WHIP+ quality details coming soon, but USDA backtracks on prior changes
In Today’s Updates
* China third quarter GDP up 4.9% versus 5.5% growth forecast
* U.S. budget gap tripled to a record $3.1 trillion in fiscal year 2020
* Summers says dollar not at
* NCBA releases voluntary price discovery framework
* Brazil suspends tariffs on corn and soy through early 2021
* Better rain chances for South America over the next two weeks
* IHS Markit expects an increase in corn, soybeans and wheat acres in 2021
* WHIP+ quality details should be out by the end of the month
* Congressional Black Caucus reportedly pushing Rep. Marcia Fudge
* China warns U.S. it may detain Americans re: prosecutions of Chinese scholars
* China passes Export Control Law
* China pork industry recovery in ‘key period’
U.S. food & beverage industry update:
* Groups push meat labeling
* Debate over vegan ‘sausages’ and ‘burgers’ heats up ahead of EU vote
* European countries tightened restrictions to contain resurgent coronavirus
* How Sturgis Motorcycle Rally may have spread coronavirus across Upper Midwest
Politics & Elections:
* Vigo County in Indiana has backed White House winner in all 16 elections since
* Democratic senator challengers set records for funding, spending
Other Items of Note:
* House Democrats set leadership elections for Nov. 18, 19
* Iran arms embargo expires
* U.S. held talks with Syria on hostages: WSJ
Equities today: Weekend developments, raising optimism about progress on an aid package, and China’s robust third quarter economic results, boosted U.S. stock index futures and prospects for a higher opening. The Shanghai Composite Index still closed down 0.7%, reversing early gains of more than 1%. Hong Kong’s Hang Seng Index pared gains to end the day 0.6% higher.
President Trump said on Sunday he wanted a "bigger" stimulus package than even House Speaker Nancy Pelosi of California (who gave a Tuesday deadline for talks), and suggested he "could quickly convince" Republicans to get on board.
U.S. equities Friday and during the week: The Dow climbed 112.11 points, 0.4%, to 28,606.31, and finished the week up 0.1%. The Nasdaq slipped 42.32 points, 0.4%, to 11,671.56, up 0.8% for the week. The S&P 500 edged up 0.47 points, less than 0.1%, to 3,483.81. The broad stock index added 0.2% for the week and is up 7.8% in 2020.
On tap today:
- National Association of Home Builders housing market index, due at 10 a.m. ET, is expected to tick down to 82 in October from 83 a month earlier.
- Federal Reserve: Chairman Jerome Powell speaks on cross-border payments and digital currencies at a virtual International Monetary Fund conference at 8 a.m. ET, New York’s John Williams speaks at 9 a.m., Vice Chairman Richard Clarida speaks at 11:45 a.m., Minneapolis's Neel Kashkari speaks at 12 p.m., and Philadelphia’s Patrick Harker at 3 p.m.
- European Central Bank President Christine Lagarde speaks to the Congress of the Regions of France at 8:40 a.m. and gives prerecorded opening remarks at an ECB monetary policy conference at 8:45 a.m. ET.
- USDA Grain Inspections report, 11 a.m. ET.
- USDA Crop Progress report, 4 p.m. ET.
China’s economy grew 4.9% in the July-to-September quarter compared with the same months last year, but below the 5.5% growth forecast by analysts, the country’s National Bureau of Statistics announced today, bringing China nearly back up to the roughly 6% pace of growth that it was reporting before the pandemic. The promising economic figures mean that China’s overall GDP growth over the first three quarters of this year is now up 0.7 percent from the previous year. The news follows last week’s record high stock valuations on the Shanghai and Shenzhen markets, when overall values reached over $10 trillion.
The third-quarter expansion builds on the second quarter’s 3.2% growth, which followed a historic contraction of 6.8% in the first three months of the year, when authorities locked down the central Chinese city of Wuhan in a bid to curb the fast-spreading virus. forecast by analysts. Despite the GDP headline disappointment, Chinese data for the month of September alone came in better than expected. Unemployment fell to 5.4%, industrial output grew 6.9% Y/Y, while retail sales grew 3.3% amid a broader upturn in consumption.
By contrast, the U.S. economy is expected to shrink by 4.3%, while the eurozone is forecast to contract by 8.3%.
The 4.9% advance brings China closer to expectations at the beginning of the year, when officials forecast 2020 growth between 5.5% and 6%. The International Monetary Fund is projecting China’s economy to expand by 1.9% in 2020, putting it on track to be the only major world economy to grow this pandemic-hit year.
The U.S. budget gap tripled to a record $3.1 trillion in fiscal year 2020. Spending soared 47% in the year ended Sept. 30 as the government rolled out programs to battle the coronavirus and a recession.
• Outside markets: The U.S. dollar index is lower. Nymex crude oil prices are modestly lower and trading around $40.60 a barrel. The yield on the benchmark U.S. 10-year Treasury note is 0.78% today.
• Crude oil continues under pressure ahead of the US trading start on concerns over Covid impacts on crude demand. U.S. crude is trading around $40.60 per barrel and Brent crude around $42.65 per barrel. Futures were lower in Asian action, with U.S. crude down 17 cents at $40.95 per barrel and Brent crude down 16 cents at $42.77 per barrel.
• Summers says dollar not at risk. Former Treasury Secretary Larry Summers said the dollar won’t collapse despite rising federal debt and urged the government to ramp up economic stimulus to offset the impact of the coronavirus pandemic. “The dollar is the world’s safe haven. It’s the place that money moves into when people get nervous about the state of the world,” Summers said in an interview on CNN. “All of the dangers are on the side of spending too little right now, rather than spending too much,” said Summers, who headed the National Economic Council under President Barack Obama and was Treasury chief for President Bill Clinton.
• NCBA releases voluntary price discovery framework. Hoping to avoid legislative or regulatory involvement, the National Cattlemen’s Beef Association is offering a voluntary price discovery framework that calls for 75% thresholds for negotiated weekly trade through weekly and quarterly time frames as well as for packer participation.
Items in Pro Farmer's First Thing Today include (Link to subscribe to FTT):
• Brazil suspends tariffs on corn and soy through early 2021
• Better rain chances for South America over the next two weeks
• IHS Markit expects an increase in corn, soybeans and wheat acres in 2021
— WHIP+ quality details should be out by the end of the month, contacts advise. But it looks like USDA punted on important issues relative to this topic, sources signal. It looks like the program will be funded at around $500 million. If so, pro rata payments are expected.
— Congressional Black Caucus reportedly pushing Rep. Marcia Fudge (D-Ohio) as new House Ag Chairman should Collin Peterson (D-Minn.) lose his close race and the Democrats retain control of the chamber, according to Axios.
— Update on China:
- China warns U.S. it may detain Americans in response to prosecutions of Chinese scholars. Chinese government officials are warning their American counterparts they may detain U.S. nationals in China in response to the Justice Department’s prosecution of Chinese military-affiliated scholars, according to people familiar with the matter, the Wall Street Journal reported Saturday.
- The National People's Congress, China's top legislative body, passed an Export Control Law on Saturday, which will go into effect on Dec. 1. According to the rule, China may take countermeasures against any country or region that abuses export-control measures and poses a threat to national security and interests. It also adds to Beijing's regulatory arsenal, which already includes a tech export restriction catalog and an unreliable entity list, amid growing competition with the U.S. over access to technology.
- China pork industry recovery in ‘key period’. “In one breath, Chinese agricultural officials in Beijing proclaim a robust recovery of the pork sector, and with the next breath they issue urgent orders to their underlings in the provinces to build more pig farms,” according to Dim Sums: Rural China Economics and Policy. Link for details.
- U.S./China Phase 1 tracker: China’s purchases of U.S. goods. Link.
— Food and beverage industry update:
- Groups push meat labeling framework. The North American Meat Institute and the Alliance for Meat, Poultry, and Seafood Innovation are sending a joint letter to USDA and FDA food safety officials today to support “a labeling framework that fosters transparency, consumer confidence, and a level playing field while also aligning with longstanding law and policy.” The groups said mandatory labeling requirements should also be informed by “more information and supporting data on finished product characteristics for cell-based/cultured meat and poultry products, particularly those that may require labeling.” The groups urged USDA’s Food Safety and Inspection Service issue an Advanced Notice of Proposed Rulemaking to collect the information.
- Debate over vegan ‘sausages’ and ‘burgers’ heats up ahead of EU vote. MEPs will decide on Wednesday whether to ban plant-based products from using meat-related labels. MEPs are scheduled to vote on whether to limit the use of words such as “steak”, “sausage”, “escalope” and “burger” on labels for products containing meat. The move has been backed by the region’s meat and livestock industry and has won the support of the European Parliament's agricultural committee. The vote comes as vegan alternatives are growing popular, boosted by new entrants into the plant-based substitutes market which mimic the look, taste, and mouth feel of real meat. The pandemic has hit meat processors and also provided a tailwind for sales of plant-based products, which have jumped 73% in Europe over the past five years, according to Euromonitor, the consumer data group. The European parliament plenary session begins today in Strasbourg.
The topic also includes "yogurt-style" and "cheese-like" for plant-based alternatives to dairy products. Farming and meat lobbyists say the terms mislead people and amount to a "cultural hijacking" of the meat industry, while major food companies, including Unilever and Nestle, say the claims are ridiculous and contradict the bloc's drive to help consumers choose more sustainable food. If passed, implementation of the proposals would then be negotiated with the member state governments in the European council, with a final decision potentially coming before the end of the year.
— Coronavirus update:
- Summary: Global cases of Covid-19 have topped 40 million, now at 40,063,546 and the death total is at 1,113,909, according to data compiled by the Center for Systems Science and Engineering (CSSE) at Johns Hopkins University (JHU). The US case count is at 8,154,936 with 219,674 deaths.
Link to Covid Case Tracker
Link to Our World in Data
- European countries tightened restrictions to contain the resurgent coronavirus. A month-long night-time curfew came into force in many French cities, with Italy imposing new restrictions and Ireland to announce more today. Meanwhile in Prague, thousands of Czechs rallied against stricter measures, clashing with riot police. Local leaders in the north of England rejected plans by the government in London to impose stricter limits on socializing without better financial support for businesses.
- How the Sturgis Motorcycle Rally may have spread coronavirus across the Upper Midwest. In South Dakota two months ago, almost 500,000 people attended an annual motorcycle rally that included crowded, indoor events. The event appears to have led to outbreaks across the Midwest, the Washington Post said. Link
POLITICS & ELECTIONS
— 2020 Presidential Election Interactive Map
— The Green Papers
— Real Clear Politics
— 2020 Political Atlas
— 2020 Demographic Swingometer
— Next presidential debate: Scheduled to occur Oct. 22.
— Days until election
- Vigo County in western Indiana has backed the eventual White House winner in all 16 elections since 1956. For details, link to WSJ article.
- Montana Gov. Steve Bullock (D), who set a record for the most ever raised in a quarter for a Montana U.S. Senate race ($27 million to GOP Sen. Steve Daines' $12 million) — beating his own record for the previous quarter, Lee Newspapers reported.
- In Iowa, Democratic challenger Theresa Greenfield raised more money in Q3 than any previous Iowa Senate candidate in an entire election cycle, according to Iowa Starting Line. She out-raised GOP Sen. Joni Ernst 4-to-1, according to the Center for Responsive Politics ($29 million to $7 million).
OTHER ITEMS OF NOTE
- House Democrats set leadership elections for Nov. 18, 19. House Democrats will hold their caucus leadership elections Nov. 18 and 19 and contested committee chairmanship elections the week of Nov. 30, Democratic Caucus Chairman Hakeem Jeffries announced in a “Dear Colleague”.
- Iran arms embargo expires. Iran is free to purchase weapons on the open market again without United Nations approval after a 13-year-long U.N. arms embargo expired on Sunday. Iran’s defense ministry said it would not seek out “unconventional arms, weapons of mass destruction and a buying spree of conventional arms” as a result of the ban being lifted because it didn’t fit their national strategy. The European Union and United Kingdom will operate a separate arms embargo on Iran, making China and Russia the most likely recipients of any future Iranian orders.
- U.S. held talks with Syria on hostages. A top White House official met in Damascus with the isolated government of President Bashar al-Assad for the first time in more than a decade, in an effort to secure the release of at least two Americans believed to be held there, according to the Wall Street Journal.