Parliamentarian: Minimum wage can't be part of $1.9 trillion stimulus bill in Senate
In Today’s Digital Newspaper
• Fed tries to ease concerns about inflation, but…
• U.S. dollar index solidly higher early today
• Gold hit hard by rising U.S. bond yields
• Crude oil futures slump on strength in U.S. dollar and concerns over OPEC+ output
• U.S. copper on course for largest monthly increase since 2016
• U.S. farmers set to plant more row crops than ever
• U.S. railroads’ grain traffic up 30% first seven weeks of 2021 from year ago
• Farmers in South dealing with dead chickens and frozen oranges: WSJ
• Run-up in crop prices going to start squeezing margins for U.S. dairy farmers
• Ag demand update
• Exchange warns coming heat and dryness could clip Argentine crop prospects
• French ratings signal grain crops overwintered well
• Major Malaysian palm oil producer reports big Q4 profits, but expects ‘eventful’ 2021
• ASF spreading across South Africa
• Mexico re-opens its market to Argentine beef
• Democrats dealt a blow in push to raise wage floor
• Republicans: aid package is partisan and doesn’t focus on actual Covid aid
• House Ag Republicans offer Covid aid package
• Additional highlights from Vilsack presser
Biden Administration Personnel
• Biden’s nominations to his administration are moving at glacial pace
• Granholm confirmed by Senate with 14 Republican votes
• One possible headwind for China's exporters: Yuan has continued to climb
• ASF concerns fuel aggressive profit-taking in Chinese soymeal futures
• China extends exemptions from its retaliatory tariffs on 65 U.S. products.
• USTR nominee Tai comments on trade-related topics at Senate panel hearing
• Global trade has rebounded from its collapse in early stages pandemic
• Big rebound in global trade coming with a shift in the direction of goods flows
Energy & Climate Change:
• Scott, Thompson agree that climate change is real, but disagree on strategy
• SEC plans for corporate climate reporting
Food & Beverage Industry Update:
• Beyond Meat to supply plant-based meat imitations to McDonald’s, KFC and Pizza Hut
• Mostly static food price outlook
• Clogged ports, full freezers snarling flow of seafood to American dinner plates
• Frontline Food Safety and Inspection Service workers will receive surveys Monday
Politics & Elections:
• Biden and VP Harris will headline House Democrats’ first-ever virtual retreat next week
• Secretary of State Antony Blinken will visit Mexico and Canada — virtually
• McConnell says he would “absolutely vote” for Trump if he wins 2024 nomination
• Former Sen. Pat Roberts (R-Kan.) joining Capitol Counsel as partner.
Other Items of Note:
• Biden orders airstrike in Syria
• Biden administration bracing for a border crisis
• Cotton AWP above 75 cents
Equities today: Global stock markets were mostly lower overnight. U.S. stock indexes are pointed toward weaker openings.
U.S. equities yesterday: The Dow dropped 559.85 points, 1.75%, at 31,402.01. The Nasdaq fell 478.54 points, 3.52% (worst sell-off since October), at 13,119.43. The S&P 500 declined 96.09 points, 2.45%, at 3,829.34.
Government bond prices fell, with the yield on the benchmark 10-year Treasury note rising to a one-year high of 1.513% from 1.388% Wednesday. Overall, the bond market has been pricing in a hotter economy as vaccine programs progress and more stimulus is set to hit the U.S. economy. But Fed officials this week said the rise in bond yields aren’t a source of concern. They said they continue to see the U.S. economy in recovery mode, with several noting they aren’t concerned about the recent rise in long-term bond yields and see no need to use monetary policy to push against it.
On tap today:
• U.S. personal income for January, due at 8:30 a.m. ET, is expected to increase 9.5% and consumer spending is expected to grow 2.5% from a month earlier.
• U.S. advance economic indicators for February are out at 8:30 a.m. ET
• Chicago purchasing managers index for February, due at 9:45 a.m. ET, is expected to fall to 61 from 63.8 a month earlier.
• University of Michigan's consumer sentiment index for February, due at 10 a.m. ET, is expected to tick up to 76.8 from a preliminary reading of 76.2.
• Baker Hughes rig count is out at 1 p.m. ET
• CFTC Commitments of Traders report, 3:30 p.m. ET.
• Outside markets: The U.S. dollar index is solidly higher early today on a corrective bounce from recent selling pressure. Nymex crude oil futures prices weaker and trading around $63.00 a barrel after hitting a 13-month high on Thursday. Gold has been hit hard by the rising government bond yields and today the safe-haven metal fell to an eight-month low.
• Crude oil futures have slumped further as strength in the U.S. dollar and concerns over OPEC+ output are weighing on prices. U.S. crude is trading under $62.50 per barrel and Brent under $65.15 per barrel. Futures were lower in Asian action, with U.S. crude down 36 cents at $63.17 per barrel and Brent down 29 cents at $65.82 per barrel.
• U.S. copper is on course for its largest monthly increase since 2016. Copper futures were down 1.7% at $9,191 a metric ton this morning, although still remain up 17.6% so far this month on the final day of trading in February.
• U.S. farmers set to plant more row crops than ever. The Wall Street Journal takes a look at the topic (link) an notes USDA projects that farmers will plant 182 million acres of corn and soybeans in 2021, an all-time high.
U.S. railroads’ grain traffic was up 30% in the first seven weeks of 2021 from a year ago, according to the Association of American Railroads, extending a monthslong surge. The good news for farmers and grain haulers is that Chinese purchases are continuing even as prices rise.
• Farmers in the South are dealing with dead chickens and frozen oranges. As crop and livestock producers tally their losses from this month's historic winter storm, agriculture industry officials say the cost could total in the hundreds of millions of dollars. One chicken company lost more than a million chickens, which were either killed by conditions created by the cold, had to be euthanized because they couldn't be shipped or were unable to hatch at all, the Wall Street Journal reports (link). Entire groves of fruit have frosted over, likely destroying 98% of the current Valencia orange crop and 55% of grapefruit in Texas, which is the third-largest citrus-producing state in the U.S. New tree blooms were also killed in the cold, meaning that significant portions of next season's crop are gone as well. And 14 million gallons of milk in Texas had to be dumped out because plants couldn’t process the product during the widespread power outages. Dale Murden, a citrus grower and president of Texas Citrus Mutual, a farmer organization, told the WSJ that even with insurance payouts, some growers could end up leaving farming entirely after the disaster, as it could take another five years to be able to produce enough fruit to create a steady income again. "Insurance was never designed to make you whole after a disaster like this," he said.
• Run-up in crop prices is going to start squeezing margins for America’s dairy farmers. That’s the warning from Land O’Lakes, one of the biggest U.S. farm cooperatives. Producers will have a “bumpy” first half of 2021, CEO Beth Ford said. “If you aren’t growing all of your own corn or animal feed, you’re going to start to see margin compression at the farm level,” she said in an interview with Bloomberg. Eventually that could mean higher costs get passed on to consumers. Meat companies like Tyson Foods are already increasing prices. The supply situation gets more worrisome with fresh outbreaks of a lethal pig disease that are starting to pop up in China.
But one analyst asks: “Ask dairy farmers why they didn’t price their feed needs early last summer when feed prices were much lower. At least they had the opportunity to do that.”
• Ag demand: South Korea’s Nonghyup Feed Inc. bought around 137,000 MT of animal feed corn to be sourced from global origins.
Items in Pro Farmer's First Thing Today include (Link to subscribe to FTT):
• Exchange warns coming heat and dryness could clip Argentine crop prospects
• French ratings signal grain crops overwintered well
• Major Malaysian palm oil producer reports big Q4 profits, but expects ‘eventful’ 2021
• ASF spreading across South Africa
• Mexico re-opens its market to Argentine beef
— Senate parliamentarian rules proposed $15 minimum wage doesn’t fit within Senate budget rules. However, House Majority Leader Steny Hoyer (D-Md.) said late Thursday it will be in the American Rescue Plan the House will vote on today. “I am deeply disappointed by the ruling that an increase to the minimum wage would be subject to a point of order in the Senate,” Hoyer said in a statement. “Gradually raising the minimum wage to $15 an hour remains a centerpiece of House Democrats’ economic plan and would provide a major boost in income to 27 million Americans while lifting nearly a million out of poverty.”
The Senate parliamentarian nixed the increase in the minimum wage for inclusion in President Biden’s American Rescue Plan bill because it does not comply with the Byrd rule that determines what can be included in a budget reconciliation bill.
Sen. Bernie Sanders (I-Vt.) said he would be working with his colleagues in the Senate to “move forward with an amendment to take tax deductions away from large, profitable corporations that don’t pay workers at least $15 an hour and to provide small businesses with the incentives they need to raise wages. That amendment must be included in this reconciliation bill.”
Jen Psaki, the White House press secretary said “President Biden is disappointed in this outcome,” but “respects the parliamentarian’s decision and the Senate’s process. He will work with leaders in Congress to determine the best path forward because no one in this country should work full time and live in poverty. He urges Congress to move quickly to pass the American Rescue Plan, which includes $1400 rescue checks for most Americans, funding to get this virus under control, aid to get our schools reopened and desperately needed help for the people who have been hardest hit by this crisis.”
How many people make minimum wage? Very few. A Labor Department report released Thursday said 247,000 workers earned exactly the prevailing federal minimum wage of $7.25 an hour last year. About 865,000 more earned less than the minimum, including many servers, bartenders and other tipped employees. The finding suggests that an initial increase to the minimum would likely have relatively little impact on the national economy.
Higher wages, fewer jobs? "While low wages contribute to the dire economic straits of many poor and low-income families, the argument that a higher minimum wage is an effective way to improve their economic circumstances is not supported by the evidence. First, a higher minimum wage discourages employers from using the very low-wage, low-skill workers that minimum wages are intended to help. ... Second, minimum wages do a bad job of targeting poor and low-income families. Minimum wage laws mandate high wages for low-wage workers rather than higher earnings for low-income families," UC Irvine's David Neumark writes at IZA World of Labor (link).
Bottom line on coming Covid aid bill: It will be whatever the Senate parliamentarian signs off on as part of the package.
— Republicans say aid package is partisan and doesn’t focus on actual Covid aid. House Minority Leader Kevin McCarthy (R-Calif.) said Wednesday out of 286 amendments proposed by Republicans for the $1.9 trillion spending package, only two were accepted. “Republicans offered 286 amendments to President Biden’s massive $1.9 trillion spending blowout. Democrats accepted two of them. So much for Biden’s calls for ‘unity,'” McCarthy said in a statement (link). The Republican Study Committee (RSC released a fact-sheet (link) on items “Democrats are hoping the public won’t find about [sic]” that are included in President Joe Biden’s $1.9 trillion stimulus bill.
Senate Majority Leader Chuck Schumer (D-N.Y.) said package will provide “bold COVID relief to Americans nationwide” and criticized Republicans for obstructing Democrat efforts. “Republican leaders are reportedly ‘maneuvering’ to get every single Republican member to oppose urgent, bold Covid relief. Every single one! Make no mistake: Democrats are working to quickly deliver the American Rescue Plan and big, bold COVID relief,” Schumer said.
Senate Minority Leader Mitch McConnell (R-Ky.) said the Democrat’s rescue package was not addressing the issues that would help reopen the economy. “Only about 1% of the Democrats’ partisan plan goes to vaccines. Only about 5% of its K-12 funding would even go out this fiscal year. Democrats are not addressing the urgent needs of a re-opening America. They started with a preconceived liberal wish-list and worked backward,” McConnell said.
Rep. Jason Smith (R-Mo.), the Republican Leader of the House Budget Committee, called package a liberal “wish list” because so little of the total funds are going to fighting the effects of the pandemic. “It’s very simple. We’re here today because Pelosi, Schumer, and Biden decided to use a pandemic to push forward a progressive wish list; items to reward political allies, friends, and donors at the expense of the American working class,” Smith said. He said that less than 9% of the $1.9 trillion is allocated for Covid health spending and only 5% is marked to fund the extra needs at schools amid the pandemic. “Why is it that this package spends more than 25%, according to the Congressional Budget Office, on items that kill millions of jobs,” he added.
— House Ag Republicans offer Covid aid package. Republicans on the House Ag Committee put forth a Covid Relief and Recovery Plan they say addresses needs of rural communities “that were excluded in the House Democrats’ reconciliation package.” The plan has $2.1 billion for rural hospitals, public safety facilities and schools; $1 billion for biofuel producers impacted by the pandemic; $800 million for rural broadband connectivity; unfreezing the Coronavirus Food Assistance Program (CFAP); and it would reprioritize excessive transportation grant funding for cities and invests in rural America instead. The plan will be offered as an amendment to the Democratic aid plan in House action but is not expected to be adopted. Link for details.
— Additional highlights of Vilsack’s presser (link to special report released Thursday) for more details.
- Climate change: Vilsack plans to meet with his climate team today about measures to reduce greenhouse gas emissions in agriculture, possibly including a carbon bank. There is no specific timeline, but “it is important for us at USDA to do what we can with the resources we have as quickly as we can,” Vilsack said. He will be “looking at” funding and authority available for climate change programs and “advocating for” additional funding needed. Vilsack said the U.S. loses four and half tons of top soil every year, while only replacing half a ton. The country is faced not only with the climate issue, but also with the need to raise food for global food security, he said. “It is important from a soil health perspective to do what we can as quickly as we can to restore the health of our soil,” he said. American farmers have the opportunity to be world leaders on climate issues, he said, not just to protect the environment but to satisfy consumers who demanding more evidence and information on farmers’ growing practices. “It is also an income imperative,” Vilsack said, citing an ERS study that indicated 89% of farmers do not make the majority of their money from farming. “Tell me another occupation or job in which 90% of the people are not making the majority of money from it,” he said. “It is an economic imperative to find additional ways for them to make a living, Vilsack said, adding that includes doubling down on export markets, creating new opportunities, local and regional food systems and making sure make “markets are fair and transparent… “We don’t have a day to waste on this,” he concluded.
- USDA funding/personnel: Vilsack said he is examining the fiscal year 2021 USDA budget developed by the Trump administration under which the department is now operating and working on the fiscal year 2022 budget that the Biden administration will propose. Farm Service Agency personnel, the Rural Development mission area, the Economic Research Service, and the National Institute for Food and Agriculture all need attention, he said. While not asked about the Trump administration’s decisions to move most ERS and NIFA positions to Kansas City, Vilsack said he is concerned about the unfilled positions in those agencies. “Those two entities do really important work,” he said, adding that USDA decision-making is dependent on the data they develop. He also said he wants to “reaffirm the importance of science.”
- Farmers to Families Food Box Program: Vilsack said USDA “learned a lot from this program” and that “in many remote areas of the country the ability to have access to fresh produce was well received,” he said, adding and that he wants to continue to focus on “nutrition security.” “Food security” is the usual term used, he said, but he noted that many Americans have one chronic disease or another that is diet-related. The United States spends more on diabetes through Medicare and Medicaid than the entire USDA budget, he said. He also said here had been many problems with the implementation of the food box program, and that he wants to make sure that that “the vast majority of resources” are not going for administration. USDA has continued the Farmers to Families program into April because the review of it could not be conducted that quickly, but the review “will allow us to make a number of determinations.”
- CFAP will be made ‘equitable’: Asked about the Biden administration’s review of the Coronavirus Food Assistance Program (CFAP), Vilsack gave no timeline for when the review will end, and money distributed. But he said payments are still going out under an earlier CFAP program, that USDA has extended the deadline for applications, and that once the review is finished, producers will have another 30 days to apply under the new rules. Vilsack revealed the Iowa delegation has asked that the program include custom cattle feeders and that members of Congress have complained about producers they believe were improperly left out. He also pointed out that the USDA inspector general testified there are concerns that improper payments had been made. The CFAP program will be made “equitable,” Vilsack concluded.
USDA Inspector General Phyllis Fong told the House Agriculture Appropriations Subcommittee that her office is investigating reports of improper payments. Members of the public have said that CFAP applicants have made false statements and made false certifications to obtain benefits and applied for benefits even if they don’t produce food. The IG’s office has also received calls about the Farmers to Families Food Box Program, Pandemic EBT, and the Paycheck Protection Program, but the number of complaints about CFAP has been the highest, reports note.
- Trade: Vilsack said that in his four years as president and CEO of the U.S. Dairy Council, he came to appreciate the importance of trade, and also learned “what it takes” to be successful in export sales. The dairy industry had several years of record exports because the industry “deepened our presence” in foreign markets, he said, and “figured them out in a very creative way.” The next USDA undersecretary for trade and global agricultural affairs needs to “make sure we are doing everything we can to deepen our presence in markets,” facilitate the work of the U.S. trade representative’s office and encourage the expansion of opportunities,” Vilsack said. He said it is important to look for opportunities beyond China, saying he wants to find out if there is an opportunity “now” for an agreement with the United Kingdom, if there is any hope of an agreement with the European Union and whether the U.S.-Mexico-Canada Agreement is being enforced.
BIDEN ADMINISTRATION PERSONNEL
— Biden’s nominations to his administration are moving at a glacial pace — and the president blames Trump. “I blame it on the failure to have a transition that is rational,” Biden told reporters. Unlike his immediate predecessors, Biden had no Cabinet secretaries who lead the largest federal departments confirmed on Day 1. So far, only nine of Biden’s 23 Cabinet-level nominees who require Senate approval have been confirmed.
— Granholm confirmed by Senate with 14 Republican votes. The Senate on Thursday confirmed, 64-35, former Michigan governor Jennifer Granholm as secretary of Energy; 14 Republicans voted for her. Granholm has said she would seek to deploy clean energy technologies being developed by the Energy Department and its 17 national laboratories. Granholm, 62, has also said she would prioritize creating jobs while deploying new energy technologies. She said she would draw upon her experience revitalizing Michigan’s economy after the 2008 recession during which the auto-dependent state was diversified to clean energy through efforts that included luring battery manufactures with tax credits and other incentives.
Granholm has been criticized by some Republicans frustrated by Biden’s actions against the fossil-fuel industry. “The Biden administration is telling these oil rig, coal mine, and well workers that they can simply get new jobs ‘building solar panels’,” Sen. John Barrasso (R-Wyo.) said shortly before casting a vote against Granholm’s nomination in committee earlier this month. “Their livelihoods are being sacrificed in the name of the Biden agenda.”
— One possible headwind for China's exporters: Yuan has continued to climb in value this year, and Beijing doesn’t appear to be in a hurry to weaken it. The currency has risen more than 9% against the U.S. dollar since June on the back of an export boom and massive investment flows, the Wall Street Journal reports (link).
— ASF concerns fuel aggressive profit-taking in Chinese soymeal futures. Chinese soymeal futures tumbled 5% today, the biggest drop in eight years, with traders booking profits amid concern new African swine fever (ASF) outbreaks will diminish demand. Expectations soybean cargo arrivals will be limited during March due to Brazilian harvest delays had pushed soymeal prices dramatically higher leading up to the selloff. A manager at a meat producer in northern China told Reuters that “as more surveys were carried out in the industry, the market found that disease is really bad.”
Meanwhile, Wang Xioyang, senior analyst with Sinolink futures commented that “outbreaks are spreading from the north to the south.” In recent months, analysts say outbreaks of ASF prompted farmers to dump sick pigs at slaughterhouses, causing pork prices to drop and hog futures to rise. A sharp drop in U.S. soy futures yesterday also added pressure.
— China extends exemptions from its retaliatory tariffs on 65 U.S. products. China’s finance ministry today said the country would extend tariff exemptions for 65 products imported from the U.S. Those exemptions had been slated to lapse Feb. 28 but will now remain in effect until Sept. 16, 2021. That lists includes things such as timber, aircraft parts and ventilators. This exemption list is separate from the 696 products including many U.S. ag goods that were also exempted from retaliatory tariffs via a separate announcement.
— U.S./China Phase 1 tracker: China’s purchases of U.S. goods. Link.
— USTR nominee Tai comments on trade-related topics at Senate panel hearing. President Biden’s nominee for U.S. Trade Representative (USTR), Katherine Tai, responded to several questions Thursday for her formal confirmation hearing before the Senate Finance Committee. Some key topics:
- Trade policy and Biden administration: “To the extent that I have been privy to conversations … I don’t expect — if confirmed — to be put on the back burner,” Tai said, responding to concerns that trade was a low priority for the Biden administration.
- WTO: The Biden administration has maintained a position held by the Trump administration — the WTO needs reform. The way the Biden administration goes about seeking reforms may be different. “The WTO does need reform,” Tai observed. “We need to be having hard conversations in Geneva in a constructive way to be asking, ‘What is the value of the WTO to its members? Is it accomplishing the goals that its founders and members expect of it?’”
- China: Sen. Rob Portman (R-Ohio) a member of the Senate Finance panel, said Tai had committed to work to on a “Top to Bottom Review” of the U.S./China relationship and to pursue reform opportunities at the World Trade Organization. During the hearing. Agriculture has been one of the focal points of the Phase 1 agreement and Tai indicated she expects they will live up to the deal. “The agreement that we have with China is the agreement that we have, and there are promises that China made that China needs to deliver on,” Tai stated. But she also signaled the administration may look at other ways of dealing with China. U.S. trade policy includes “roads that have been well worn by U.S. Trade Representatives before me,” Tai said. “We need to be exploring all of our options” relative to the U.S./China trade relationship. Tai also knows the party line on trade policy as she pointed out that trade policy in the past has seen “a pattern where one sector of our economy and one segment of our workers feel like their livelihoods and their opportunities are sacrificed for yet another part of our economy,” including that farmers and manufacturing workers have been pitted against one another. “I think one of our challenges going forward is to figure out how to craft our trade policies and how to coordinate our trade policies with our other domestic and foreign policies to break out of that pattern,” Tai stressed. But forced labor is not an area where the U.S. will ease any actions on China, as she labeled it as “one of the crudest examples of the race to the bottom” for workers.
- MCOOL: The U.S. ended mandatory country-of-origin labeling (MCOOL) for beef and pork when the WTO ruled it did not meet U.S. trade commitments and Canada and Mexico were given the okay to hit the U.S. with more than $1 billion in sanctions if it was not ended. Sen. John Thune (R-S.D.) elicited a pledge from USDA Secretary Tom Vilsack to look into finding a way to revive MCOOL that would meet U.S. WTO commitments. Tai commented that the MCOOL decision has “not been a popular ruling back here at home,” but much of the U.S. livestock industry is opposed to the effort. Tai further vowed to work closely with USDA Secretary Tom Vilsack, lawmakers and ag stakeholders to look at ways of crafting MCOOL “that will survive WTO challenge.”
- USMCA: Regarding Canada coming into compliance on dairy provisions and Mexico lagging on labor provisions, Tai said, “the top priority for USMCA is to use those enforcement tools… The renegotiation of NAFTA was hard work and the agreement we have now as [House Ways and Means Committee] ranking member [Kevin] Brady [R-Texas] mentioned has improved enforcement mechanisms,” she said. “The key to using the USMCA and making it successful is to exercise the tools that were so hard fought in being incorporated into the agreement.” Tai acknowledged the “very clear promises” Canada made on dairy. “I know that [former USTR Bob] Lighthizer initiated consultations under the dispute settlement mechanism of the USMCA with Canada on this issue. If confirmed, I look forward to digging into this file,” she said, again saying she will explore all options and all tools available to resolve the issue.
Regarding Mexico maintaining restrictions on the importation of potatoes and biotech crops, Tai said, “I am aware of some of the ongoing concerns with Mexico’s implementation of the USMCA in these areas and others… We have a full set of tools for engaging with Mexico to address ongoing irritants and frictions. If confirmed, I look forward to engaging with stakeholders and the expert staff at USTR to begin engagement with the Mexican government.” The Mexican Supreme Court postponed a decision until at least next week on whether to allow the importation of fresh U.S. potatoes throughout the country.
- Trade deal with the U.K.: Sen. Bill Cassidy (R-La.) asked about a U.K. trade deal that could benefit rice. “We would love to sell a lot of Louisiana rice to the U.K. and it turns out they love it. The issue is 25% countervailing tariffs as it’s caught up in other aspects of our trade war. Just to encourage that it be resolved ASAP.” If confirmed, said Tai, she would “want to take every opportunity to work this issue not just at USTR but with other agencies that have a stake.”
— Global trade has rebounded from its collapse in the early stages of the pandemic, with China and other Asian manufacturing countries grabbing a bigger slice of exports — market share they are expected to keep after the public-health crisis fades, the Wall Street Journal reports (link). Drivers for the rebound: Demand for personal protection equipment, including face masks, soared. Working and schooling from home boosted demand for computers. Efforts to avoid risky public transport systems in cities boosted demand for bicycles. Many splashed out on new kitchens and furnishings. Huge government stimulus in wealthy countries has turbocharged such demand. Now, as a global recovery gathers pace, trade will likely keep growing, say policy makers, business executives and economists. But it will be hampered by the growing difficulties factories face in meeting Western consumers’ appetite for goods, the WSJ concludes.
The big rebound in global trade is coming with a shift in the direction of goods flows. China and other Asian manufacturing countries are grabbing a bigger slice of exports, gaining market share that they are expected to keep after the public-health crisis fades. Global trade flows fell far less than expected last year, driven by rising demand for goods ranging from personal protection equipment to computers, bicycles and furniture, much of it from Asia. Experts expect demand to remain strong, particularly as more government relief funds flow, spurring more orders from factories in Asia that are hampered only by their ability to keep up with Western consumer appetites. The share of total world exports accounted for by China rose 10% in 2020, but even that growth was outpaced by Taiwan and Vietnam.
ENERGY & CLIMATE CHANGE
— Scott, Thompson agree that climate change is real, but disagree on strategy. During a House Ag Committee hearing Thursday, panel Chairman David Scott, (D-Ga.) and ranking member Glenn “G.T.” Thompson (R-Pa.) showed while both agree that climate change is a major topic, how to deal with it is as well.
Scott said that changes in weather patterns “introduce significant risks to agricultural production, forest resources, and the economy” and “these risks cannot be understated.” He cited USDA’s Economic Research Service saying “climate change will likely affect risk-management tools, financial markets, and our global food security, among other important areas.”
Thompson said, “There’s a saying I learned BC (before Congress) — if you’re not at the table, you’re probably on the menu. For too long the agriculture sector has been on the menu when it comes to climate.” The hearing, he added, “begins to put us at the table, and I’d like to start my remarks by making a very clear position: The climate is changing, the Earth’s temperature is rising, and I trust the science that global industrial activity has contributed to the issue. Reducing global emissions is what we should be pursuing — it is the right thing to do, and it requires smart, prudent and science-based policies. But the apocalyptic narrative of the world coming to an end within the decade is not evidence based and it is not supported by science.”
— SEC plans re: corporate climate reporting. The Securities and Exchange Commission (SEC) plans to take a hard look at how public companies apply 2010 agency guidance that emphasized the importance of disclosing how climate change impacts their bottom lines. Allison Lee, the acting chair of the SEC, ordered the agency to enhance its focus on climate in its reviews of corporate filings that are pored over by investors. The goal is to move toward more “consistent, comparable, and reliable” climate reporting by companies, she said this week. The SEC’s potential scrutiny of annual 10-Ks and a host of other public company filings comes as the agency ramps up its work on environmental, social, and governance issues under Biden. Lee frequently called for more ESG disclosures before becoming the agency’s interim leader last month, echoing similar pleas from investors, environmental groups, and others.
FOOD & BEVERAGE INDUSTRY
— Beyond Meat said it struck deals to supply plant-based meat imitations to McDonald’s, KFC and Pizza Hut, a victory in its effort to take meat alternatives into the American dining mainstream. It will be McDonald’s preferred supplier for the patty in the McPlant burger. Beyond Meat also announced a global strategic partnership with Yum Brands to co-create items that can only be found at KFC, Pizza Hut and Taco Bell.
— Mostly static food price outlook. USDA did not alter its major food price inflation outlook in its forecast issued Thursday from levels in January, still forecasting overall food price inflation for 2021 2% to 3% overall, with food away from home (restaurant) prices also expected to rise 2% to 3%. That would put overall food price inflation for 2021 in line with the 20-year average of 2.4% while the restaurant price rise the past 20 years has been 2.8%.
Food at home (grocery store) prices are looked to up be 1% to 2% in 2021, below the 20-year average of 2%, but well below the 2020 pandemic-influenced rise of 3.5% — both restaurant and overall food prices rose 3.4% in 2020. Within the categories of food at the grocery store, USDA only adjusted its forecasts for fats and oils, now putting it at 1% to 2%, and sugar and sweets at 1.5% to 2.5%. That marks a sizable jump for fats and oils as USDA in January saw those prices unchanged — a range of down 0.5% to up 0.5%, while sugar and sweets were expected to rise 1% to 2% in last month’s forecast.
These mostly static forecasts may not remain that way as USDA cautioned “uncertainty about the effect of the pandemic on food prices remains largely unresolved.” Whether their forecasts remain closer to the 20-year averages in 2021 than the levels seen in 2020 remains to be seen. But they are still elevated from the period leading up to the pandemic where food price increases at the grocery store were less than 1% in 2018 and 2019 and actually declined from the prior year in 2016 and 2017.
— Clogged ports and full freezers are snarling the flow of seafood to American dinner plates, boosting costs for fish suppliers and consumers. A flood of imports, and workforces diminished by Covid-19, have caused backlogs at major U.S. ports, stranding containers of frozen fish on ships and docks in places like California and New Jersey. Freezers in key port cities are also filling up, often leaving seafood with nowhere to go once it is unloaded and prompting importers to shuttle fish between warehouses or across longer distances to find cold storage. Those bottlenecks are running up against Lent, when many Christians abstain from meat and Americans eat more seafood than during any other time of year, the Wall Street Journal notes (link).
— Summary: Global cases of Covid-19 are at 113,049,065 with 2,508,843 deaths, according to data compiled by the Center for Systems Science and Engineering at Johns Hopkins University. The U.S. case count is at 28,413,389 with 508,307 deaths. The Johns Hopkins University Coronavirus Resource Center said that there have been 68,274,117 doses administered, 21,555,117 have been fully vaccinated, or 6.59% of the U.S. population.
— Frontline Food Safety and Inspection Service workers will receive surveys Monday asking if they feel Covid-19 protocols are keeping them safe on the job, USDA Inspector General Phyllis Fong told the House Ag Appropriations Subcommittee. The survey will run for two weeks.
POLITICS & ELECTIONS
— President Biden and Vice President Kamala Harris will headline the House Democrats’ first-ever virtual retreat next week. Democrats will gather remotely Tuesday and Wednesday, with Biden speaking Wednesday and Harris, as well as Secretary of State Tony Blinken, addressing the gathering on Tuesday.
— Secretary of State Antony Blinken will visit Mexico and Canada — virtually. Blinken will begin his first “virtual trip” abroad tomorrow, filling an itinerary of videoconferences with Mexican and Canadian leaders, the Washington Post reports. Conversations on immigration and energy challenges are at the top of the agenda.
— McConnell says he would “absolutely vote” for Trump if he wins 2024 nomination. Senate Minority Leader McConnell (R-Ky.), who excoriated former President Donald Trump over the deadly Jan. 6 Capitol riot less than two weeks ago, said on Thursday that he would “absolutely” vote for Trump if he became the 2024 Republican presidential nominee. Asked on Fox News if he would vote for Trump if he won the GOP nomination, McConnell said, “The nominee of the party? Absolutely! There’s a lot to happen between now and ‘24. I’ve got at least four members that I think are planning on running for president, plus some governors or others. Should be a wide-open race.”
— Former Sen. Pat Roberts (R-Kan.) is joining Capitol Counsel as a partner. Roberts, first elected to the House in 1981 before winning election to the Senate in 1997, is the longest-serving member of Congress from Kansas. He is barred by Senate rules from lobbying his former colleagues for two years but will likely register at some point. He also hasn’t ruled out lobbying for foreign governments once his ban lifts, but according to John Raffaelli, a partner at Capitol Counsel, he would be “very selective” about which foreign clients he represents “should the situation arise in the future.” Roberts “embodies the no-nonsense, authentic approach that made him a respected statesman,” Shannon Finley, another partner, said in a statement, adding that the former senator’s “unmatched experience offers our clients best-in-class strategic advice, and we are honored to have him join our team.” (Source: Politico)
OTHER ITEMS OF NOTE
— Biden orders airstrike in Syria. The U.S. military launched an airstrike in Syria targeting groups affiliated with an Iran-backed militia in response to deadly rocket attacks against American forces in northern Iraq earlier this month. The Associated Press says Biden’s decision to order the strikes “did not appear to signal an intention to widen U.S. military involvement in the region but rather to demonstrate a will to defend U.S. troops in Iraq.” Defense Secretary Austin told reporters, “I’m confident in the target that we went after, we know what we hit. .... We’re confident that that target was being used by the same Shia militants that conducted the strikes.” The AP says Austin was “referring to a Feb. 15 rocket attack in northern Iraq that killed one civilian contractor and wounded a U.S. service member and other coalition personnel.” Austin “said he recommended the action to Biden.”
— Biden administration bracing for a border crisis. An Immigration and Customs Enforcement (ICE) email obtained by the Washington Post shows the administration has already entered crisis mode on the southern border. “We need to prepare for border surges now,” Timothy Perry, ICE’s new chief of staff, wrote in a Feb. 12 email. “We need to begin making changes immediately.” The WaPost said the administration “is so worried about running out of shelter space for migrant minors that shelters have been authorized to purchase airplane tickets and cover other transportation costs for minors whose relatives are already living in the U.S.”
— Cotton AWP above 75 cents. The Adjusted World Price (AWP) for cotton rose to 75.76 cents per pound, effective today (Feb. 26), up from 73.13 cents per pound the prior week and third week in a row above 70 cents per pound. This is the highest AWP since it was at 79.67 cents per pound the week of Aug. 10, 2018. Meanwhile, USDA said Special Import Quota #19 for Upland Cotton would be established March 4 for the import of 39,720 bales of Upland Cotton, applying to supplies purchased not later than June 1 and entered into the U.S. not later than Aug. 30.