Is USDA significantly overestimating Black Sea corn production?
In Today’s Updates
* Senate leaves town... no aid package until after elections
* Foreign direct investment in China largely held steady during first half of year
* Libya announces plans to restart last of its major oil fields
* USDA's World Board may be substantially overestimating corn crops in Black Sea
* Hurricane Zeta set to hit Gulf of Mexico
* SovEcon notes improving weather for winter grains
* Abrupt shift in weather extremes causing trouble for EU farmers
* Cordonnier highlights safrinha corn risks, but sticks with forecast
* CFAP 2 payments now over $7.5 billion
* EPA mulling changes to E15 pump labels
* EPA to announce decision on dicamba this afternoon in Georgia
* Senate leaves town, meaning aid package will come after Nov. 3 elections
* Chinese Communist Party’s Central Committee holding plenum
* World’s biggest IPO to take place outside U.S. via Jack Ma's Ant
* Another Phase 1 update
* Antibodies don’t last: study
* AstraZeneca: experimental vaccine for Covid producing immune response
Politics & Elections:
* Amy Coney Barrett confirmed as Supreme Court Justice, 52-48
* SCOTUS prevents Wis. from counting mailed ballots received after Election Day
* Trump ahead of Biden in daily Rasmussen Reports head-to-head poll
* Update on Georgia's two Senate races
* Investors positioning for speedy outcome to presidential contest
* Markets and elections
* Finance chiefs closely tracking how U.S. trade policy could change
Other Items of Note:
* EU to back Okonjo-Iweala in WTO bid
* Pacific Ethanol to change name
Equities today: Global stock markets were mostly weaker overnight. Overnight, the MSCI Asia Pacific Index slipped 0.1% while Japan's Topix index closed down 0.1%. U.S. stock indexes are set to open slightly higher.
U.S. equities yesterday: The Dow finished down 650.19 points, 2.29%, at 27,685.38. The Nasdaq lost 189.34 points, 1.64%, at 11,358.94. The S&P 500 fell 64.42 points, 1.86%, at 3,400.97.
On tap today:
• U.S. durable goods orders for September, due at 8:30 a.m. ET, are expected to rise 0.4% from a month earlier.
• S&P/Case-Shiller home-price index for August is out at 9 a.m. ET.
• Conference Board's consumer confidence index for October, due at 10 a.m. ET, is expected to rise to 102.0 from 101.8 a month earlier.
• Richmond Fed's manufacturing survey for October, due at 10 a.m. ET, is expected to fall to 16 from 21 a month earlier.
Foreign direct investment in China largely held steady during the first half of this year, even as investment inflows into the U.S. and European Union plummeted. Globally, the monthly average for new investments for the first half of the year was down almost half compared with the whole of 2019, the largest decline on record, the United Nations’s Conference on Trade and Development said today. But while foreign investment in the U.S. and European Union fell by 61% and 29% respectively, inflows to China were down by just 4%, a fresh sign that the world’s second-largest economy has suffered less damage from the pandemic, the Wall Street Journal reports (link).
• Outside markets: The U.S. dollar index is near steady. Nymex crude oil prices are higher and trading around $39.00 a barrel. The yield on the benchmark U.S. 10-year Treasury note is 0.8% today.
• Crude oil prices have continued to recover some of their Monday losses ahead of the U.S. trading start. U.S. crude is trading around $38.95 per barrel and Brent around $41.20 per barrel. Prices firmed in Asian trading after losses in Monday U.S. action. U.S. crude was up 19 cents at $38.75 per barrel while Brent crude moved up 20 cents at $41.01 per barrel.
• Libya announced plans to restart the last of its major oil fields, creating another headache for OPEC+ in its bid to prop up crude prices.
• USDA's World Board may be substantially overestimating corn crops in the Black Sea. SovEcon has recently lowered Ukraine’s corn crop estimate to 29.4 MMT (35.9 MMT in 2019; 36.5 MMT – as per WASDE). Russia’s crop estimates at 13.7 MMT (14.3 MMT; 15 MMT). So, in total, USDA could be overestimating the crop by as much as 8.4 MMT (331 mln bu).
• Gulf oil, natural gas industry bracing for now-Hurricane Zeta. With Zeta now reaching Hurricane status, expectations are that additional levels of Gulf of Mexico oil and natural gas production will be shut-in over the next few days. As of midday Monday, 15.9% of oil and 6% of natural gas production in the Gulf of Mexico had been shut-in. The National Hurricane Center said that areas of the northern Gulf Coast could see hurricane conditions by late Wednesday with heavy rainfall through Thursday in portions of the central U.S. Gulf Coast into the southern Appalachians and Mid-Atlantic states near and in advance of Zeta.
Items in Pro Farmer's First Thing Today include (Link to subscribe to FTT):
• SovEcon notes improving weather for winter grains
• Abrupt shift in weather extremes causing trouble for EU farmers
• Cordonnier highlights safrinha corn risks, but sticks with forecast
— CFAP 2 payments top $7.5 billion. Payments under the Coronavirus Food Assistance Program 2 (CFAP 2) have reached $7.6 billion as of Oct. 25, including $3.9 billion in acreage-based payments, $2.1 billion for livestock, $843.9 million for sales commodities, $790.1 million for dairy, and $17.8 million for eggs/broilers.
By commodity, the payments are led by $2.2 billion for corn, $1.7 billion for cattle. $832.2 million for soybeans, $793 million for sales commodities, $790.1 million for milk, $391.3 million for wheat, $377.9 million for hogs/pigs and $169.6 million for upland cotton.
Payouts have reached $500 million or more in five states — Iowa ($776.9 million), Nebraska ($517.9 million), Minnesota ($510.2 million) and Illinois ($505.7 million).
CFAP 1 payments stand at $10.3 billion, including $5.0 billion for livestock, $2.6 billion for non-specialty crops, $1.8 billion for dairy, $802.6 million for specialty crops and $112.8 million for aqua nursery flora.
— EPA mulling changes to E15 pump labels. Changing labels on pumps dispensing E15 and higher blends of ethanol are being considered by EPA, according to a Reuters report. However, it was not clear what kind of changes are being contemplated. The report noted two sources signaling the proposal on label changes could come soon.
— EPA Administrator Andrew Wheeler to announce decision on dicamba this afternoon in Georgia. Of note, Wheeler will be joined by American Farm Bureau Federation President Zippy Duvall, National Cotton Council Chairman Kent Fountain and Georgia Commissioner of Agriculture Gary Black. Those ag attendees signal EPA will likely approve dicamba formulations Xtendimax, Engenia and FeXapan for continued over-the-top use on cotton and soybeans.
Recall that last month President Donald Trump tweeted that he was prepared to allow states to permit fuel retailers to use their current pumps that dispense up to E10 to sell E15.
— Update on China:
- Chinese Communist Party’s Central Committee is holding its plenum (through Oct. 29), where it’s expected to chart the course for the economy’s development for the next 15 years.
- World’s biggest IPO to take place outside U.S. Jack Ma, China’s richest man, is set to snub U.S. markets as he launches the world’s biggest initial public offering of shares in his financial technology company Ant. Ma intends to list the company on both the Shanghai and Hong Kong stock markets, a patriotic move that also allows him avoid to avoid further scrutiny from U.S. regulators. At $34 billion, the stock offering will eclipse the previous IPO record, set by Saudi Aramco in December 2019.
- Another Phase 1 update. China accelerated purchases of U.S. farm products last month, new data show, but overall it remains far behind on a commitment to buy about $140 billion in specific U.S. agricultural, energy and manufactured goods this year under a trade accord signed Jan. 15. As of Sept. 30, China had purchased $58.8 billion in goods covered by the agreement, according to calculations Chad Bown of the Peterson Institute for International Economics made based on Commerce Department figures released Monday. Purchases should have reached $108 billion by that time to be on track toward the full-year target.
A recent report from the U.S. Trade Representative and USDA said that combining information on purchases and contracts for future purchases suggested the Chinese are closer to the farm-product target than actual exports alone indicate.
- U.S./China Phase 1 tracker: China’s purchases of U.S. goods. Link.
— Update on next aid package:
- Senators go home amid expectation of no aid package until after Nov. 3 elections. House Speaker Nancy Pelosi (D-Calif.) criticized the Trump administration in a Dear Colleague letter Monday, saying it hasn’t agreed to Democratic terms for virus testing and tracing, despite earlier promises.
— Coronavirus update:
- Summary: Global cases of Covid-19 have reached 43,539,290 with the total deaths at 1,160,213, according to data compiled by the Center for Systems Science and Engineering (CSSE) at Johns Hopkins University (JHU). The U.S. case count is at 8,704,606 with deaths at 225,735.
Link to Covid Case Tracker
Link to Our World in Data
- Antibodies don’t last: study. A large English study showed the number of people with Covid-19 antibodies declined significantly over the summer, suggesting that getting the virus might not confer long-lasting immunity from future infection. Link to WSJ article.
- AstraZeneca said experimental vaccine for Covid producing immune response. AstraZeneca said that its experimental Covid-19 vaccine had produced an immune response in both older adults and younger adults in the Phase 2 study. The potential vaccine, AZD1222, is being developed in collaboration with the University of Oxford. The company said the vaccine triggers protective antibodies and T-cells in older age groups.
POLITICS & ELECTIONS
— 2020 Presidential Election Interactive Map
— The Green Papers
— Real Clear Politics
— 2020 Political Atlas
— 2020 Demographic Swingometer
— Days until election
- Judge Amy Coney Barrett was confirmed, 52-48, as the 115th justice of the Supreme Court and the fifth woman, and the first by a Republican president since Sandra Day O’Connor in 1981. The only Republican not voting for Barrett, 48, was Susan Collins of Maine, who is battling for re-election. It was the first time in 151 years that a justice was confirmed without the support of a single member of the minority party. (In December 1869, the Senate confirmed Edwin Stanton by a vote of 43 Republicans, 0 Democrats, and 3 Liberal Republicans, according to the Senate Historical Office. Stanton died before he could be sworn in.
Barrett chose Justice Clarence Thomas to administer the oath at the white House, with President Trump attending. Justice Barrett will take the judicial oath today, when it will be administered at the Supreme Court by Chief Justice John Roberts. She can then begin participating in court decisions. The Supreme Court now has a 6-3 conservative majority.
Democrats react. “You may win this vote, and Amy Coney Barrett may become the next associate justice of the Supreme Court,” said Senator Chuck Schumer of New York, the Democratic leader. “But you will never, never get your credibility back. And the next time the American people give Democrats a majority in this chamber, you will have forfeited the right to tell us how to run that majority.”
- Supreme Court sided with Republicans to prevent Wisconsin from counting mailed ballots that are received after Election Day. In a 5-3 order, the justices refused to reinstate a lower court order that called for mailed ballots to be counted if they are received up to six days after the election. Last week, the high court preserved a Pennsylvania state court order extending the absentee ballot deadline but voted the other way in the Wisconsin case. Chief Justice John Roberts last week joined the liberals to preserve a Pennsylvania state court order extending the absentee ballot deadline but voted the other way in the Wisconsin case.
- Trump is ahead of Democratic presidential nominee Joe Biden in Monday’s debut of the daily Rasmussen Reports head-to-head poll. In its now daily White House Watch, Rasmussen has Trump at 48% and Biden at 47%. The pollster Trump prefers to follow and tout has his approval rating at 52%, a key factor to winning re-election. Former Presidents George W. Bush and Barack Obama were both at 50% when they edged out reelection victories.
The poll data showed 27% of black people said they would choose the president if the election were held today. In 2016, he won 8% of the black vote.
The polls in the closing days of the race have been mixed, though several have tracked Trump's rise, such as Rasmussen, Trafalgar, and John Zogby Strategies.
A Trump election comeback? A WSJ article (link) takes a look at the possibilities.
- Update on Georgia's two Senate races: The latest Atlanta Journal-Constitution poll shows Jon Ossoff deadlocked with Republican U.S. Sen. David Perdue, who was once heavily favored to win a second term. Meanwhile, Democrat Raphael Warnock, a pastor and first-time candidate, is the clear front-runner in the chaotic special election for GOP Sen. Kelly Loeffler’s seat. Warnock is taking advantage of the bitter internal rift between Loeffler and U.S. Rep. Doug Collins, her most formidable Republican opponent in the 21-candidate race. The poll pegged Collins at 21% and Loeffler at 20% — with roughly 15% of Republican voters undecided in that race.
Democratic presidential candidate Joe Biden will make two stops in Georgia today, and his running mate, Kamala Harris, spent much of Friday campaigning in Atlanta.
No decisions until 2021? The special election contest for Loeffler’s seat is clearly destined to land in a Jan. 5 runoff, which is required by law if no candidate gets a majority of the vote. But the AJC poll is the latest to suggest that Perdue’s race is so close that it, too, could wind up having to be settled in a runoff election Jan. 5.
- Investors appear to be positioning for a speedy outcome to the presidential contest and dwindling volatility through the end of the year. Bets on volatility falling through the end of the year in the derivatives market picked up, after months of investors positioning for rocky markets into January. Investors are focusing on polls showing former Vice President Joe Biden with a steady lead over President Trump, which increases the chances of a decisive victory. Democratic nominee Joe Biden continues to hold an 8-point lead in national polls, according to RealClearPolitics. They also see a robust fiscal stimulus plan in the cards.
- Markets and elections: Since 1928, the market has usually risen in the last full week before a presidential election. The S&P 500 has been up in 70% of those weeks, according to Dow Jones Market Data. The gains are even more frequent if measured from the Tuesday before the election to Election Day. The index has risen in 91% of those instances.
- Finance chiefs are closely tracking how U.S. trade policy could change after the presidential election, potentially leading to higher tariff-related costs and new restrictions on certain products. Link to WSJ article.
OTHER ITEMS OF NOTE
- EU to back Okonjo-Iweala in WTO bid. The European Union is set to publicly endorse former Nigerian Finance Minister Ngozi Okonjo-Iweala in her bid to become the new director general of the World Trade Organization (WTO). Only one other candidate remains in the race, South Korean Trade Minister Yoo Myung-hee, who is reportedly preferred by the United States. The candidate is chosen by consensus, so either one could still be blocked if one of the WTO’s 164 member states wishes to do so. Whichever candidate prevails, it will be the first time a woman has led the organization.
- Pacific Ethanol to change name. Pacific Ethanol officials on Monday announced the company will change its name in the future to reflect the fact that it is shifting its focus toward specialty alcohols and alcoholic beverages. It has boosted output of specialty alcohol for consumer products in the wake of the Covid-19 pandemic. With the downturn in energy demand due to the travel and economic restrictions deployed around the globe, less fuel demand has meant less demand for fuel ethanol. The company did not disclose what the new name will be.