Biden Pushes Dems to Find Consensus on Budget Package; Framework Accord Sought

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RFS twists and turns | Stabenow: Dems’ reconciliation spending will help write next farm bill


In Today’s Digital Newspaper


Market Focus:
• Fed Reserve announcement: Pick what you want to focus on
• Fed is finally getting more realistic about inflation
• Fed’s Powell: Evergrande not a U.S. worry
• Fed examining bond holdings by Fed officials
• Apple will give store employees up to $1,000 in one-time bonuses next month
• More than 1.5 million U.K. households forced to switch energy suppliers 

• European production cutbacks leave hole in natural-gas output just as demand returns
• China Evergrande Group causing iron-ore prices to buckle  
• Ag demand update
• USDA daily sale: 138,403 MT corn to Guatemala during 2021-2022 MY

• Followthrough buying lifts soybeans and wheat futures
• Expectations for today’s Weekly Export Sales Report
• Warm, dry fall and winter could lead to low water levels on the Missouri River
• Argentina pledges to work with private sector to reverse decision on biodiesel duties
• Efforts to grow SAF industry
• China lower sow herd target in five-year plan (details below)
• Steady to lower cash cattle trade
• Big jump for pork cutout value 

Policy Focus:
• Who Biden met with Wednesday re: congressional issues
• Biggest issue discussed on Wednesday: final price tag for human infrastructure bill
• Biggest issue left unresolved: final price tag for human infrastructure measure
• Pelosi, Schumer comment following meetings with Biden
• Debt limit suspension conflict continues
• Jayapal reiterates pledge to vote against infrastructure bill, if…
•  Podesta warns Dems: Scale back $3.5 trillion social policy bill or lose Congress
• OMB will send out its gov’t shutdown guidance today
• When will Senate vote on combine CR/debt suspension bill>
• Biden, Pelosi game plan: Get warring Dem factions to agree on framework
• Stabenow: Dems’ reconciliation spending will help write next farm bill 

Biden Administration Personnel:
• Senate approves Jayme Ray White to be a deputy U.S. Trade Representative
• Senate Ag Committee to vote on USDA nominee this morning
• Several nominations on tap in Senate today
• Vilsack nudges Senate to act on pending USDA nominees
• Biden to nominate Saule Omarova to a top job overseeing nation’s banks   

China Update:
• China lowers sow herd target in five-year plan
• Evergrande situation remains in focus
• Soybeans and cotton major U.S. export sales activity to China

Trade Policy:
• Taiwan applies to join trade pact; China comments
• Vilsack comments on appointment of a USDA Undersecretary re: trade

Energy & Climate Change:
• Reports cite ‘document’ listing apparent proposed RFS levels
• Grassley says EPA RFS announcement coming Fri. afternoon; others say no
• Vilsack comments on RFS, gives hints of what may be coming
• Granholm sees new opportunities for nuclear power
• SEC asking companies to tell investors how climate change might affect earnings
• White House moves to limit a major driver of climate change


Livestock, Food & Beverage Industry Update:
• Vilsack comments about ASF in Haiti, Dominican Republic
• General Mills reviving emergency strategies it undertook at start of pandemic


Coronavirus Update:
• Older Americans will get booster shots
• U.S. dispensing about 760,000 vaccinations per day on average
• Six United Airlines employees sued airline over its vaccine mandate

Politics & Elections:
• Majority of Americans disapprove of Biden for the first time in his presidency
• Iowa poll shows big decline in Biden approval

Congress:
• Iron Dome funding up for a vote today
• Liz Cheney will be featured on 60 Minutes Sunday night
• Bipartisan talks to overhaul police tactics and accountability collapse


Other Items of Note:
• Biden advisors meet with CBC members
• Biden spoke over the phone with his French counterpart Emmanuel
• Violence in Ukraine


MARKET FOCUS


Equities today: Global stock markets were mostly up in overnight trading. The U.S. Dow opened up around 200 points higher. World markets rallied after the U.S. Federal Reserve confirmed plans to start reeling in stimulus, Norway became the first rich economy to raise rates since Covid struck and China Evergrande shares leapt ahead of a crucial debt payment. Asian equities finished mostly higher in the wake of the US Fed meeting. The Nikkei closed down 200.31 points, 0.67%, at 29,639.40. The Hang Seng Index was up 289.44 points, 1.19%, 24,510.98. European equities are trading higher in early action. The Stoxx 600 was up 0.8%, with most other markets up 0.7% to 0.95; the FTSE has been slightly weaker.

     U.S. equities yesterday: The Dow finished just below where it was prior to the Fed's meeting conclusion, putting in a somewhat volatile late trading day. The Dow ended up 338.48 points, 1.00%, at 34,258.32. The Nasdaq gained 150.45 points, 1.02%, at 14,896.85. The S&P 500 rose 41.45 points, 0.95%, at 4,395.64.

     Stocks

On tap today (see detailed list of events and reports below):

     • Bank of England releases a policy statement at 7 a.m. ET.
     • U.S. jobless claims are expected to fall to 320,000 in the week ended Sept. 18 from 332,000 a week earlier. (8:30 a.m. ET)
     • USDA Weekly Export Sales report, 8:30 a.m. ET.
     • IHS Markit's preliminary U.S. manufacturing index for September is expected to tick up to 61.7 from a final reading of 61.1 in August. The services index is forecast to fall to 54.9 from 55.1. (9:45 a.m. ET)
     • Conference Board's leading economic index for August is expected to rise 0.7% from the prior month. (10 a.m. ET)
     • Kansas City Fed's manufacturing survey is expected to tick up to 30 in September from 29 a month earlier. (11 a.m. ET)
     • White House will host a meeting today of semiconductor producers and users, including Apple, Intel, Samsung, Ford and GM. Administration officials said they are seeking more information about supply and demand problems and how the government can help. The administration is also ratcheting up a system meant to mitigate semiconductor-plant shutdowns related to the spread of Covid-19’s Delta variant.
     • U.N. food systems summit begins today. The virtual event gets underway from New York City alongside the U.N. General Assembly, with USDA Sec. Tom Vilsack and USAID Administrator Samantha Power expected to speak. Some countries have released documents on how they plan to meet the UN’s sustainable development goals by 2030, though the U.S. outline hadn’t been posted its plan yet.

FOMC members signal bond-buy tapering ‘may soon be warranted;’ rate hike in 2022 expected. Other keys: If economy continues to progress as expected, tapering ‘may soon be warranted’; half of FOMC expect rise in target range for Fed funds rate in 2022; more in 2023.  

     The U.S. economy has continued to make improvement and that has Fed officials signaling that tapering their bond purchases could be on tap ahead even as they made no policy changes at the conclusion of the Federal Open Market Committee (FOMC) meeting.  

     Pandemic and Delta variant remain keys. While noting progress in the U.S. economy due to increased vaccinations and policy support, the FOMC post-meeting statement indicated that “risks to the economic outlook remain” ahead. “The sectors most adversely affected by the pandemic have improved in recent months, but the rise in Covid-19 cases has slowed their recovery,” the statement said. “Inflation is elevated, largely reflecting transitory factors.” The latter has been a common theme for the Fed and recent data has not altered that view.  

     Taper timing only identified as possibly being warranted ‘soon’. One of the main focal points in the FOMC meeting conclusion was the potential tapering of bond purchases which have taken place at $120 billion per month — $80 billion in Treasuries and $40 billion in mortgage-backed securities. “Last December, the Committee indicated that it would continue to increase its holdings of Treasury securities by at least $80 billion per month and of agency mortgagebacked securities by at least $40 billion per month until substantial further progress has been made toward its maximum employment and price stability goals,” the statement said. “Since then, the economy has made progress toward these goals.”  

     But the Fed left the timing question open on tapering for the most part. “If progress continues broadly as expected, the Committee judges that a moderation in the pace of asset purchases may soon be warranted,” the statement said.  

     Unanimous decision. The decisions announced by the Fed were backed by a unanimous vote by FOMC members — there were no dissenting votes. Some could find that surprising given that there have been some Fed officials advocating for a sooner-rather-than-later timing for the tapering to begin.  

     Fed projections signal rate rise in 2022, more in 2023. Fed officials see a U.S. economy growing at 3.8% in 2022, up from 3.3% in June, but their 2021 outlook was rather sharply downgraded — 5.9% versus a June expectation of 7.0%. Fed officials are expecting the unemployment rate to be a little higher for 2021 at 4.8% compared with 4.5% in June. Inflation expectations are also higher, with core personal consumption expenditures (PCE) seen up 3.7% in 2021, a substantially higher mark than the 3% seen in June. For 2022, core PCE inflation is expected to be 2.3%, up from 2.1% in June, while 2023 is to come in at 2.2% versus 2.1% in June.

     Regarding the target range for the Fed funds rate, nine of the 18 members of the FOMC expect at least one rate hike in 2022, with only one expecting no rate rise needed in 2023. Up to three increases are implied by the updated economic forecasts. 

     Stock rise, yield curve flattens. The broader stock market had a choppy reaction to the Fed yesterday, finishing solidly up, but well off the highs of the day. Investors look to be balancing the positives of the central bank dealing with inflation with the negatives of removing accommodation, even with rates still at zero. (Source for table: ING Economics)

     Fed projections

     Fed dot map

Powell thinks conditions largely met for taper, but not all agreed. Fed Chairman Jerome Powell, during his Wednesday presser, was pressed to give some additional guidance on the timing of starting to taper the Fed’s bond purchases. But Powell did not offer a specific timeline but did outline the conditions for the tapering to start. “The task for beginning our taper we receive progress toward our goals of inflation and maximum employment,” Powell stated. “For inflation, we appear to have achieved more than significant progress, substantial further progress. That part of the test is achieved in my view and the view of many others.” As for maximum employment, Powell noted, “Many on the committee feel that substantial further progress test for employment has been met. Others feel it's close—they want to see a little more progress.” 

     Powell indicated his view is that the “substantial furthered progress test for employment is all but met.” Those two tests could possibly be met “as soon as the next meeting,” he noted, adding the committee “will consider that test and look at the broader environment at that time and make a decision whether to taper.” 

     If conditions are met soon, Powell indicated the tapering would likely be completed by the middle of 2022 “which seems appropriate.” However, he stressed that the Fed would continue to hold their purchased securities and that will keep downward pressure on interest rates. 

     Asked again on the timing of tapering, Powell noted, “I think if the economy continues to progress broadly in line with expectations and also the overall situation is appropriate for this, then I think we can easily move ahead at the next meeting.  Or not, depending on whether we feel like those tests are met.” 

     As for timing of the liftoff or the start to the increase in the target range of the Fed funds rate relative to tapering the bond purchases, Powell simply said, “You are going to be well away from satisfying the lift off test when we begin the taper.” He further stressed the Fed will “work it out as we go” reiterating his stance is that the test “is all but met” on tapering. “I don't personally need to see a very strong employment report, but I like to see a decent employment report,” he said. 

     Regarding when to start reducing the Fed’s balance sheet, Powell said, “Let's get through the taper decision and let's turn to those issues.” And reducing the balance sheet is something the Fed is not focused on, Powell said, “We are really not.” 

     Asked about the potential for a U.S. default on its obligations if Congress does not address the debt limit, Powell said that it was “important” the debt ceiling be raised and that it needs to be done in a timely manner. “I think we can agree the United States shouldn’t default on any of its obligations and should pay them when due.” Asked if he had talked about the situation with members of Congress, Powell simply said, “I don't generally talk about the conversations I have with elected officials or other appointed officials,” he stated. 

     As for whether he has talked with the White House about being reappointed to another term as Fed chairman, Powell again simply stated, “The phrase goes I have nothing for you on that today. Sorry. I'm focused on doing my job every day for the American people and I don't have any comment on that.” 

     Evergrande not a U.S. worry. One reporter did bring up the Evergrande situation and their potential default. But Powell indicated he saw no impacts for the US at this stage as there was little US exposure relative to Evergrande. “The Evergrande situation seems particular to China which has very high debt for an emerging market economy… the largest. “While there is little US exposure, Powell cautioned, “you would worry it would affect global around confidence channels. I wouldn't draw a parallel between the United States [private] sector.”

     As for other topics Powell addressed:

  • The Fed is examining bond holdings by Fed officials that came to light recently relative to the Dallas and Boston Fed presidents. “I think no one is happy. No one on the FOMC is happy to be in this situation, to be having these questions raised,” he observed. “It's something we take very, very seriously. This is an important moment for the Fed and I'm determined we will rise to the moment and handle it in ways that will stand up over time.”
  • Wells Fargo is still being watched closely, Powell said when asked to respond to Sen. Elizabeth Warren (D-Mass.) urging a breakup of the bank. “We are very closely monitoring Wells Fargo to fix its problems…  they present a serious problem to us and the firm is required to remediate them.”

Inflation is finally catching the Federal Reserve’s attention. All year the Fed’s message on inflation has been consistent: This year’s surge is transitory, and inflation will soon return close to the central bank’s 2% target. Yet look more closely and it’s clear Fed officials are turning less sanguine. That explains growing eagerness to start raising interest rates. Last September, long before the supply bottlenecks emerged, the median forecast by Fed officials was for core inflation (which excludes food and energy) in 2022 of 1.8%. Every few months since they have nudged that up, and in the forecasts released Wednesday they see core inflation next year at 2.3%. While current-year forecasts get pushed around a lot by temporary factors such as a jump in oil prices, the next-year forecast reflects where inflation is expected to settle once temporary factors recede. The message from the Fed’s latest projections is that “transitory” is lasting an awfully long time, the WSJ’s Greg Ip writes (link).

     "What is clear is that inflation is likely to be the determining factor for liftoff and the pace of rate hikes," Deutsche Bank Chief U.S. Economist Matthew Luzzetti writes in a note. "If inflation is at or below the Fed's current forecast next year of 2.3% core PCE, liftoff is likely to come in 2023, consistent with our view. However, if inflation proves to be higher with inflation expectations continuing to rise, the first rate increase could well migrate into 2022."

     Fed

$1,000 for geniuses. Apple will give store employees as much as $1,000 in one-time bonuses next month. It's another move to get its retail operations back on track after pandemic shutdowns. Retail staff hired before March 31 will get $1,000, while those brought on after that date will receive $500.

Market perspectives:

     • Outside markets: The U.S. dollar index was lower in early dealings, with several foreign currencies higher versus the greenback. The yield on the 10-year U.S. Treasury note is firmer, trading around 1.34%. Gold and silver are lower ahead of U.S. economic updates, with gold around $1,773 per troy ounce and silver around $22.70 per troy ounce.

     • Crude prices are lower ahead of U.S. trading, with U.S. crude around $71.80 per barrel and Brent around $75 per barrel. Futures edged lower overnight in Asian action, with US crude down seven cents at $72.16 per barrel and Brent was eight cents lower at $75.31 per barrel. 

     • More than 1.5 million U.K. households are being forced to switch energy suppliers after two more retailers collapsed on Wednesday, bringing the tally of companies going out of business to seven since early August. 

     • European production cutbacks have left a hole in natural-gas output just as demand returns from lockdown-induced lows. The supply shortfalls have led to record prices for the fuel and electricity, and handed more sway to Russia, Europe’s biggest supplier. The Kremlin said last week that the shortfall could be eased by swifter approval for its Nord Stream 2 pipeline, which could double Russian supplies sent directly to Germany. 

     Gas pains

     • Crisis engulfing property developer China Evergrande Group is causing iron-ore prices to buckle, as investors worry that pressure on China’s huge property market will translate into lower appetite for steel. The price of iron ore, the world’s second-most-traded commodity after crude oil, has fallen more than 50% since mid-July. Concerns about Evergrande and its peers have combined with a slowdown in steel production in China that some analysts think could last until early next year. China makes more than half of the world’s steel. 

     Steel

     • Ag demand: Algeria’s state grains agency is thought to have purchased somewhere between 300,000 MT and 500,000 MT of durum wheat in a tender, reportedly from Mexico and Canada. Egypt’s state grain buyer bought 12,000 MT of sunflower oil in an international tender. It made no purchase in its tender for 30,000 MT of soyoil. The Taiwan Flour Millers’ Association bought an estimated 49,580 MT of milling wheat to be sourced from the U.S. Jordan’s state grain buyer issued a new international tender to buy 120,000 MT of milling wheat from optional origins. It made no purchase in its tender to buy 120,000 MT of barley. 

     • USDA daily sale: 138,403 MT corn to Guatemala during 2021-2022 MY. 

     • NWS weather: A strong, slow-moving cold front will bring additional heavy rains and possibly strong to severe thunderstorms to the Mid-Atlantic on Thursday, before moving into New England on Friday... ...Strong winds and hazardous beach conditions are expected across portions of the Great Lakes on Thursday. 

        NWS
        Wx Today

Items in Pro Farmer's First Thing Today include:

Followthrough buying lifts soybeans and wheat futures
• Expectations for today’s Weekly Export Sales Report
• Warm, dry fall and winter could lead to low water levels on the Missouri River
• Argentina pledges to work with private sector to reverse decision on biodiesel duties
• Efforts to grow SAF industry
• China lower sow herd target in five-year plan (details below)
• Steady to lower cash cattle trade
• Big jump for pork cutout value


POLICY FOCUS


— Who President Biden met with Wednesday re: congressional issues:

     Meeting 1. The leaders: House Speaker Nancy Pelosi (D-Calif.) and Senate Majority Leader Chuck Schumer (D-N.Y.). 

     Meeting 2. The moderates: Reps. Suzan Delbene (D-Wash.), Josh Gottheimer (D-N.J.), Steven Horsford (D-Nev.), Stephanie Murphy (D-Fla.) and Mike Thompson (D-Calif.), and Sens. Catherine Cortez Masto (D-Nev.), Joe Manchin (D-W.Va.), Jeanne Shaheen (D-N.H.), Kyrsten Sinema (D-Ariz.), Jon Tester (D-Mont.) and Mark Warner (D-Va.). 

     Meeting 3. The progressives: Reps. Katherine Clark (D-Mass.), Pramila Jayapal (D-Wash.), Barbara Lee (D-Calif.), Mike Pocan (D-Wis.) and Jim McGovern (D-Mass.), and Sens. Cory Booker (D-N.J.), Patty Murray (D-Wash.), Brian Schatz (D-Hawaii), Ron Wyden (D-Ore.) and Bernie Sanders (I-Vt.).

     Biden will meet with more Democratic lawmakers today on both the infrastructure and reconciliation bills, trying to find common ground between the different wings of his party.

— Biggest issue discussed on Wednesday: the final price tag for the human infrastructure bill. There was discussion of a number less than $3 trillion, which is where many Democrats believe the reconciliation package will end up. But no one apparently gave a specific final price tag to Biden. “Give me a number and tell me what you can live with and what you can’t,” Sen. Joe Manchin (D-W.Va.) later quoted the president saying. But no luck. “He was very good in how he handled it,” Manchin said of Biden. “Being a former senator and understanding this process really gave him the ability to have the understanding and empathy of what everybody goes through, and the ways people are tugged and pulled.” There was no breakthrough on climate. “I have big problems” with the climate provisions, Manchin said afterward. “Probably [the president] and I are in a different place on that.” 

— Pelosi, Schumer comment following meetings with Biden. House Speaker Nancy Pelosi (D-Calif.) talked to reporters after returning to the Capitol from her White House meeting, where she discussed the administration's agenda with President Joe Biden: “We're on schedule, let's put it that way. … We are on schedule, that’s all I will say. And we’re calm and everybody’s good and our work’s almost done. We’re in good shape.” 

     Senate Majority Leader Chuck Schumer (D-N.Y.): “We made some good progress, I'm not going to talk about the details. … We’re moving along.” 

— Debt limit suspension conflict continues. Senate Minority Leader Mitch McConnel (R-Ky.), at a presser Wednesday said:  

    “We all agree, America must never default. The debt ceiling will need to be raised… My advice to this Democratic government, the president, the House and Senate: don't play Russian roulette with our economy. Step up and raise the debt ceiling and cover all that you've been engaged in all year long. So no effort on their part to describe our position as irresponsible makes any sense because the facts are indisputable. This is a totally Democratic government. They have an obligation, to raise the debt ceiling, and they will do it.” 

     Meanwhile, reporters asked Senate Budget Committee Chair Sen. Bernie Sanders (I-Vt.) if there was enough time to amend the reconciliation bill to raise the debt limit. Sanders insisted Republicans would end up joining Democrats in voting to raise the ceiling. “A default could bring the entire world’s economy to its knees,” Sanders said. “Do I think Republicans are that crazy? I don’t.” 

     Treasury Secretary Janet Yellen is trying to enlist Wall Street CEOs to pressure Republicans to support raising or suspending the debt ceiling. Bloomberg reports that Yellen has called Jamie Dimon, Jane Fraser, Charlie Scharf, Brian Moynihan and a senior Goldman official, urging them to speak publicly on the issue. 

— Jayapal reiterates pledge to vote against infrastructure bill. In an appearance Wednesday on CNN, Rep. Pramila Jayapal (D-WA), who chairs the House Progressive Caucus, was asked, “Is there any wiggle room on this pledge not to vote for the bipartisan [infrastructure] bill unless you see a vote on the larger [reconciliation] bill the Democrats only are championing?” Jayapal said: “The Progressive Caucus is about...making sure that we deliver the entirety of the President’s agenda. ... When the deal was made coming out of the Senate, that the bipartisan infrastructure bill would pass, the deal was also made that the reconciliation bill would pass at the same time. We are just holding to that promise and saying that we will not be able to vote for the bipartisan bill until we have got the reconciliation bill passed.” Jayapal added, “Other people are willing to crash the entire Democratic agenda by refusing to come together on the reconciliation bill. .... We are the only people...that have said we want both bills done.” 

— Podesta warns Democrats: Scale back $3.5 trillion social policy bill or lose Congress. John Podesta, a former chief of staff to President Bill Clinton, called on lawmakers in his party on Wednesday to pare back a proposed $3.5 trillion social policy plan that carries much of President Biden’s domestic agenda. If they do not, he warned, they risk failure to pass the legislation — and the loss of their congressional majorities next year. “The political reality is clear, given Democrats have no margin for error in the Senate and a limited margin in the House,” he wrote. “We will not secure the full $3.5 trillion investment. It’s time for Democrats to unite in finding the path forward.” 

     Podesta also had harsh words for moderates who have resisted the social safety net package, pushing instead for the passage of a $1 trillion bipartisan infrastructure bill that has passed the Senate, and is due for a House vote next week. “You are either getting both bills or neither — and the prospect of neither is unconscionable,” he wrote. “It would signal a complete and utter failure of our democratic duty, and a reckless abdication of our responsibility. It would define our generation’s history and show that, when our time came, we failed, both for Americans now and in the years to come.” 

     Meanwhile, the U.S. Chamber of Commerce launched TV ads to pressure five centrist Democrats — whom it previously endorsed — to vote against the $3.5 trillion proposal. 

— Office of Management and Budget, which oversees federal agencies, will send out its shutdown guidance today. That is a usual step to help prepare for any gov’t shutdown. OMB usually sends out such guidance seven days before funding lapses. Link to OMB contingency plans. 

— When will Senate vote on combine CR/debt suspension bill already passed by the House? It’s not yet official, but the Senate is likely to wait until Monday to vote on gov’t funding bill, which would keep agencies open until Dec. 3. Because that legislation includes a provision suspending the debt limit until December 2022, Senate Minority Leader Mitch McConnell (R-Ky.) and his GOP colleagues will block it from being considered. That leaves just three days for the congressional leaders and the White House to find a way to keep the gov’t open. Congress could pass a temporary “clean” funding extension to ensure federal agencies remain open while a longer-term funding bill — without the debt limit — is reached. 

     Senate Majority Leader Chuck Schumer (D-N.Y.) could file cloture today on the stopgap funding bill, setting up a Monday vote. 

— How will Pelosi deal with major differences in her party re: human infrastructure measure? Word is that House Speaker Nancy Pelosi (D-Calif.) wants to get moderates and progressives in both the House and Senate to publicly agree on the outlines of a framework by Monday. If so, the House can try to move toward a vote on the bipartisan infrastructure bill with unified Democratic support next week. Pelosi this will hold her weekly news conference and more insight could come from that. 

     The framework approach is also what President Biden told lawmakers who visited him Wednesday. He urged legislators to come up with a set of principles or framework for reconciliation that will persuade progressives to back down from their threat to kill BIF in the House on Monday. 

     Sanders comments. “My hope is that that vote will be delayed. If it’s not, [the infrastructure bill] should be defeated,” Sen. Bernie Sanders (I-Vt.), who met at the White House on Wednesday with Biden and other Democrats. “Both bills have got to go forward… Look, this is a slow and torturous process when you have 50 [senators] and no votes to spare,” Sanders added. “In the House, they’re got three votes to spare. There are a lot of disagreements. I think at the end of the day, we’re gonna work it out.” 

— Senate Agriculture Chair Stabenow says Democrats’ budget reconciliation spending will help write the next farm bill. While Senate Agriculture Committee Ranking Member John Boozman (R-Ark.) and other Republicans have complained of being shut out of the process Democrats have used to make spending decisions on additional funds under the control of the Agriculture Committees in the budget reconciliation package, Senate Agriculture Committee Chair Debbie Stabenow (D-Mich.) said Wednesday that the Republican minority will welcome the additional funds when it comes time to write the next farm bill. 

     Reconciliation “will add some baseline to the farm bill, and I’ve told [Senate Ag ranking member John Boozman] that he’ll thank me later when we’re writing the farm bill because we’ll have some additional resources,” Stabenow told reporters after speaking to United Fresh.

     Stabenow eyes starting work on the next farm bill next year, starting with a request for feedback on the 2018 Farm Bill late this year to get ready.

     As for the conservation and debt relief provisions that were missing when the House Agriculture Committee marked up their portion of the reconciliation bill, Stabenow said there is an agreement on debt relief. “We have really good language, and we have the funding in the bill, and it will be added on the floor. I'm not sure what the reason was in committee, why it wasn't ready,” she noted. 

     On conservation, Stabenow cited Congressional Budget Office (CBO) scoring issues as delaying those details, but said she was pleased with the result.


BIDEN ADMINISTRATION PERSONNEL


— Senate approved the nomination of Jayme Ray White to be a deputy U.S. Trade Representative with responsibility for the Western Hemisphere, Europe, the Middle East, labor and environment. The approval came on a vote of 80-18. White had served as chief trade adviser on the Senate Finance Committee, focusing on international competitiveness and innovation. 

— Senate Ag Committee to vote on USDA nominee this morning. The Senate Agriculture Committee has set a business meeting this morning to vote on the nomination of Dr. Homer Wilkes to be undersecretary for natural resources and environment. The timing is unclear as it will be held in conjunction with the first floor vote in the Senate which is set for 10 am ET. 

— Nominations on tap in Senate today. Majority Leader Chuck Schumer (D-N.Y.) has teed up cloture and possible confirmation votes on several State Department nominees, plus a top post at USTR. Details: 

  • Sarah Bianchi to be Deputy United States Trade Representative (Asia, Africa, Investment, Services, Textiles, and Industrial Competitiveness)
  • Daniel J. Kritenbrink to be an Assistant Secretary of State (East Asian and Pacific Affairs)
  • Karen Erika Donfried to be an Assistant Secretary of State (European Affairs and Eurasian Affairs)
  • Monica P. Medina to be Assistant Secretary of State for Oceans and International Environmental and Scientific Affairs
  • Mary Catherine Phee to be an Assistant Secretary of State (African Affairs)
  • Todd D. Robinson to be an Assistant Secretary of State (International Narcotics and Law Enforcement Affairs)
  • Jessica Lewis to be an Assistant Secretary of State (Political-Military Affairs) 

— USDA Secretary Tom Vilsack nudged the Senate to act on pending USDA nominees still waiting on a confirmation vote. “Hopefully, we'll get our Senate friends to proceed with getting nominations through the process more quickly,” Vilsack remarked. “Frankly, we only have one undersecretary at this point in time approved by the Senate. We have a couple who are on the docket for approval — who are currently sort of stalled,” he continued, adding that he hoped to see the Senate Agriculture Committee act on the picks “in the very near term.” 

     Asked when FSA State Executive Directors (SEDs) will be appointed, Vilsack said: “Look, nobody — nobody — in this audience is more interested in having our state directors in place than me,” Vilsack responded. “The good news is I think over the course of the next 30 days, you're going to begin to see a rolling out of state FSA and state rural development directors.” He added that the picks would likely come in “tranches” of “5, 10, 15 states at a time,” with an initial batch of picks coming “very soon in the next couple of weeks.” 

— Biden is poised to nominate Cornell Law School Professor Saule Omarova to a top job overseeing the nation’s banks, Politico reports, handing a win to advocates for stricter financial rules. As comptroller of the currency, Omarova would be responsible for policing the activities of the U.S.' largest banks as the head of a key financial regulator.


CHINA UPDATE


— China lowers sow herd target in five-year plan. China’s ag ministry lowered its sow herd inventory target in its Five-year Plan to around 41 million head for 2021-2025, with the interim plan indicating those numbers should be no lower than 37 million head. Previously, the target was for sow supplies between 40 million and 43 million head. “As long as the inventory of breeding sows is kept within a reasonable range, piglet production will be guaranteed [and] hog market supply and pork prices will be kept relatively stable,” the ministry said in a statement. It also indicated breeding sow herd stocks would be divided into three zones to help authorities bring stocks to normal levels. the green zone would indicate normal fluctuation of the sow herd. Yellow would indicate sharp fluctuation and red would signal excessive fluctuation of more than 10% either up or down. China will keep records on farms that slaughter more than 500 pigs annually. 

— Evergrande situation remains in focus. Chinese authorities have been laying the groundwork for the potential default by Evergrande, telling local governments they need to prepare for the potential event, according to reports. The apparent instructions to local governments are being taken as a sign that China’s government may be unwilling to bail out the property development company. Reports said the central government’s stand was viewed as “getting ready for the possible storm,” saying that local-level government agencies and state-owned enterprises have been instructed to step in only at the last minute if Evergrande failed to manage its situation. 

     Evergrande

— Soybeans and cotton major U.S. export sales activity to China. USDA’s weekly update of U.S. export sales for the week ended Sept. 19 showed active sales of U.S. soybeans and upland cotton to China. Net sales for 2021-22 of 624,150 tonnes of soybeans, 219,775 running bales of upland cotton, 123,000 tonnes of sorghum were reported, along with 2,822 tonnes of wheat and 4,238 tonnes of corn. For 2021, net sales of 3,031 tonnes of beef and 620 tonnes of pork were reported.


TRADE POLICY


— Taiwan applies to join trade pact. Taiwan formally submitted its application to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) on Wednesday, less than a week after China did the same in what could become an awkward admissions process. The trading bloc includes a mixture of mature and growing economies with Canada, Australia, Brunei, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam making up the agreement’s 11-nation membership. The United Kingdom could be the next country to join the CPTPP after it began negotiations in June. British Foreign Secretary Liz Truss visits Mexico today to lobby for U.K. accession to the trade agreement.

     Beijing says it opposes the island joining international bodies as Taipei seeks to join Comprehensive and Progressive Agreement for Trans-Pacific Partnership. “China has long tried all it could to squeeze Taiwan’s international space,” says island’s top trade negotiator John Deng.

— USDA Secretary Tom Vilsack discussed the appointment of a USDA Undersecretary for Trade and Foreign Agricultural Affairs. In comments during an event earlier this week, Vilsack said he looked forward to working with NASDA’s new CEO, former USDA Undersecretary Ted McKinney and commented on the process to appoint his successor at the department. Vilsack dubbed McKinney “the Energizer Bunny of exports,” saying he “did a great job in that position as undersecretary in the Trump administration — a constant advocate for exports and trade, and certainly served American agriculture well in that capacity.”

     As for who the Biden administration might tap to fill the undersecretary position — the top trade-related post at USDA — "I can tell you that we have a couple of folks who we are looking at, who are highly qualified for that position and we're anxious to get through the process,” Vilsack remarked. He suggested the “high ethical standard” imposed by the Biden administration on nominees “sometimes discourages folks from considering the position and the things that they would have to do to be able to qualify,” but he expressed confidence that the administration would settle on “a very good nominee.”


ENERGY & CLIMATE CHANGE


— Reports cite ‘document’ listing apparent proposed RFS levels. Markets were buffeted Wednesday by news service reports (Reuters, OPIS and Bloomberg) that cited proposed levels under the Renewable Fuel Standard (RFS) that EPA has proposed or will propose for 2020, 2021 and 2022.

     EPA is expected to retroactively reduce the 2020 biofuel levels that were approved in December 2019 to reflect the impacts of the pandemic. The reports indicated the agency is proposing 505 million gallons of cellulosic biofuel, 3.791 billion gallons of biomass-based biodiesel, total advanced biofuels of 4.630 billion gallons, conventional biofuels at 12.5 billion gallons, for total renewable fuels of 17.129 billion gallons. Those compare with approved levels of 590 million gallons of cellulosic biofuel, 5.090 billion gallons of total advanced biofuel and 20.090 billion totals of total renewable fuel.

     For 2021, the reports put the proposed levels at 621 million gallons for cellulosic biofuel, 4.265 billion gallons for biomass-based biodiesel, 5.175 billion gallons for advanced biofuels, 13.453 billion gallons for conventional ethanol for total renewable fuels at 18.628 billion gallons.

     For 2022, the reports indicated cellulosic biofuels would be at 765 million gallons, biomass-based biodiesel at 5.615 billion gallons, total advanced biofuel at 6.669 billion gallons, conventional ethanol at 14.096 billion gallons and total biofuels at 20.765 billion gallons.

     It is not clear what the source of the table circulating was, but the Renewable Fuels Association (RFA) sent an email advising reporters that any table that was cited as being sent by RFS to member companies was not accurate and the group sent no such information to member companies.

     Sen. Chuck Grassley (R-Iowa) acknowledged to AgriTalk that once the proposed levels are out there, it is “very, very hard” to get them changed. But he expressed a hope that Democrats like Sens. Dick Durbin (D-Ill.) and Amy Klobuchar (D-Minn.) would weigh in with the White House. “Obviously, a Republican senator has less weight than they do with the White House,” he noted.

     Also on the AgriTalk program, USDA Secretary Tom Vilsack reminded that the pandemic did have an impact on US fuel demand and in turn biofuels. “I'm going to look for ways in which we at USDA can provide help and assistance,” he said. “That’s why we are prepared to provide $700 million of assistance now and additional resources above and beyond that, for infrastructure to expand the capacity to get higher blends out there to consumers. We're gonna continue to do what we can do at USDA to support this industry.” But he also stressed that whatever EPA comes with the important message is “stability,” and that the Biden administration was not going with a liberal use of the small refinery exemptions (SREs) as were granted during the Trump administration.

     The RFS situation will continue to see lots of reports and speculation in the days ahead. If the proposed levels announced on Friday afternoon echo the speculation, the attention will be not just be on the top line numbers but on the entire document produced by EPA, which will be expansive in terms of the issues and areas covered, which will provide more perspective than just the numbers that have been reported thus far. Despite comments by Sen. Grassley, there can often be changes in what is finalized in December versus what was proposed by EPA.

     Comments: Vilsack’s comments were clearly a spin to make a bad situation for biofuel proponents better — throw money at them, a reaction that is increasingly becoming a Democratic Party approach. As for the reports, if true, they show that the system EPA uses on this topic should be changed. Rumors about some of the information surfaced Tuesday and impacted RIN values, analysts said. When various media reports added more details on Wednesday during ag market hours, soybean oil took a hit, as well as a slight hit for corn futures. The impacts did not last by the end of trading. And if the EPA levels are as speculated, the biofuel lobbyists would be seen as losing another issue. One biofuel analyst: "I knew refiner relief was coming but this is Rolaids, Alleve and Miralax in a single dose." Bottom line: No one should be shocked at the levels if confirmed. Fuel demand down = less biofuel. Follow the math. And the timing of EPA’s announcement is always in doubt. Some reports signal the announcement may not come Friday. This is so typical of RFS-related developments.

     RFS

      RFS EISA

— Granholm sees new opportunities for nuclear power. Energy Secretary Jennifer Granholm said she believes new opportunities for nuclear energy could come through “unusual partnerships” that expand the use of the nuclear power beyond supplying electricity to the power grid. “We need to pursue a silver buckshot rather than a silver bullet approach,” Granholm said of nuclear and other clean energy technologies in an interview with Bloomberg. “All of these technologies have to come into play at various levels. Everybody is seeking clean dispatchable power and nuclear provides that, even though it is more expensive.”

     Granholm suggested nuclear could play a supportive role to other clean energy sources like hydrogen. “Nuclear is certainly a very reliable source for the power necessary to create hydrogen,” Granholm said. “There's not a single energy minister I've spoken to who hasn't talked about hydrogen as a source of clean, dispatchable baseload power.”

     Besides using nuclear energy to produce clean hydrogen fuel, Granholm also touted next generation small modular reactors (SMRs)—which developers claim are simpler and cheaper to build than the large reactors in use today. She added that more cross-border collaboration on SMRs could lead to further advances in the technology.

— The SEC has asked dozens of companies to tell investors more about how climate change might affect earnings or operations.

— White House moves to limit a major driver of climate change. EPA is expected to announce today a rule that would reduce the use of hydrofluorocarbons, or HFCs, which are widely used in air-conditioners and refrigerators. Experts said that the change would be a major step in cutting the country’s greenhouse gas emissions.


LIVESTOCK, FOOD & BEVERAGE INDUSTRY


— Vilsack comments about ASF in Haiti, Dominican Republic. The discovery of African swine fever (ASF) in Haiti — following its earlier detection in the neighboring Dominican Republican — was a topic addressed by Vilsack at an event earlier this week. Vilsack was asked to comment on the trade implications for pork. “There's no state in the country that has more at stake,” Vilsack said of Iowa, where he previously served as governor, adding he was “very sensitive” to the issue. In terms of trade, he said USDA “will continue to underscore the importance of our international trading partners understanding and appreciating the regional nature of particular diseases and particular challenges.”

     Vilsack predicted that efforts to ink regionalization strategies — which allow the continued flow of exports from areas of the country free of ASF — including protection zones for imports — will help minimize any impacts of an ASF discovery in the U.S. and hopefully prevent its spread there in the first place. The message to trade partners, he explained, is: “We're doing everything we possibly can to ensure that it doesn't get into the U.S. and therefore you can be comfortable continuing to import products from the U.S.”

     Near-term keys to USDA’s strategy on ASF, Vilsack said, are “investing additional resources through APHIS to harden our system here in the U.S. from African swine fever, to do an even better job of surveillance, of making sure that we have folks at the border to understand and appreciate what they need to be looking for.” In the event the disease does reach the U.S., USDA aims to identify and respond quickly so “we're able to quarantine quickly, we're able to eradicate quickly, and we’re able to contain the damage.”

     USDA will be proposing additional investment in ASF prevention and response, Vilsack told the gathering. In the meantime, he said the department is working closely with the Dominican Republic and Haiti which lack many of the resources needed to respond to the ASF outbreaks. “We're going to have to basically provide the technical assistance and the resources to enable the Dominican Republic and Haiti to respond quickly and to do a thorough and complete job of eradication,” he remarked, adding, “we don't know how extensive the situation is in Haiti, but our theory and our belief is it's more widespread than perhaps we know today.”

     On a positive note, Vilsack said investments in research and development on an ASF vaccine might soon yield results. “We've had some pretty good news recently in terms of the possibility of a vaccine that might work, at least against the Asian variety of African swine fever,” he noted.

— Food supplier General Mills is reviving some of the emergency strategies it undertook at the start of the pandemic. The maker of Cheerios cereal and Betty Crocker cake mix has resumed “control tower meetings” and stepped up communications with suppliers, the Wall Street Journal reports (link), as the company grapples with growing labor, transport and supply-chain costs that are squeezing deliveries and profit margins. The company is facing hundreds of disruptions across its operations, ranging from pricier raw ingredients to a shortage of truck drivers, which executives said will push up prices for customers. Executives say supply chain challenges are hampering the company’s ability to fill orders, with service levels in the 80th percentile, far behind its goal of the high-90th percentile. Other food companies are also raising alarms, adding to strains in the sector as supermarkets seek to buy goods earlier ahead of the holidays. “It’s almost whack-a-mole right now. It really changes on a daily and weekly basis,” said Jon Nudi, head of General Mills’ North America retail business, on supply-chain challenges.

     Food mfg


CORONAVIRUS UPDATE


Summary: Global cases of Covid-19 are at 230,147,174 with 4,720,430 deaths, according to data compiled by the Center for Systems Science and Engineering at Johns Hopkins University. The U.S. case count is at 42,545,220 with 681,199 deaths. The Johns Hopkins University Coronavirus Resource Center said that there have been 387,493,716 doses administered, 182,387,840 have been fully vaccinated, or 55.6% of the U.S. population.

— Older Americans will get booster shots. The FDA cleared boosters for anyone over 65, and for other high-risk adults. More regulatory hurdles lie ahead before the dispensing of boosters can begin. Advisors to the Centers for Disease Control and Prevention opened a two-day meeting Wednesday to make their own, more specific recommendations about who should get the extra shots and when. U.S. regulators will decide at a later date on boosters for people who have received the Moderna or Johnson & Johnson vaccines. If Pfizer boosters are authorized this week, U.S. regulators indicated the shots would not be recommended for people who got a different brand of vaccine initially.

— U.S. is dispensing about 760,000 vaccinations per day on average, down from a high of 3.4 million a day in mid-April. About 180 million Americans are fully vaccinated, or 64% of those who are eligible.

— Six United Airlines employees have sued the airline over its vaccine mandate, alleging it hasn’t made reasonable accommodations for those seeking exemptions.


POLITICS & ELECTIONS


— Majority of Americans disapprove of President Biden for the first time in his presidency. According to a Gallup poll released Wednesday, Biden’s approval rating is 43% — the lowest to date -— while 53% of Americans disapprove of his job as president. The poll was conducted from Sept. 1 to Sept. 17, after the botched Afghanistan withdrawal and as the Delta variant was continuing to surge. Biden’s approval has slid six percentage points since August, when he had a 49% approval rating and a 48% disapproval rating. Link for details.

     A Quinnipiac University poll released last week found 42% of participants approved of Biden's overall performance, with his approval on foreign policy dropping significantly.

     And a poll released Tuesday showed Biden’s approval in Iowa, a traditional swing state, had dropped 12 points since June. Selzer/Des Moines Register poll of Iowa voters found Biden’s approval rating down to 31%, with 62% of respondents disapproving. Sen. Chuck Grassley (R-Iowa) is up for re-election next year, and Iowa is home to a pair of closely contested House districts.

     “The honeymoon is definitely over for Biden,” Dan Eberhart, a GOP fundraiser, told The Hill. “He’s betting voters will forget the problems by the time the midterms come around. He’s going to find a lot of takers of that bet on the Republican side. Biden’s problem is that he can’t keep his coalition together no matter what he does. The more he tries, the more he hands issues to Republicans.”

     The White House has generally dismissed the numbers. “I think the country is going through a lot right now, and people are still under the threat of Covid. That is concerning to a lot of people. We see that in polls, as well,” White House press secretary Jen Psaki said when asked to assess the Gallup poll’s findings. “Even as they approve of the president’s handling of Covid, that’s still something impacting people’s lives,” she continued. “There’s a great deal of anxiety about that. We understand that. But our objective is to keep pushing his agenda forward and keep making their lives better and look at that over the long term.”

     It could be worse, just as former President Donald Trump. Biden’s approval rating is 7 percentage points higher than former President Trump’s was at the same time in his first term, according to a FiveThirtyEight average, indicating he remains more popular than his predecessor, particularly with independents.


CONGRESS  


— Iron Dome funding up for a vote today. House Appropriations Chair Rosa DeLauro (D-Conn.) released a standalone Iron Dome funding bill (PDF Link). This will get a vote today and is likely to pass overwhelmingly. Recall that Democrats removed $1 billion for the Iron Dome missile-defense system from the stopgap because of pressure from the left.

— Liz Cheney will be featured on 60 Minutes Sunday night. Lesley Stahl was with her in the Capitol Wednesday. Stahl also traveled to Wyoming with Cheney in August.

— Bipartisan talks to overhaul police tactics and accountability collapsed. The negotiations, which began early this year, were led by Sens. Cory Booker (D-N.J.), Tim Scott (R-S.C.) and Rep. Karen Bass (D-Calif.). A previous effort to pass policing rules failed before the 2020 election. Lawmakers were unable to resolve differences over how police officers should be prosecuted and held liable for misconduct. Even the areas they broadly agreed on — such as limiting the transfer of military equipment to local departments and the use of no-knock warrants — ran into opposition when language was drafted. The Biden administration must now rely on the Justice Department to change American policing under existing statutes, mainly through civil-rights investigations.


OTHER ITEMS OF NOTE     


— Biden advisors meet with CBC members. Cedric Richmond and Susan Rice, top advisers to President Joe Biden, met Wednesday morning with a group of Congressional Black Caucus (CBC) members critical of the Biden administration’s treatment of Haitian migrants at the U.S./Mexico border. Democratic Reps. Sheila Jackson Lee (Texas), Hakeem Jeffries (N.Y.) Gregory Meeks (N.Y.), Troy Carter (La.), Bennie Thompson (Miss.), Joyce Beatty (Ohio) and Yvette Clarke (N.Y.) attended the morning's session at the White House. House Democrats demand answers by Friday about the Border Patrol’s treatment of Haitian migrants. Even as the Biden administration deports some Haitian migrants, it is letting in others.

— President Joe Biden spoke over the phone with his French counterpart Emmanuel Macron on Wednesday as the two sought to mend ties after a new defense pact between Australia, the United Kingdom, and United States (AUKUS) froze France out of a lucrative submarine deal. According to a joint statement, the two leaders “agreed that the situation would have benefited from open consultations” and said that they would improve communications. The White House also committed to “reinforcing its support to counter-terrorism operations in the Sahel,” where France has in recent months begun reducing its troop levels. As part of efforts to improve U.S. ties, Macron said he would return his Washington Ambassador Philippe Étienne after he was withdrawn last week. Biden and Macron also agreed to meet again later in the year when Biden travels to Europe for the G20 and COP26 summits.

— Violence in Ukraine. Ukrainian President Volodymyr Zelensky has vowed a “strong” government response after his top aide Serhiy Shefir came under automatic gunfire in an apparent assassination attempt on Wednesday morning. Assailants sprayed Shefir’s car with bullets in the village of Lisnyky, injuring Shefir’s driver who is recovering in hospital. Police have not announced any suspects or motive for the assault. Zelensky, who delivered an address to the U.N. General Assembly on Wednesday said he would return to Ukraine immediately. “Sending me a message by shooting at my friend’s car is weakness,” the president said.


EVENTS AND REPORTS


Thursday, September 23

· Agriculture carbon markets. House Agriculture Committee hearing on "Voluntary Carbon Markets in Agriculture and Forestry."
· UN Food Systems summit. UN Food Systems Summit in New York setting the stage for global food systems transformation to achieve the Sustainable Development Goals by 2030.
· Immigration reform. PunchBowl News discussion on immigration reform.
· South China Sea. Center for Strategic and International Studies virtual 11th Annual South China Sea Conference: Session Three.
· Covi scams. Senate Special Aging Committee hearing on "Frauds, Scams and Covid-19: How Con Artists Have Targeted Older Americans During the Pandemic."
· Fed emergency lending program. House Financial Services National Security, International Development, and Monetary Policy Subcommittee hearing on "Lending in a Crisis: Reviewing the Federal Reserve's Emergency Lending Powers During the Pandemic and Examining Proposals to Address Future Economic Crises."
· Sustainable energy. Business Council for Sustainable Energy sponsors virtual 2021 National Clean Energy Week Policy Makers Symposium, including remarks from Sue Biniaz, deputy to Special Presidential Envoy for Climate John Kerry and Sen. Dan Sullivan (R-Alaska).
· Antitrust reforms. House Judiciary Antitrust, Commercial and Administrative Law Subcommittee hearing on "Reviving Competition, Part 4: 21st Century Antitrust Reforms and the American Worker."
· Climate issues. Washington Post Live virtual discussion on "Protecting Our Planet" with Alok Sharma, president of the United Nations Climate Change Conference (COP26).
· Food insecurity. Tom Lantos Human Rights Commission virtual hearing on "Root Causes of Migration: Food Insecurity and the Right to Food in Central America."
· Future of climate issues. Henry L. Stimson Center virtual discussion on "From UNGA (UN General Assembly) to COP26 (26th UN Climate Change Conference of the Parties) & Beyond: The Future of Climate Governance."
· Cybersecurity and infrastructure. Senate Homeland Security and Governmental Affairs Committee hearing on "National Cybersecurity Strategy: Protection of Federal and Critical Infrastructure Systems."
· 5G. Washington Post Live \ virtual discussion on "5G: Industry 4.0."
· The next pandemic. Washington Post Live virtual discussion with former FDA Commissioner Scott Gottlieb, author of "Uncontrolled Spread: Why Covi-19 Crushed Us and How We Can Defeat the Next Pandemic."

· Economic reports. Jobless Claims | Chicago Fed National Activity Index | PMI Composite Flash | Leading Indicators | KC Fed Manufacturing        

· Energy report. EIA Natural Gas Report

· USDA reports. FAS. Export Sales  NASS: Livestock Slaughter | Cotton Ginnings    


 

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