China Drops Probe into U.S. Sorghum Shipments

Posted on 05/18/2018 3:16 AM

Farm bill vote slated in House today, as conservatives urge immigration vote deal 

In a positive U.S./China trade development, China dropped its probe into U.S sorghum shipments. China ended an antidumping and antisubsidy investigation into imported U.S. sorghum, as the two countries work toward a deal to ease trade tensions. The Commerce Ministry announced the halt Friday, saying punitive measures on imports of the grain would “affect the cost of living for consumers” in China. The investigation began in February after the U.S. imposed new tariffs on imports of Chinese solar panels.
     Votes are scheduled today for the House farm bill, but arch-conservatives continue to link a prior vote on a controversial immigration reform plan before they agree to vote for the farm bill. GOP leaders talked about the topic late into Thursday. An amendment adopted Thursday by voice vote came from Rep. Darin LaHood (R-Ill.) that would allow producers on a farm to file once for enrollment in Agricultural Risk Coverage or Price Loss Coverage through crop year 2023, and would allow producers to file an updated program contract within one year of a change.
     NAFTA 2.0 talks are either upbeat or pessimistic depending on who is saying what.
     Regarding the U.S. summit with North Korea, President Trump wonders whether Chinese leader Xi altered North Korea's perspective in a recent meeting between leaders of the two countries.
     The upcoming RFS volume requirements for 2019 ethanol and 2020 for advance biofuel (including biodiesel), according to usually reliable sources, could show a volume increase for advanced biofuel for both 2019 and 2020. The proposed rule is currently at the Office of Management and Budget.

China announced a surprise ending to probe of U.S. sorghum shipments. China has ended an antidumping and antisubsidy investigation into imported U.S. sorghum, as the two countries work toward a deal to ease trade tensions. The Commerce Ministry announced the halt today, saying punitive measures on imports of the grain would “affect the cost of living for consumers” in China. The investigation began in February after the U.S. imposed new tariffs on imports of Chinese solar panels.

The ministry said it would return deposits collected from importers. However, Shanghai JC Intelligence analyst Cherry Zhang told Reuters, "The damage has been done, mainly to the domestic buyer. The government won't compensate you for the losses out of reselling and demurrage." Reuters said their data indicates that almost two dozen ships carrying U.S. sorghum to China were stranded at sea when the deposits on sorghum imports were announced in February, prompting a search for alternative destinations for some of the shipments.

The two countries are nearing a deal to resolve other trade issues, according to officials in both countries. It would give China’s ZTE Corp. a reprieve from U.S. sanctions in exchange for Beijing’s lifting tariffs and threat-need tariffs on billions of dollars of American agricultural products.

President Xi Jinping’s economic envoy, Liu He, who is leading a Chinese economic delegation in Washington, told President Donald Trump on Thursday that China is willing to work with the U.S. to “appropriately handle and resolve trade issues,” China’s official Xinhua News Agency reported today. Trump said both sides should focus on strengthening trade and investment ties in sectors such as energy, manufacturing and agriculture, the report said. He also called for cooperation in protecting intellectual property.

China and U.S. trade officials have been discussing how to narrow the trade deficit gap through increased Chinese purchases of U.S. goods and services.

House farm bill vote today... if enough votes for passage. The House has scheduled a vote on the Republican farm bill today, even though the GOP's conservative members continued their push for a floor vote on immigration legislation in exchange for their support on the farm bill. The members trying to link the immigration bill to the farm bill want a vote on immigration reform first before they agree to support the farm bill.

Today's floor schedule released by House Majority Leader Kevin McCarthy (R-Calif.) includes voting on final passage of the farm bill (HR 2). McCarthy said leadership had a "good conversation" with the Freedom Caucus and said his intention is to move immigration legislation on the floor in June. "The element right now is just trying to figure out where we're going to be in terms of tomorrow's vote," Rep. Mark Meadows (R-N.C.) the group's chairman, said Thursday night. "I think everybody's trying to get to 'yes', but everybody's trying to figure out what we're going to do on immigration as well." Conservative Republicans have made their support for the GOP-written farm bill contingent on House leadership holding a vote on an immigration bill (HR 4760) by House Judiciary Chairman Bob Goodlatte (R-Va.). Leadership has agreed to hold that vote, but timing is a point of disagreement.

Meadows acknowledged that the farm bill is the last must-pass legislation before the federal government spending bill must be approved in October. “Obviously when you look at that it’s a leverage point,” he said.

While the Freedom Caucus does have some concerns about the farm bill itself, most caucus members are willing to get to “yes” if a deal is reached on immigration votes, Meadows said. “I’m hopeful that we’ll bring up bills on immigration first so that we can have those real discussions about what’s in it and what’s not in it before we have to move on to the farm bill,” he said. “We don’t have an impending deadline for the farm bill,” Meadows added. “Honestly, it doesn’t expire until September. I can tell you my farmers want us to deal with immigration and the farm bill both.”

President Donald Trump urged passage of the bill in a tweet Thursday, saying, "Tomorrow, the House will vote on a strong Farm Bill, which includes work requirements. We must support our Nation’s great farmers!''

In action Thursday, the House easily defeated, with help from Democrats, a sugar policy amendment to the farm bill proposed by Rep. Virginia Foxx, (R-N.C.) that opponents said would upend the U.S. sugar price support program. Rep. Collin Peterson (D-Minn.), ranking member on the House Ag panel, represents the top sugar beet-growing district. He and some other Democrats helped defeat the Foxx target on the sugar program. The House rejected the amendment, 137-278. House Ag Chairman Mike Conaway (R-Texas) said he was concerned about the sugar amendment because had it been approved, it would have opened the door for opponents of farm subsidies to go after programs such as crop insurance premiums.

Majority Whip Steve Scalise (R-La.) said Conaway “made it very clear how important it was to the bill that we keep our coalition intact,'' he said. "It showed we're working very hard to get this bill passed, to get these work requirements."

Also rejected by a 34-380 vote was an amendment by Rep. Tom McClintock (R-Calif.) to phase out all agricultural subsidies. Also defeated, by a 83-330 vote, was McClintock's SNAP amendment to only exempt from more stringent work requirements parents of children ages 3 and younger, which would place more able-bodied adults under mandatory work rules. The bill now exempts parents of children 6 and younger.

Action on other amendments included:

  • By Don Young (R-Alaska), adopted 208-207, an amendment that would exempt Alaska from a 2001 Forest Service rule by reversing a federal court ruling that prohibits construction of roads and logging on 58.5 million acres of federal land that are considered wild forestland. It is known as the roadless rule. Democrats Marcy Kaptur of Ohio and Collin Peterson of Minnesota voted for the amendment. Young argued that the amendment only applied to Alaska, but there was concern that it could be used to provide exemptions for other states. The amendment was headed for defeat, but the vote was kept open as Young paced the floor while shouting for support. Eventually, retiring Rep. Ryan Costello (R-Pa.) changed his vote from “no” to “yes” to pass the measure.
  • By John Faso (R-N.Y.), adopted 222-192, an amendment that would allow states to contract out services under SNAP to private businesses, as long as such personnel have no direct or indirect financial interest in an approved retail food store. No Democrats voted for the amendment. Faso said states have that flexibility under other programs such as Medicaid and Temporary Assistance to Needy Families. During floor debate, Jim McGovern (D-Mass.) said he was concerned that the proposal would lead to lost civil service jobs and inadequate services for the SNAP recipients with difficult cases or specific needs that require individual attention and close monitoring.
  • By Bruce Westerman (R-Ark.), adopted 224-191, an amendment that would require environmental impact statements for certain forest management activities to only study and describe the forest management activity in question and the alternative of not taking any action.
  • An amendment by Rep. George Holding (R-N.C.) that would end SNAP eligibility for “convicted violent rapists, pedophiles and murderers” cleared on voice vote.

Some of the amendments adopted by voice vote Thursday included:

  • By Darin LaHood (R-Ill.) an amendment that would allow producers on a farm to file once for enrollment in Agricultural Risk Coverage or Price Loss Coverage through crop year 2023, and would allow producers to file an updated program contract within one year of a change;
  • By Tom MacArthur (R-N.J.) an amendment that would specify that if an individual becomes ineligible for SNAP as a household member, that remaining members of the household may still be eligible to apply for SNAP benefits;
  • By Jenniffer González-Colón (R-P.R.) an amendment that would require the Department of Agriculture to extend a study of comparable access to the Supplemental Nutrition Assistance Program for Puerto Rico;
  • By Young, an amendment that would expand the allowance of traditional foods for native populations in food service programs, to include federally funded child nutrition and senior meal programs;
  • By Doug LaMalfa (R-Calif.) an amendment that would require the secretary of Agriculture to standardize the application process for modifying communications facilities on Forest Service lan;
  • By Steve Pearce (R-N.M.) an amendment that would reauthorize the Collaborative Forest Landscape Restoration Program through 2023, and would allow the secretary of Agriculture to waive the requirement that proposals eligible for funding under the program prioritize ecological restoration treatments for a 10-year period.

Language directing USDA to revamp the school nutrition rules that were championed by former first lady Michelle Obama was cleared by voice vote as part of a broader manager’s amendment package. The provision asks USDA, within 90 days, to review the rules that set nutrition standards for school lunches, breakfasts and all food sold in schools — regulations that all stem from the 2010 Healthy Hunger-Free Kids Act. USDA is then directed to issue new rules within a year "in consultation with school nutrition personnel and school leaders."

Language calling on states to return unused training funds to the Treasury also cleared on voice vote as part of the manager’s amendment.

Proposal to freeze CRP pulled back. At Conaway’s request, Rep. Mike Rogers (R-Ala.) withdrew an amendment to freeze the Conservation Reserve Program at 24 million acres. Conaway said the amendment would have cost critical votes that he needed for the farm bill on final passage.

Case being filed in Court of International Trade on U.S. import duties on Argentine biodiesel. Argentine biodiesel producer Vicentin is challenging the U.S. duties on imports of the product from Argentina of up to 86.41 percent, filing a case in the Court of International Trade.

However, Vicentin has not yet detailed portions of the determination made by the U.S. Commerce Department they are going to challenge in the case, and the matter has not yet been assigned a judge.

The court is designed to make sure that duties, etc., are uniform throughout the United States, and it makes sure there are expeditious procedures, avoids jurisdictional conflicts among federal courts and provides uniformity in the judicial decision-making for import transactions.

Differing NAFTA 2.0 assessments given. "The NAFTA countries are nowhere near close to a deal," U.S. Trade Representative Robert Lighthizer said Thursday, the day House Speaker Ryan (R-Wis.) had set as a deadline for Lighthizer to notify Congress if he would ask for a vote this year on a renegotiated NAFTA. Lighthizer said talks will continue.

Ryan said there was a two-week “wiggle room” for negotiators to conclude a NAFTA 2.0 accord and still have Congress vote on it this calendar year. “My guess is there’s probably some wiggle room,” said Ryan, suggesting that the original cutoff of this Thursday was based on estimates of key procedural steps, including how long it will take the U.S. International Trade Commission (ITC) to complete a required economic study. The ITC has 105 days to complete an economic report on a trade agreement that is eligible for expedited consideration in Congress without amendments or procedural delays. The ITC could begin its work when the text of an agreement is first published, rather than after it is signed, which cannot occur until at least 60 days after publication. Other required steps under the fast-track (Trade Promotion Authority) law, include notifying Congress 90 days before an agreement is signed. The administration also has a deadline, within 60 days of signing the agreement, for submitting to Congress the changes to U.S. law that any agreement would require.

Lighthizer said remaining issue included intellectual property, market access for agricultural products, de minimis levels, energy, labor, rules of origin and geographical indications. He added that "much more" is still up for debate as well.

A more positive assessment came from Canadian Prime Minister Justin Trudeau's comments. Trudeau said Thursday that NAFTA negotiators could be offering positive news on NAFTA in the coming days and have come to an agreement on an auto rules of origin that works for the U.S., Mexico and Canada. ‘We’re down to a point where there is a good deal on the table,” Trudeau told Fox Business at a luncheon at the Economic Club of New York. “I’m confident in saying we have found a proposal that is broadly acceptable to the three partners and our industries on the auto side of things,” he added. “The rest of it and how we move forward is now very much something we’re continuing to work on.”

Trudeau said current proposals would address President Donald Trump’s long-time concerns related to the auto industry and loss of jobs to Mexico. “Mexico has put proposals on the table that will actually go a long way toward reducing the trade deficit the U.S. has with Mexico, and indeed, even bring back some auto jobs from Mexico to the United States,” Trudeau said. “There’s a very positive deal there.”

But Mexican Economy Minister Ildefonso Guajardo via Twitter tried to clarify that a NAFTA 2.0 would not involve exporting Mexican jobs to the U.S., and instead will “rebalance 3-way trade by creating new business opportunities” and jobs for the three countries.

China is “disgorging massive quantities of surplus corn from its reserves,” but sales are costing the Chinese treasury billions of dollars, according to Dim Sums: Rural China Economics and Policy. It said China sold 1.4 million metric tons (MMT) of corn from its "temporary reserve" at an average price of 1,401 yuan ($220.79) per metric ton. Most of that corn had been purchased during 2014 at support prices of 2,220 yuan in Heilongjiang Province and 2,260 yuan in Inner Mongolia and Liaoning Province. “Thus, the sale recovered only about 62% of the price paid for the corn when in was purchased about 3 1/2 years ago. Additionally, authorities paid about 5% interest on loans used to buy the corn and about 86 yuan ($13.50) per ton per year to store the corn.”

The April-May auctions of corn have generated $5.9 billion (using an exchange rate of 6.35 yuan/dollar), but the original purchase cost of the corn was $8.9 billion. So auction sales, on average, recovered 64% of the original cost of the corn — "not nearly enough to pay back the loans used to purchase the corn. Interest and storage cost for the corn added $3.4 billion, presumably paid for by subsidies from the Ministry of Finance. Thus, the corn cost $12.3 billion, but only $5.9 billion was generated from auction sales. The net cost of the corn sold is therefore $6.4 billion, or $249 per metric ton."

The 48.8 MMT auctioned during May-September 2017 generated $10.4 billion and cost $21.9 billion, a net cost of $11.5 billion for 48.8 MMT, or $236 per metric ton.

These figures do not include costs for unsold corn still held in inventories.

Other items of note:

  • The White House has "no intention" to cancel the joint U.S.-South Korea military exercises to which North Korean dictator Kim Jong Un has reportedly objected, White House press secretary Sarah Sanders said. Meanwhile, President Trump openly speculated whether North Korea Kim's viewed on the summit had changed following his recent meeting with China leader Xi Jinping.

  • Trump: EU name-calling doesn't bother him. President Donald Trump said Thursday that he wasn't bothered by criticism from European Council President Donald Tusk and accused the EU of being "terrible" to the United States on trade. "We lost $151 billion last year dealing with the European Union," Trump said, referring to the U.S. trade deficit with the 28-nation bloc. "So they can call me all sorts of names. And if I were them, I’d call me names also, because it’s not going to happen any longer."

  • WOTUS rule. House Transportation and Infrastructure Chairman Bill Shuster (R-Pa.) said the draft Water Resources Development Act (WRDA) bill he plans to introduce today will not address the Obama-era environmental regulation known as Waters of the United States (WOTUS), but he expected an amendment regarding it. The measure has the support of the committee's ranking member, Rep. Peter DeFazio (D-Ore.), as well as the top Democrat and Republican on the Water Resources and Environment Subcommittee, according to Rep. Garret Graves (R-La.), chairman of that subcommittee. A markup could come as soon as next week.

  • Missouri bans fake ‘meat’ labeling. Lawmakers in Missouri became the first state to approve legislation that would prohibit companies from labeling lab-grown or plant-based products as meat. The measure, which was approved by 125-22, now goes to the governor’s desk.

Markets. The Dow on Thursday fell 54.95 points, or 0.2%, to 24,713.98, while the S&P 500 slipped 2.33 points, 0.1%, to 2,720.13 and the Nasdaq Composite lost 15.82 points, 0.2%, to 7,382.47. Investors appeared nonchalant by upbeat earnings and more concerned with renewed trade and geopolitical concerns.



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