NASS to include prior year corn crop review in Sept. Grain Stocks report
In Today’s Updates
* Chaotic presidential debate leaves markets rattled, uncertainty ahead
* China's manufacturing activity surges in September
* Retail-store closings in U.S. hit record in first half of 2020
* Gasoline demand in U.S. has flatlined for much of the third quarter
* USDA's NASS to review 2019 corn crop as part of Sept. Grain Stocks report
* U.S. export sales of 215,000 tonnes soybeans to unknown destinations 2020-21
* Grassley expects no additional SRE actions ahead of elections
* Germany finds two more cases of ASF in wild boars
* Russian ag ministry hikes wheat crop forecast
* JPMorgan Chase will pay $920 million to settle “spoofing” trading accusations
* CME Group plans Nov. 9 launch of pork cutout futures, options contracts
* Justice antitrust chief to scrutinize prices exchanges charge for trading data
* Trump again tries to use chaos, this time to confuse Biden during first debate
* Senate to take final vote on short-term spending bill; expected to pass
* Major thing missing from new House Dems' aid package; $16 billion for ag aid
* Stimulus talks continue despite skepticism a deal is possible
* GOP lawmaker says trade deal with Taiwan on administration’s radar screen
* Chinese gov't more deeply involved in acquisitions of European companies
* WSJ: China taking over international organizations, one vote at a time
Update on re-opening America... and around the world:
* About 28,000 employees at Disney's U.S. theme parks will be laid off
* Three players and five staff members on Tennessee Titans test positive
* New York City set to allow indoor dining at 25% of capacity from today
* Pandemic issue provided sharp contrast during Tuesday's presidential debate
* Canada seeing a sharp rise in cases of Covid-19
* China greenlights another Covid-19 vaccine for human testing
Politics & Elections:
* Main takeaway: first presidential debate didn’t alter the race
* Political dispute at U.S. Chamber of Commerce
Other Items of Note:
* NASS to end data gathering, publication of Ag Labor report
* USTR requests Section 201 investigation on blueberries
* Immigration Fees update
* EPA eying dicamba decision by mid-October
* U.S. Customs to issue withhold release order on Malayasian palm oil/FGV Holdings
* House bill would increase local meat production
Equities today: U.S. equity futures signal a lower opening amid concerns about delayed Nov. 3 election results, a coronavirus resurgence and dimming prospects for new additional spending to support the economy. Major Asian benchmarks closed mixed. The pan-continental Stoxx Europe 600 edged down 0.2%.
U.S. equities yesterday: The Dow finished down 131.40 points, 0.48%, at 27,452.66. The Nasdaq fell 32.28 points, 0.29%, at 11,085.25. The S&P 500 was down 16.13 points, 0.48%, 3,335.47.
On tap today:
• ADP employment report is expected to show a net gain of 600,000 private-sector jobs in September. (8:15 a.m. ET)
• U.S. gross domestic product is expected to contract at a 31.7% annual pace in the second quarter, unchanged from an earlier estimate. (8:30 a.m. ET)
• Chicago purchasing managers index for September is expected to tick up to 51.9 from 51.2 a month earlier. (9:45 a.m. ET)
• U.S. pending-home sales for August are expected to rise 3.2% from a month earlier. (10 a.m. ET)
• Federal Reserve: Minneapolis Fed President Neel Kashkari speaks on Covid-19 and the economy at 11 a.m. ET, Fed governor Michelle Bowman speaks at a community banking conference at 1:40 p.m. ET, and Dallas Fed President Robert Kaplan discusses national and global economic issues at 6 p.m. ET.
• Japan's tankan survey of business sentiment for September is out at 7:50 p.m. ET.
China data shows continued recovery from Covid pandemic. The Caixin/Markit Manufacturing PMI for September was at 53.0, down slightly from the August reading of 53.1, but that marked a fifth straight month the index has been above 50 — the line separating growth from contraction. Total new orders registered their strongest rise since January 2011 while new export orders rose at the quickest pace in three years. The data showed factory output was down slightly from August. The official PMI data from the National Bureau of Statistics was at 51.5 in September, up from 51 in August while the official non-manufacturing PMI was at 55.9, up from 55.2 in August. The official and Caixin PMI readings indicate the Chinese economy continues to recover from the Covid-19 pandemic and shows that foreign demand continues to increase as countries around the world are showing some improvement from the Covid pandemic.
Retail-store closings in the U.S. hit a record in the first half of 2020 and bankruptcies and liquidations are on pace to set records, as the Covid-19 pandemic accelerated industry changes, particularly the shift to online shopping. Including filings through mid-August, 29 retailers have sought bankruptcy protection in 2020, surpassing the 22 such filings recorded last year and on pace to rival 2010, when 48 retailers filed for bankruptcy in the wake of the 2007-09 recession, according to the report by professional-services firm BDO USA.
Gasoline demand in the U.S. has flatlined for much of the third quarter, keeping crude-oil prices near $40 a barrel and challenging the global energy industry heading into the final months of the year. Fragile fuel demand joins other indicators of economic activity — from consumer spending to hiring — in signaling that growth is softening after a surge from April to June.
• USDA's NASS has not officially announced it but they now will at least review prior year's corn crop in September Grain Stocks report, echoing the yearly soybean crop review. NASS is being criticized by some market participants for not officially putting out a statement noting the procedural change. While NASS officials talked about this possibility during and after a NASS meeting earlier, they never issued an official statement on the change. Several industry analysts and others called NASS on Monday and Tuesday and were told that the 2019 corn crop was part of the September Grain Stocks report review.
• Outside markets: In bond markets, the yield on the benchmark 10-year Treasury ticked up to 0.646%, from 0.644% Tuesday. The ICE U.S. Dollar Index, which tracks the greenback against a basket of currencies, edged up 0.2%. In commodities, Brent crude, the international energy benchmark, fell 0.6% to $41.33 a barrel ahead of weekly data on U.S. crude inventories. Gold declined 0.7% to $1,889.30 a troy ounce. Also, today is the last trading day of the month and of the quarter, making it a more important day from a technical chart perspective.
• Oil futures are lower ahead of the U.S. trading start and the U.S. government inventory data due out later this morning. U.S. crude is trading around $39.15 per barrel and Brent around $41.30 per barrel. Crude was under pressure in Asian action, with US crude down 20 cents at $39.09 per barrel while Brent crude was 25 cents lower at $41.21 per barrel.
• USDA announced export sales of 215,000 metric tons of soybeans for delivery to unknown destinations during the 2020-2021 marketing year.
• Sen. Grassley expects no additional SRE actions ahead of elections. Additional decisions by the Trump administration on waivers under the Renewable Fuel Standard (RFS) are not likely to be made before the Nov. 3 elections, according to Sen. Chuck Grassley (R-Iowa). The issue of small refinery exemptions (SREs) has gained in focus in the wake of the 10th Circuit Court ruling that in order to qualify for these waivers, refiners had to have requested them on an annual basis since 2011. "I think the president showed his pro-ethanol credentials by what he said about the 'gap waivers,' and that was a big win for biofuels from President Trump," Grassley said in a call with reporters
• Germany finds two more cases of ASF in wild boars. Germany has confirmed two more cases of African swine fever (ASF) in wild boars in the state of Brandenburg, including one outside the area where the first cases were found. This brings the total ASF cases to 38, all in wild boars and none in the domestic hog herd. “The state of Brandenburg must now undertake an appropriate adaptation of the existing protection zones and protection measures to prevent a further expansion of the disease,” the German Ag Ministry said.
• Russian ag ministry hikes wheat crop forecast. Russia will likely produce at least a 125 MMT grain crop, with wheat expected to account for no less than 82 MMT of that tally, Russian Agriculture Minister Dmitry Patrushev said today. This is a substantial hike from the ministry’s previous 122.5 MMT grain crop forecast, with wheat expected to account for 75 MMT of that total.
• JPMorgan Chase will pay $920 million to settle “spoofing” trading accusations. The bank admitted wrongdoing by 15 of its traders who sought to manipulate markets for precious metals and Treasury securities. The Justice Department said the scheme cost other traders more than $300 million in losses.
• CME Group plans Nov. 9 launch of pork cutout futures, options contracts. The CME Group said Tuesday it will launch Pork Cutout futures and options contracts on Nov. 9, pending regulatory approval. “Once based almost exclusively on the value of live hogs, many agreements now pay greater attention on prices further down the value chain, particularly the pork cutout,” the CME Group said, with an aim of providing the U.S. pork industry and export markets “tailored risk-management tools on the cutout.” The contracts will be cash-settled to the CME Pork Cutout Index and “will complement CME Lean Hog futures and options,” the exchange said. The Pork Cutout futures contract months will match those for lean hog futures and be based on a contract unit of 40,000 pounds and be quoted in cents per pound. “The contract settles directly to the CME Pork Cutout Index, which tracks prices of pork cutout values,” the exchange said. “That provides the tight price correlation needed to better manage exposure.”
• Justice Department’s antitrust chief, Makan Delrahim, said he planned to scrutinize the prices that exchanges charge for trading data. Link to more from Bloomberg.
— Trump again tries to use chaos, this time to confuse Biden during first debate. President Donald Trump’s usual strategy was clear Tuesday evening: Throw Democratic nominee Joe Biden off his stride with a broadside of interruptions and personal put-downs. Biden floundered a few times, but survived the 96-minute “debate” without any gaffes and with that could see a slight bump in ratings or hold his current spread advantage. Moderator Chris Wallace of Fox News was reduced to the role of bystander with Trump taking control most of the time. The president finally made clear what he wants for the next four years: more of the same of the past four years. Link to special perspective report on the Trump-Biden confrontation.
Suggestion for future debates: Put both in a booth and let them hear the other one but unable to respond until they are authorized. If they act like children, treat them that way.
— Senate to take final vote on short-term spending bill; expected to pass. The Senate will vote today on legislation to avert a partial government shutdown at midnight, but the measure is expected to pass. Senators voted 82-6 to end debate on the bill (HR 8337) Tuesday, making it all but certain to clear the chamber today. President Donald Trump is expected to sign the bill. The legislation gives lawmakers until Dec. 11 to pass fiscal 2021 appropriations or to vote on another short-term spending measure if an agreement can’t be reached. It also includes extensions of several expiring programs, including the National Flood Insurance Program and the surface transportation program.
Provisions of the bill would expand child nutrition funding by nearly $8 billion, including a one-year extension of the so-called P-EBT program, and allow a financial replenishment of USDA's Commodity Credit Corporation (CCC) that can spend up to $30 billion on agricultural subsidies.
— One major thing missing from new House Dems' aid package; $16 billion for ag aid. The House bill passed in May provided improvements to CFAP to ensure farmers losses are covered up to 85%. The Democrat bill unveiled this week does not include that and drops it. That suggests that the Democrats are not interested in providing any further direct aid to producers but leaving it to USDA to use the Commodity Credit Corporation (CCC). The GOP-led Senate's “skinny” bill provided 20 billion plus CCC replenishment.
— Stimulus talks continue despite skepticism a deal is possible. Treasury Secretary Steven Mnuchin and House Speaker Nancy Pelosi (D-Calif.) are expected to talk again today despite skepticism on Capitol Hill that a deal is possible at this stage. Mnuchin is expected to make an offer to Pelosi today. Mnuchin hasn’t spoken on the new bill publicly, but other White House officials have been critical, including National Economic Council director Larry Kudlow, who panned the cost of the package.
Democrats are holding out hope for a coronavirus relief deal after releasing a new aid package, with state and local aid still a main issue in negotiations. But they also appear ready to bring their own bill to the House floor as soon as today.
Pelosi said that if her party wins the majority in the House and Senate in November, they would pass more aid. “We didn't take out priorities,” she said. “We just reduced the timeline as to how long those benefits would last. We hope and pray for a vaccine that would of course reduce the necessity for us to go on for a longer period of time, but if we need to, we will.”
— Update on China:
- GOP lawmaker says trade deal with Taiwan on administration’s radar screen. A trade deal between the U.S. and Taiwan is “very much on their radar screen, according to Rep. Mike McCaul (R-Texas) told Reuters relative to the prospect for a deal. "I don't think that [U.. Trade Representative Bob] Lighthizer has 100% approved it, but... it is one of the options on the table for them and I think a recommendation coming from the task force would carry a lot of weight,” he said. The task force is poised to release their recommendations later today, a list of some 400 that includes boosting the U.S. medical supply chain, sanctioning China firms engaged in economic or industrial espionage in telecommunications and evaluating whether the China’s actions relative to Uigher Muslim minorities amounts to genocide.
- The Chinese government has been more deeply involved in acquisitions of European companies in recent years than previously appreciated, according to a new analysis that comes as the EU prepares to tighten screening of foreign investments. Of 650 Chinese investments in Europe since 2010, roughly 40% have high or moderate involvement by state-owned or state-controlled companies, including some in advanced technologies, according to new research by Dutch consulting firm Datenna BV. European officials increasingly worry this leaves companies exposed to unwanted foreign influence, loss of critical innovations and an erosion of cutting-edge industries, the Wall Street Journal reports (link).
- WSJ: China is taking over international organizations, one vote at a time. China is pushing its civil servants, or those of clients and partners, to the helm of U.N. institutions that set global standards for air travel, telecommunications and agriculture, the Wall Street Journal reports (link). Gaining influence at the U.N. permits China to stifle international scrutiny of its behavior at home and abroad. “Washington has recently attempted to counter the effort, cajoling and wooing countries around the world. Those efforts, hamstrung by damaged relationships with partners and allies, have had a limited impact so far,” the article notes.
- U.S./China Phase 1 tracker: China’s purchases of U.S. goods. Link.
— Update on re-opening America... and around the world:
- About 28,000 employees at Disney's U.S. theme parks will be laid off, with the company complaining that the impact of the pandemic has been “exacerbated in California by the state’s unwillingness to lift restrictions that would allow Disneyland to reopen.”
- Three players and five staff members on the Tennessee Titans have tested positive for the coronavirus, shutting down that team as well as the Minnesota Vikings, who played the Titans on Sunday.
- New York City is set to allow indoor dining at 25% of capacity from today, even as the daily share of people who tested positive for Covid-19 in the city hit 3.25% for the first time since June. Mayor Bill de Blasio said the city would close public schools if the percentage of positive tests citywide is 3% or higher for seven days.
— Coronavirus update:
- Summary: Global cases of Covid-19 are now at 33,673,556 with 1,008,368 deaths, according to data compiled by the Center for Systems Science and Engineering (CSSE) at Johns Hopkins University (JHU). The US case count is at 7,191,061 with 205,998 deaths.
Link to Covid Case Tracker
Link to Our World in Data
- Coronavirus was the issue that provided one of the sharpest contrasts during Tuesday's presidential debate. Joe Biden sought to portray President Trump’s handling of the crisis as a failure, while Trump highlighted the steps he has taken, including restricting some travel and speeding along a vaccine.
- Canada is seeing a sharp rise in cases of Covid-19, alarming health officials and triggering a second round of lockdowns and strict distancing recommendations. Average daily case counts have nearly reached the peak levels set in April.
- China greenlights another Covid-19 vaccine for human testing. Chinese drugmaker Shenzhen Kangtai will test its vaccine on people after showing it protected mice and monkeys from coronavirus.
POLITICS & ELECTIONS
— 2020 Presidential Election Interactive Map
— The Green Papers
— Real Clear Politics
— 2020 Political Atlas
— 2020 Demographic Swingometer
— Presidential debates: Scheduled to occur Sept. 29, Oct. 15 and Oct. 22.
— VP debate: Scheduled for Oct. 7.
— Days until election
- Main takeaway is that the first presidential debate didn’t alter the race. UBS’s Paul Donovan wrote in a note to clients today that, if anything, “the debate may have increased expectations for a contested election result,” particularly as Trump again suggested that he would challenge an unfavorable outcome. Political betting markets also showed little change, maintaining odds implying Biden is still the favorite to eventually win. Link to our perspective on Tuesday's event.
- A political dispute in the U.S. Chamber of Commerce. The business lobbying group’s top political strategist, Scott Reed, resigned over what he called a drift to the political left. The chamber disputes his account. Reed said he had left because of a string of endorsements of Democrats and what he characterized as a lack of commitment to defend Republicans’ majority in the Senate. Reed is a longtime Republican operative who managed Bob Dole’s 1996 presidential campaign and was credited with helping oust Representative Steve King of Iowa over his hard-line views on immigration. The chamber said he had been fired for improper conduct, including breaching confidentiality and leaking to news outlets. The group noted that it has endorsed 192 House Republicans, versus 30 Democrats, and it supports President Trump’s nomination of Judge Amy Coney Barrett to the Supreme Court.
OTHER ITEMS OF NOTE
- NASS to end data gathering, publication of Ag Labor report. The National Ag Statistics Service (NASS) will no longer be gathering information on agricultural workers, including the number of those workers, hours worked and wage rates, figures that have been used to make estimates on ag productivity, with the wage rate data used in the H-2A program and for setting Adverse Effect Wage Rates. “USDA has determined the public can access other data sources for the data collected in the Agricultural Labor Survey,” USDA said in a notice announcing its intent to discontinue its collection of the data. “These sources include, but are not limited to, the Agricultural Resources Management Survey (ARMS), Census of Agriculture (COA), American Community Survey (ACS), Quarterly Census of Employment and Wages (QCEW), National Economic Accounts, and the National Agricultural Workers Survey (NAWS).” Given those information sources, the Federal Register notice said, “NASS will not be collecting data in October 2020, as originally planned. NASS will not publish the biannual Farm Labor report this November.”
- USTR requests Section 201 investigation on blueberries. The Office of the U.S. Trade Representative (USTR) has requested that an investigation on imports of blueberries are hurting U.S. growers be launched by the U.S. International Trade Commission (ITC). USTR Bob Lighthizer said the request was being made under Section 201 of the Trade Act of 1974 and was among steps the administration is taking to “support American producers of seasonal and perishable agricultural commodities.” Depending on the outcome, the investigation could result in “safeguard” tariffs being put in place on blueberry imports. The administration held two listening sessions earlier this year relative to fresh produce issues and said in a report issued Sept. 1 that it would request the ITC initiate the Section 201 investigation on blueberries. Typically, Section 201 investigations are triggered by a domestic industry, as this request by USTR marks only the second time in 25 years that USTR has requested such an investigation. USTR said that 98% of total US blueberry imports came from five countries since 2014 and that the value of those imports has more than doubled since 2014.
- Immigration Fees: A federal judge temporarily blocked the Trump administration from raising the cost of citizenship and other immigration applications, whose fees were set to rise at the end of the week.
- EPA eying dicamba decision by mid-October. A new registration decision for dicamba products should be ready “sometime in the middle of October,” EPA Administrator Andrew Wheeler told the Red River Farm Network in Minnesota this week. Wheeler made the comments while briefly discussing the agency’s progress in reviewing registration proposal for Bayer’s XtendiMax and BASF’s Engenia. The agency is under pressure to extend the registration of the products in the wake of a court ruling that found the agency understated the risks for the products when it approved use of the chemicals.
- U.S. Customs to issue withhold release order on Malayasian palm oil from FGV Holdings. U.S. Customs and Border Protection (CBP) said it will issue a withhold release order on imports of Malaysian palm oil from FGV Holdings, saying the decision was based information it received on forced labor in the production process.
- House bill would increase local meat production. Small livestock producers often complain about finding a meat processor who is located nearby or with the available capacity when their animals are ready for slaughter. Reps. Chellie Pingree (D-Maine) and Jeff Fortenberry (R-Neb.) said the bottleneck would be eased under their bill, filed on Tuesday, that increases funding for state meat inspection programs and offers grants so small plants can expand their facilities.