USDA to Hold WHIP+ Roundtable Today as Farmers and FSA Offices Note Lack of Info

Posted on 01/05/2021 8:21 AM

CFAP 2 payouts top $13 billion; soybean futures top $13

 


In Today’s Updates


 

Market Focus:
• Traders closely watch outcome of Georgia’s two Senate runoffs
• Chicago Fed president not concerned about inflation
• Bitcoin finally declines
• Alvean expects global sugar market to face two years of shortages
• Natural and manmade forces are buffeting global cotton markets
Cordonnier cuts Brazilian soybean crop peg
• Corn export suspension adds to ideas Argentina won’t plant all its intended corn acres
• Argentine soy exports face higher export taxes to kick off 2021
• State offices report notable drops in winter wheat ratings since late-November
• Russia to hit soybeans with an export duty, too

 

Policy Focus:
• CFAP 2 payments top $13 billion
• CRP general signup opens, runs through Feb. 12
• USDA trying to soothe farmer complaints about lack of info re: WHIP+ payments

 

China Update:
• NYSE scraps plans to delist China’s three largest telecoms firms
• China temporarily bans pork from another Brazilian plant

 

Energy & Climate Change:

• Consent decree sets late February deadline for SRE decision  
• OPEC+ members could not agree on production levels for February but will meet again
• Trump administration opens millions more acres of Alaska to drilling


Food & Beverage Industry Update:
• USDA to purchase an additional $1.5 billion in Food Box effort
• Nearly 78,000 Covid cases in food chain  
• FDA issues uniform compliance date for final food labeling regulations


Coronavirus Update:
• Britain’s prime minister announces a strict new lockdown for all of England
• New York reported its first case of the highly contagious new Covid-19 strain
• Moderna raises its forecast for Covid-19 vaccine production
Reuters: Covid restrictions seen hitting Japan economy in first quarter

 

Politics & Elections:
• Update on Georgia’s two Senate runoff races… toss-up predictions, but…
• Rules passed by the House for the new Congress grease skids for Dem initiatives


Other Items of Note:
• Iranian gov’t accuses South Korean banks of holding $7 billion in cash “hostage”
• Mexico offered political asylum to Julian Assange
• South Korea’s population decreased for the first time on record

 


MARKET FOCUS


 

Equities today: Overnight, the MSCI Asia Pacific Index added 0.6% while Japan's Topix index closed 0.2% lower. The Hang Seng Index rose 177.05 points, 0.64%, at 27,649.86. The Nikkei fell 99.75 points, 0.37%, at 27,158.63. U.S. stock indexes are pointed toward slightly higher openings. Focus is on today’s elections in Georgia which will decide control of the U.S. Senate. Election analysts are being cautious and saying both races are too close to call.
 

     U.S. equities yesterday: The Dow lost 382.59 points, 1.25%, at 30,223.89. The Nasdaq declined 189.84 points, 1.47%, at 12,698.45. The S&P 500 was down 55.42 points, 1.48%, at 3,700.65.

 

On tap today:

 

     • Institute for Supply Management's manufacturing index for December is expected to fall to 54.5 from 55.9 a month earlier. (10 a.m. ET)
     • World Bank's global economic prospects report is out at 11 a.m. ET.
     • American Economic Association's virtual annual meeting includes remarks from New York Fed President John Williams on monetary and fiscal policy (3:45 p.m. ET) and Chicago Fed President Charles Evans on Fed actions during the pandemic (3:45 p.m. ET).
     • U.S. auto industry is expected to report its lowest yearly sales tally in nearly a decade. Meanwhile, Fiat Chrysler and PSA are accelerating plans for their trans-Atlantic merger, saying it should be complete in mid-January.
     • China's Caixin services index for December is out at 8:45 p.m. ET.
     • Georgia runoff elections will determine which party controls the U.S. Senate.

 

Chicago Fed president not concerned about inflation. "The bottom line is that it will take a long time for average inflation to reach 2%," Chicago Fed President Charles Evans said on Monday. "To meet our objectives and manage risks, the Fed's policy stance will have to be accommodative for quite a while."
 

     The U.S. economy will require steady, continued support from monetary and fiscal policy throughout 2021 as it faces a bleak winter before reaching a vaccine-driven, mid-year rebound, according to Federal Reserve Bank of Cleveland President Loretta Mester. “A slowdown in the economy in the first part of the year along the lines I am expecting would not require a change in monetary policy so long as the medium-run outlook remains intact,” Mester said in the text of remarks she was set to deliver last night.

 

Market perspectives:

 

     • Outside markets: The U.S. dollar index is lower and not far above Monday’s 2.5-year low in early U.S. trading. February Nymex crude oil futures prices higher and trading around $48.50 a barrel. Oil prices hit a nine-month high on Monday. The yield on the benchmark 10-year U.S. Treasury note futures is currently around 0.93%.


     • Crude prices have built on gains seen overnight and Monday as the focus remains on OPEC+ countries. U.S. crude is trading around $48.40 per barrel while Brent is around $51.90 per barrel. Prices firmed in Asian action, with U.S. crude up 14 cents at $47.76 per barrel while Brent crude was up 11 cents at $51.20 per barrel.

 

     • Jordan issued an international tender to buy 120,000 MT of animal feed barley.

 

     • Bitcoin finally declines. The price of bitcoin, after rising as much as 19% over the weekend, lost 7.6% Monday.

 

     • Alvean, the world’s largest sugar trader, expects the global market to face two years of shortages, the most “constructive” backdrop since 2016. Alvean, a joint venture between Cargill Inc. and Brazilian producer Copersucar SA, expects sugar production to fall short of demand by 5 million metric tons this season, Chief Executive Officer Paulo Roberto de Souza said Monday in a phone interview with Bloomberg. That will be followed by another deficit of 6 million tons in 2021-22, he said.

 

     • Natural and manmade forces are buffeting global cotton markets. Cotton prices are up to their highest level in nearly two years, the Wall Street Journal reports (link), adding to the stresses that have hit a range of commodities over the past year. Cotton is being roiled by dry weather in key growing regions that has reduced expectations for the current crop and also by concerns of forced labor in China that have made a big chunk of the nation’s output off-limits to clothing makers. The supply strains come as the rollout of Covid-19 vaccines fuels expectations that apparel makers hit hard by the pandemic will scale up production in hopes of a revival in consumer demand. U.S. cotton had already grown more attractive to textile and clothing suppliers, and new sanctions from Washington may push China to buy more cotton from elsewhere to keep supplying American apparel sellers.
 

        Cotton rally

 

Items in Pro Farmer's First Thing Today include (Link to subscribe to FTT):

     • Cordonnier cuts Brazilian soybean crop peg
     • Corn export suspension adds to ideas Argentina won’t plant all its intended corn acres
     • Argentine soy exports face higher export taxes to kick off 2021
     • State offices report notable drops in winter wheat ratings since late-November
     • Russia to hit soybeans with an export duty, too

 


POLICY FOCUS


 

—  CFAP 2 payments top $13 billion. USDA has now paid out $13.01 billion under the Coronavirus Food Assistance Program 2 (CFAP 2) as of Jan. 3, including $6.17 billion in acreage-based payments, $3.4 billion for livestock, $2.22 billion for sales commodities, $1.17 billion for dairy and $54.0 million for eggs/broilers.

 

     Payments for seven commodities have reached $500 million or more, including corn ($3.35 billion), cattle ($2.78 billion), sales commodities ($2.14 billion), soybeans ($1.29 billion), milk ($1.17 billion), wheat $703 million), and hogs/pigs ($532 million).

 

— CRP general signup opens, runs through Feb. 12. The next general signup for the Conservation Reserve Program (CRP) opened Monday and will run through Feb. 12. Contracts under the general signup will start Oct. 1. New acres or land under a CRP contract that will expire Sept. 30 can be offered for enrollment under the current general signup effort. Contracts on 3.0 million acres are scheduled to expire as of Sept. 30, including 2.55 million acres enrolled via general signups and 450,000 acres enrolled via continuous signups. As of November, there were 20.77 million acres in the CRP, up slightly from the October total. There were 3.4 million acres approved for enrollment in the prior general signup (Signup 54), with 2.87 million acres enrolled through November. Of 1.2 million acres approved under the CRP Grasslands signup 202, 910,000 acres had been enrolled through November. Another 3,724 acres have been enrolled via the fiscal Year 2021 CRP continuous signup (Signup 55).

 

— USDA trying to soothe a lot of farmer complaints about WHIP+ payments. An approach USDA and farm-state lawmakers typically use to put out some fires is to hold a roundtable on a particular topic. That will happen today when USDA officials hold such an event regarding delivery of WHIP+ funds. Based on calls and emails from farmers, USDA implementation of the program, including payments for quality losses, has been very haphazard as some states/counties are way behind other locations.

 

     Local FSA offices have been authorized to make payments to farmers for any 2018 and 2019 WHIP+ disaster payments on applications reviewed and approved. The funding for the additional 50% of the 2019 WHIP+ payments was passed in late December by Congress, which provided another $1.5 billion for the Wildfire and Hurricane Indemnity Program Plus (WHIP+), to ensure program funding is sufficient to meet demand from producers who were impacted by natural disasters in 2018 and 2019.

 

     The delay in some payments appears to be snags in processing the WHIP+ applications at local FSA offices.

 

     Comments: USDA Washington needs to do a better job about communicating with state/county FSA offices on this topic because some of them do not even know that Congress late last year approved additional WHIP+ funding. Perhaps the coming roundtable on this will provide clear direction ahead.

 

     Link to document on public inspection at the Federal Register.


 


CHINA UPDATE


 

New York Stock Exchange scrapped plans to delist China’s three largest telecoms firms — China Mobile, China Telecom and China Unicom. It had originally sought to comply with an executive order signed by President Trump that bars Americans from investing in companies with Chinese military ties from Jan. 11. Little explanation was given for the change, other than to say that it had consulted with the Treasury Department. Some traders see the prospect of a less overtly combative approach toward China by the Biden administration as a reason, according to the Financial Times (link/paywall).The share prices of the dual-listed trio rose by over 6% on Hong Kong’s exchange.

 

— China temporarily bans pork from another Brazilian plant. China has suspended imports from a privately owned Brazilian pork plant due to concerns about Covid-19 cases at the plant owned by Aurora Alimentos. China has requested information about cases of the virus at the plant and Brazil’s Animal Protein Association (ABPA) said it is supplying Brazil’s ag ministry with information needed for Chinese authorities to reverse the ban. ABPA says, “This is an isolated event in the past.” 

 

U.S./China Phase 1 tracker: China’s purchases of U.S. goods. Link

 

 


ENERGY & CLIMATE CHANGE


 

— Consent decree sets late February deadline for SRE decision. The Environmental Protection Agency (EPA) filed a notice that a proposed consent decree would require EPA to act on a small refinery exemption (SRE) from United Refining for the 2019 compliance year not later than Feb. 19. The company filed a complaint in U.S. District Court for the District of Columbia in July which contended EPA failed to act on its SRE request for the 2019 compliance year. United submitted a petition Dec. 18, 2019, for the SRE relative to the 2019 compliance year. The notice points out that the Clean Air Act states that there is a 90-day deadline for EPA to act on such petitions. “EPA or the Department of Justice may withdraw or withhold consent to the proposed consent decree if the comments disclose facts or considerations that indicate that such consent is inappropriate, improper, inadequate, or inconsistent with the requirements of the Act,” the notice stated.

 

     Background: EPA has not acted on 32 SRE requests for the 2019 compliance year and another 14 that are pending for the 2020 compliance year. Plus, there are still 20 “gap-year” SREs pending for the 2011-2018 compliance years combined.

 

— OPEC+ members could not agree on production levels for February but will meet again. The big two of the alliance — Saudi Arabia and Russia — disagree on whether to go ahead with the planned production increase next month that was agreed in December. The Saudis argue that new coronavirus lockdowns mean demand will be lower than expected, while Russia's oil minister wants to stick to the original plan. There are also difficulties caused by some members already pumping more crude than their quota.

 

     Saudi Energy Minister Prince Abdulaziz bin Salman proposed rolling back the 500,000 barrel-a-day production increase the group made this month, while his Russian counterpart, Deputy Prime Minister Alexander Novak, wanted to maintain that supply hike and add the same amount for February.

 

     OPEC+ producers are currently idling 7.2 million barrels a day, or about 7% of world supplies, and had planned to return a further 1.5 million barrels a day in installments over the coming months.

 

— Trump administration opens millions more acres of Alaska to drilling. The Trump administration decided to open millions more acres of land in the Alaskan Arctic to oil and gas drilling. The decision from the Bureau of Land Management on Monday, finalized just two weeks before President Trump is set to leave office, will allow for fossil fuel extraction from 18.6 million acres in Alaska's North Slope along the Arctic Ocean — a remote area roughly the size of West Virginia, or 82% of the National Petroleum Reserve in Alaska.

 


FOOD & BEVERAGE INDUSTRY


 

— USDA to purchase an additional $1.5 billion in Food Box effort. USDA will purchase an additional $1.5 billion in food nationwide for distribution via the Farmers to Families Food Box Program. The fifth round of food box purchases comes via funding provided via the Covid aid plan approved Dec. 21. The effort will utilize organizations that previously participated, and solicitations are expected to be issued by the end of this week.

 

     Seafood products will now be eligible along with other hard, semi-firm or semi-soft cheeses will be included. As of Jan. 4, USDA said that 132.5 million Food Boxes had been invoiced.

 

— Nearly 78,000 Covid cases in food chain. At least 349 workers at meat plants, in food processing plants and on farms have died of Covid-19 and at least 77,733 have tested positive for the coronavirus, according to data collected by the Food and Environment Reporting Network as of Monday at mid-day.

 

— FDA issues uniform compliance date for final food labeling regulations. Jan. 1, 2024, will be the uniform compliance date for final food labeling regulations issued in calendar years 2021 and 2022, the Food and Drug Administration (FDA) announced. This action does not change existing requirements for compliance dates contained in final rules published before Jan. 1, 2021. The FDA periodically announces uniform compliance dates for new food labeling requirements to minimize the economic impact on the food industry of having to respond separately to each labeling change. The FDA generally encourages industry to comply with new labeling regulations as quickly as feasible.  However, all food products subject to the January 1, 2024, uniform compliance date must comply with the appropriate labeling regulations when initially introduced into interstate commerce on or after January 1, 2024. For some food labeling regulations, the FDA will set a compliance date that differs from the uniform compliance date if special circumstances justify a different compliance date.  The specific compliance date is published when a final regulation is issued.  

 


CORONAVIRUS UPDATE


 

 Summary: Global cases of Covid-19 are at 85,760,827 with 1,855,414 deaths, according to data compiled by the Center for Systems Science and Engineering at Johns Hopkins University. The U.S. case count is at 20,823,856 with 353,628 deaths.
      

       Link to Covid Case Tracker
       Link to Our World in Data

 

— Boris Johnson, Britain’s prime minister, announced a strict new lockdown for all of England to reduce the spread of Covid-19. The imposition of a third national lockdown came after the government’s chief medical officers warned the more-contagious strain was spreading quickly across the country and that some hospitals risked being overwhelmed Schools will be closed to most students and people required to work from home where possible. A new variant of the coronavirus has led to rising rates of infection, which Johnson said threatened to overwhelm the health service. Scotland introduced a similar lockdown.​

 

— New York reported its first case of the highly contagious new Covid-19 strain on Monday. The new variant, which is known to spread 70% faster than earlier versions of the virus, was first detected in the U.S. in a man in Colorado, health officials said last week.

 

— Moderna raises its forecast for Covid-19 vaccine production. The company said it planned to make as many as 600 million doses this year, up 20% from previous expectations. In other vaccination news, more countries are weighing whether to follow Britain’s plan of delaying booster shots so as to give more people an initial inoculation against the coronavirus.

 

— Reuters: Covid restrictions seen hitting Japan economy in first quarter. Japan is now expected to see an economic contraction in the January-March quarter as the country is expected to declare a state of emergency relative to the Covid situation that is expected to take effect Friday (Jan. 8), according to a report from Reuters. The restrictions are expected to be imposed in Tokyo and surrounding areas but are not expected to be nationwide like the restrictions that were put in place in early 2020.

 


POLITICS & ELECTIONS


 

—Today's runoff election in the Georgia that will decide which party has the majority in the U.S. Senate. If the outcome of the two races are as close as some predict, the winners may not be known tonight. Peach State voters will decide whether Republicans David Perdue and Kelly Loeffler return to Washington or if Democratic challengers Jon Ossoff and Raphael Warnock take their place. Election watchers expect the bitterly contested race to be extremely close. Trump lost Georgia in his own race by just under 12,000 votes. Polls close at 7:00 p.m. Eastern time.

 

     Almost 40% of all registered voters in the state have cast ballots early, either by mail or in person. Among those who didn’t participate in the general election but had already cast ballots by the beginning of last week, roughly four in 10 were African-American — far more than Black voters’ overall share in Georgia — according to TargetSmart data.

 

     As of now, the GOP holds a 50-48 majority in the Senate, but if Democrats win both of the runoff races, Vice President-elect Kamala Harris would be the tiebreaking vote, giving the party control of the White House and Congress.

 

     Here’s how Sabato’s Crystal Ball sums up the election: “This may be an oversimplification, but our sense is that if total turnout runs north of 4 million, and particularly if it’s clearly more than 4 million, the Republicans probably are getting a large enough Election Day turnout to win. If turnout runs south of 4 million, the Democrats may be in good shape given their likely advantage in the votes already cast, which constitute a healthy chunk of the eventual total. Our uncertainty about what the turnout ultimately will be is why we’ve decided to keep both races as Toss-ups.”

 

     Georgia

 

— Rules passed by the House for the new Congress allow current and former White House employees to be subpoenaed and renew proxy voting, among other changes. The rules package for the new Congress passed on partisan lines in a 217-206 vote. The package instructs lawmakers to honor all gender identities by changing pronouns and familial relationships in the House rules to be gender-neutral.

 

     The new rules include a change to a House procedure called a motion to recommit, a procedural vote that the minority can use to change legislation in a final amendment vote before legislation passes. The rules adopted on Monday would prevent the procedural vote from altering bills on the floor directly before passage. Instead, the minority would only be able to use the motion to send a bill back to the committee.

 

     The rules package also changes the longstanding pay-as-you-go, or PAYGO, provision that says legislation that would increase the deficit needs to be offset. Progressives sought to eliminate the provision so they could push for legislation that doesn’t have a direct offset, such as Medicare for All or the Green New Deal. Moderate Blue Dog Democrats countered and argued for specific exemptions, rather than a complete end to PAYGO, according to a senior Democratic aide. The final compromise gives the Budget Committee chairman the ability to declare bills that respond to the pandemic or seek to combat climate change as having no cost, effectively exempting them from the PAYGO rules.

 

     GOP comments. In a letter to House Speaker Nancy Pelosi (D-Calif.), Budget ranking member Jason Smith (R-Mo.) wrote Monday that the change is "an obvious attempt to weaken budgetary tools in an overall effort to advance the Democrats wish list of progressive policies" like the Green New Deal.

 


OTHER ITEMS OF NOTE     


 

—  Iranian government accused South Korean banks of holding $7 billion in cash “hostage” in accounts that were frozen after America tightened sanctions on Iranian oil exports in 2019. The claim follows Iran’s seizure of a South Korean chemical tanker off the coast of Oman. Tensions rose further this week after Iran resumed enriching uranium to a level breaching the nuclear deal it signed with world powers in 2015.

 

— Mexico offered political asylum to Julian Assange on Monday after a British court denied a U.S. request to extradite the founder of WikiLeaks to face spying charges. President Andrés Manuel López Obrador called the court decision a “triumph for justice.”

 

— South Korea’s population decreased for the first time on record. Asia’s fourth-largest economy reported a population of 51.8 million last year, down 20,838 people from 2019, according to government data. Sociologists and economists say the coronavirus pandemic likely played a role in the population drop, with many couples’ job losses and decisions to delay marriage weighing on birth rates. With fewer newborns, South Korea is projected to have the world’s largest proportion of individuals 65 or older by 2045. An aging population is expected to hamper the country’s growth as its working-age population declines, the Wall Street Journal reports.

 

     South Korea

 


 

Add new comment