McConnell Blocks Push for $2,000 Covid Aid Checks as GOP is Split on Topic

Posted on 12/30/2020 8:09 AM

U.S. blocks palm oil from second Malaysia plantation on human rights abuses

 


In Today’s Updates


 

Market Focus:
• Trading volumes likely to start easing as holiday approaches
• Four new voters will join the U.S. Fed’s rate-setting panel in 2021
• Argentine port strike ends
• Rampant reports of China buying U.S. corn
• Egypt reports it has self-sufficiency in rice
• Overnight demand news
• Natural-gas prices are heading for their second consecutive big monthly drop
Argentina drying out, conditions generally favorable for Brazil
• Halfway through marketing year, Ukraine’s grain exports lag last year by nearly 15% 

 

Policy Focus:
• McConnell blocks vote on bigger Covid aid checks
• $600 aid payments started going out last night
• Cutoff date for Main Street Lending Program extended to Jan. 8

 

China update:
• China revises 2019 GDP downward; 2020 GDP released Jan. 18
• EU and China to agree new investment treaty
• Australia continues to push for WHO inquiry into China’s role in Covid-19
• Chinese pork prices climb

 

Trade Policy:
• U.S. blocks palm oil from second Malaysia plantation on human rights abuses

 

Energy & Climate Change:

• Will 2021 be a turning point for electric cars?


Food & beverage industry update:
• Dietary guidelines keep current allowances for sugar & alcohol consumption unchanged


Coronavirus update:
• U.K. approves AstraZeneca/Oxford Covid vaccine
• Argentina begins giving Russia’s Sputnik V Covid-19 vaccine outside of trials  
• U.S. finds first variant Covid-19 case
• Biden again criticizes Covid vaccine rollout

 

Politics & Elections:
• Georgia audit confirms authenticity of absentee ballots
• GOP Rep.-elect Luke Letlow dies of Covid-19


Other Items of Note:
• Argentina legalizes abortion
• Mexico set to become world’s largest legal cannabis market

 


MARKET FOCUS


 

Equities today: Global stock markets were mixed. U.S. stock indexes are pointed toward higher openings. The Nikkei fell 123.98 points, 0.45%, at 27,444.17. The Hang Seng Index was up 578.62 points, 2.18%, at 27,147.11. European equities have turned mixed after a firmer start.

 

     U.S. equities yesterday: The Dow ended down 68.30 points, 0.22%, at 30,335.67. The Nasdaq lost 49.20 points, 0.38%, at 12,850.22. The S&P 500 was down 8.32 points, 0.22%, at 3,727.04.

 

On tap today:

 

     • U.S. economic data due for release include the weekly MBA mortgage applications survey, advance economic indicators, pending home sales, and the weekly DOE liquid energy stocks report.

 

Market perspectives:

 

     • Outside markets: The U.S. dollar index is lower and overnight came within a hair of the recent 2.5-year low in early U.S. trading February Nymex crude oil futures prices higher and trading around $48.50 a barrel. The yield on the benchmark 10-year U.S. Treasury note futures is currently around 0.95%.


     • Trading volumes are likely to start to ease at mid-week, ahead of the New Year’s Day holiday on Friday, when governments and markets are closed.

 

     • Four new voters will join the U.S. Fed’s rate-setting panel in 2021, including some of its strongest supporters of policies to stimulate the economy. Link for details via the WSJ.

 

     • Argentine port strike ends. A deal between Argentine soy crushing companies and oilseed workers unions Tuesday will bring the 20-day strike in the country to an end. The deal includes a 35% salary increase in 2020, an annual bonus equal to the 2020 salary with the 35% raise, an exceptional bonus for the employees who worked during the lockdowns, and a further 25% adjustment in 2021, according to Bloomberg. Reuters reported that the deal includes a two-part 25% rise in salaries from January to August with increases for the remainder of the year to be set based on inflation. "An agreement was reached with the oilseed workers' unions in a meeting held at the Ministry of Labor, to lift the strike that had paralyzed port terminals and the agro-industrial complex," said a statement from Argentina’s CIARA soy crushing chamber. It is estimated that some 162 ships have been delayed loading in Argentina, keeping some $1.458 billion in exports on hold, but others suggest the number is closer to 151 ships affected.

 

     • Rampant reports of China buying U.S. corn. Traders are playing one of their parlor games guessing the number of cargoes to China. The corn market is still thinking China is buying corn, but USDA today no daily export sales to China. Latest market chatter is that while the official Chinese production estimate for the corn crop just harvested is 260-265 MMT, commercials and others are in the 230-235 MMT range. These observers think China’s corn import total will be 25-30 MMT, with up to 10 MMT of corn imported from Brazil and the Ukraine, leaving 15-20 MMT coming out of the U.S. As of the week of Dec. 17, the U.S. had sold 11.564 million tons of corn to China (excluding the purchase of unknown destinations) and 4.087 million tons of sorghum. In December, USDA raised China’s corn import forecast for 2020-21 from 13 million tons to 16.5 million tons, and the USDA ag attaché forecast 22 million tons. Meanwhile, domestic Chinese corn prices are rising.

 

     • Egypt reports it has self-sufficiency in rice. Egypt produced 6.5 million tonnes of rice in 2020, bringing the country to self-sufficiency for the grain, according to the country’s cabinet. Rice plantings were at 1.7 million feddans (1.76 million acres) this year, according to Supply Minister Ali Moselhy. The country also has 11.1 months of strategic rice reserves.

 

     • Overnight demand news: Taiwan’s Flour Millers’ Association bought around 82,325 MT of milling wheat from the United States. Jordan’s state grains buyer issued an international tender to buy 120,000 MT of animal feed barley from optional origins. The country made no purchase in its tender earlier this week to buy the same amount of the grain.

 

     • Natural-gas prices are heading for their second consecutive big monthly drop, impacted by forecasts of warmer-than-expected weather that are denting demand for the heating fuel. Prices are more than 25% below a peak hit in late October.

 

        Natural gas prices

 

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

     • Argentina drying out, conditions generally favorable for Brazil
     • Halfway through marketing year, Ukraine’s grain exports lag last year by nearly 15% 

 


POLICY FOCUS


 

—  McConnell blocks vote on bigger Covid aid checks. Senate Majority Leader Mitch McConnell (R-Ky.) blocked an attempt to significantly increase Covid aid payments. President Trump wants the direct payment checks increased from $600 to $2,000. Democrats, who also want the boost, pushed for an immediate vote. McConnell, however, insisted that the bill first add two other contentious measures: reducing legal protections for social media (Section 230) and investigating alleged electoral fraud via an election fraud commission.

     A Wall Street Journal editorial agrees with McConnell: ““We’ll see how this plays out in Georgia, but the fault here isn’t Mitch McConnell’s. The political damage to the GOP comes from Donald Trump, who is lashing out at all and sundry in defeat — no matter if it also helps to elect a Democratic Senate.”

 

     The $600 stimulus payments already started going out last night, according to Treasury Secretary Mnuchin, and if Congress approves the increase to $2,000, it will be added to the original sum.

 

     Meanwhile, the cutoff date for the Main Street Lending Program has been extended to Jan. 8 from Dec. 31 to process a last-minute crush in loan approvals.

 


CHINA UPDATE


 

— China revises 2019 GDP downward. China’s 2019 GDP is now put at 6.0%, down from a preliminary mark of 6.1%, according to the National Bureau of Statistics, after a final calculation of economic data. The country’s 2020 GDP level is to be released Jan. 18 and is expected to be in positive territory as the country reported GDP at 0.7% for the first three quarters of the year. A likely positive reading in China would make it the only major economy reporting a positive growth rate.

 

— EU and China to agree new investment treaty. The EU and China are set to announce a long-awaited investment treaty, in a move that is aimed at opening up lucrative new corporate opportunities. China’s President Xi Jinping is due to hold a video conference with European Union (EU) leaders, including European Commission President Ursula von der Leyen and German Chancellor Angela Merkel, whose country holds the EU presidency this year.

 

     The draft accord awaits confirmation by European Commission president Ursula von der Leyen and the Chinese leadership today, European officials said — a moment that would finally bring seven years of often difficult negotiations to a successful close.

 

     The deal is expected to remove some barriers to EU companies’ possibilities for investing in China, such as specific joint-venture requirements and caps on foreign equity. Industries where the EU has secured improved access terms include automotive, healthcare, cloud computing and ancillary services for air transport, EU officials said. The deal will also lock in existing market openness in the Chinese financial services sector. For Beijing, the draft deal will lock in existing market access rights while securing some openings in the areas of manufacturing and renewable energy.

 

     EU businesses will remain banned from China’s internet services market, with the exception of offering end user internet access. Only Chinese carriers will be permitted to operate domestic flights, while foreign investment in the general aviation sector must be in the form of joint ventures. European firms will not be allowed entry to the air traffic control space. Industries considered sensitive by the Chinese government, such as research and development, market research, and many forms of mapping and surveying, will remain strictly off limits, according to the draft.

 

     The EU sealed key concessions on forced technology transfer and transparency on state subsidies for China’s services sector, with Beijing obliged to publish a list of subsidies provided to designated sectors every year. In return, China will continue to receive relatively free access to the EU market, home to 16% of the global economy in 2019. A senior EU official said that the agreement on subsidies “closed a loophole” in World Trade Organization (WTO) rules. Among the many sectors obliged to publish subsidies will be real estate, telecoms, banking and construction. This would be the first time it has committed to publishing subsidies as part of a bilateral deal. But Beijing will not be obliged to declare the aid it provides the manufacturing or industrial sectors, technically covered by its WTO membership obligations, but which still provoke ire among its trading partners 20 years after accession.

 

     The agreement, which will need to be approved by EU governments and the European parliament, includes dispute settlement procedures, with the possibility that the EU can withdraw market-access opportunities if China does not meet its obligations. Ratification processes will only begin after at least several months, once the text has been legally checked and translated. The announcement comes only two days before an end of 2020 target date agreed on by Brussels and Beijing last year.

 

— Australia’s gov’t to keep pushing for WHO inquiry into China’s role in Covid-19. Australia will use the final months of its term on the World Health Organization (WHO)’s executive board to continue pushing for a robust inquiry into China's role in the origins of the Covid-19 pandemic, according to a statement made by the Australian government. The WHO’s independent evaluation panel is set to provide its interim report in January, with the final results due in May. Australia's term on the WHO’s executive board expires in mid-2021.

 

     Observers expect China to maintain trade pressure on Australia well into 2021, leaving little room for a resolution to the two countries’ deepening political rift. The Australian government is facing internal pressure from ruling coalition hardliners to maintain public pressure on China, even as Australia’s industry leaders express concern about rising bilateral tensions between their country and one of their top export markets.

 

     Background: In April, Canberra's hardline statements about the need for an investigation of China's management of its Covid-19 outbreak triggered trade pressure from Beijing that has since encompassed a range of Australian products, including coal, barley and wine.

 

— Chinese pork prices climb. Between Dec. 21 and Dec. 25, China’s average pork price index across 16 provincial-level regions edged 0.5% higher to 43.16 yuan (roughly $6.60) per kilogram as the country prepares for its Lunar New Year Celebrations. This was down just 1.9% from last year’s elevated level, a 0.6-point narrowing of the discount from the week prior, according to Xinhua. China has actively worked to fuel expansion of its herd after African swine fever, importing pork and other meat to tame food price inflation in the meantime. The country recently indicated it had restored its herd to 90% of pre-pandemic levels, but China’s history of fudging numbers and still-elevated pork prices make more than a few analysts skeptical. In any case, the quality of the herd is likely subpar.

 

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

 


TRADE POLICY


 

— U.S. blocks palm oil from second Malaysia plantation on human rights abuses. CNN is reporting that U.S. Customs and Border Patrol (CBP) has issued another withhold release order relative to imports of Malaysian palm oil, with a Dec. 28 order applying to palm oil and palm oil products produced by the Sime Darby Plantation Berhad over findings of forced labor abuses. Sime Darby claims to produce 15% of Malaysia’s palm oil, CBP said. “Palm oil is an ingredient in a lot of products that American consumers buy and use. And I think it's important for manufacturers and importers to be aware of where they're at higher risk of forced labor, and to demand that their suppliers are adhering to protecting human rights of their workers," said Ana Hinojosa, executive director of CBP's Trade Remedy Law Enforcement Directorate. CBP in September issued a withhold release order for imports of palm oil and palm oil products from FGV Holdings Berhad and its subsidiaries.

 


ENERGY & CLIMATE CHANGE


 

— Will 2021 be a turning point for electric cars? “Yes,” says the Financial Times in a list of year-ahead predictions. Their reasoning: “There have been false dawns, with sales of electric vehicles in China surging and falling along with subsidies. But EVs have broken through in Germany and Scandinavia as diesel fades. Morgan Stanley predicts global EV sales will rise by more than 50% in 2021. This will happen, with sales nearing 5% of the total from the International Energy Agency’s estimate of 3.2% in 2020.”

 


FOOD & BEVERAGE INDUSTRY


 

— New dietary guidelines do not broaden urgings on consuming less added sugars, alcohol. The Dietary Guidelines for Americans, 2020-2025, was released by USDA and the Department of Health and Human Services (HHS) Tuesday, with the guidelines now including recommended dietary patterns for infants and toddlers. The agencies said the new guidelines were “informed by the scientific report developed by the Dietary Guidelines Advisory Committee” along with public input and that from other government agencies. Link to recommendations. Link to executive summary.

 

     The recommendations “look similar” to prior guidelines, the agencies noted, in particular on two topics — added sugars and alcoholic beverages — even as the advisory panel had recommended reducing intake of those items. “Dietary Guidelines for Americans, 2020-2025 carried forward the committee’s emphasis on limiting these dietary components, but did not include changes to quantitative recommendations, as there was not a preponderance of evidence in the material the committee reviewed to support specific changes, as required by law,” the agencies said. But they do encourage “limited intake” of the two items.

 

     As for red meat and processed foods, the guidelines do not delve significantly into those areas. They recommend replacing processed or high-fat meats with seafood or beans, peas and lentils to meet protein recommendations. The majority of meat and poultry a person consumes should be fresh, frozen or canned, and in lean forms, according to the guidelines, items like chicken breast or ground turkey, versus processed meats like ham or other deli meat. The U.S. Cattlemen’s Association tweeted that the guidelines gave scant mention of beef. “In the 164-page 2020 Dietary Guidelines for Americans, ‘Beef’ is mentioned only five times; ‘Meat’ is mentioned 87 times; ‘Protein’ can be found 166 times.” But the National Cattlemen’s Beef Association (NCBA) declared the new guidelines recognize the role that lean beef can play in a healthy diet. “Beef is one of Americans' favorite foods, and science consistently shows lean beef can be the cornerstone in a variety of healthy diets," said NCBA President Marty Smith. The group pointed out beef is a source of the nutrient-rich foods recommended in the guidelines.

 

     The mixed reactions to the guidelines are not surprising as some in the food industry are complaining they do not go far enough in recommending dietary changes and that the agencies set the scientific agenda for the guidelines, not the Dietary Guidelines Advisory Committee.

 


CORONAVIRUS UPDATE


 

 Summary: Global cases of Covid-19 are at 82,051,958 with 1,792,251 deaths, according to data compiled by the Center for Systems Science and Engineering at Johns Hopkins University. The U.S. case count is at 19,515,529 with 338,656 deaths.
 

       Link to Covid Case Tracker
       Link to Our World in Data

 

— U.K. approves AstraZeneca/Oxford Covid vaccine. The U.K. Medicines and Healthcare products Regulatory Agency has approved the coronavirus vaccine developed by Oxford university and AstraZeneca. The company said the agency had approved the emergency authorization for the vaccine, allowing it to be added to the arsenal of vaccines the country is using to combat the virus as the number of Covid patients in U.K. hospitals has hit a new high. The U.K. has ordered 100 million doses of the vaccine and it is expected to begin to be deployed Monday. However, some do not expect that the U.S. or the European Union (EU) will follow the U.K. lead quickly in approving the jab due to questions raised about trial data. The vaccine is cheaper and easier to make than those already in use, but clinical-trial data caused confusion: a half-dose followed by a full dose appeared more effective than two full doses. The British regulator has approved two full doses, saying there was insufficient evidence for approving an initial half-dose. Meanwhile, Chief of the White House's Operation Warp Speed, Moncef Slaoui, and others in the U.S. have also expressed concern over the age groups in the trial, saying the 90% efficacy was only shown for the lowest risk group, which numbered 2,741 people below age 55.

 

— Argentina became the third country, after Russia and Belarus, to begin giving Russia’s Sputnik V Covid-19 vaccine outside of trials. Russia points to evidence that the vaccine is effective, but some international observers are skeptical because of a lack of published data from large, late-stage clinical trials with randomized controls.        

 

— U.S. finds first variant Covid-19 case. State officials in Colorado they have detected the first known case of the variant Covid-19 virus that was originally found in the U.K., with reports saying that a second potential case was under examination. The variant Covid-19 virus has been found in several European countries along with Canada, Australia, India, South Korea and Japan.

 

—  Biden again criticizes Covid vaccine rollout. President-elect Joe Biden Tuesday said that it could take “years” for most Americans to be vaccinated for Covid-19 at the current distribution ratings for the vaccine. "The effort to distribute and administer the vaccine is not progressing as it should," Biden said Delaware. At the current pace of the vaccine distribution, he commented, "it's going to take years, not months, to vaccinate the American people." He noted the 2 million receiving the initial does of one of the two vaccines is well behind the 20 million figure that President Donald Trump said would receive the vaccine by year-end.

 

     Biden said he would invoke the Defense Production Act to ramp up production of materials needed for the coronavirus vaccines. The law, enacted in 1950, gives the president the power to compel companies to produce and distribute supplies. Trump has invoked the act several times to increase the manufacturing of ventilators, among other items. Biden said that the Trump administration has yet to fully scale up testing — ‘that’s a travesty,’ he said — and that its vaccine distribution efforts were also lagging behind what had been promised.”

 

     With only two days remaining in 2020, the U.S. will likely fall short of its goal to vaccinate 20 million Americans by the year's end. Operation Warp Speed planned to provide 40 million doses (each vaccine requires two shots) between Pfizer-BioNTech and Moderna, but according to the latest figures from the CDC, just over 11.4 million doses had been distributed since Dec. 13 and only about 2.1 million had been administered (the large variance is partly due to a lag in reporting). Covid-19 vaccine czar Moncef Slaoui acknowledged last week that the ramp-up of immunizations "is slower than we thought it would be," while U.S. Army Gen. Gustave Perna, who oversees logistics for Operation Warp Speed, repeatedly apologized after some state officials reported cuts to their allocations. The launch of the federal government's partnership with major pharmacy chains like CVS and Walgreens, which will be tasked with vaccinating long-term care residents, is also pending.

 


POLITICS & ELECTIONS


 

Atlanta Constitution article: “No fraud: Georgia audit confirms authenticity of absentee ballots.” Law enforcement and election investigators didn’t find a single fraudulent absentee ballot during an audit of over 15,000 voter signatures, according to a report by the Georgia secretary of state’s office released Tuesday. (Link for details.)

 

— Rep.-elect Luke Letlow dies of Covid-19. Rep.-elect Luke J. Letlow, a Louisiana Republican and former chief of staff to retiring Rep. Ralph Abraham, whom he was elected to succeed, has died of Covid-19. His death Tuesday comes just days before the 117th Congress he was elected to be part of is set to begin. Letlow just turned 41 earlier this month. Letlow told CQ Roll Call in a September interview that he had planned to focus his legislative agenda on agriculture, the economic driver for the 5th District, in an effort to preserve rural culture. “I grew up in a very rural community,” he said. “ I think I’m the only candidate that drives down a dirt road to get home every night. I want my children to have that same experience.” Letlow had two children. A hospital official told The (Monroe, La.) News Star: "He had no underlying conditions ... It was just Covid." Letlow defeated fellow Republican Lance Harris in a Dec. 5 runoff election as no candidate had captured more than 50% of the vote on Nov. 3.
 


OTHER ITEMS OF NOTE     


 

— Argentina legalizes abortion. Argentina has become only the third country in Latin America — after Cuba and Uruguay — to allow unmitigated access to abortion after the country’s Senate approved legislation in a 38-29 vote. The law grants access to abortion up to 14 weeks of gestation and allows for doctors to refuse the procedure based on their personal beliefs. President Alberto Fernández, a Catholic, has indicated that he will sign the bill into law and has made support for the issue a key plank of his presidency. He called the action a public health victory, citing the 38,000 women who are hospitalized each year due to clandestine abortions.

 

— Mexico is set to become the world’s largest legal cannabis market, as its Congress wraps up legislation to legalize pot in an attempt to tackle the world’s most powerful drug cartels by legalizing at least one of their products.

 


 

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