USDA Thinks Up to 6 MMT U.S. Corn Sales to China Will Not Be Shipped This Marketing Year

Posted on 04/13/2021 7:54 AM

J&J vaccine halted on blood clot concerns

 


In Today’s Digital Newspaper


 

Market Focus:
• USDA World Board needs to provide public info on their China corn import forecast
• CPI rose 0.6% but 2.6% from year ago, highest since August 2018
• New York Fed survey: Americans think inflation will rise about 3.2%
• U.S. gov’t spent $660 bil. more in March than revenue, 3rd-largest monthly deficit
• Majority of CEOs say Biden tax hikes will harm business, slow wage growth: Poll.

• Americans now have too much toilet paper
• Economic rally is building up commodity markets
• Average of 30 container ships a day stuck outside Ports of Los Angeles, Long Beach
• Bitcoin sets a record, again
• Ag demand update

Safrinha corn crop needs rain in a week or two to prevent yield loss
• Cordonnier cuts Argentine soybean crop forecast
• Brazil lowers vegoil blends in biodiesel
• Some Brazilian beef processors stop production amid on demand, price issues
• SRW crop leads CCI ratings improvements
• French soft wheat seedings expected to return to average
• Beef price rally pushes packer margins near $600 a head
• Pork prices tumble

Policy Focus:
• Questions and answers document issued on USDA debt relief for selected farmers of color
• USDA sets April 30 deadline for processing QLA applications

 

Biden Administration Personnel

• Senate votes today on Biden nominees

 

China Update:
• China trade data shows strong first quarter imports of grains, soybeans
• Chinese trade data for March showed exports up 30.6% from year ago in dollar terms
• China is confronting the U.S. with a new world view: We are equals now

 

Energy & Climate Change:

• Energy-related carbon dioxide emissions dropped 11% last year in the U.S
• Farm Journal to host free webinar on carbon markets


Food & Beverage Industry Update:
• USDA requests comments on extending info collection for meat, egg product recalls


Coronavirus Update:
• Federal agencies recommend pausing use of Johnson & Johnson coronavirus
• U.S., others discuss waiving intellectual property rights on Covid vaccines

 

Politics & Elections:
• Haley says she will not run for president in 2024 if Trump
• Charles Booker exploring Kentucky Senate bid
• McCrory expected to enter North Carolina Senate race this week


Other Items of Note:
• Biden declares semiconductors as infrastructure
• Reuters names new editor in chief, first woman to hold role in its 170-year history

 


MARKET FOCUS


 

Equities today: Global stock markets were mostly up overnight. U.S. stock indexes are pointed toward mixed openings, but Dow futures fall more than 100 points after FDA recommends pausing J&J Covid vaccine (see related item below). Traders today will focus on results of the Consumer Price Index report for March. Economists expect the CPI to rise 0.5% for the month, with the core CPI, ex food and energy, up 0.2%, both 0.1 percentage point higher than February. Year over year, the CPI is forecast to be 2.5%, up from 1.7%, with the core rate at 1.5%, up from 1.3%. (For report results see item below). Meanwhile, banks are expected to post a big increase in first-quarter profits this week, propelled by the release of rainy-day reserves set aside after the coronavirus pandemic hit. European equity markets are mixed in early action ahead of US inflation data. The Stoxx 600 was little changed with regional markets seeing gains and losses of up to 0.5%. Asian equity markets ended mostly higher, supported by China trade data. Japan’s Nikkei rose 212.88 points, 0.72%, at 29,751.61. Hong Kong’s Hang Seng was up 43.97 points, 0.15%, at 28,497.25.

 

     U.S. equities yesterday: The Dow finished down 55.20 points, 0.16%, at 33,745.40. The Nasdaq declined 50.19 points, 0.77%, at 13,850.00. The S&P 500 was down 0.81 points, 0.02%, at 4,127.99.

 

On tap today:

 

     • U.S. Consumer Price Index for March is expected to rise 0.5% from one month earlier and 2.5% from one year earlier. Excluding food and energy, CPI is forecast to rise 0.2% and 1.5%. (8:30 a.m. ET) Update: Consumer prices shot higher in March, given a boost both by a strong economic recovery and year-over-year comparisons to a time when the Covid-19 pandemic was about to throttle the U.S. economy, the Labor Department reported. The CPI rose 0.6% from the previous month but 2.6% from the same period a year ago. The year over year gain is the highest since August 2018.
     • Federal Reserve speakers: Philadelphia’s Patrick Harker on the economic outlook at 12 p.m. ET, Richmond's Thomas Barkin to the Economic Roundtable of the Ohio Valley at 12 p.m. ET, and the Minneapolis Fed hosts an event on racism and the economy with Kansas City's Esther George at 12 p.m. ET, San Francisco’s Mary Daly at 1:15 p.m. ET, and Atlanta’s Raphael Bostic, Cleveland’s Loretta Mester and Boston's Eric Rosengren at 2:50 p.m. ET.

 

Modern Spending Theory? U.S. government spent $660 billion more in March than it collected in revenue, the third-largest monthly deficit on record. The huge gap was driven by the millions of $1,400 stimulus checks authorized by the White House and Democrats in Congress. Some Republicans have complained about the high levels of government spending as they seek to scale back any new infrastructure package.

 

     The U.S. budget deficit widened to a record $1.7 trillion in the first half of the government’s October-September fiscal year. The shortfall was twice that of the first half of last fiscal year, the Treasury Department said. Deficits are likely to remain at the center of debates over President Biden’s $2.25 trillion infrastructure plan.

 

     The Congressional Budget Office (CBO) projects the deficit for the fiscal year ending Sept. 30 will total $2.3 trillion, almost $1 trillion less than last year’s record gap but more than officials projected in September. Even before the latest aid package was passed, the CBO projected that federal debt would equal 102% of gross domestic product in 2021. It has exceeded that level only twice before in U.S. history, in 1945 and 1946, after a surge in federal spending as a result of World War II.

 

     Deficit bulge

 

Majority of CEOs say Biden tax hikes will harm business, slow wage growth: Poll. A survey of CEOs has found that a majority think President Biden’s proposed hike in the corporate tax rate to pay for his $2 trillion infrastructure package would negatively affect their companies’ competitiveness, expansion and wage growth. The poll released Monday by Business Roundtable of its CEO members showed that 98% f them said raising the rate to 28% from 21% would have a “moderately” or “very” significant adverse effect on competitiveness. Seventy-five percent of the executives said it would “negatively affect” their businesses’ investments in R&D and innovation, while 71% believe it would harm their ability to hire new employees, and two-thirds said it would hamper wage growth for American workers. In the survey, 88% of the CEOs polled said maintaining a globally competitive U.S. tax policy is essential for business expansion.

 

Federal Reserve Bank of New York's March Survey of Consumer Expectations showed that Americans think inflation will rise about 3.2% over the next year, the highest reading in the survey since April 2014. Expectations about home, gasoline and rent price changes all reached record highs for data dating back to 2013.

 

    Inflation rise

 

Americans now have too much toilet paper. Bath-tissue sales in January fell more than 4% from the same period a year earlier, before the spread of Covid-19 spurred Americans to load up on staples from toilet paper to sanitary wipes, according to figures from NielsenIQ. Demand for toilet paper shot up in the outbreak’s initial weeks, doubling in the second week of March, and remained elevated throughout most of 2020. Now, consumers are working through their stockpiles, the Wall Street Journal reports (link).

 

     toilet paper

 

Market perspectives:

 

     • Outside markets: The U.S. dollar index is slightly higher. Nymex crude oil prices are firmer and trading around $60.30 a barrel. Meantime, the yield on the benchmark 10-year U.S. Treasury note is presently fetching around 1.687%. Gold and silver futures are mixed, with gold weaker and trading around $1,729 per troy ounce, while silver is firmer and trading around $25 per troy ounce.


     • Crude oil futures remain in positive territory ahead of the U.S. trading start, with U.S. crude around $59.95 per barrel and Brent around $63.60 per barrel. Crude prices rose in Asian action, with U.S. crude up 32 cents at $60.02 per barrel while Brent crude was up 37 cents at $63.65 per barrel.

 

     • An economic rally is building up commodity markets. Surging prices for raw materials are leading to higher costs for companies from home builders to clothing makers, the Wall Street Journal reports (link), which could become a boon to corporate earnings. Despite concerns over inflation, higher input costs generally accompany broad economic growth, which allows companies to pass along higher prices. And lately it has been hard to find a commodity not rising in price. Wheat, copper, wood pulp, crude oil and corn have all rebounded from the depths of last spring’s economic lockdowns. Lumber prices are more than 75% higher than the pre-pandemic record. Demand remains strong, however, and the impact is rippling across shipping markets. The Baltic Dry Index measuring bulk shipping rates has more than doubled since December and U.S. rail transports of metallic ores, chemicals, forest products and grains all jumped sharply from February to March.

 

     Commodity rally

 

• So much for USDA’s World Board transparency when it comes to China. Last week’s WASDE report from USDA caused a lot of head-scratching… again. This time it concerns USDA’s forecast for the 2020-21 Oct./Sept. trade year corn import estimate for China. USDA left it at 24 million tons. Ukraine has already shipped China 6 million tons of corn, and when you consider outstanding sales plus shipments to date (and some unknown destinations), U.S. corn sales to China total around 24 million tons. So why did USDA stick with 24 million tons for total China corn imports? What USDA should have informed the public but did not is that the World Board thinks around 6 million tons (nearly 240 mil. bu.) of U.S. corn now on the books will not be shipped until the new marketing year. USDA analysis shows that China would have to ship double the amount of its top monthly pace of corn imports for the five months of April-August. So why did USDA keep its 24 million ton forecast for total China corn imports? And why did USDA not include commentary about this important topic in the WASDE report. Absence of information like this is why USDA (both NASS and the World Board) is losing credibility among some in the ag sector, and definitely among farmers.

     Details: Accumulated U.S. corn exports at 9.040 million tonnes, outstanding sales at 14.244 million tonnes, export commitments total 23.284 million tonnes.

 

     China corn

 

    • An average of 30 container ships a day have been stuck outside the Ports of Los Angeles and Long Beach just waiting to deliver their goods. The backlog is part of a global supply-chain mess spurred by the pandemic that means consumers could see delivery delays for weeks. In a video report (link), the Wall Street Journal looks at how the shipping traffic came about, and how long customers can expect the supply-chain squeeze to last.

 

     • Bitcoin sets a record, again. The cryptocurrency was trading at more than $62,000 this morning, continuing a weeklong run-up. That’s good for Coinbase, the cryptocurrency exchange whose shares are set to begin trading tomorrow at a potential valuation of more than $100 billion. Meanwhile, a former CIA leader called concerns about crypto “significantly overstated” in a new report. Michael Morell said he had begun his “call it as I see it” investigation suspicious of crypto but concluded that officials are not sufficiently informed about the technology. “Most illicit activity still takes place in the traditional banking system and not via cryptocurrency,” he wrote. The research was commissioned by the Crypto Council for Innovation, a new trade association with four members: Coinbase, Fidelity, Paradigm and Square.

 

     • Ag demand: Algeria’s state grains agency issued an international tender to buy a nominal 50,000 MT of durum wheat. South Korea’s Major Feedmill Group bought 66,000 MT of animal feed wheat that can be sourced from optional origins.

 

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

Safrinha corn crop needs rain in a week or two to prevent yield loss
• Cordonnier cuts Argentine soybean crop forecast
• Brazil lowers vegoil blends in biodiesel
• Some Brazilian beef processors stop production amid on demand, price issues
• SRW crop leads CCI ratings improvements
• French soft wheat seedings expected to return to average
• Beef price rally pushes packer margins near $600 a head
• Pork prices tumble

 


POLICY FOCUS


 

— Questions and answers document issued on USDA debt relief for selected farmers of color. USDA on Monday published a document on how it plans to implement the debt relief to selected farmers of color in the American Rescue Plan that Congress recently passed and President Biden signed. The document follows a request from Black farm groups and individual farmers to USDA Secretary Tom Vilsack urging him to implement the relief program quickly and listing Black farm groups’ priorities. Link for details. Link to letter from Black Belt Justice Centers. Link to Website for the program.

 

— USDA sets April 30 deadline for processing QLA applications. April 9 was the signup deadline for the Quality Loss Assistance (QLA) program, and producers in many areas across the country were unable to complete the process prior to April 9. USDA’s Farm Service Agency (FSA) has set a deadline of April 30 for QLA applications on a register to be finalized and for producers to submit all their supporting documentation. County FSA offices are currently undertaking Phase I reviews of the QLA applications (to determine if information provided is reasonable and adjust applications as necessary). Those Phase I reviews are to be completed by May 14. USDA at the end of March set a deadline of April 16 for all Wildfire and Hurricane Indemnity Program Plus (WHIP+) applications to be finalized and approved for payment.

 

     Meanwhile, FSA said it would work with the Risk Management Agency (RMA) to determine if WHIP, WHIP+ and QLA applicants have met the requirements for the purchase of crop insurance or Noninsured Assistance Program (NAP) coverage as a condition of receiving their payment.
 


BIDEN ADMINISTRATION PERSONNEL


 

— Senate votes today on Biden nominees. The Senate is expected to vote on the nomination of Polly Trottenberg to be deputy secretary of Transportation. She is expected to easily win confirmation after the 81-14 to invoke cloture (proceed to consideration) on her nomination Monday. The Senate is also expected to vote on the nomination of Wendy Sherman to be deputy Secretary of State.
 


CHINA UPDATE


 

China trade data shows strong first quarter imports of grains, soybeans. Chinese imports of soybeans hit 7.77 million tonnes in March, according to trade data released by the General Administration of Customs, up 82% from year ago. That pushed China’s soybean imports to 21.18 million tonnes for the first quarter of 2021, up 19% from 17.79 million imported during the same period in 2020. The January-February soy imports were below expectations due to delays in shipments clearing customs. Chinese corn imports during the first quarter were at 6.727 million tonnes, more than five times the year-ago level, while January-March wheat imports totaled 2.925 million tonnes, nearly double the first quarter 2020 result.
 

    Meanwhile, data showed 1.02 million tonnes of meat imports by China in March, the most since at least January 2020. For the first quarter, imports were at 2.63 million tonnes, up 20.8% from the January-March 2020 period.
 

     Chinese trade data for March showed exports up 30.6% from year ago in dollar terms, a slowing from the record growth of 154.9% registered for February. But imports rose a sharp 38.1% in March, the highest level since at least January 2020. That pared China’s overall trade surplus to $13.8 billion, well below expectations for a surplus of more than $52 billion. As with other data that will be coming out in countries around the world, Li Kuiwen, spokesman for China’s Customs Bureau, cautioned that overall trade growth in the second quarter would slow given that there would be a higher base period from year-ago when demand boosted the headline trade figures. The March data signals that economic recovery both within and outside of China continues to unfold.
 

— China is confronting the U.S. with a new world view: We are equals now. At the Biden administration’s first meeting with Chinese officials last month, President Xi Jinping’s top foreign-policy aide delivered a lecture about America’s racial problems and democratic failings and warned against challenging Beijing over a mission it sees as sacred — the eventual reunification with Taiwan. The objective, say Chinese officials, was to make clear that China sees itself as an equal of the U.S. For decades Chinese leaders took care not to challenge the U.S. as world leader, but Xi is reshaping the relationship. Link to WSJ article.
 


ENERGY & CLIMATE CHANGE


 

— Energy-related carbon dioxide emissions dropped 11% last year in the U.S., primarily due to the pandemic and related public health restrictions, the Energy Information Administration said Monday.

 

— Farm Journal to host free webinar on carbon markets. Farm Journal’s next Farm Country Update, “The Three Biggest Trends in Carbon Markets,” will feature a panel of experts to discuss how carbon markets are changing what farmers and ranchers are doing at the grassroots level. The online event is set for Thursday, April 15, 2021, at 3 p.m. CDT. Panelists include:

  • Robert Bonnie, Deputy Chief of Staff for Policy and Senior Advisor, Climate, for USDA
  • Kelley Delpit, Oregon Rancher and Conservation Manager for Sustainable Northwest
  • Mitchell Hora, Iowa Row Crop Farmer and Co-Host of the Field Work Podcast from American Public Media
  • Kris Johnson, Interim Director of Agriculture, North America for The Nature Conservancy
  • Amy Skoczlas Cole, Executive Vice President of Trust In Food, Moderator

 


FOOD & BEVERAGE INDUSTRY


 

— USDA requests comments on extending information collection for meat, egg product recalls. USDA’s Food Safety and Inspection Service (FSIS) is requesting comments by June 14 on renewing its authority to collect information on voluntary recalls of meat, poultry, and egg products. FSIS can request firms recall meat, poultry, or egg products that have been imported or produced and are adulterated or misbranded. When making such requests, FSIS asks the recalling firm to provide basic information such as the “identity of the recalled product, the reason for the recall, and information about the distributors and retail consignees to whom the product was shipped.” Companies are required to keep this information under the Federal Meat Inspection Act, the Poultry Products Inspection Act, and the Egg Products Inspection Act. FSIS said it has not changed its estimates on the burden of the data collection effort. The current authority to collect the information expires Sept.30, 2021. The request is non-controversial, and the full expectation is the agency will put the extension in place before the current authority expires. 

 


CORONAVIRUS UPDATE


 

 Summary: Global cases of Covid-19 are at 136,727,030 with 2,947,846 deaths, according to data compiled by the Center for Systems Science and Engineering at Johns Hopkins University. The U.S. case count is at 31,268,400 with 562,533 deaths. The Johns Hopkins University Coronavirus Resource Center said that there have been 189,692,045 doses administered, 67,246,967 have been fully vaccinated, or 20.6% of the U.S. population.

 

— Federal agencies recommend pausing use of Johnson & Johnson coronavirus vaccine after reports of ‘rare and severe’ blood clots. The Food and Drug Administration and Centers for Disease Control and Prevention said today they are reviewing data involving six reported U.S. cases of a rare and severe type of blood clot in individuals after receiving the J&J vaccine. All six cases occurred among women between the ages of 18 and 48, and symptoms occurred six to 13 days after vaccination. One woman died and a second woman in Nebraska has been hospitalized in critical condition, officials said. Nearly seven million people in the U.S. have received Johnson & Johnson shots so far, and nine million more doses have been shipped to states. It’s unclear how much the J&J halt will hurt the Biden administration’s goals, with the White House aiming to have enough vaccines to inoculate all adults in the country by the end of May. FDA officials plan to hold a news conference at 10 a.m. ET.

 

— U.S., others to participate in discussion on waiving intellectual property rights on Covid vaccines. The US, European Union (EU) and other countries will participate in a closed discussion at the WTO over the issue of waiving intellectual property rights relative to Covid vaccines. U.S. Trade Representative Katherine Tai, European Union Trade Commissioner Valdis Dombrovskis, Indian Commerce and Industry Minister Piyush Goyal and South African Trade and Industry Minister Ebrahim Patel will participate, according to reports quoting a WTO spokesperson. The U.S> and EU have taken the stance that India and South Africa have not made the case as to why a waiver is needed. The two countries have requested the waiver under the WTO Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement, having made the request back in March, urging the waiver be in place for the duration of the pandemic.

 


POLITICS & ELECTIONS


 

Haley says she will not run for president in 2024 if Trump does. Former UN Ambassador Nikki Haley, asked about a 2024 presidential bid at a Monday news conference, said, “I would not run if President Trump ran, and I would talk to him about it. That’s something that we’ll have a conversation about at some point if that decision is something that has to be made.”

 

— Charles Booker exploring Kentucky Senate bid. The Louisville Courier-Journal reports (link), “Charles Booker formed an exploratory committee Monday for another run for U.S. Senate in Kentucky next year, this time eyeing a challenge” to Sen. Rand Paul (R-Ky). Booker ran for Senate in 2020 and almost pulled off a come-from-behind upset in the primary, falling just 3 percentage points shy of Amy McGrath, who later lost to Senate Minority Leader McConnell (R-Ky.).

 

— McCrory expected to enter North Carolina Senate race this week. CNN reports (link) on its website that ex-North Carolina Gov. Pat McCrory (R) reportedly plans to announce his candidacy for Senate this week. Republican pollster Glen Bolger claimed in a memo Monday that McCrory has a “significant lead” over both Rep. Ted Budd (R-N.C.), who is considering a run, and ex-Rep. Mark Walker (R-N.C.), who is already in the race.
 


OTHER ITEMS OF NOTE     


 

— President Biden declares semiconductors as infrastructure. At a meeting with tech executives yesterday, Biden addressed a global chip shortage that has hurt manufacturers, tying the issue to his $2.25 trillion infrastructure spending plans.

 

— Reuters named Alessandra Galloni as its new editor in chief, the first woman to hold the role in the news agency’s 170-year history.

 


 

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