Scott likely new House Ag chairman | Stealth opposition to Fudge as possible USDA leader
In Today’s Updates
• OECD: Gov’t restrictions, consumers’ fear of weigh on the global economic outlook
• Canada’s deficit is growing faster than other developed nations
• Oil exports rising
• Iron-ore prices surging again
• Fed could start buying more long-term Treasurys by next policy meeting
• U.S. shoppers spent 14% less than last year over a five-day stretch
• Weather forecast continues to have rain chances improving for Brazil
• CP announces best-ever November for Canadian grain transport
• Disruptive Argentine strikes come to an abrupt end, but another strike underway
• Brazilian soybean exports fade into year-end
• Steady to softer cash cattle trade in an early, light test
• Pork movement picks up on price break
• Several new aid proposals surface, but no consensus
• Biden tells NYT columnist he will not immediately end China tariffs
• House to consider Senate-passed bill imposing restrictions on Chinese companies
• China purchases rice from India for first time in at least three decades
Energy & Climate Change:
• More carbon capture in pipeline
• Changes urged in Indonesia’s biodiesel programs
Food & beverage industry update:
• Labor liability and the Supreme Court
• Singaporean regulators approve first meat product not requiring killing an animal
• White House to host Covid-19 vaccine summit
• Pfizer vaccine wins U.K. authorization
• Priorities listed for those who will receive first Covid-19 vaccinations
Politics & Elections:
• Barr: No Evidence of widespread voter fraud in election
• NYT: Trump has considered pre-emptive pardons for three of his children
• Kelly joins Senate
• Hall wins runoff to briefly fill Georgia House seat
• House Democratic Steering Committee backs Rep. Scott to head Ag panel
• Rep. DeLauro poised to lead House Appropriations Committee
• Some groups/lobbyists stealthy opposition to Fudge as Biden USDA Sec.
• McConnell has no ear for ending ban on earmarks
• House to consider grain inspection fee reauthorization
Other Items of Note:
• Bipartisan commission: Congress should give FTC more power over mergers
• Trump threatens to veto annual defense bill
• Federal Maritime Commission expands check on ocean carriers
Equities today: Global stock markets were mixed to weaker overnight. U.S. stock indexes are pointed toward modestly lower openings. The Nikkei ended up 13.44 points, 0.05%, at 26,800.98. The Hang Seng Index declined 35.10 points, 0.13%, at 26,532.58.
U.S. equities yesterday: The Dow gained 185.28 points, 0.63%, at 29,823.92. The Nasdaq rose 156.37 points, 1.28%, at 12,355.11. The S&P 500 was up 40.82 points, 1.13%, at 3,662.45.
On tap today:
• ADP jobs report for November is expected to show private-sector employment increased by 475,000 from the prior month. (8:15 a.m. ET)
• Federal Reserve Chairman Jerome Powell and Treasury Secretary Steven Mnuchin appear before the House Financial Services Committee at 10 a.m. ET.
• Fed speakers: Vice Chairman Randal Quarles on financial regulation at 9 a.m. ET, New York’s John Williams at a webinar on culture at 9 a.m. ET, Philadelphia’s Patrick Harker on the economic outlook at 10 a.m. ET, and Mr. Williams on the economic impacts of Covid-19 at 1 p.m. ET.
• Federal Reserve Beige Book report on U.S. economic conditions at 2 p.m. ET.
• China's Caixin services index for November is out at 8:45 p.m. ET.
Government restrictions and consumers’ fear of infection will continue to weigh on the global economy well into next year, even as vaccine developments offer hope of an end to the pandemic, the Organization for Economic Cooperation and Development (OECD) said Tuesday. When the world’s economy does come back, China will emerge as the big winner, according to the research body, accounting for as much as one-third of next year’s recovery, as Western countries slowly shake off the effects of 2020’s record-setting contractions.
Canada’s deficit is growing at the fastest rate among developed nations as it seeks to prop up its economy during the pandemic. Officials argue the country can afford to pour money into the economy while borrowing costs are historically low. But some economists warn the heavy spending could lead to a fiscal crisis, and one major ratings firm has already stripped the country of its triple-A rating, according to the Wall Street Journal (link).
• Outside markets: The U.S. dollar index is firmer early today after hitting a 2.5-year low Tuesday. The other important outside market sees January Nymex crude oil futures prices near steady and trading around $44.50 a barrel. The OPEC oil cartel is meeting this week and will be discussing keeping its present production cuts. The yield on the benchmark 10-year U.S. Treasury note futures is currently trading at 0.92%.
• Crude oil futures are weaker but have lifted off their lows as attention remains on OPEC+ countries and their Thursday meeting on output targets. U.S. crude is trading around $44.35 per barrel and Brent around $47.25 per barrel. Crude oil prices were under pressure in Asian action from the OPEC+ uncertainty, with U.S. crude down 47 cents at $44.08 per barrel and Brent crude down 45 cents at $46.97 per barrel.
• Oil exports are rising. Since June, U.S. exports of petroleum products and crude oil have recovered — to 5.1 million b/d and 3.2 million b/d in September, respectively. U.S. imports of crude oil, meanwhile, have begun to decline again, reaching their lowest monthly value in September since March of 1992 at 5.4 million b/d, according to the EIA’s latest data.
• Iron-ore prices are surging again as steelmakers in China keep output high to support the economic recovery there. Iron ore climbed to $133.05 a metric ton on Tuesday, reaching its strongest price in seven years, according to data from S&P Global Platts. The value of steel’s main ingredient, one of the world’s most-traded commodities, has climbed 13% since the start of November, taking year-to-date gains to 45%.
• Some investors are betting the Fed could start buying more long-term Treasurys as soon as its next policy meeting.
• U.S. shoppers spent 14% less than last year over a five-day stretch including Black Friday and Cyber Monday.
• Weather forecast continues to have rain chances improving for Brazil starting late week. Central Argentina received rain overnight. Brazil rain has daily showers in the forecast for 10 days.
• CP announces best-ever November for Canadian grain transport. Canadian Pacific completed its best-ever November and second-best-ever month for shipping Canadian grain and grain products, with 2.96 million metric tonnes (MMT) moved. This exceeds the previous November record in 2019 by 8% and is second only to October 2020 for total monthly tonnage. CP has shipped 11.13 MMT of Canadian grain and grain products in the 2020-2021 crop year, exceeding the amount shipped at this time in the 2019-2020 crop year by 15%.
Items in Pro Farmer's First Thing Today include (Link to subscribe to FTT):
• Disruptive Argentine strikes come to an abrupt end, but another strike underway
• Brazilian soybean exports fade into year-end
• Steady to softer cash cattle trade in an early, light test
• Pork movement picks up on price break
— Several new aid proposals surface, but no consensus. A bipartisan group unveiled a $908 billion package to break the political logjam. But Senate Republicans are working on a far smaller proposal that is unlikely to win Democratic support, while Democratic leaders are pushing for more spending. Some details of each approach:
A bipartisan group of lawmakers unveiled a $908 billion aid proposal to address small business loans, state and local aid and unemployment benefits, among other issues. House Speaker Nancy Pelosi (D-Calif.) and Senate Majority Leader Mitch McConnell (R-Ky.) have not yet commented on the plan, but McConnell offered a revised package.
The $908 billion package is designed to provide enough relief through the end of March, lawmakers said. “It’s inexcusable for us to leave town and not have an agreement,” said Sen. Joe Manchin (D-W.Va.), a leader of the bipartisan group that presented its plan at a news conference. “It’s not the time for political brinkmanship.” Manchin said the group has received no assurance from congressional leadership about getting floor votes on their proposal, which has yet to be drafted into legislation.
Treasury Secretary Steven Mnuchin and McConnell were consulted on the proposal, according to Sen. Mitt Romney (R-Utah), who is part of the bipartisan group
Joe Biden is also planning how he will boost the economy when he takes office next month. The effort starts with a newly formed economic team headlined by Treasury Secretary nominee Janet Yellen, the former Fed chair who has called for more fiscal relief throughout the pandemic.
GOP and Democratic leaders also traded new offers. Pelosi and Mnuchin held their first phone conversation since the election on relief measures and spending legislation. Also, McConnell circulated a new plan to his caucus that he said reflected what President Trump would be willing to sign into law in the waning days of his administration, after speaking with White House officials.
The new Republican offer includes more funding for small businesses, legal protections for entities operating during the pandemic and a one-month extension of expanded unemployment insurance programs that expire at the end of December. It doesn’t include additional funding for state and local governments, a priority of Democrats. (Pelosi and Senate Minority Leader Chuck Schumer (D-N.Y.) sent a letter to McConnell outlining Democratic leaders’ latest offer.) There was no official price tag for the new GOP offer. “I hope this is something that would be signed into law by the president, be done quickly, deal with the things that we can agree on now,” McConnell told reporters. He nodded to the possibility of more aid proposals next year under the incoming Democratic administration.
Bottom line: The outlook on this issue comes from McConnell who said it’s challenging and slow to move legislation across the Senate floor, so an omnibus and a stimulus will likely be attached as one major piece of legislation. “It’ll all likely come in one package,” McConnell said. The continued divide between the various offers continues to point to either no immediate agreement on a plan or the potential for a much smaller plan to result with additional aid likely in the pipeline next year.
— Biden tells NYT columnist he will not immediately end China tariffs. Joe Biden told New York Times columnist Thomas Friedman (link) he will seek to review the existing Phase 1 agreement between the U.S. and China and would not immediately remove the tariffs the Trump administration put in place on China. While Trump was focused on the trade deficit with China, Biden says his "goal would be to pursue trade policies that actually produce progress on China's abusive practices — that's stealing intellectual property, dumping products, illegal subsidies to corporations" and forcing "tech transfers" from American companies to their Chinese counterparts.
He also indicated, as expected, that his strategy will be to enlist U.S. allies in taking on China. “The best China strategy, I think, is one which gets every one of our — or at least what used to be our — allies on the same page. It’s going to be a major priority for me in the opening weeks of my presidency to try to get us back on the same page with our allies,” Biden said.
Getting bipartisan consensus in the U.S. relative to China is another tack Biden will take, seeking to build “leverage” over China. “I want to make sure we’re going to fight like hell by investing in America first,” Biden said.
He also confirmed what has been an expectation on new trade deals — they will not be a priority. “I’m not going to enter any new trade agreement with anybody until we have made major investments here at home and in our workers,” Biden told the columnist, with those investments also to include education.
— House today plans to consider a Senate-passed bill that would impose restrictions on Chinese companies listed on U.S. exchanges. The bill’s sponsors say the aim is to ensure foreign companies traded in America are subject to the same independent audit requirements that apply to U.S. firms.
— China purchases rice from India for the first time in at least three decades. China purchased 100,000 MT of broken rice from India, marking its first purchase from the country in at least 30 years as Indian rice was offered at sharply discounted prices and supplies are tightening in Thailand, Myanmar and Vietnam. China typically imports around 4 MMT of rice annually, but it typically avoids purchases from India, the world’s biggest exporter of the grain, due to quality issues. This comes despite simmering political tensions between the nations.
— U.S./China Phase 1 tracker: China’s purchases of U.S. goods. Link.
— Sen. Grassley charges GSP renewal snared by Democratic demands. Democrats are holding renewal of the Generalized System of Preferences (GSP) “hostage” with demands that human rights, anti-corruption, and environment provisions be included, according to Senate Finance Committee Chairman Chuck Grassley (R-Iowa). "I think all of those are good goals of the moral position of the United States to signal to the rest of the world but using those things right now to get on GSP is not very appropriate," Grassley told reporters, referencing efforts by Senate Finance Committee Ranking Member Ron Wyden (D-Ore.) and House Ways and Means Committee Chairman Richard Neal (D-Mass.). Wyden told Politico that an effort to address those issues now in the GSP renewal is appropriate. “Adding criteria on issues like human rights, anti-corruption and the environment will help align GSP with other US trade policies that have garnered strong bipartisan support,” Wyden said. “It will also raise the bar for our trading partners and help prevent a race to the bottom when it comes to human rights, rule of law, and the health of our planet.”
GSP is set to expire at the end of the year and the standoff could mean it may lapse, something which has happened previously. However, the matter could be addressed in a fiscal year 2021 spending plan that lawmakers are trying to finalize before the current stop-gap funding effort runs out Dec. 11 via at least a temporary extension.
ENERGY & CLIMATE CHANGE
— More carbon capture in pipeline. The number of carbon capture projects in operation and under development worldwide continued to grow in 2020 for the third year in a row, according to a status report (link) by the Global CCS Institute. This year, 26 operating commercial carbon capture projects — ranging from natural gas processing facilities to ethanol production to coal-fired power plants — captured nearly 40 million tons of carbon dioxide, the report finds.
The U.S. remains the leader in operating carbon capture projects, and 12 of the 17 new commercial projects added to the development pipeline this year are located in the U.S., the Institute said. However, countries in Europe are ramping up carbon capture, including significant investment from the Norwegian government in a carbon capture project, increased funding for carbon capture in the United Kingdom, and the inclusion of carbon capture to qualify for the European Union’s 10 billion Euro innovation fund.
Despite the growth this year, the Global CCS Institute notes it is not enough to achieve global climate goals. To keep warming to 1.5 degrees Celsius, the more ambitious goal under the Paris Agreement, the world should have more than 2,000 carbon capture facilities in operation by 2050, a more than hundredfold scale-up over the next few decades, the report said.
— Changes urged in Indonesia’s biodiesel programs. Policy changes are needed in Indonesia’s biodiesel program if the effort is to continue, according to Eddy Abdurrachman, president director of the Estate Crop Fund Agency (BPDP). In remarks to the Indonesian Palm Oil Conference, he noted, "The price gap between crude palm oil and diesel widened in 2020, posing a challenge to the sustainability of the support program … especially the mandatory biodiesel program.” Others at the conference agreed that changes were needed, according to a Reuters recap, including tax increases and other efforts. The country’s aggressive expansion of using palm oil in biodiesel appears in need of adjustments under current market conditions.
FOOD & BEVERAGE INDUSTRY
— Labor liability: Supreme Court justices expressed doubt over a suit seeking to hold Nestle and Cargill liable for child slavery.
— Singaporean regulators approved the first meat product as safe for sale that does not require killing an animal. The “chicken bites,” produced by Eat Just, an American foodmaker, are the first lab-grown meat to gain such an approval in the world. The chicken cells are grown in a bioreactor fed on plant-based nutrients and will initially be served in a posh restaurant.
— Summary: Global cases of Covid-19 are at 63,938,037 with 1,481,750 deaths, according to data compiled by the Center for Systems Science and Engineering at Johns Hopkins University. The U.S. case count is at 13,725,917 with 270,691 deaths.
— White House to host Covid-19 vaccine summit as it hopes to start vaccinations next week. The White House has invited pharmaceutical companies and drug distributors to a Covid-19 vaccine summit next Monday, two days before the Food and Drug Administration is to consider emergency approval for the first immunizations to halt the coronavirus pandemic.
— Pfizer vaccine wins U.K. authorization. Britain became the first Western nation to grant emergency-use authorization for a Covid-19 vaccine, clearing a shot developed by Pfizer and Germany’s BioNTech to be distributed in limited numbers within days. The first 800,000 doses will be available in the U.K. from next week (another 40 million doses are on order), with the vaccines being rolled out at hospitals, vaccination centers, and in the community via GPs and pharmacists. Two doses three weeks apart are required for protection and will first be offered to frontline health care workers and nursing home residents, followed by older adults. As noted, other countries aren't far behind: The U.S. and the EU also are vetting the Pfizer shot along with a similar vaccine made by competitor Moderna, and a similar nod by the FDA is expected as early as next week.
— Frontline U.S. healthcare workers and elderly residents of long-term care facilities will receive the very first Covid-19 vaccinations, a Centers for Disease Control and Prevention (CDC) advisory board recommended Tuesday. These groups will make up Phase 1A of U.S. vaccine recipients who will receive the first 40 million or so doses that could be available by the end of the year. According to the CDC, there are about 21 million healthcare workers, including people who work in hospitals, long term care facilities, home healthcare, pharmacies, emergency medical services as well as in public health, and about 3 million older Americans living in skilled nursing or long term care facilities.
The recommendation now go to the director of the CDC, Dr. Robert Redfield. If he accepts the recommendation, state health departments can start making decisions about how to allocate the anticipated 6.4 million doses that will be the first batch released within days of the FDA authorizing a vaccine.
POLITICS & ELECTIONS
— Barr: No Evidence of widespread voter fraud in election. The attorney general’s comments contradict President Trump, who pressed forward with more legal challenges.
— President Trump has considered pre-emptive pardons for three of his children, his son-in-law Jared Kushner, and Rudy Giuliani. Details via NYT item. Separately, the Justice Department is investigating a potential bribery scheme involving pardon seekers (link for more).
— Kelly joins Senate. Senator-elect Mark Kelly (D) will be sworn in this afternoon, following his victory over Sen. Martha McSally (R-Ariz.) in a special election last month. Once Kelly replaces McSally, the Senate will have 52 Republicans and 48 Democrats.
— Hall wins runoff to briefly fill Georgia House seat. Former Atlanta City Councilman Kwanza Hall (D) won a special election runoff Tuesday in Georgia’s 5th District to complete the term of the late John Lewis (D). He’ll serve for the next month before Nikema Williams (D), who was elected to a full term in November, is sworn in.
— House Democratic Steering Committee backs Rep. Scott to head Ag panel. The House Steering Committee Thursday cast votes on who they back to lead the various standing committees in the 117th Congress, with Rep. David Scott (D-Ga.) emerging as their choice. He received 32 votes to 19 for Rep. Jim Costa (D-Calif.). While Costa has touted the backing of several ag groups for him to take the Ag panel gavel, Scott importantly received the support of currently House Ag Committee Chairman Collin Peterson (D-Minn.) who was defeated in his bid for re-election. Scott is also the second ranking Democrat on the panel in terms of seniority, something which Peterson noted when he endorsed Scott for the chairman’s spot. The full House Democratic caucus will make its choices Thursday on who will lead the committees.
— Rep. DeLauro poised to lead House Appropriations Committee. The House Democratic Steering Committee made their selections for who should lead the various congressional committees in the 117th Congress and endorsed Rep. Rosa DeLauro (D-Conn.) as the next House Appropriations Committee leader. She received 36 votes from the Democratic Steering and Policy Committee, compared with 11 for Rep. Debbie Wasserman Schultz (D-Fla.) and six for Rep. Marcy Kaptur (D-Ohio). The full Democratic caucus is expected to make their selections on Thursday, giving the other lawmakers another shot at taking the gavel. But the endorsement of the Steering panel typically drives the end result.
— Don’t believe reports that U.S. farm and commodity groups are playing no favorites in the parlor game of the next USDA secretary. Behind the scenes, some are pushing against Rep. Marcia Fudge (D-Ohio). You usually hear the term “production agriculture” in opposition to Fudge.
— McConnell has no ear for ending ban on earmarks. Senate Majority Leader Mitch McConnell (R-Ky.) said yesterday he hadn’t “given any thought” to House Democrats’ plans to revive the use of earmarks in the 117th Congress. “It’ll be interesting to see how the Republicans in the House respond to it,” McConnell said at yesterday’s press conference.
— House to consider grain inspection fee reauthorization. USDA’s authority to collect user fees to cover the costs of inspecting and weighing grain would be extended through Sept. 30, 2025, by S 4054. The authority was set to lapse on Sept. 30, but was extended through Dec. 11 by a stopgap spending law. The Senate passed the bill by voice vote Nov. 16.
OTHER ITEMS OF NOTE
— Bipartisan commission said that Congress should give the Federal Trade Commission more power over mergers involving foreign buyers. Link to WSJ item.
— President Trump threatened to veto an annual defense bill if it doesn’t include language overturning a provision giving social-media companies broad immunity for user content.
— Federal Maritime Commission expands check on ocean carriers. The Federal Maritime Commission (FMC) will expand its Fact Finding 29 effort, the International Ocean Transportation Supply Chain Engagement, to now include practices that have arisen relative to the return of empty containers and other questionable practices. The expanded effort (which began Nov. 20) comes in the wake of several industries, including the U.S. ag industry, complaining that foreign carriers are rejecting exports of ag products in favor of sending empty containers back to China to be used to send Chinese goods back to the U. S. The situation arose, according to reports, after Chinese transportation officials met with major carriers and called on them to cut rates and reinstate some sailings that had been cancelled. Indications are the rejection of ag shipments is linked to costs and time associated with such shipments to China — they are cheaper to move and take longer to unload. By sending the empty containers back to China to be filled with Chinese goods, carriers can then charge higher shipping rates.
The original Fact Finding 29 investigation was launched to “identify operational solutions to cargo delivery system challenges related to recent global events.” The expanded investigation is looking at “practices and regulations that are having an unprecedented negative impact on congestion and amplifying bottlenecks at these ports and other points in the Nation’s supply chain,” FMC said. The expanded check is focusing on “alliance carriers who call on the Port of New York and New Jersey or who call on the Port of Long Beach and the Port of Los Angeles are employing practices or regulations” that are restricting U.S. exports via “practices and regulations related to demurrage and detention, empty container return” and “practices related to the carriage of U.S. exports.” It is not clear what results of the expanded effort will be, but actions involving ag shipments which have increased demurrage charges and other costs due to shipment rejections have caught the attention of U.S. shipping regulators.