Democrats Pushing Citizenship for Some Illegals in Infrastructure Measure
Biden and Vilsack to visit Wisconsin next week… still more aid for dairy?
In Today’s Digital Newspaper
Market Focus:
• Fair chair continues dovish comments during Tuesday hearing
• Biden, Vilsack to Wisconsin on June 29
• U.S. home prices in May nearly 24% higher than a year earlier
• Ag demand update
• Choppy to higher trade overnight
• Welcome rains for Iowa, but western areas again missed out
• ANEC lowers Brazil’s soybean export forecast for June
• Farm sales of Argentine soybeans tracking in line with year-ago
• Parana River levels remain problematic
• Some higher cash cattle trade begins
• Cold storage data raises demand concerns
Policy Focus:
• Democrats eye path for citizenship|
• Psaki: “Progress was made” in talks on bipartisan infrastructure compromise
• U.S. airports are set to receive $8 billion in gov’t grants
China Update:
• Apple Daily to shut down newspaper by Saturday
• Justin Trudeau had harsh words for China
• Yantian port signals full operations to return Thursday
• China’s ambassador to the U.S. departing
• China focus on commodity prices continues
Trade Policy:
• Argentina to partially restore beef exports for remainder of 2021
Energy & Climate Change:
• Amazon to buy capacity from 14 new solar and wind plants around the world
• Senate session on renewable energy yields little fresh developments
Coronavirus Update:
• Several nations across Asia and Africa have run out of Covid-19 vaccines
• White House acknowledges vaccination goal will not be met
Congress:
• Senate Republicans blocked Democrats from moving ahead with election legislation
MARKET FOCUS
Equities today: Global stock markets were flat to narrowly mixed overnight. The U.S. stock indexes are pointed toward higher openings.
U.S. equities yesterday: The Dow closed up 68.61 points 0.20%, at 33,945.58. The Nasdaq gained 111.79 points, 0.79%, at a record 14,253.27. The S&P 500 rose 21.65 points, 0.51%, at 4,246.44.
Biden, Vilsack going to Wisconsin next week. President Joe Biden and USDA Secretary Tom Vilsack will be in Wisconsin Tuesday June 29 to discuss agriculture and rural economies, according to the White House. Dairy is likely to figure high on the list of issues that will be focused on with the administration having announced additional aid will be coming to the sector over the next 60 days. But there has been little detail on the aid plans as of yet. However, we would expect this visit to Wisconsin could be a format for some additional details to emerge on that and other taxpayer aid to the ag sector.
Federal Reserve Chair Jerome Powell said high prices should wane. The price increases seen in the economy recently are bigger than expected but reiterated that they will likely wane, Powell told lawmakers on Tuesday. The Fed chair said “a pretty substantial part, or perhaps all of the overshoot in inflation comes from categories that are directly affected by the re-opening of the economy such as used cars and trucks.” Fed officials responded last week to increasing inflation risks by pulling forward their expected timing and pace of interest-rate increases, while also kicking off a discussion of when to taper asset purchases.
As for the U.S. jobs market, Powell noted that things should continue to improve and “strong” job creation is expected as the year goes on. He noted hiring is strong but people quitting existing jobs is tempering the situation. “Very quick job gains of the early recovery essentially involve going back to your old job. That's not so much what's happening now," he said. "Now, it's actually finding new jobs and that's a matching function that is more labor intensive and time consuming. There may be a bit of a speed limit on that.”
Comments: Powell told lawmakers the Fed will not pre-emptively raise interest rates on expectations that inflation will get out of hand and reiterated that data coming in is matching with Fed expectations the situation on inflation is transitory. "We will not raise interest rates pre-emptively because we fear the possible onset of inflation. We will wait for evidence of actual inflation or other imbalances," Powell told members of the House Oversight and Reform Coronavirus Crisis Subcommittee. He noted the readings on inflation “don’t speak to a broadly tight economy” that would require a response from the Fed to increase rates. “The incoming data are very much consistent with the view that these are factors that will wane over time,” Powell noted. His comments do not mark a major departure from the stance he outlined following last week’s Federal Open Market Committee (FOMC) meeting, but signal Powell and the Fed are aware that markets are increasingly on edge over what was perceived as a more-hawkish view from the U.S. central bank. U.S. markets were little moved during this afternoon testimony Tuesday, but Asian markets got a higher start as traders there dissected Powell’s assertions on inflation and the U.S. economy.
U.S. home prices in May were nearly 24% higher than a year earlier — the biggest annual increase in more than two decades. The median existing-home sales price in May topped $350,000 for the first time. The price increase and a shortage of homes on the market are contributing to a slowdown in the pace of home sales. Meanwhile, nonbank lenders issued more than two-thirds of mortgages in 2020, their highest market share on record.
Market perspectives:
• Outside markets: The U.S. dollar index is weaker ahead of U.S. trading as the euro, yen and British pound are all firmer against the U.S. currency. The yield on the 10-year U.S. Treasury note has edged lower to trade around 1.46%, with global gov’t bond yields mixed. Gold and silver futures are higher, with gold trading above $1,782 per troy ounce and silver just under $26 per troy ounce.
• Crude futures have advanced ahead of U.S. gov’t inventory data due out later this morning. U.S. crude is trading around $73.35 per barrel and Brent around $74.65 per barrel. Crude gained in Asian action, with U.S. crude up 36 cents at $73.21 per barrel with Brent crude up 42 cents at $74.50 per barrel.
• Ag demand: Jordan’s state grain buyer canceled a tender Tuesday to buy 120,000 MT of milling wheat for December shipment and issued a new tender to buy 120,000 MT of wheat with a bidding deadline of July 6. Egypt purchased 63,000 MT of soyoil and 10,500 MT of sunflower oil in an international tender. The Taiwan Flour Millers association issued an international tender to buy 55,000 MT of grade 1 milling wheat from the United States.
• Weather from NWS: There is a slight risk of severe thunderstorms over parts of the Central Plains through Thursday morning... ...There is a slight risk of excessive rainfall over parts of the Central Plains and the Middle Mississippi Valley Thursday through Friday morning... ...Fire weather conditions forecast across the Great Basin.
Items in Pro Farmer's First Thing Today include:
• Choppy to higher trade overnight
• Welcome rains for Iowa, but western areas again missed out
• ANEC lowers Brazil’s soybean export forecast for June
• Farm sales of Argentine soybeans tracking in line with year-ago
• Parana River levels remain problematic
• Some higher cash cattle trade begins
• Cold storage data raises demand concerns
POLICY FOCUS
— Democrats eye path for citizenship. Senate Democrats plan to include a pathway to citizenship for certain immigrants in the country illegally as part of the sweeping infrastructure bill they hope to enact on a partisan basis this year. Senate Budget Committee Chairman Bernie Sanders (I-Vt.), whose committee would start the process of crafting a bill, confirmed Tuesday that it would include a pathway to citizenship but said Democrats are still determining who would be covered. “We’re working on that right now,” Sanders said. An early draft would call for $150 billion to go toward immigration policies, including the path to citizenship and some border security, according to a document circulating on Capitol Hill.
— Psaki: “Progress was made” in talks on bipartisan infrastructure compromise but “more work remains to be done.” White House Legislative Director Louisa Terrell and Steve Ricchetti, counselor to President Biden, had a productive meeting on Tuesday with a bipartisan group of senators about the lawmakers’ $1 trillion infrastructure plan, according to White House Press Secretary Jen Psaki. She also said Biden is “encouraged by the ongoing talks and discussions that are continuing with Democrats and Republicans.” Sen. Rob Portman (R-Ohio),“who is one of the lead negotiators, said there likely would be additional talks today, a day before the Senate leaves Washington until mid-July. Meanwhile, House Speaker Pelosi (D-Calif.) and Senate Majority Leader Schumer (D-N.Y.) will confer today with White House officials on the next steps.
— U.S. airports are set to receive $8 billion in gov’t grants to help them emerge from the Covid-19 pandemic. Airports can use the funds, included in the stimulus package approved in March, to cover operating costs, to pay debt service, or for new expenses related to preventing the spread of disease, such as installing air filters or stepping up cleaning practices. Airports must also commit to keeping 90% of employees as a condition of accepting the funds.
CHINA UPDATE
— Apple Daily, a pro-democracy newspaper in Hong Kong, said that it would shut down by Saturday after the police froze its accounts and arrested staff. The closure will silence one of the biggest and most aggressive media outlets in the city, highlighting the vast reach of the security law imposed on Hong Kong by Beijing last year.
— Justin Trudeau had harsh words for China after Beijing called for a United Nations probe into crimes against Indigenous children in Canada. The prime minister, asked about the move Tuesday, slammed the “systemic abuse and human rights violations” against Uyghur Muslims, as well as the situations in Hong Kong and Tibet. Chinese diplomats raised Canada’s treatment of its First Nations in an apparent response to Ottawa joining an international effort to force Beijing to allow UN officials access to Xinjiang province.
“The journey of reconciliation is a long one, but it is a journey that we are on. China is not recognizing that there is even a problem. That’s a pretty fundamental difference,” Trudeau told reporters in Ottawa. “That is why Canadians, and people from around the world, are speaking up for people like the Uighurs who find themselves voiceless, faced with a government that will not recognize what’s happening to them.”
— Yantian port signals full operations to return Thursday. Yantian International Container Terminals announced in a notice to port customers that it will resume normal operations Thursday (June 24) after a month of disruptions due to a Covid outbreak at the key container port in Shenzhen, China. “Currently, Covid-19 has been effectively under control in the port area, and the operation capacity of the terminals have steadily recovered,” Yantian said in announcing a return to normal operations. All berths will “essentially resume normal operations,” it said, while the number of laden gate-in tractors will be increased to 9,000 per day, and the pickup of empty containers and import laden containers remain normal.” The announcement also said that acceptance of laden containers will “resume normal with ETA – 7 (within seven days of the vessel’s ETA).” Major shippers have been bypassing the port after the Covid situation affected operations. While the port has announced a return to normal operations, expectations are that it will take an extended period to address the shipping backlogs that have emerged, with some expecting it could take until year-end before things are cleared up.
— China’s ambassador to the U.S. departing. Cui Tiankai has served as the Chinese ambassador to the U.S. since April 2013 and this week announced he is returning to China. "I will leave for China soon. This was the longest term in my diplomatic career abroad, which allowed me to experience many historic events, meet many friends, and left me with memories for life," he said in a letter released noting his departure. Cui labeled the Sino/U.S. relationship as being at a “critical crossroads,” saying that the choice facing the U.S. in that relationship is one of dialogue and cooperation, or confrontation and conflict, according to a China Daily story. He expressed a hope that China will “continue to be a firm promoter and active contributor to the healthy and stable development of Sino/U.S. relations.” Cui has been a steady voice for China in the U.S. during his time in Washington and there has been no word on who might replace him.
— China focus on commodity prices continues. Teams from the pricing department of China’s National Development and Reform Commission (NRDC) have been dispatched to various Chinese provinces and cities to investigate bulk commodity prices and supplies, according to a Reuters report recapping a statement from the agency. "The working groups will learn more about ... bulk commodity spot market transactions and carefully listen to feedback from midstream and downstream companies" on supply levels and price fluctuations, the statement said, and those teams will also “listen to suggestions on how to combat speculation — after speculative buying on commodity exchanges partly fueled the price rally — and ensure supply, Reuters said. This is the latest in a series of actions the Chinese government has announced recently to address commodity prices, having announced earlier this week it would sell state-owned reserves of coper, zinc and aluminum and it also has announced new rules covering commodity price indices.
TRADE POLICY
— Argentina to partially restore beef exports for remainder of 2021. Argentina has announced it will resume exports of beef but at limited levels through the end of the year as the country grapples with inflation, Ag Minister of Productive Development Matias Kulfas told a news conference. "Exports are being re-established, but only up to 50% of last year's average exports," he said. "Our plan has short-term objectives of organizing the sector to provide a supply of meat in the domestic market at affordable prices.” A statement issued by the ministry indicated the country seeks to boost meat production to 5 million tonnes per year, up from a current level of 3.2 million tonnes. “This way, 3 million tonnes could be destined for the domestic market, which could bring local consumption to more than 70 kilos per year per inhabitant, and 2 million tonnes for export, which would double last year's exports," the ministry said, noting the plan would start being implemented within 30 days. Argentina halted beef exports in May and has been facing pressure from the ag industry to reopen export channels.
ENERGY & CLIMATE CHANGE
— Amazon is set to buy 1.5 gigawatts of production capacity from 14 new solar and wind plants around the world. The new commitments, expected to be announced today, are part of the company’s push to purchase enough renewable energy to cover all of its activities by 2025. Amazon and other tech companies are financing renewable-energy projects on an unprecedented scale, helping make corporations more important than government subsidies as the main drivers of renewable-energy investment in some countries. Link for details via WSJ.
— Senate session on renewable energy yields little fresh developments. A Senate Agriculture subcommittee Tuesday examined issues on renewable energy and the U.S. rural economy, with the panel hearing a consistent message from supporters of biofuels — using biofuels can contribute to the Biden administration’s goal of net-zero emissions by 2050. Emily Skor of Growth Energy stressed that accurate modeling on ethanol’s lifecycle greenhouse gas (GHG) emissions was a key need so that the fuel gets proper credit for its benefits over straight gasoline. “Important for us is that you have a modeling that reflects the most current science and reflects all of the innovation that's taking place, not only at the plant, but also on the field,” she stated. She also said that a low carbon fuel standard (LCFS) is something the ethanol industry supports, but said it has to be technology neutral and be science-based.
As for refiner contentions that compliance costs relative to their Renewable Fuel Standard (RFS) obligations have risen so high that their survivability is in question, Skor said, “There is no correlation to the price of complying with the RFS and refinery profits. This is something that has been affirmed by many experts, including the EPA several times.”
The hearing also focused on other forms of renewable energy such as solar and wind. The session mostly focused on issues and information relative to ethanol, biofuels and other renewable energy sources that is mostly known so it likely has not altered the situation much from a lawmaker standpoint. But it did focus on the economic importance for biofuels in particular for rural areas.
CORONAVIRUS UPDATE
— Summary: Global cases of Covid-19 are at 179,914,672 with 3,883,429 deaths, according to data compiled by the Center for Systems Science and Engineering at Johns Hopkins University. The U.S. case count is at 33,565,294 with 602,462 deaths. The Johns Hopkins University Coronavirus Resource Center said that there have been 319,223,844 doses administered, 150,424,675 have been fully vaccinated, or 45.8% of the U.S. population.
— Several nations across Asia and Africa have run out of Covid-19 vaccines or are on the brink of doing so, months after receiving first shipments from a global program meant to equitably distribute the lifesaving shots. A WHO adviser said that of 80 lower-income countries across the globe that have received vaccines through the program, about 40 are either out of vaccines or on the verge of running out.
— White House acknowledges vaccination goal will not be met. White House officials Tuesday said that the administration’s goal that 70% of the population 18 and over would receive at least one vaccination for Covid will not be met. The main factor, officials said, is that younger adults have been resistant to getting the vaccine. “The reality is, many younger Americans have felt like Covid-19 is not something that impacts them and have been less eager to get the shot,” said Jeff Zeints who heads up the White House Covid response. The 70% mark is expected to be reached for those 27 and older by July 4, he noted, but it will take a while longer before those 18 to 26 reach that mark. He also stressed the vaccination effort will continue, commenting, “We are not stopping at 70 percent, and we are not stopping on July 4.”
CONGRESS
— Senate Republicans blocked Democrats from moving ahead with election legislation, forcing the party to devise an alternative approach. President Biden said the work to pass an election reform bill is “far from over” and accused Senate Republicans of “attacking” the right to vote by blocking a mammoth bill to overhaul federal elections.” He added, “I’ll have more to say on this next week. But let me be clear. This fight is far from over — far from over. I’ve been engaged in this work my whole career, and we are going to be ramping up our efforts to overcome again — for the people, for our very democracy.”
