those acres, the effective date for the contract cannot be deferred and will start Oct. 1, 2020.

 

Tyson Foods signs deal for beef plant in Kazakhstan; U.S. meat processor hopes to boost sales to China, Russia and the Middle East… An agreement signed on Monday to collaborate with the government of Kazakhstan is part of the country’s efforts to raise a global livestock industry. Tyson hopes to boost its international business, which accounts for 3% of its $42.4 billion in annual revenue. The proposed 2,000 head-per-day slaughterhouse envisaged by the agreement would add an overseas beef plant to Tyson’s more than 20,000 head-per-day U.S. business.

The Financial Times first reported Tyson’s interest in investing in Kazakhstan in May. Noel White, Tyson chief executive, said neither swine fever nor retaliatory tariffs were factors in the planned investment in Kazakhstan. Instead, Kazakhstan has sufficient water and land to breed livestock and good rail and road access to markets across the continent, he said. “It’s well-situated geographically with China, Russia, the Middle East. And they also have a transportation and distribution network going into central Europe,” he said.

 

Abiec: Brazilian beef exports to shatter records this year, with more growth likely in year ahead… China’s has more than doubled the number of Brazilian beef suppliers authorized to ship it meat over the past few months, pushing the total number of facilities to 37. That should help push Brazilian beef exports to a record 1.828 MMT this year, according to the industry association group Abiec. China has aggressively been bringing in beef, pork, poultry and other sources of protein amid a devastating outbreak of African swine fever that has nearly halved its pig herd. China made up 24.5% of Brazil’s total shipments, with Hong Kong accounting for another 18.9%. 

Abiec expects further growth in 2020, with Brazil’s beef exports forecast to surge to 2.067 MMT, a 13% gain from its assessment of this year’s shipments.

The country hopes to continue to make strides in expanding the market for its beef, with Abiec saying 12 to 15 beef plants should be approved to sell beef to Russia by February. The trade group also says a U.S. mission to Brazil sometime in the first quarter of 2020 will likely include more discussions about a reopening of the U.S. market to Brazilian beef.