Charlie Cook has bad news/predictions for Republicans
In Today’s Updates
* Eurozone economy grew at record pace in third quarter, but stalls on Covid return
* Oil prices fell to lowest level since early June on Thursday
* Daily sale: 121,500 metric tons of soybeans to unknown destinations, 2020-2021
* Brazilian president: commodity imports taking place as domestic prices rise
* Zeta had major impacts
* Exchange: Rains came too late to benefit Argentina’s wheat crop; rains helping corn
* Argentine oilseed crushers and union officials expected to meet next week
* Big strides in French wheat planting, with progress in line with five-year average
* South Korea bans Dutch poultry
* RFS policy ahead
* Blame game continues on lack of new aid package
* China to focus on expanding domestic demand, breakthroughs in core technologies
U.S. food & beverage industry update:
* Dunkin’ Brands continues to negotiate possible sale to Arby’s parent Inspire Brands
* Black franchisees sue McDonald’s over accusations of racial discrimination
* AquaBounty picks Kentucky to house next GE salmon farm
* 1,370 Covid-19 patients dying in EU and U.K. every day on average
Politics & Elections:
* Charlie Cook has bad new/predictions for Republicans
* FJ Pulse survey: Farmers & ranchers continue to show strong preference for Trump
* Where Trump and Biden will visit today
* Four Democratic senators to release proposal r to 'fundamentally reform' capitalism
* Early voting in presidential election reaches 82 million ballots
* Court blocks Minnesota plan to count absentee ballots after Election Day
Other Items of Note:
* Farm Bureau annual meeting latest to go virtual
* Commodity Classic announces transition to digital experience
* Judge blocks USDA end of Farm Labor Survey
* Gray wolf protections lifted by Trump administration
* EPA reduces exclusion zone around pesticide applicators
* AWP rises for a fifth week
Equities today: Global stock markets were mostly down overnight. U.S. stock indexes are set to open solidly lower. Germany saw its GDP rise a better-than-expected 8.2% in the third quarter from the second quarter, but still down 4.3%, year-on-year. The MSCI Asia Pacific Index dropped 1.3% while Japan's Topix index closed 1.9% lower.
U.S. equities yesterday: The Dow moved up 139.16 points, 0.52%, at 26,659.11. The Nasdaq gained 180.72 points, 1.64%, at 11,185.59. The S&P 500 was up 39.08 points, 1.19% at 3,310.11.
On tap today:
• U.S. consumer spending for September is expected to rise 1% from a month earlier. (8:30 a.m. ET)
• U.S. personal consumption expenditure price index excluding food and energy for September is expected to rise 0.2% from a month earlier and 1.7% from a year earlier. (8:30 a.m. ET)
• U.S. employment cost index for the third quarter is expected to rise 0.5% from the prior quarter. (8:30 a.m. ET)
• Chicago purchasing managers index for October is expected to fall to 57.9 from 62.4 a month earlier. (9:45 a.m. ET)
• Univ. of Michigan consumer sentiment index for October is expected to hold at 81.2, unchanged from a preliminary reading. (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
• China's official manufacturing index for October is out at 9 p.m. ET.
Eurozone economy grew at a record pace in the third quarter, but has already stalled in the face of a resurgence of coronavirus infections and tough new restrictions, leaving Europe lagging even further behind the U.S. and Asia in its recovery from the crisis. Figures released by the European Union's statistics agency showed the combined gross domestic product of the currency bloc's 19 members was 12.7% higher in the three months through September than in the previous quarter. That outpaced 7.4% growth in the U.S. during the same period.
• Outside markets: The U.S. dollar index is a bit weaker on a mild corrective pullback after strong gains this week that pushed the index to a four-week high on Thursday. Nymex crude oil prices are slightly lower early today and hit a 4.5-month low on Thursday, presently trading around $36.00 a barrel.The yield on the benchmark U.S. 10-year Treasury note is 0.82% today.
• Oil prices fell to their lowest level since early June on Thursday, hit by wagers that fresh lockdowns in Europe will dent commerce and travel, eroding demand for fuel.
• Covid concerns have reversed earlier gains for crude oil, with U.S. crude trading around $36 per barrel and Brent around $38 per barrel. Crude oil futures firmed in Asian action, taking back some of Thursday’s losses. U.S. crude was up 33 cents at $36.50 per barrel while Brent crude was up 34 cents at $38.60 per barrel.
• USDA daily export sale: 121,500 metric tons of soybeans to unknown destinations during the 2020-2021 marketing year.
• Brazilian president says commodity imports taking place as domestic prices rise. Brazil is importing staple commodities like soybeans as the country if facing rising domestic prices, according video comments on social media from President Jair Bolsonaro. "We are importing soy now because the price is going up," Bolsonaro said, but did not mention any specific amounts. Market chatter has indicated the volume of soybean purchases is not large, with reports mentioning at least one cargo sold last week. USDA’s Export Sales report for the week ended Oct. 22 showed no U.S. soybean sales to Brazil, but did list 5,920 tonnes of wheat, taking total U.S. export commitments to Brazil to 529,158 tonnes, all of it shipped. USDA also shows outstanding wheat sales of 100,000 tonnes for 2021/22 to Brazil. U.S. export commitments of rice to Brazil are at 115,250 tonnes.
• Zeta had major impacts. At least six people have been killed across Louisiana, Alabama, Mississippi and Georgia, while more than 2 million people were without power after Hurricane Zeta slammed into the Gulf Coast. It's the 27th named storm this season, one less than the record set in 2005, and has halted up to 85% of offshore Gulf of Mexico oil production this week and nearly 58% of its natural gas output. Oil prices collapsed, regardless, as new coronavirus lockdowns in Europe and surging infections elsewhere weighed on the demand outlook. Crews have now begun returning to Gulf offshore facilities, with Chevron and Royal Dutch Shell redeploying personnel to restore production.
• The slump in air travel has made it harder for meteorologists to forecast the weather. Link to NYT article. Just what we need, another reason for weather forecasts to be wrong. Perhaps USDA can use this for its China corn import forecast....
Items in Pro Farmer's First Thing Today include (Link to subscribe to FTT):
• Exchange: Rains came too late to benefit Argentina’s wheat crop, but moisture is helping corn
• Another meeting between Argentine oilseed crushers and union officials expected next week
• Big strides in French wheat planting, with progress in line with the five-year average
• South Korea bans Dutch poultry
— Where to for RFS policy ahead? The authorization for the Renewable Fuel Standard (RFS) ends in 2022. That means the RFS will be a topic of debate in 2021, no matter who wins the White House and controls Congress. But the future of the RFS is dependent in part on the next president, Congress and who is the next EPA administration. Unless lawmakers come up with new policy, the Environmental Protection Agency (EPA) will begin calling the shots on yearly biofuel-gasoline blend quotas in 2023. The law outlines annual targets only through 2022.
A Biden administration may have an “Energy Czar” or something similar and if so, the portfolio of that possible position would be important to monitor.
The Democrats’ race to eliminate CO2 emissions is resulting in decisions like that of California to eliminate gasoline-powered vehicle sales. If that occurs and 11 states follow suit, one industry source said, “it would make small refinery exemptions look like a walk in the park for biofuels.” Some Democrats want to use the RFS reset as a chance to replace explicit biofuel-usage targets with a broader low-carbon fuel standard, using California as a guide.
Sen. Chuck Grassley (R-Iowa) this week urged farm groups to push back against a new Senate bill that would ban gas-powered cars after 2035 in favor of electric vehicles. “It’s really an extreme government overreach that would strip away consumer choice and freedom while destroying opportunities for rural Americans,” Grassley told reporters. A University of Tennessee study commissioned by the Agricultural Retailers Association notes net farm income would drop by as much as $27 billion under an all-EV mandate.
Another industry analyst adds, “The next two years are potentially the most consequential for biofuels because of the emphasis on climate and electronic vehicles (EV’s). An electric fuel future has surpassed biofuels as the most fantastic, fascinating and freshly popular energy topic. Traditional ethanol and biodiesel are now considered legacy, old and been-there, done-that. Combined with unsettled volumes for this year and an uncertain future over the next two, we are entering a very consequential period for the future of biofuels as we know them.”
Democratic presidential candidate Joe Biden is scheduled to campaign in Des Moines, Iowa today, his first visit since he won the Democratic nomination. He has promised to accelerate that trend and put more electric cars on the road — a vow that worries some farmers and ethanol makers. “We’ve got big concerns about Biden’s focus on electric vehicles,” National Corn Growers Association Chairman Kevin Ross said. Biden wants to fund the installation of 500,000 EV charging stations nationwide.
Former Iowa Governor Tom Vilsack, who served as Obama’s USDA secretary, says worrying about electric cars filling up the highways anytime soon is not realistic. “We’re talking about generations that will pass before we have a vehicle fleet that is even remotely close to being all electric,” Vilsack said in an interview cited by Bloomberg, adding that he sees opportunity to expand ethanol to ships and planes.
“The U.S. has basically reached peak ethanol demand,” according to Iowa State University rural economist David Swenson. “We are driving more energy-efficient automobiles, we are using electric vehicles and some of our younger generation doesn’t bother to drive at all.”
— Blame game continues on lack of new aid package. "Your ALL OR NOTHING approach is hurting hard-working Americans who need help NOW," Treasury Secretary Steven Mnuchin said in response to a letter from House Speaker Nancy Pelosi (D-Calif.), which detailed six areas that need to be addressed before stimulus talks can move forward. Those include state and local funding, school safety, child care, tax credits for working families, unemployment insurance and worker liability.
Outlook: While an aid package is out of sight before the election, Pelosi said it may be possible to strike a Covid relief deal in the so-called the lame-duck session of Congress.
— Update on China:
- China will focus on expanding domestic demand and achieving “major breakthroughs in core technologies,” the ruling Chinese Communist party said on Thursday as it completed an annual planning meeting in Beijing. It also emphasized "quality growth over speed" and underscored the roles of innovation, real economy, a strong domestic market, rural vitalization and green development. After four days of deliberations, the party’s 200-member Central Committee signed off on a planning blueprint through to 2025. The party’s 14th five-year plan may not be fully revealed until it is rubber-stamped by China’s parliament early next year. There was also a pledge to open up to more foreign investment. The U.S. has threatened bans on Bytedance’s TikTok app and Tencent Holdings’s WeChat. Because of U.S. sanctions, Huawei Technologies is running out of processor chips to make smartphones and may soon have to suspend production of its own most-advanced chips.
- U.S./China Phase 1 tracker: China’s purchases of U.S. goods. Link.
— Food and beverage industry update:
- Dunkin’ Brands is continuing to negotiate its possible sale to Arby’s parent Inspire Brands, while closing hundreds of stores hit hard by altered customer behavior during the pandemic.
- Black franchisees sue McDonald’s over accusations of racial discrimination. The proposed class-action lawsuit accuses the fast-food chain of giving them undesirable locations with below-average sales and failing to provide support. The plaintiffs are seeking damages that could exceed $3 billion.
- AquaBounty picks Kentucky to house next GE salmon farm. After considering some 230 sites, AquaBounty Technologies identified Mayfield, Kentucky, for a large-scale, land-based fish farm to grow out its AquaAdvantage salmon, the company said Thursday (Oct. 29). The planned facility will have 10,000 tonnes in annual production capacity, eight times the size of the current Indiana farm, the company said. Construction is expected to begin in 2021, with commercial production slated for 2023. AquaAdvantage salmon is the only GE animal approved for human consumption.
— Coronavirus update:
- Summary: Global cases of COVID-19 are at 45,076,642 with 1,182,010 deaths, according to data compiled by the Center for Systems Science and Engineering (CSSE) at Johns Hopkins University (JHU). The U.S. case count is nearing 9 million, currently at 8,946,876 cases and 228,669 deaths.
Link to Covid Case Tracker
Link to Our World in Data
- Around 1,370 Covid-19 patients are dying in the European Union and the U.K. every day on average, compared with 808 in the U.S. Not since March has Europe suffered more recorded deaths than the U.S. The U.S. reported more than 88,500 new coronavirus infections Thursday, its highest daily number so far.
POLITICS & ELECTIONS
— 2020 Presidential Election Interactive Map
— The Green Papers
— Real Clear Politics
— 2020 Political Atlas
— 2020 Demographic Swingometer
— Days until election
- Charlie Cook of Cook Political Report: “... it is hard to look closely at the presidential election and not see that, given how little time is left, the odds of a big Biden win are higher than those of a Trump come-from-behind victory... It increasingly looks like a foregone conclusion that the GOP Senate majority is soon to be history... This election is going to a very different place than many expected, and it may turn out for Republicans to be even worse than they fear.”
- Farmers and ranchers responding to the Farm Journal Pulse continue to show a strong preference for re-electing President Donald Trump.
- Where Trump and Biden will visit today:
Trump Campaign: President Trump campaigns in Michigan, Wisconsin and Minnesota. Vice President Mike Pence campaigns in Arizona.
Biden Campaign: Democratic presidential nominee Joe Biden campaigns in Iowa and Wisconsin. Vice presidential nominee Kamala Harris campaigns in Texas.
- Four Democratic senators — Tammy Baldwin, Tom Carper, Mark Warner and Elizabeth Warren — are banding together to “fundamentally reform” capitalism. The plan will be announced today. It wants to push corporate America to focus less on shareholders and short-term profits. “Short-term financial pressure often pushes corporations to forgo necessary long-term investments, ignore the threat of climate change and concentrate opportunity in ways that exclude too many of our communities,” the senators said in a statement. “We will work together on ways we can fundamentally reform corporate governance in America.”
- Early voting in the Presidential election reached 82 million ballots, almost 60% of the total turnout in 2016, according to the U.S. Elections Project.
- Court blocks Minnesota plan to count absentee ballots after Election Day. A federal appeals court on Thursday said Minnesota’s plan to count absentee ballots received after Election Day was illegal, siding with Republicans in the battleground state. In a 2-1 decision, the U.S. 8th Circuit Court of Appeals said the deadline extension was an unconstitutional maneuver by the state’s top election official, Minnesota Secretary of State Steve Simon, a Democrat.
OTHER ITEMS OF NOTE
- Farm Bureau annual meeting latest to go virtual. The annual gathering of the nation’s largest farm organization will be a virtual event this with the American Farm Bureau Federation now set as a virtual event Jan. 10-13. The group noted that the original host site for the event — San Diego Convention Center — has been temporarily turned into a homeless shelter. “This January the American Farm Bureau Convention is going to be hosted at farm and ranch homes across America,” AFBF President Zippy Duvall said in his Zipline column. “The best news is that holding our annual convention online gives us the unique opportunity to ‘open the doors’ to the entire Farm Bureau family, our friends and neighbors.”
- Commodity Classic announces transition to digital experience. Commodity Classic said it will transition its annual conference and trade show, originally scheduled for March 4-6, 2021, in San Antonio, Texas, to an alternative digital format. The change was necessary due to restrictions related to the Covid-19 pandemic. The new format is expected to be offered the first week in March 2021. The 2022 Commodity Classic will be held in New Orleans on March 10-12, 2022.
- Judge blocks USDA end of Farm Labor Survey. USDA’s Sept. 30 announcement that it was suspending data collection and release of its Farm Labor Survey has been blocked by U.S. District Judge Dale Drozd of the U.S. District Court for the Eastern District of California. United Farm Workers (UFW) union and the UFW Foundation brought the suit, charging USDA did not follow the Administrative Procedures Act in suspending the FLS which is used by the Department of Labor to set minimum wages for guestworkers under the H-2A program. The groups said the end of the FLS survey could mean that the Adverse Effect Wage Rate (AEWR) for H-2A workers could revert to federal or state minimum wage levels to the detriment of workers as those are lower than the AEWR rates. It is not clear whether USDA will appeal the action.
- Gray wolf protections lifted by Trump administration. The gray wolf will lose its protection under the Endangered Species Act across the contiguous United States, a long-held goal of some Republican lawmakers, ranchers and hunting groups. Interior Secretary David Bernhardt announced the new rule Thursday at the Minnesota Valley National Wildlife Refuge in Bloomington, Minnesota. Bernhardt said the gray wolf packs in the Lower 48 states had recovered sufficiently to justify the delisting. The U.S. Fish and Wildlife Service will monitor gray wolves for five years under the rule, which would turn management of the animals over to states and tribes. Interior is expected to publish the rule on Tuesday, Election Day. The proposal is not expected to apply to Mexican wolves, a subspecies of grays, which are listed as a different animal type under the law. If Democrat Joe Biden wins the presidency, his administration could seek to overturn the move.
- EPA reduces exclusion zone around pesticide applicators. EPA finalized a regulation on Thursday that reduces the size of the buffer zones intended to protect people from pesticides being applied on the farm. EPA administrator Andrew Wheeler said the new regulation would be simpler and easier to follow than its predecessor.
- AWP rises for a fifth week. The Adjusted World Price (AWP) for cotton rose to 57.37 cents per pound, effective today (Oct. 30), up from 55.71 cents per pound the prior week. The increase marked the fifth weekly the AWP has risen and the third week it has been above the national average loan rate, ending the availability of an LDP. Meanwhile, USDA announced that Special Import Quota #2 will be established Nov. 5 for 25,499 bales of upland cotton, applying to supplies purchased not later than Feb. 2 and entered into the U.S. not later than May 3.