Highlights From USDA’s Data Users’ Confab | Changes Coming for CRP?

Posted on 04/16/2021 8:16 AM

Biden today meets with Japan’s Prime Minister

 


In Today’s Digital Newspaper


 

Market Focus:
• China's economy grew record-breaking 18.3% in Q1, but growth slowed vs last quarter
• U.S. beef industry stakeholders hope for new in Japan/U.S. White House meeting
• Yellen to meet with environmental groups to discuss tax & climate plan
• U.S. economic recovery is accelerating

• U.S. housing market 3.8 million single-family homes short
• Publicly held debt vs GDP highest ratio since 1946
• Highlights of USDA data users’ confab this week
• Iran’s sanctioned oil production at highest level in almost two years
• U.S. oil drillers 'dying on the vine'
• JPMorgan Chase & Co. sold $13 bil. of bonds, largest-ever deal by a bank
• Dogecoin jumps again to double record rally price
• Ag demand update

Widespread rain and snow for HRW country
• Modest dip in French wheat crop ratings after cold snap
• German farm co-ops calling for modest rise in wheat and rapeseed production
• Average Indian monsoon season expected
• Steady cash cattle action, beef prices extend rally
• Disappointing pork exports trigger heavy selling in lean hogs

Policy Focus:
• Breaking up Biden’s infrastructure plan into two parts
• Vilsack: ‘greater opportunities’ coming for landowners re: CRP 6

 

China Update:
• China economy posts big first quarter GDP result
• China first quarter pork output up more than 31% versus year ago

 

Trade Policy:
• USTR Tai, Rep. Brady deliver two diverging trade policy views
• Nigeria to halt foreign currency for sugar, wheat importers

 

Energy & Climate Change:

• Sanders, Omar target oil and gas subsidies
• EPA reaching out to oil, corn, biofuel groups for input on post-2022 RFS: Reuters
• Report: U.S. could halve emissions using only a carbon tax
• Biden considers methane vow before April 22 summit  
• Dallas Fed: February freeze costs up to $130 billion


Coronavirus Update:
• Annual Covid-19 vaccine booster shots likely to be needed: Pfizer CEO
• Covid-19 shots overwhelmingly protective; low rates of post-vaccination infection

 

Politics & Elections:
• Democratic lawmakers split on overhauling Supreme Court
• Redistricting data ahead
• Ocasio-Cortez criticizes SALT repeal push
• Pence gets pacemaker after slow heart rate


Other Items of Note:
• Cotton AWP rebounds
• Biden wants ‘predictable’ relations with
• White House threatening to cut Russia’s ties to global financial system
• Congress urged to alleviate truck driver shortage

 


MARKET FOCUS


 

Equities today: Global stock markets were mixed to firmer overnight. U.S. stock indexes are pointed toward mixed openings. Analysts expect earnings among S&P companies jumped 30% in the first quarter compared with the same period last year. New jobs data also showed that 576,000 workers in the U.S. applied for first-time unemployment benefits in the week ended April 10, down from the 769,000 who did so the week prior. Morgan Stanley, BNY Mellon and State Street are due to publish Q1 data. The Stoxx Europe 600 rose 0.5%, led by shares of banks and makers of cars and car parts. Daimler gained 3.1% after the German auto maker said sales of Mercedes-Benz cars would push first-quarter results above analysts’ forecasts. Asian markets were broadly higher. China’s Shanghai Composite Index rose 0.8% by the close and Japan’s Nikkei 225 edged up 0.1%.

 

     Jobless decline

     U.S. equities yesterday: The Dow finished with a record close, up 305.10 points, 0.90%, at 34,035.99, closing above 34,000 for the first time. Nasdaq gained 180.92 points, 1.31%, at 14,038.76. The S&P 500 moved up 45.76 points, 1.11%, at 4,170.42.

 

On tap today:

 

     • U.S. housing starts are expected to rise to an annual pace of 1.62 million in March from 1.421 million a month earlier. (8:30 a.m. ET)
     • University of Michigan's preliminary consumer sentiment survey for April is expected to rise to 89 from a final reading of 84.9 in March. (10 a.m. ET)
     • Dallas Fed President Robert Kaplan speaks at a Dallas climate change symposium at 10:45 a.m. ET and at a Texas A&M bitcoin conference at 12:30 p.m. ET.
     • Baker Hughes rig count is out at 1 p.m. ET.
     • CFTC Commitments of Traders report, 3:30 p.m. ET.
     • Japanese Prime Minister Yoshihide Suga will meet today with President Biden. The two leaders have unfinished business to resolve on the trade front. 1:30 p.m. ET. Then the pair will participate in an expanded bilateral meeting at 2:30 p.m. ET in the State Dining Room. That will be followed by a press conference at 4:15 p.m. ET in the Rose Garden.
    • Treasury Sec. Janet Yellen, Deputy Treasury Sec. Wally Adeyemo to meet with group of environmental organizations to discuss Biden’s Made in America tax plan, including how it could be used to help address climate change.

 

U.S. economic recovery is accelerating as stimulus money, Covid-19 vaccinations and business re-openings spur a spring surge in consumer spending, a sharp pullback in layoffs and a bounce back in factory output. Retail sales — a measure of purchases at stores, at restaurants and online — jumped 9.8% in March, the Commerce Department reported Thursday. The gain in consumer spending — the biggest driver of economic activity — came as the government began distributing hundreds of billions of dollars of stimulus funds to households. It was the largest monthly gain since last May, during the initial recovery from lockdowns early in the Covid-19 pandemic.

 

     Retail happy

 

U.S. housing market is 3.8 million single-family homes short of what is needed to meet the country’s demand, according to a new analysis by mortgage-finance company Freddie Mac. The estimate represents a 52% rise in the nation’s home shortage compared with 2018, the first time Freddie Mac quantified the shortfall. The Wall Street Journal reports (link) the figures underscore the severity of the housing deficit, which is a major factor fueling the current red-hot housing market. The shortage is especially acute for entry-level homes, which makes it more expensive for first-time home buyers to enter the market.

 

     Homes shortage

 

Publicly held debt is projected to hit 102% of the country’s gross domestic product this year. It would be the highest debt-to-GDP ratio since 1946, according to the Congressional Budget Office (CBO). At the same time, the annual deficit is expected to reach $2.3 trillion, or 10.3% of GDP, the second-largest shortfall since 1945. The numbers pale in comparison to Japan, which seems to be testing the limits. In 2019, its debt was equal to about 230% of its GDP.

 

     Debt percent of GDP

 

Some highlights of USDA data users’ confab this week:

  • USDA’s data still a hot topic, driven in part by revisions. Quarterly Grain Stocks updates from USDA have become one of the key market focal points, particularly after markets were surprised by revisions to prior totals over the past 12 months — especially the major revision to the June 1 stocks that was released in September. That was one of the dominant topics in the two-day data users meeting that USDA holds each year, with the 2021 version going virtual.
  • Grain Stocks review underway. The National Agricultural Statistics Service (NASS) has launched what agency officials say is a “top-to-bottom” review of the Grain Stocks report. That encompasses the surveys used to gather the data, the training of those gathering the data and the statistical work used to generate the eventual estimates. That NASS review is scheduled to be completed by Sept. 30, with recommendations to be implemented after October 1. Changes that are linked to manuals or training documents will be implemented immediately, while remaining suggestions will be analyzed.
  • On-farm price forecast for corn looks out of whack based on current central Illinois prices of around $5.50 per bushel and USDA’s season average price at $4.30 per bushel. The WASDE forecast is for the total crop year and much of the crop is marketed earlier in the crop year, giving a higher weight to what were lower prices. While prices will be higher the rest of the marketing year, farmers don’t have as much to sell and so those higher prices get lower weight in the price forecast.
  • Revisions to grain stocks sometimes include production. Those revisions take into account supply and disappearance. According to NASS Crops Branch Chief Lance Honig, “Sometimes that means we need to make an adjustment to stocks and sometimes we need to make an adjustment to production and sometimes it means the combination of the two. So, we will take all the available data we have, and just make the best fit put all the pieces of that puzzle that we have.”
  • A surprise to NASS? No questions from data users on the March Prospective Plantings report which showed farmers intended to plant fewer corn and soybean acres than market participants expected.
  • Does WAOB use the same data points to forecast soybean imports for China as they do corn and what is used for Japan or other countries? “We rely on the China import data as our official source and we check out with what is exported data through the year,” said WAOB feedgrains analyst Mike Jewison. “For Japan, we use Japan’s official import data for their import number and as an aside, it varies by country and commodity. Whether we are talking exported or imported data, it varies by commodity.”
  • What about better quantifying feed use for corn? Not really, according to USDA analysts, as they noted to be able to do that, it would mean having animal numbers, rates of gain, weather patterns, regional and seasonal feeding practices and updates for other technological advancements and genetic changes to capture feed use.
  • What about wheat acreage by class estimates? Bottom line is that NASS has to balance the resources available, and they do not want to overburden producers… it boils down to resources and the amount of data it would take to get an estimate down to that by class level.
  • Another factor on grain stocks? Commercial grain elevators are not required to report stocks data to NASS — it is strictly voluntary.
  • Grain storage capacity by commodity? Not possible since the same structure can be used to store multiple commodities.
  • How about a double-crop soybean intentions figure? NASS asks farmers in the first two weeks of March what their intentions are for soybean plantings, not what they intend to plant in spring and then what they intend to plant double crop. NASS realizes that many times double-crop decisions get made much later in the year and depend a lot on several factors, like is the wheat harvest early or late? Is it too wet? Is it a drought? It is just too early in the year to know about that portion of the crop that will be double cropped.

Market perspectives:

 

     • Outside markets: The U.S. dollar index is slightly lower as the euro, British pound and Japanese yen are all firmer against the U.S. currency. Nymex crude oil prices are near steady and trading around $63.45 a barrel. Meantime, the yield on the benchmark 10-year U.S. Treasury note is presently fetching around 1.576%. Gold and silver futures are moving higher, with gold trading around $1,778 per troy ounce and silver around $26.20 per troy ounce.


     • Crude oil prices are little changed ahead of the U.S. trading start, with U.S. crude around $63.45 per barrel and Brent around $67.05 per barrel. Futures weakened in Asian activity as U.S. crude was down 19 cents at $63.27 per barrel and Brent was down 19 cents at $66.75 per barrel.

 

     • Iran’s sanctioned oil production has risen to its highest level in almost two years — a development some say could lessen the West’s leverage in nuclear talks. The International Energy Agency (IEA) says China has dramatically increased purchases from Iran since last year. The IEA said the Islamic Republic pumped 2.3 million barrels a day in March, its highest production level since May 2019. Delivering the oil has been complicated, but Iran has set up covert distribution channels to sail around the sanctions. Broader tanker markets remain weak and earnings stagnant. Shipping group Bimco says U.S. seaborne crude exports fell by 18.8% in the first two months of the year from last year. Link to details via the WSJ.

 

        Iran oil production

 

     •  U.S. oil drillers 'dying on the vine'. Private equity funding for the U.S. oil sector is drying up, prompting stricken operators to make "last gasp" efforts to boost production and cash flow to attract buyers, the Financial Times reports (link). Despite oil's recovery to about $60/barrel, scores of oil producers are "dying on the vine," says Kimmeridge managing partner Ben Dell, left without the regular cash infusions to bankroll the capital spending needed to keep on drilling.

 

     JPMorgan Chase & Co. sold $13 billion of bonds yesterday, the largest-ever deal by a bank. The sale, in the wake of the bank's best ever quarter, comes amid high demand for debt that provides a premium over Treasuries.

 

     • Dogecoin jumps again to double record rally price. Dogecoin has doubled from its Wednesday morning rally to reach prices of more than $0.30 Thursday night. The dog meme-inspired cryptocurrency — that began as a joke — is up 400 percent over the past week, according to Coindesk. The surge came a day after Wednesday’s stock market debut for the cryptocurrency exchange Coinbase, which was considered a sign of Wall Street’s acceptance of crypto. However, Dogecoin is not listed on Coinbase. Meanwhile, retail investors poured $57 million into Coinbase on its first trading day. This makes it the fifth most popular launch in the past four years according to VandaTrack.

 

        Bitcoin

 

• Ag demand: Egypt purchased 30,000 MT of soyoil in a tender. A group if importers in the Philippines is thought to have rejected all offers and made no purchase in a tender for up to 380,000 MT of milling wheat and animal feed wheat. South Korea’s Korea Corn Processing Industry Association rejected all offers and made no purchase in a tender for up to 55,000 MT of corn.

 

Items in Pro Farmer's First Thing Today include:

Widespread rain and snow for HRW country
• Modest dip in French wheat crop ratings after cold snap
• German farm co-ops calling for modest rise in wheat and rapeseed production
• Average Indian monsoon season expected
• Steady cash cattle action, beef prices extend rally
• Disappointing pork exports trigger heavy selling in lean hogs

 


POLICY FOCUS


 

—  Breaking up Biden’s infrastructure plan into two parts. Sen. Chris Coons (D-Del.), a key ally of President Biden, said he’s talking with Senate Republicans about breaking up the president’s infrastructure-economic package into two bills, and passing a bipartisan bill first. “That could end up being an $800 billion to $1 trillion bipartisan bill,” Coons said. He said that would include such items as roads, bridges, airports, water projects and rural broadband that have support from both sides of the aisle.

 

     A bipartisan group held a call on Thursday to discuss where lawmakers could find common ground. A group of Senate Republicans involved in the talks have started discussing a counteroffer to President Biden’s $2.25 trillion plan.

 

— Vilsack signals ‘greater opportunities’ coming for landowners to take fragile farmland out of production via CRP. USDA Secretary Tom Vilsack on Thursday revealed that since early February, the Biden administration has been mulling how to stop a 13-year decline in enrollment in the Conservation Reserve Program (CRP). Speaking on Illinois public radio (link), Vilsack said that the CRP could play a role in President Biden’s plan to make American agriculture the first in the world to achieve net-zero emissions of greenhouse gases. Some 20.8 million acres are enrolled at present in the CRP, with contracts set to expire on 3 million acres on Sept. 30. While the 2018 farm law called for gradually raising the enrollment cap to 27 million acres, it lowered the annual rental rate to landowners to pay for the additional acres. “It’s something that I think we’re going to be addressing in the very near future … he needs to wait a week or two,” Vilsack said, responding to a caller’s question about the CRP. “But I think he’s going to see us respond to that need to create greater opportunities in CRP than before, and to take a look at how many acres makes sense,” said Vilsack. “The president has committed to a 30 x 30 effort: 30% of our working lands and public lands being dedicated in some form or fashion to conservation [by 2030]. I think that also plays to the strength of CRP. I think it’ll play a particularly important role in that.”

 

     “You focus on the opportunity side of the climate discussion,” Vilsack said when Brian Mackey, host of The 21st, asked how he would persuade farmers to act against global warming. “If the United States government is willing to pay me, if the private marketplace is willing to pay me to take certain actions on my land that will sequester more carbon, that is an income source I don’t have today, that I’ll have in the future that basically allows me to have additional flexibility in my operation.”

 

     This week, companion bills were filed in the Senate and House for a 40 million-acre CRP as part of supporting land stewardship on 100 million acres of farmland. The two Democratic sponsors, Sen. Cory Booker (D-N.J.) and Rep. Abigail Spanberger (D-Va.), compared their legislation, aimed at climate change, to New Deal programs to help farmers combat soil loss during the Dust Bowl.


 


CHINA UPDATE


 

China economy posts big first quarter GDP result. China GDP rose a record 18.3% in the first quarter from year ago, a surge reflecting a big recovery in the country’s economy in the wake of the Covid-19 pandemic. It was also up from the fourth quarter 2020 result of 6.5%. The big jump from year ago was not as great as expected as market expectations were for a figure of 19% or more. The year-ago quarter was also the onset of the pandemic which dramatically reduced economic activity in the quarter. On a quarterly basis, the expansion was just 0.6%, a slowing from the quarterly rate of 3.2% seen in the fourth quarter. Other data released included figures on retail sales that rose 34.2% from year ago, a rise from the 33.8%-pace registered in the January-February period and above expectations. Industrial output increased 14.1% in March compared with year-ago, slowing from the January-February rate of 35.1%. The results remind of a Chinese economy that continues to rise from the pandemic, but it is still an economy that faces challenges from flare-ups of the virus in the country and around the world that could temper demand.

 

     Perspective: China’s year-over-year growth rate for gross domestic product will almost certainly trend lower in coming quarters as the Chinese economy is measured against higher levels from the year-earlier period. Stripping out the statistical distortion from last year’s low base of comparison, economists at HSBC in Hong Kong estimate that underlying year-over-year GDP growth in the first three months of 2021 was about 5.4%, lower than the pre-coronavirus trend of roughly 6% growth. And when compared with the last three months of 2020, the Chinese economy expanded just 0.6%, slowing from a 2.6% quarter-on-quarter GDP increase in the fourth quarter of 2020. Economists polled by the Wall Street Journal expect the Chinese economy to grow 8.5% in 2021 from a year earlier.

 

     China economy
 

— China first quarter pork output up more than 31% versus year ago. First quarter 2021 pork production in China reached 13.69 million tonnes, up 31.9% from year ago, according to the National Bureau of Statistics. Reuters reported their calculations put that as the highest production since the first quarter of 2019. The agency said the pig herd was at 415.95 million at the end of March, up 29.5% from year ago and up from 406.5 million head as of December 31. However, reports of African Swine Fever (ASF) in the country have continued to temper expectations on the speed that the Chinese hog herd is being rebuilt from the big reductions caused by ASF. Pan Chenjun, senior analyst at Rabobank, comments that the average weights of pigs slaughtered are under year-ago, signaling the increase is driven by liquidation by farmers. Also of note, the major producers New Hope Liuhe, Jiangxi Zhengbang and Tech bank Food Co. Ltd. said they culled several hundred inefficient sows during the quarter, pushing up the meat production.

 


TRADE POLICY


 

— USTR Tai, Rep. Brady deliver two diverging trade views. Trade policy was in focus Thursday as U.S. Trade Representative Katherine Tai delivered remarks on trade policy to two different groups, and the ranking Republican on the House Ways and Means Committee Kevin Brady (R-Texas) also offered up his views on trade issues, with the two focusing on different areas.

 

    Tai spoke to the Center for American Progress and laid out a view that climate has to become a component in global trade policy. “For too long, the traditional trade community has resisted the view that trade policy is a legitimate tool in helping to solve the climate crisis,” Tai remarked. “That dated line of thinking only perpetuates the chasm that exists between the lived experiences — and expectations — of real people on the one hand, and trade experts on the other.” She said the U.S.-Mexico-Canada Agreement (USMCA) should serve as a template ahead even as she called it a “glaring omission” in the trade deal she helped move through Congress that it does not explicitly mention climate change. She was also silent on the Environmental Goods Agreement at the WTO, a situation where talks have been stalled since 2016 on the package that would cut tariffs on such products. She also welcomed the recent agreement between battery makers LG and SK Innovation and said she looked forward to working with USDA Secretary Tom Vilsack on “ambitious ideas” to address climate in agriculture, saying she would work with Vilsack to “help make these practices the new global standard.” But her initial remarks have not offered a lot of concrete plans or ideas on how to make that goal a reality. And Brady’s views make it clear that lawmakers will also seek have their input on the trade strategy moving forward.

 

     Meanwhile, Brady told the Center for Strategic and International Studies that the U.S. needs to get off the sidelines on trade, a reference to the Biden administration signaling they are not focused on negotiating new trade deals. "I believe the first step is to renew without delay Trade Promotion Authority (TPA), which for all practical purposes, has already expired. Every president of any party should have this important tool,” Brady said. He chided the administration for not giving any indication of completing trade negotiations started under the Trump administration with the U.K., Kenya and Japan. He also criticized the administration for as of yet not asking Congress to renew TPA, which officials like USDA’s Vilsack have said is coming. The global minimum tax proposal floated by the Biden administration was also rejected by Brady. "There is a lot of concern on Capitol Hill that we will be party to negotiations that ultimately are a revenue grab on American companies, but more importantly would surrender America's tax base to our foreign global competitors," Brady said.

 

     Perspective: The 13-term Texas Republican has announced he will not seek another term in the House, putting him in an interesting position to push on trade issues. Not surprisingly, he is coming from a different perspective on trade than Tai. As for the USTR, her remarks were some of the first since she was put in place as the top U.S. trade official and make clear that the government-wide focus on climate will most definitely apply to trade policy.

 

— Nigeria to halt foreign currency for sugar, wheat importers. The Nigerian central bank said on social media today that the country will no longer provide foreign currency to importers of sugar and wheat as it tries to conserve dollar reserves. "Sugar and wheat to go into our FX restriction list. We must work together to produce these items in Nigeria rather than import them," the central bank said in a tweet, according to Reuters. The mention of the FX restriction list refers to an action in 2015 which they restricted foreign exchange access for 41 items that could be produced locally, and they have added products to that list over time. However, they have altered the policy at times. They banned access to foreign exchange for dairy imports and ordered lenders to stop offering credit to milk importers in a bid to spur domestic production. However, they later lifted the foreign exchange restrictions for six firms to import milk after businesses complained.

 

     USDA export sales data shows that Nigeria has been either the second or third largest importer of U.S. wheat since the 2015-16 marketing year, taking in anywhere from 836,200 tonnes to 1.09 million tonnes.

 


ENERGY & CLIMATE CHANGE


 

Sanders, Omar target oil and gas subsidies. Tax loopholes and federal subsidies that benefit the oil, gas, and coal industries would be eliminated under a bill proposed by Sen. Bernie Sanders (I-Vt.) and Rep. Ilhan Omar (D-Minn.). “We should be fighting for a greener, more equitable future for all instead of making the fossil fuel industry more profitable,” Omar said in a statement. The bill also proposes updating below-market royalty rates for oil and gas production on federal lands and prohibiting taxpayer-funded fossil fuel research.

 

— EPA reaching out to oil, corn, biofuel groups for input on post-2022 RFS: Reuters.  EPA is seeking input on biofuel policy beyond 2022 when the current authority for the Renewable Fuel Standard (RFS) expires, with Reuters quoting four sources familiar with the situation as saying the agency is reaching out to the oil, corn and biofuel lobbies to “reshape the regulation.” EPA declined to comment on the matter.

 

     The item lays out what are relatively predicable views on the situation. The American Petroleum Institute (API) said that the RFS should encourage cellulosic and advanced biofuels over conventional biofuels like ethanol, while the American Fuel & Petrochemical Manufacturers said the RFS needs to set up a methodology where biofuel levels reflect market demand. On the other side, Advanced Biofuels Business Council Executive Director Brooke Coleman said EPA should not discourage production of conventional biofuels in favor of others. The National Biodiesel Board told the news service that the RFS needs to keep pace with expectations for rising biodiesel and renewable diesel demand.

 

     It is not clear that EPA will be the final word on what happens to RFS authority after 2022 as Congress is fully expected to weigh in on the situation. 

 

— Report: U.S. could halve emissions using only a carbon tax. The U.S. could halve its emissions of planet-warming carbon dioxide by 2035, solely by adopting a carbon tax, the Climate Leadership Council said in a report out today (link). “A carbon fee at the heart of a U.S. climate strategy will go further, faster than any other single policy intervention,” former EPA Administrator Christine Todd Whitman wrote in a foreword to the report. Putting a fee on the carbon content of fossil fuels would cut CO2 emission 51% by 2035. A fee in concert with energy efficiency and other climate policies — such as better forest and land management — could halve those emissions by 2030, according to the report, Meeting the Climate Challenge: A Carbon Fee Should Be the Centerpiece of America’s Climate Strategy.

 

    Those reductions are based on an initial $40 per ton carbon tax, applied economy-wide on coal, oil, and other fossil fuels and implemented in 2023. A carbon tax also could cut air pollution by as much as half across the U.S., as the additional cost would prod utilities and industries to boost energy efficiency and switch to low-carbon energy sources such as renewables, the report said.

 

— Biden considers methane vow before summit. The Biden administration is considering singling out methane for significant reductions as part of a pledge to cut greenhouse gases in advance of a climate summit next week, according to reports. Biden is already expected to unveil an ambitious goal for slashing all greenhouse gases before the April 22 virtual event, which dozens of nations are slated to attend. But activists have pushed the administration to go further when it comes to methane, since it is so potent that reductions over just the next few years can be a major weapon in the fight against climate change.

 

— Dallas Fed: February freeze costs up to $130 billion. The costs incurred in the state of Texas from the freezing temperatures and storms that hit Texas have convinced Dallas Federal Reserve Bank researchers that winterizing for extreme weather events “appears to be financially reasonable.”

 

     The bank published an analysis of the situation, noting that wind power generation had dropped off ahead of the storms as wind speeds in the state had declined. That prompted more reliance on gas-fired power plants to meet rising energy needs. The week ahead of the storms, more than 50% of Texas power requirements were met by wind.

 

     As temps plummeted, wind-farm output declined even further as wind speeds were low and ice accumulated on turbine blades, the report noted. Plus, electricity output declined even further as gas-fired plants were unable to procure needed supplies and in some cases, “critical equipment failed at several power plants.”

 

     The situation was compounded, the report said, when power was cut to natural gas wells, processing plants and compressor stations that move gas into and long major pipelines serving power plants. The report detailed 38 of Texas’ 176 gas processing plants shut down due to weather conditions and electricity service disruption. Texas natural gas production dropped 45 percent February 13–17. “This created a death spiral for electricity generation,” the report stated.

 

      As for estimating costs, the report indicated that early estimates are that the freeze and outage could have caused a hit to the Texas economy of $80 billion to $130 billion in direct and indirect economic loss. “These initial calculations come with significant uncertainty,” The report cautioned. Estimates of insured losses, which are easier to quantify, range from $10 billion to $20 billion, the report said. Since “every source of power generation” failed during the storm, the report said measures to void future disruptions “ranged from winterization of power plants to addressing the efficacy of intermittent renewable generation.”

 

     Winterizing oil and gas wells. With winterizing equipment costing between $20,000 and $50,000 per well, we estimate these measures statewide would total $85 million–$200 million annually, the report said.

 

     Winterizing power plants are another step, which according to a study by the Federal Energy Regulatory Commission (FERC) and North American Electric Reliability Corp (NERC) in 2011 after an outage put those costs (in 2011 dollars) at $50,000 to $500,000. In today’s terms, the Fed bank said installing the equipment on all 162 gas-fired power plants in Texas would cost up to $95 million.

 

     Prioritizing electricity for gas infrastructure would be “a large and perhaps inexpensive fix” which the report did not affix a price to.

 

     Cost assessment. Using a value of lost load (VOLL) measure to determine an economic value, the bank report said the power outage cost $4.3 billion. “Using our VOLL estimate of $4.3 billion, and accounting for the once-a-decade frequency of subzero temperatures in Texas, winterizing measures and other actions should be equal to or less than $430 million annually,” the bank said.
 


CORONAVIRUS UPDATE


 

Summary: Global cases of Covid-19 are at 139,165,841 with deaths closing in on 3 million at 2,988,238 deaths, according to data compiled by the Center for Systems Science and Engineering at Johns Hopkins University. The U.S. case count is at 31,495,924 with 565,289 deaths. The Johns Hopkins University Coronavirus Resource Center said that there have been 198,317,040 doses administered, 70,811,070 have been fully vaccinated, or 21.6% of the U.S. population.

 

— Annual Covid-19 vaccine booster shots are likely to be needed. Pfizer CEO Albert Bourla said more research is needed but that booster shots are likely to be required to stay ahead of virus variants.

 

— Covid-19 shots are overwhelmingly protective, with data showing low rates of post-vaccination infection. Of the more than 66 million people in the U.S. who have completed their vaccination courses, only roughly 5,800 have tested positive for the virus, the Centers for Disease Control and Prevention estimates. That represents about 0.008% of the fully vaccinated population—in line with expectations for the shots, which proved highly effective but not 100% foolproof in trials. Public-health officials are trying to determine whether some Covid-19 variants are more resistant to vaccines than others, and the CDC has been conducting genomic sequencing of respiratory samples from people who tested positive for the virus after being vaccinated to look for clues about how new strains interact with existing shots. Of the rare “breakthrough” cases of infection among vaccinated people that the CDC identified, 40% occurred in people over age 60, 29% were asymptomatic and 74 people who caught Covid-19 after being vaccinated have died.

 


POLITICS & ELECTIONS



— Democratic lawmakers are split on overhauling the Supreme Court. House Speaker Nancy Pelosi (D-Calif.) said she backs President Biden’s deliberative approach after progressives introduced a bill to expand the court.

 

— Redistricting data ahead. The Census Bureau later this month will release data determining which states will gain or lose House seats.

 

— Ocasio-Cortez criticizes SALT repeal push. Rep. Alexandria Ocasio-Cortez (D-N.Y.) said Biden’s infrastructure plan shouldn’t be held hostage to demands to repeal the limits on state and local tax (SALT) deductions being made by some of her fellow New York Democrats as well as other representatives from high-tax states. She called abolishing the $10,000 limit on SALT deductions “a giveaway to the rich” and “a bit of an extreme position.”

 

— Pence gets pacemaker after slow heart rate. Former Vice President Mike Pence said he had a pacemaker implanted after experiencing symptoms associated with a slow heart rate over the past two weeks and is expected to fully recover. Pence, 61, says he underwent the procedure to implant the pacemaker on Wednesday after consultation with his doctors.
 


OTHER ITEMS OF NOTE     


 

— Cotton AWP rebounds. The Adjusted World Price (AWP) for cotton is at 68.16 cents per pound, effective today (April 16), up sharply from 64.92 cents per pound the prior week and the first rise since the week of March 19. Meanwhile, USDA said that Special Import Quota #26 would be established April 22 for 37,324 bales of Upland Cotton, applying to supplies purchased not later than July 20 and entered into the U.S. not later than Oct. 18.

 

— Biden wants ‘predictable’ relations with Putin. President Biden said he wants a “stable, predictable relationship” with Russia after imposing sanctions in response to allegations that the Kremlin was behind a hack on SolarWinds and meddled with last year’s U.S. presidential election. “The United States is not looking to kick off a cycle of escalation,” Biden said yesterday at the White House. But “if Russia continues to interfere with our democracy, I’m prepared to take further actions to respond,” he said.

 

     The White House is threatening to cut Russia’s ties to the global financial system. The Biden administration barred American banks from buying newly issued Russian government debt, part of sanctions imposed in retaliation for the Solar Winds hack. The short-term impact is likely small, but experts say it is a symbolic step that signals a willingness to isolate Moscow.

 

— Congress urged to alleviate truck driver shortage. Some 118 stakeholder groups this week urged lawmakers to help alleviate a nationwide shortage of commercial truck drivers by providing new opportunities for younger drivers. “Seventy percent of the nation’s freight is carried by commercial trucks, and while demand is projected to increase over the next decade, the threat posed by the driver shortage stands to disrupt the continuity of the supply chain,” stated an April 14 letter (link) to leaders of the Senate Commerce Committee and the House Transportation and Infrastructure Committee. “This is especially problematic as the nation and our economy recover from the monumental impacts of the Covi-19 pandemic.” The DRIVE-Safe Act, bipartisan legislation that garnered support from more than one third of the House and Senate in the 116th Congress, would address the nation’s growing truck driver shortage by promoting opportunity and enhanced safety training for emerging members of the transportation workforce, the National Grain & Feed Assn. (NGFA) points out. Although 49 states and the District of Columbia currently allow individuals under the age of 21 to obtain a commercial driver’s license and operate in intrastate commerce, these same individuals are prohibited from driving a truck across state lines until they turn 21, the groups noted.

 


 

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