Total prevent-plant numbers put at 12.5 million acres as of early July; likely will go higher
Some internal numbers at USDA have surfaced regarding prevent-plant acres this year... details below.
— USDA's Risk Management Agency (RMA) has a running tally of prevent-plant acres. Usually reliable sources detail prevent-plant (PP) acres for corn as of early July were 7 million to 8 million acres, while soybeans were 2 million to 3 million acres, with the total PP tally for all crops put at 12.5 million acres. Final amounts are expected to go higher, sources advise. USDA Undersecretary Bill Northey earlier said total PP acres would likely go over 10 million acres, and that appears to be the cased based on internal USDA numbers.
Meanwhile, USDA is expected this Thursday or Friday to release more information of importance to farmers.
— France announced restrictions on water use in two-thirds of its departments as drought grips the country ahead of the summer holiday season. The ministry of sustainable development said on Tuesday that 61 of France’s 96 European departments were subject in whole or in part to limits on water consumption — 21 of them in the critical red category that bans farm irrigation and preserves water only for drinking, health and sanitation. Central France, including the Dordogne and the Loire valley, is the worst affected part of the country. The heatwave which hit Europe in late June has also contributed to the French drought.
— U.S./China trade policy update:
- President Trump again threatened to slap duties on another $325 billion in Chinese goods if Beijing doesn’t meet his trade demands. “We have a long way to go as far as tariffs, where China is concerned,” Trump said Tuesday. “We have another $325 billion that we can put a tariff on if we want.”
- As for China buying U.S. farm products, Trump said: “They are supposed to be buying farm products. Let’s see whether or not they do.”
- China comments. Foreign Ministry spokesman Geng Shuang told reporters that U.S. and Chinese negotiating teams have stayed in contact, labeling cooperation on trade with the US as a mutually beneficial situation.
- China’s May holdings of U.S. Treasuries dipped for the third straight month to a two-year low amid trade war woes. China’s holdings of U.S. Treasuries including notes, bills and bonds fell by $2.8 billion in May to $1.11 trillion. The dip in May was the third consecutive month of declines, leaving China’s holdings at the smallest since May 2017. China remained the US’ biggest foreign creditor. Japan was next, with $1.1 trillion, up by $37 billion from a month earlier, which was the biggest gain since 2013. The $9.2 billion gap between the two nations’ holdings was also the smallest since Japan was last the largest US foreign creditor two years ago. Overall, U.S. Treasury holdings by foreigners hit a new high, rising to $6.54 trillion. The previous record of $6.47 trillion was hit in March.
- China’s total debt rises to nearly 304% of GDP as Beijing loosens borrowing curbs to boost growth. The figure has risen to over $40 trillion, some 15% of overall global debt, according to data released by the Institute of International Finance. China has eased its deleveraging campaign in a bid to aid the slowing economy amid the trade war with the United States. Spurred by falling interest rates, global debt rose by a hefty $3 trillion in Q1 2019. At over $246 trillion, global debt is now just $2 trillion shy of the all-time high of Q1 2018. Emerging Market debt hit a record $69 trillion in Q1 2019 — over 216% of GDP.
— U.S. and Japan trade officials are working on a small trade deal that would involve agriculture and autos, Reuters reported (link), citing three unidentified industry sources familiar with the talks. The deal could be agreed by President Donald Trump and Japanese Prime Minister Shinzo Abe in September in New York.
The pact could involve Japan offering U.S. farmers new access to markets in return for reduced tariffs on Japanese auto parts, the report noted, citing an auto industry official.
U.S. officials have been seeking increased access for U.S. beef and pork products. Japanese government official declined to comment to Reuters on the possibility of deal but said working level discussions on trade are taking place. U.S. officials at the U.S. Trade Representative and Commerce Departments did not provide comments to Reuters.
“We are going to continue to hemorrhage market share unless we quickly get the same market access our competitors have in Japan,” David Herring, president of the National Pork Producers Council, said at a House Agriculture hearing on Tuesday. Trade talks with Japan “can’t move quickly enough, as far as we are concerned,” Herring said.
Meanwhile, the Wall Street Journal has a profile of President Trump’s point man on trade woos Congress. “When he isn’t trying to forge an elusive trade deal with China, U.S. Trade Representative Robert Lighthizer can often be found working Capitol Hill, schmoozing with lawmakers on that other trade deal, the one with Canada and Mexico,” the article notes. Link.
— USMCA update. U.S. Trade Representative Robert Lighthizer met with Speaker Nancy Pelosi (D-Calif.) and House Ways and Means Chairman Richard Neal (D-Mass.) on Tuesday to continue his attempt to deal with Democratic concerns about several topics that could clear the way for a House vote on the trade pact. Congressional sources see a possible House vote in the October or November timeframe, while some are not ruling out a December vote if lawmakers continue in session that month.
Lighthizer is set to meet again today with the Democratic working group to continue talks about labor, enforcement, drug pricing and environmental provisions in the USMCA.
— Leaders of Mercosur, the world’s fifth-largest trading bloc, meet in Argentina today to celebrate a new pact with the European Union. “The days of closed, protectionist economies in South America are over,” said an adviser to Mauricio Macri, Argentina’s president and outgoing head of Mercosur.
The deal must still be ratified by national parliaments, but when fully implemented it will eliminate tariffs on 93% of exports to the EU from Argentina, Brazil, Paraguay and Uruguay. That should boost Mercosur’s trade in goods, which total-led around $500 billion last year, a fifth of which was with the EU.
Negotiations are ongoing with Canada and South Korea, both of which already have EU trade agreements.
— South Korea says it has found no unapproved GMO wheat in U.S. wheat, flour. South Korea’s Ministry of Food and Drug Safety said today it has found no unapproved GMO wheat in imports of U.S. wheat and flour that have been tested in the wake of the U.S. finding unapproved GMO wheat in Washington state July 12. The ministry said it would continue to test imports relative to the presence of any unapproved GMO wheat but would remove the temporary block that it put on US wheat after the discovery.
— Other items of note:
How does Kim Jong-un get his luxury cars? The North Korean leader has frequently been seen using expensive Mercedes-Benz and Rolls-Royce limousines, in open defiance of U.N. sanctions intended to keep his country from importing luxury goods. Using shipping data, corporate records, satellite imagery and interviews, a New York Times investigation tracked the circuitous routes (link) that North Korea uses to import high-end goods. Watch the video. The Wall Street Journal also took a look at this topic (link).
House votes to condemn Trump for comments. The House on Tuesday voted to formally admonish President Trump, approving a resolution condemning as “racist” his tweets targeting four minority congresswomen. The 240-187 vote fell largely along partisan lines, as GOP leaders rushed to the president’s defense in whipping against the measure. Four Republicans and the House’s lone independent, Rep. Justin Amash of Michigan, voted with all the Democrats to condemn the president. The four Republicans who voted to approve the measure were Reps. Will Hurd of Texas, Brian Fitzpatrick of Pennsylvania, Fred Upton of Michigan and Susan Brooks of Indiana. Brooks is not seeking a fifth term and Hurd and Fitzpatrick face competitive re-elections. Republicans criticized Speaker Nancy Pelosi (D-Calif.) as violating the House’s rules of decorum, which call for lawmakers to avoid impugning the motives of their colleagues or the president. The second-highest Democrat in the House, Rep. Steny Hoyer of Maryland, said the chamber's parliamentarian determined Pelosi's comments were "not in order.”
“Whiskey is for drinking, water is for fighting.” One powerful West Texas family wants to pipe millions of gallons of water daily from under its farmland to oil producers. Another wants to stanch that flow — echoing battles around the world over the resource. Link to Wall Street Journal article.
The House Ways and Means Committee created a bipartisan “task force” n rural health care issues. The group will hold its first meeting on July 25.
Major U.S. freight operators are delivering a mixed outlook in the runup to the peak shipping season. Transport bellwether J.B. Hunt Transport Inc.’s second quarter earnings helped push shares at trucking companies sharply upward, the Wall Street Journal reports (link), signaling more confidence in U.S. logistics businesses after slackening demand earlier this year. J.B. Hunt’s overall earnings were a mixed bag, but dedicated trucking services expanded sharply, and company executives says customers tell them they’ve been working through overstuffed inventories and now “feel better about the back half of the year.” Freight railroad CSX Corp. is more downbeat, however, after reporting revenue and profit slipped in the quarter (link), the WSJ noted, saying “volumes for its industrial customers show no signs of improving. Truckers like J.B. Hunt are more closely tied to the consumer economy, which remains robust, than to a faltering industrial sector that has been delivering sagging carload traffic.”
Plant-based food sales surged to $4.5 billion last year, as products from oatmilk to alternative proteins go mainstream. Link to Minneapolis StarTribune article.
Dan Pearson, a former chairman of the U.S. International Trade Commission who’s recently been heading his own trade policy consultancy firm, has joined Americans for Prosperity as the organization’s first trade policy fellow. Pearson also spent four years serving as a senior fellow in trade policy studies at the Cato Institute and has worked at Cargill, Inc. and as a Senate legislative aide.
— Markets. The Dow on Tuesday closed down 23.53 points, 0.09%, at 27,335.63. The Nasdaq lost 35.39 points, 0.43%, at 8,222.80. The S&P 500 fell 10.26 points, 0.34%, at 3,004.04.
Federal Reserve Chairman Jay Powell again signaled the U.S. central bank is considering an easing of monetary policy to offset mounting trade tensions and softness in the world economy, stressing that “global factors” had become more relevant to policymaking in recent years. Speaking at a conference in Paris ahead of a meeting of G7 finance ministers and central bank governors, Powell said the Fed would “act as appropriate to sustain the expansion” in the face of increasing “uncertainties” about the U.S. outlook — reinforcing expectations of an interest-rate cut of at least 25 basis points this month. Powell said policymakers had grown “more keenly aware” of the international environment over the past decade. “The global nature of the financial crisis and the channels through which it spread sharply highlight the interconnectedness of our economic, financial and policy environments. U.S. economic developments affect the rest of the world, and the reverse is also true,” he said. Powell noted how different the world has become, pointing in particular to persistently low inflation as a key source of concern. At the moment the Fed’s preferred inflation measure — the core PCE price index — is growing at a rate of 1.7% annually, below the central bank’s target of 2%. Powell said several factors were behind this trend — from demographics to globalization, low productivity, higher demand for safe assets, and weaker links between inflation and joblessness — and they were expected to persist. “If that happens, the neutral rate of interest will remain low, and policymakers will continue to operate in an environment in which the risk of hitting the effective lower bound is much higher than before the crisis,” Powell said, adding that this “poses new complications for central banks and calls for new ideas.”
European car sales took a dive in June — and the industry looks set to drop for a second straight year. Sales dropped 7.8% to 1.49 million cars, according to the European Automobile Manufacturers' Association (ACEA), the worst drop since December.