China Set to Import More U.S. Corn and Squeeze Global Prices: Bloomberg

Posted on 11/27/2020 8:17 AM

Trump says he’ll exit if Electoral College votes for Biden | Vilsack to return to USDA?


In Today’s Updates


Market Focus:
• China’s coming corn buying binge
• USDA daily export sales:  302,160 metric tons of corn to Mexico, 2020-2021
• Biggest shopping weekend of the year is here
• Cargo sales to account for a third of global airline revenues in 2020 & 2021
• U.S. oil demand fell for second consecutive week

• Members of OPEC and its allies are squabbling
• U.S. dollar this week hit its lowest levels in more than two years  
• Bitcoin plunged by 15% on Thanksgiving, or nearly $3,000
• AgroConsult expects slow Brazilian soybean planting to delay start to the export season

• Argentine soybean planting picks up after rain in key production areas

• IKAR estimates 6 MMT drop in Russia’s wheat crop in 2021

• Cash cattle trade picks up at steady to higher prices

• Average hog weights slip week-over-week, but still up from year-ago


Policy Update:

Fed signaled new guidance is coming on its asset-purchase program


U.S./China update:
• China is set to import more U.S. corn
• Sen. Rubio pushing for broader sanctions on imports from China’s Xinjiang province


Trade Policy:
• France sends notices to Big Tech companies to pay its digital service tax


Energy & Climate Change:

• Supreme Court to hear oral arguments in appeal fighting lawsuit brought by Baltimore
• Carper: Dems ‘should not be a cheap date’ if Republicans want to reopen 2017 tax bill

Coronavirus update:
• AstraZeneca likely to conduct additional global trial
• NY governor accused Supreme Court of playing politics with pandemic
• Disney revealed plans to lay off more employees”
• Delta Airlines and Alitalia to launch only transatlantic quarantine-free travel corridor


Politics & Elections:
• Trump to leave Oval Office if the Electoral College votes for Biden on Dec. 14
• Vilsack pushed by some to return as USDA secretary; big support for Fudge

Other Items of Note:
• U.S. Army Corps of Engineers canceled permit for Pebble Mine in Alaska
• Annual Macy’s Thanksgiving Day Parade in New York confined to a single city block




Equities today: Global stock markets were mostly flat overnight, amid no major news developments the past 48 hours. U.S. stock indexes are pointed toward modestly higher openings. Overnight, the MSCI Asia Pacific Index added 0.2%. Japan's Nikkei 225 closed up 0.4%, giving the index a month-to-date gain of almost 16%. In Europe, the Stoxx 600 Index was broadly unchanged.


     U.S. equities Wednesday: The Dow fell 173.77 points, 0.6%, to 29,872.47 points, a day after breaching the 30,000 milestone for the first time. The S&P 500 lost 5.76 points, 0.2%, to 3,629.65. The Nasdaq rose 57.62 points, 0.5%, to 12,094.40, notching its 44th record close of 2020 and its first since early September.


Biggest shopping weekend of the year is here, with bargain hunters across the U.S. planning to spend the next few days searching for discounts in stores and online despite the coronavirus pandemic. With rising wages and increasing consumer confidence, U.S. holiday sales are expected to grow between 3.6% and 5.2%, vs the 4% growth last year, while online sales are seen rising 20% to 30%, according to the National Retail Federation.


    Online shopping


Cargo sales are expected to account for a third of global airline revenues in 2020 and 2021, a big jump from the pre-pandemic level of 12%, says trade group IATA, according to Dow Jones Newswires. Chief Economist Brian Pearce expects air cargo traffic to expand by 13% in 2021, twice the level of world trade, lifted by Covid-19 vaccine shipments and broader demand for industrial goods. Many airlines are running cargo-only flights on passenger jets or using freight to ensure services with few customers onboard remain profitable.


Market perspectives:


     • Outside markets: The U.S. dollar index is near steady early today. The other important outside market sees January Nymex crude oil futures prices weaker and trading around $45.40 a barrel. The yield on the benchmark 10-year U.S. Treasury note futures is currently trading at 0.86%.


     • USDA daily export sales:  302,160 metric tons of corn for delivery to Mexico during the 2020-2021 marketing year.

     • U.S. oil demand fell for the second consecutive week to 19.3 million barrels per day from 19.6 million b/pd the Energy Information Administration reported n its Weekly Petroleum Status report. Demand is down about 9% compared to the same period last year. Gasoline and diesel use declined during the week ending Nov. 20, while jet fuel demand increased ahead of the Thanksgiving holiday. EIA also reported crude inventories fell by 0.8 million barrels last week to 488.7 million barrels, a slight easing of the glut in the market. Oil prices on Wednesday shot to their highest levels since March because of positive developments around coronavirus vaccines.


     •  Members of OPEC and its allies are squabbling over a proposal to extend current supply curbs. Iraq, the United Arab Emirates and Nigeria are upset with the current deal ahead of the scheduled meeting to decide on production levels. The disagreements have led to Saudi Arabia and Russia summoning OPEC+ ministers for last-minute informal talks tomorrow to smooth the path towards a deal next week.


     • U.S. dollar this week hit its lowest levels against a basket of currencies in more than two years. Investors and analysts think it has further to fall.

        Dollar decline


     Bitcoin plunged by 15% on Thanksgiving, or nearly $3,000, to as low as $16,328, while other cryptocurrencies tumbled by as much as 20%. Many in the industry had been expecting a $20,000 milestone for Bitcoin in the next few days after it hit highs not seen since the end of 2017. "Any healthy market needs to have pullbacks and periods of consolidation. Already in 2020 we've seen a gain of 160%," said Antoni Trenchev, a managing partner and co-founder of Nexo, which bills itself as the world's biggest crypto lender. "Long term I don't see anything derailing Bitcoin's irrevocable rise higher."  


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

AgroConsult expects slow Brazilian soybean planting to delay start to the export season
• Argentine soybean planting picks up after rain in key production areas
• IKAR estimates 6 MMT drop in Russia’s wheat crop in 2021
• Cash cattle trade picks up at steady to higher prices
• Average hog weights slip week-over-week, but still up from year-ago




—  Fed signaled new guidance is coming on its asset-purchase program. Officials this month discussed plans to provide more information about how long they will keep purchasing Treasury and mortgage-backed securities by linking the time frame for the stimulus program to economic conditions.




China is set to import more U.S. corn, with volumes for next year seen hitting the top end of market expectations and squeezing global grains prices, according to Bloomberg. State-owned food Cofco Corp. has sold 10 million tons to domestic private mills and will probably boost purchases from the U.S. even further, people familiar with the matter told the news group This could put China’s total imports of the U.S. crop “on track to hit 30 million tons next year,” the people estimated. The purchases are in addition to China’s annual corn import quotas. The nation allocates annual corn import quotas to state and private firms. Cofco may at times receive allowance to buy additional amounts and resell domestically to private mills or to replenish state reserves. Cofco has signed supply agreements with private mills for an additional 10 million tons, said the people familiar with discussions, who asked not to be identified as the information is private. Some shipments will arrive in the first half of 2021, the people said.

     Corn imports China

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

— Sen. Marco Rubio (R-Fla.) says he will keep pushing for broader sanctions on imports from China’s Xinjiang province over China’s treatment of Uighur Muslims even if legislation is stalled until after Biden’s inauguration. A measure that would require companies to show “clear and convincing evidence” imports aren’t made with forced labor sailed through the House 406-3 in September. A companion bill is held up over “technical language issues,” the Florida Republican told the Wall Street Journal, plus the jam-up of legislation that may come during this lame-duck session. The White House is also looking at a tougher ban, but Rubio says a law is necessary “to provide stability long-term.”




— France has sent out notices to Big Tech companies to pay its digital service tax as planned in December. The levy was suspended earlier this year while negotiations played out at the OECD regarding an overhaul of cross-border taxation rules, but with the group stretching negotiations in 2021, France chose not to wait. The country will apply a 3% tax on revenue from digital services earned in France by companies with local revenues of more than €25M and €750M worldwide but will withdraw the tax as soon as an OECD deal is reached.




— Supreme Court announced it will hear oral arguments Jan. 19 in oil companies’ appeal fighting a lawsuit brought by Baltimore seeking billions to compensate for adapting to climate change effects. The timing means the oil companies, led by BP, will have some help from the Trump administration in its waning time left. The Trump administration earlier this week in an amicus brief backed oil majors in the lawsuit. Biden, meanwhile, has said in his climate plans he would direct his attorney general to “strategically support ongoing plaintiff-driven climate litigation against polluters.”


     Observers note the Supreme Court won’t be taking up the merits of Baltimore’s challenge, but instead will be considering a very technical legal question related to where the case can be heard. The oil companies have been attempting to push Baltimore’s case other similar cases to federal court, thought to be a more favorable venue for the industry. Federal appeals courts have repeatedly rejected the oil companies’ attempts.


     Bottom line: What the Supreme Court decides on the Baltimore case could have implications for all of those lawsuits.


— Carper: Dems ‘should not be a cheap date’ if Republicans want to reopen the 2017 tax bill and should demand clean energy tax credits in return. Sen. Tom Carper (D-Del.) is the top Democrat on the Senate Environment Committee. He recently listed priorities for the next Congress and the Biden administration, including a “50-state deal” on stricter fuel economy standards, a revamped Clean Power Plan, and new tax credits for clean energy technologies. He told reporters that he’s already started reaching out to the CEOs of car companies to talk fuel economy, trying to persuade automakers that have been opposed to stricter standards. “As soon as we get this administration in the rearview mirror” and the threat of retaliation from Trump is gone, “I think the other car companies will join us,” he said. (General Motors this week decided to drop its support of Trump’s battle with California over tailpipe greenhouse gas limits).


     Carper sees opportunities to work with Republicans on climate legislation, especially efforts that boost research funding for clean energy technologies like advanced nuclear reactors. “We’re going to be very narrowly drawn in the new Congress,” he said, adding “bipartisan solutions are lasting solutions.”




 Summary: Sources: Johns Hopkins University as of 6:30 a.m. ET; Hospitalization figures from the Covid Tracking Project as of yesterday.

       • 61,064,901: Confirmed cases world-wide, and 1,433,789 deaths
       • 110,611: New U.S. cases recorded yesterday
       • 12,885,299: Total confirmed cases in the U.S.
       • 1,232: Deaths in the U.S. recorded yesterday
       • 263,462: Total U.S. deaths
       • 90,481: People currently hospitalized in the U.S.


       Link to Covid Case Tracker
       Link to Our World in Data


— AstraZeneca is likely to conduct an additional global trial to assess the efficacy of its Covid-19 vaccine using a lower dosage, after the latest studies raised questions over its level of protection. The new assessment would be run instead of adding an arm to an ongoing U.S. trial and would evaluate a lower dosage that performed better than a full amount in Astra's studies, CEO Pascal Soriot told Bloomberg. Soriot does not expect the additional testing to hold up regulatory approvals in the U.K. and EU, though clearance from the FDA may take longer because the regulator is unlikely to approve the vaccine on the basis of studies conducted elsewhere.


— Andrew Cuomo, the Democratic governor of New York, accused Supreme Court of playing politics with the pandemic after it struck down restrictions that he had imposed on religious services. The court, with its newly cemented conservative majority, ruled 5-4 that limiting the number of people attending services violated the first amendment’s prohibition on government interference in the free exercise of religion. Justice Amy Coney Barrett cast the decisive vote.


— Disney revealed plans to lay off 4,000 more employees by the end of March. The giant entertainment company had said in September that it would cut 28,000 jobs, mostly at its theme parks, because of the pandemic. It recorded a loss of $1.7 billion in the year to October 3, vs an income of $13.9 billion last year.

— Delta Airlines and Alitalia said they will soon launch the only transatlantic quarantine-free travel corridor, going between Rome, Italy’s capital, and Atlanta, Georgia. Passengers will have to take a polymerase-chain-reaction test for Covid-19 up to 72 hours before their flight and then two rapid tests, one at the airport of departure and one at the airport of arrival.




— President Trump said he would leave the Oval Office if the Electoral College votes for Joe Biden on Dec. 14, though it would be hard for him to concede because "we know there was massive fraud." "Certainly, I will. And you know that," he said at a press conference after taking questions from reporters for the first time since Election Day.


— Vilsack is being pushed by some to return as USDA Secretary; big support for Fudge. The New York Times reported (link) that Rep. Jim Clyburn (D-S.C.), who was key to former Vice President Joe Biden getting the Democratic nomination for president, is weighing in heavily with the Biden team in favor of Rep. Marcia Fudge (D-Ohio) to head USDA. In an interview, Clyburn was critical of former USD Secretary Tom Vilsack, who the NYT reported is also being considered to return to the post. Former Sen. Heidi Heitkamp (D-N.D.) is another top contender but has been criticized by the progressive wing of the Democratic party. The NYT said Heitkamp supports Biden’s rural plan.


     Another name being mentioned for USDA secretary is Russell Redding, Pennsylvania's state agriculture secretary.


     Fudge continues to get endorsements from Unions, anti-hunger groups and advocacy groups. In a Nov. 13 interview with, Fudge said as Agriculture secretary she would review the effectiveness of the department’s many programs and the use of taxpayer money. She would focus on issues like clean water and ways agriculture can help address climate change, she said. As chairwoman of the House Agriculture Subcommittee on Nutrition, Oversight and Department Operations, Fudge has blasted USDA Secretary Sonny Perdue for proposed rules to tighten Supplemental Nutrition Assistance Program (SNAP/food stamps) eligibility, work requirements and formulas for monthly benefits in ways that could push people out of the program. Fudge also sits on the Education and Labor Committee and the House Administration Committee, where she is chairwoman of the Elections Subcommittee. Fudge told that her oversight of the nearly $70 billion program and other nutrition programs means she reviews more than half USDA’s budget. Fudge has opposed waivers issued to meat and poultry plants by USDA’s Food Safety Inspection Service allowing them to speed up the pace at which carcasses move past federal inspectors and line workers. She and other opponents say the waivers make it more difficult to monitor the carcasses for food safety and increase the risk of injury for workers on the slaughter lines as they try to keep up.



— U.S. Army Corps of Engineers canceled a permit for the Pebble Mine in Alaska, Sen. Tom Carper (D-Del.) said. The proposed copper and gold mine had come under bipartisan criticism in recent months.


— Annual Macy’s Thanksgiving Day Parade in New York was confined to a single city block, only a snippet of its traditional 2.5-mile route. There were no high school bands, and about 130 balloon handlers instead of the usual 2,000.



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