WHIP+ payments haphazard with some FSA offices way behind
In Today’s Updates
• Three U.S. stock indexes have combined for 100 record closes in 2020, most since 2017
• China’s saw tenth consecutive month of expanding manufacturing growth
• Crude oil futures under pressure
• CME Group adjust corn, soybean, wheat margins
• Rice prices on the rise
• Bird flu continues to expand in South Korea
• Argentine suspends corn export sales until Feb. 28
• Algeria bought 400,000 tons of world wheat
• Chinese soymeal futures soar to a new record high
• Demand remains limited for wheat at China’s weekly auctions
• Hog packing margins widen
• ‘No realistic path’ for a quick vote on $2,000 stimulus checks: McConnell
• WHIP+ payments authorized but some state/county FSA offices way behind
• Summary of CFAP 3 payments, other details for the ag sector
• China to release more meat from reserves ahead of Lunar New Year holiday
• China to cut subsidies on new energy vehicles
• Britain’s post-Brexit trading agreement with EU signed into law
• U.S. increases tariffs on EU products over aircraft subsidies dispute
• France resumes collecting digital-services tax on U.S. tech giants
Food & beverage industry update:
• Large rise in ag commodities creates ‘recipe for unrest’ within fragile economies
• China booking 2021 pork supplies
• China promises free jabs for all as Sinopharm’s Covid-19 vaccine approved
Politics & Elections:
• Both Biden Trump will campaign Monday in Georgia; Dems more upbeat about runoffs
• Hicks is Biden’s Defense secretary nominee
• Iowa Republican will provisionally join House after six-vote win
• Sen. Hawley will object when Congress counts Electoral College votes next week
• Trump's presidency: $8 trillion-plus in added debt in one term
Other Items of Note:
• Alaska Airlines will ban emotional support animals from flights beginning Jan. 11
• Good riddance to 2020 as depicted by the New York Post
Equities today: Global stock markets were mixed overnight. Asian shares were mostly up but European shares were pressured by new business restrictions imposed by the U.K. in an effort to thwart still-rising Covid-19 cases. U.S. stock indexes are pointed toward slightly lower openings.
U.S. equities yesterday: The Dow gained 73.89 points, 0.24%, 30,409.56. The Nasdaq was up 19.78 points, 0.15%, at 12,870.00. The S&P 500 rose 5.00 points, 0.13%, at 3l,732.04. The Dow reached a new record high on Wednesday, its 13th this year. The three indexes have combined for 100 record closes in 2020, the most since 2017, and are set to end near highs.
The S&P 500 is up 15.5% for the year and the Dow has advanced 6.6%, while the Nasdaq has soared more than 43%. The small-cap Russell 2000 has gained nearly 19% YTD.
On tap today:
• U.S. economic data due for release today is light and includes the weekly jobless claims report. Economists expected more people sought unemployment benefits during a holiday week when benefit payments were in jeopardy. UPDATE: U.S. weekly jobless claims totaled 787,000, vs 828,000 expected.
China’s saw a tenth month in a row of expanding manufacturing growth. The official manufacturing purchasing managers index (PMI) rose to 51.9 in December versus 52.1 in November. China’s non-manufacturing PMI for December came in at 55.7 from 56.4 in November. A reading above 50.0 suggests expansion in the sector.
• Outside markets: The U.S. dollar index is lower and hit another 2.5-year low in early U.S. trading. February Nymex crude oil futures prices weaker and trading around $48.00 a barrel. The yield on the benchmark 10-year U.S. Treasury note futures is currently around 0.923%.
• Crude oil futures are under pressure ahead of the U.S. trading start, with U.S. crude under $48 per barrel and Brent under $51.10 per barrel. Crude oil prices were mixed in Asian action, with U.S. crude down 12 cents at $40.38 per barrel while Brent crude was up 25 cents at $51.34 per barrel.
• CME Group adjust corn, soybean, wheat margins. The CME Group announced changes to maintenance margins for corn, soybean and wheat futures that will be effective with the close of business January 4. Corn futures maintenance margins will rise to $975 per contract, up 14.7% from the current $850 for March 2021; for soybeans the margins will rise to $2,400 per contract, up 9.1% from the current $2,200 for January 2021; and wheat will rise to $1,500 per contract, up 9.1% from the current $1,375 for March 2021.
• Rice prices on the rise. Values rose after south-east Asian producers threatened to limit overseas sales at the start of the pandemic, have remained elevated over logistics bottlenecks and buying by China. Port congestion and a lack of containers had caused shipping durations to double in some cases, leading to jitters in the market, said Frank Gouverne, chief operating officer at Rice Exchange, a digital platform for rice trading. “Freight prices have doubled. People are also waiting three to four months for their orders, adding further pressure on the market,” he told the Financial Times.
• Bird flu continues to expand in South Korea. South Korea has confirmed nearly 40 cases of H5N8 highly pathogenic avian influenza as of Dec. 31, with the latest case on a duck farm north of Seoul. With 37 cases confirmed so far, the country has destroyed 11.5 million birds and quarantine measures have been deployed near where confirmed cases have been found. Cases in wild birds have also expanded to 45, officials said, and officials are closely monitoring poultry farms as wild birds migrate through the country early in 2021. Despite the culls, the country’s ag ministry said domestic market supplies of poultry products remains stable and that the culls have only had a “limited” impact on supplies, according to Yonhap News. The ministry said average egg prices were up 1.3% in the first three weeks of December from year ago, while duck meat was up 10.3%, but chicken prices were down 1.3% over the period on an oversupply.
• Argentine suspends corn export sales until Feb. 28. Argentina will suspend export sales of corn until Feb. 28 in a bid to make sure domestic food supplies remain ample. "This decision is based on the need to ensure the supply of grain for the sectors that use it as a raw material for the production of animal protein such as pork, chicken, eggs, milk and cattle, where corn represents a significant component of production costs," a statement from the Ag Ministry said. The country has authorized 34.23 million tonnes of corn for export out of an exportable supply of 38.50 million tonnes, the ministry said. "The objective of the measure is that the remaining 4.27 million tonnes remain available for domestic consumption, in order to ensure the supply during the summer months when the supply of cereal tends to be scarce," the statement said.
• Overnight demand news: Algeria bought 400,000 tons of world wheat. The execution point is expected to be EU and perhaps some from Argentina, trade sources signal.
Items in Pro Farmer's First Thing Today include (Link to subscribe to FTT):
• Chinese soymeal futures soar to a new record high
• Demand remains limited for wheat at China’s weekly auctions
• Hog packing margins widen
— ‘No realistic path’ for a quick vote on $2,000 stimulus checks: Mitch McConnell. The majority leader said lawmakers would only consider an omnibus bill that included the $2,000 checks and two other issues that President Donald Trump has demanded Congress address: investigating the integrity of the 2020 election and revoking legal protections for social media platforms. Democrats will not take up either matter, dooming any chance that such a bill could pass. Speaking from the Senate floor, McConnell (R-Ky.) accused Democrats of overstepping. “The Senate is not going to be bullied into rushing out more borrowed money into the hands of Democrats’ rich friends who don’t need the help,” he said.
Trump reacts. “Unless Republicans have a death wish, and it is also the right thing to do, they must approve the $2000 payments ASAP. $600 IS NOT ENOUGH!” the president wrote on Twitter on Tuesday.
— WHIP+ payments have been authorized but some state/county FSA offices are way behind. Emails and calls from farmers eligible for WHIP+ payments paint a far different picture of payouts. Some farmers say they recently received the final 50% of 2019 payments, while others (notably in North and South Dakota) say they haven’t received anything for 2019 yet. USDA had to stop issuing until what is called reapportionment. That has been done, so USDA should be restarting the payouts. The recently signed omnibus spending bill covers all commitments including quality-related payments. It’s taking states/counties longer to get back up and running. As previously noted, this Congress punted the issue of WHIP+ payments for 2020 crops to the next Congress starting Jan. 3.
— Summary of CFAP 3 payments, other details for the ag sector. Link to a rundown of the payments and other information via Farm Bureau top economist John Newton.
— China booking 2021 pork supplies. Export sales to China for several U.S. ag commodities were reported for the week ending Dec. 24, including new pork and beef sales for 2021.
Net sales for 2020-21 were reported for 133,151 tonnes of wheat, 26,214 tonnes of corn, 44,258 tonnes of sorghum, 619,726 tonnes of soybeans and 43,653 running bales of cotton.
For 2021-22, sales of 53,000 tonnes of sorghum, 126,000 tonnes of soybeans and 13,200 running bales of upland cotton were reported.
For 2020, net sales of 3,088 tonnes of beef and 1,649 tonnes of pork (after cancellations of 4,000 tonnes) were reported. For 2021, sales of 262 tonnes of beef and 22,651 tonnes or pork were reported.
— China plans to release more meat from reserves ahead of Lunar New Year holiday. China will release more meat from its state reserves in a bid to boost supplies ahead of the Lunar New Year holiday, Commerce Ministry spokesman Gao Feng said at a briefing today (Dec. 31). The country has been releasing pork from its reserves as it seeks to shore up supplies hit by the African swine fever outbreak which dramatically reduced the Chinese hog herd. It was not clear how much meat would be release nor was a timeline laid out for the releases.
— China to cut subsidies on new energy vehicles. China will reduce its subsidies 20% on new energy vehicles like electric cars, according to the country’s finance ministry, with a 10% reduction on those vehicles used for public transport. China will also improve regulations on new auto investment in a bid to prevent overcapacity in the auto sector. Subsidies and tax exemptions on new energy vehicles will be extended to 2022. China wants the new energy vehicles to make up 20% of auto sales by 2025 versus a current 5%.
— U.S./China Phase 1 tracker: China’s purchases of U.S. goods. Link.
— Britain’s post-Brexit trading agreement with the European Union was signed into law, after being overwhelmingly approved by Parliament. It comes into effect at 11pm tonight, London time.
— U.S. increases tariffs it imposes on European products, including cognac and airplane parts, in retaliation for Europe’s state aid to Airbus. The increase would bring U.S. tariffs more into line with those the European Union imposes on the U.S. for its aid to Boeing. The dispute over subsidies for the two planemakers has been running for 16 years.
— Global tech-tax detente is ending. France has resumed collecting taxes on digital revenue from big technology companies, and countries including Italy and the U.K. are set to join it in coming months, while U.S. tariffs on $1.3 billion of French imports, including cosmetics and handbags, are set to take effect Jan. 6. Pending U.S. investigations could lead to similar tariffs on 10 other countries, including the U.K., Italy, India and Spain.
FOOD & BEVERAGE INDUSTRY
— Food price rally sparks warnings of pressure on developing countries. A Financial Times article (link/paywall) says the issue is not a food shortage at this point — grains and oilseeds have had bumper crops over the past few years, leading to higher inventories. But analysts worry that higher prices at a time of economic stress bodes badly, especially for poorer countries, particularly while an economic rebound in Asia is bumping up demand for grains and soyabeans. “Food inflation is the last thing governments need right now,” said Carlos Mera, analyst at Rabobank. “If [people] will realize the vaccine won’t solve the problems in the near term and they don’t have food, then things could get out of control,” warned Abdolreza Abbassian, senior economist at the FAO., adding: “Although I still doubt we will hit those [previous] peaks, we will see volatility in the coming year.”
— Summary: Global cases of Covid-19 are at 82,820,052 with 1,807,331 deaths, according to data compiled by the Center for Systems Science and Engineering at Johns Hopkins University. The U.S. case count is at 19,745,137 with 342,414 deaths.
— China approved its first vaccine, made by state-backed Sinopharm. Regulators said that interim results suggested the jab is safe and 79% effective, although no detailed data were provided; the process has been criticized for a lack of transparency. Still, China will now push ahead with an inoculation program and has promised to make the vaccine available across the world as a “public good.”
POLITICS & ELECTIONS
— Biden and Harris to campaign in Georgia. Vice President-elect Kamala Harris is heading to Savannah on Sunday, while President-elect Joe Biden plans to go to Atlanta on Monday, the same day President Trump is flying to Dalton, Ga., for a rally with Republican Sens. Kelly Loeffler and David Perdue. Democrats are newly optimistic about Jon Ossoff and Raphael Warnock’s chances based on early vote numbers, which show Black voters making up a larger percentage of the electorate than in November and higher early turnout in Democratic congressional districts in the state. Turnout has been weak in the northwestern part of the state, which is home to many working-class white Trump supporters. In Walker County, which Trump won with 79% of the vote, the turnout, as of Wednesday, was only 47% of the general election total, according to the website georgiavotes.com.
While Democrats would hold only a 50/50 majority with Harris as tiebreaker, they would control the Senate floor, allowing them to bring bills up for a vote such as the legislation the House passed Monday to increase stimulus checks to $2,000 a person. Sen. Joe Manchin (D-W.Va.) has said he wouldn’t vote to scrap the filibuster or stack the Federal Reserve, so most bills would still need 60 votes.
Since the start of early voting on Dec. 14, more than 2.5 million Georgians have cast ballots in next week’s Senate runoff elections. Polls suggest that the races are too close to call, but Republicans are worried about strong turnout in Democratic areas and mixed messages from Trump. Some Republicans fret that Trump continues to make the unsubstantiated claim that he lost Georgia because of a rigged voting system and is sending confusing signals to his followers that may serve to keep them home on election day.
— Hicks is Biden’s Defense secretary nominee. President-elect Joe Biden picked Kathleen Hicks, a former Obama administration Pentagon official, to serve as the first female deputy defense secretary, according to his transition office. Hicks, who heads Biden’s transition team for the Pentagon, is director of the International Security Program at the Center for Strategic and International Studies, a Washington-based research group.
— Iowa Republican will provisionally join House after six-vote win. House Speaker Nancy Pelosi (D-Calif.) plans to provisionally seat Iowa Republican Mariannette Miller-Meeks on Sunday while her opponent, Rita Hart, contests a six-vote victory. “Every vote counts and that’s why the Committee on House Administration is conducting a thorough and fair review of this election to make sure every vote was counted and counted as cast,” Drew Hammill, a spokesman for Pelosi, said in a statement. “Pending the outcome of the Committee’s review and consistent with House practice, we intend to provisionally seat the Republican candidate on Sunday.”
— Missouri Republican Sen. Josh Hawley said that he will object when Congress counts the Electoral College votes next week, which will force lawmakers in both the House and Senate to vote on whether to accept the results of President-elect Joe Biden's victory.
Background. The Electoral Count Act of 1887 requires a joint session of Congress to count the Electoral College votes from each state and stipulates that the vice president, as presiding officer, will certify the results. However, if an objection to the count is declared in writing by a House member and signed by at least one senator, the joint session would be required to suspend, and both the House and the Senate would be required to debate the objection for two hours. The chambers would vote on the lawmakers’ objection before reconvening in the joint session.
— Trump's presidency: $8 trillion-plus in added debt in one term. President Trump promised in the 2016 campaign to eliminate the federal debt over a two-term presidency. That pledge won't come to fruition, and, in fact, he will leave office having added massively to the debt. Link to details via the Washington Examiner.
OTHER ITEMS OF NOTE
— Alaska Airlines will ban emotional support animals from its flights beginning Jan. 11, becoming the first major U.S. airline to do so after the Department of Transportation revised its guidelines earlier this month. "To ensure a safe and accessible air transportation system," the Air Carrier Access Act now defines a service animal as "a dog that is individually trained to do work or perform tasks for the benefit of a person with a disability." "This regulatory change is welcome news, as it will help us reduce disturbances onboard, while continuing to accommodate our guests traveling with qualified service animals," said Alaska Airlines director of customer advocacy Ray Prentice. U.S. airlines have lobbied for the rule change for more than a year, with many questioning whether some passengers may be trying to pass off their pets as support animals to avoid paying associated fees.
— Good riddance to 2020 as depicted by the New York Post: