Putin Praises ‘Positive’ U.S. Response to Kremlin’s Demands Re: Ukraine

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Bullish corn, soybean traders in control as dry weather in Brazil continues
 


In Today’s Digital Newspaper


Market Focus:
• Jobless claims hold steady
• Consumer spending rose more slowly in November
• Putin denied his country is seeking conflict with Ukraine
• Putin praised “positive” U.S. response to Kremlin’s demands re: Ukraine  
• Summary of economist reports released Wednesday 

• Supply of homes for sale has stayed well below normal all year
• Update on cargo flights
• Summers warns of testing period for U.S. economy in coming years
• ‘Containergeddon’ and California agriculture
• Granholm pushing oil execs to boost production to help lower gas prices
• Europe’s energy crunch to get worse
• World could consume more oil in 2022 than ever before
• Grain analyst and trader Richard Crow sums up market outlook
• U.S. sugar supply boost
• Ag demand update

• Light pre-holiday trade overnight
• Ukraine grain traders: No need to curb wheat exports
• Key livestock markets out this afternoon
• Northern cash cattle market firms a little
• Hogs may pull back in pre-holiday trade 

Policy Focus:
• White House: making progress on effort to unblock supply chains
• Biden extends student loan repayment pause by 90 days
• Build Back Better update 

Afghanistan:
• Biden administration takes steps to let more humanitarian aid into Afghanistan  

China Update:
• Xi Jinping is already longest-serving leader since Mao Zedong
• Chinese city of Xi’an ordered its 13 million residents to stay at home
• Intel, an American chipmaker, apologized to its ‘respected Chinese customers’
• China Evergrande said panel helping contain risks and will engage with creditors
• Beijing Olympics organizers are suddenly facing a big challenge
• FDA addresses export requirements under China’s new facility registration rules 

Trade Policy:
• South Korea suspends Canadian beef imports after BSE case 

Energy & Climate Change:
• NFU disappointed new greenhouse gas emissions standards for cars do not boost ethanol 


Livestock, Food & Beverage Industry Update:
• McDonald's limits French fry sales in Japan because of potato shortage


Coronavirus Update:
• WHO briefing today to discuss progress of Covid-19 vaccines in Africa
• Biden tested for Covid again and is negative; VP Harris also tested
• Supreme Court to hear legal challenges to two Biden admin. Covid-19 vaccine mandates
• Omicron cases less likely to require hospital treatment, studies show
• Costs of gov’t spending to distribute 500 million free, at-home Covid-19 test kits
• First pill to treat Covid authorized
• Covid-aid fraud  

Politics & Elections:
• Biden said ‘fate’ and continued good health would decide if he will run again in 2024
• McConnell urging Thune to seek re-election
• Cruz: GOP presidential nominee ‘runner-up is almost always the next nominee’ 

Congress:
• Clyburn tests positive for Covid 


Other Items of Note:
• Russia now has 122,000 troops within 120 miles of the Ukraine border
• Iran negotiations
• Record number of Americans has signed up for ObamaCare
• EPA hit with another pesticide/endangered species lawsuit
• Branstad forms consultancy
• Pigs still can’t fly — but maybe they will help us fly more safely


MARKET FOCUS


Equities today: Global stock markets were mostly up in overnight trading. U.S. Dow opened up around 100 points higher. Look for quieter trading and lower volumes today, as many traders turn their attention to the Christmas holiday. Markets are closed on Friday. Asian equities advanced following positive U.S. economic data and reports that suggested the Omicron variant may result in fewer hospitalizations. The Nikkei gained 236.16 points, 0.83%, at 28,798.37. The Hang Seng Index rose 91.31 points, 0.40%, at 23,193.64. European equity markets are also seeing gains in early action. The Stoxx 600 was up 0.6% while regional markets were seeing gains of 0.2% to 1.2%.

     U.S. equities yesterday: The Dow gained 261.19 points, 0.7%, to 35,753.89. The S&P 500 rose 47.33 points, 1%, to 4,696.56, off 0.3% from its record close earlier this month. The Nasdaq advanced 180.81 points, 1.2%, to 15,521.89.

     Stocks

On tap today:

     • U.S. jobless claims are expected to hold at 206,000 in the week ended Dec. 18, unchanged from one week earlier. (8:30 a.m. ET) UPDATE: Worker filings for unemployment benefits held steady around the lowest level in more than half a century last week. Initial jobless claims, a proxy for layoffs, were unchanged at 205,000 in the week ended Dec. 18, the Labor Department said. The prior week’s level was revised down by 1,000. The four-week moving average, which smooths out weekly volatility, rose to 206,250.
     • U.S. consumer spending for November is expected to increase 0.6% from the prior month. (8:30 a.m. ET) UPDATE: Consumer spending rose more slowly in November, raising risks of a broader economic slowdown amid the latest wave of Covid-19 cases. U.S. consumer spending rose 0.6% last month, after climbing 1.4% in October, the Commerce Department reported.
     • U.S. personal consumption expenditures price index excluding food and energy for November (8:30 a.m. ET) UPDATE: Purchases of goods and services, after adjusting for higher prices, were little changed following a 0.7% gain in October, Commerce Department figures showed. Unadjusted for inflation, so-called nominal spending rose 0.6%, matching the median estimate of economists. The Federal Reserve uses the price for its 2% inflation target. It increased 0.6% from a month earlier and 5.7% from November 2020, the highest reading since 1982. Those figures followed an annual increase in the Labor Department’s consumer price index that was also the fastest since 1982.
     • U.S. durable goods orders for November are expected to increase 1.5% from the prior month. (8:30 a.m. ET) UPDATE: Orders placed with U.S. factories for durable goods rose in November by the most in six months, exceeding forecasts and pointing to steady demand that will help drive production growth in early 2022. Bookings for all durable goods — or items meant to last at least three years — increased 2.5% from the prior month, partly reflecting a sharp rise in commercial aircraft orders. The value of core capital goods orders, a proxy for business investment in equipment that excludes aircraft and military hardware, fell 0.1% after an upwardly revised 0.9% increase in October, Commerce Department figures showed.
     • USDA Weekly Export Sales report, 8:30 a.m. ET
     • University of Michigan's consumer sentiment index for December is expected to hold at 70.4, unchanged from a preliminary reading. (10 a.m. ET)
     • U.S. new-home sales are expected to increase to an annual pace of 766,000 in November from 745,000 one month earlier. (10 a.m. ET)

     • Russian leader Vladimir Putin held his annual press conference. He usually answers questions from ordinary citizens, but the focus is on clues about whether he plans to invade Ukraine (see related item below). Putin denied his country is seeking conflict with Ukraine and made no mention of the threat of military action as he did earlier this week but said the Kremlin will do what it needs to ensure Russia’s security. Talks between the United States and Russia are set to begin early in the new year, Foreign Minister Sergei Lavrov said on Wednesday. Putin praised what he described as a “positive” U.S. response to the Kremlin’s demands for legally binding security guarantees to defuse the stand-off over Ukraine. He also lauded Russia’s central bank, saying rate hikes helped avert a Turkey-style crisis. The usual guest list of 1,000 reporters was cut to 500. Unfriendly publications — like 2021 Nobel Peace Prize-winning Dmitry Muratov’s Novaya Gazeta — were not invited.

Summary of economist reports released Wednesday:

  • Sales of existing homes rise less than expected in November. The National Association of Realtors reported that sales of previously owned homes were up 1.9% in November to 6.46 million units. Economists had expected sales would rise further, to 6.510 million units. Year-over-year, sales were down 2.9%. Inventory fell 13% from the previous year to 1.11 million homes. At the current sales pace, the inventory would be exhausted in 2.1 months. The median sales price rose 13.9% from one year ago to come in at $353,900.
  • Consumer confidence rises unexpectedly in December. The Conference Board reported that its index of consumer confidence rose from 111.9 in November to 115.8 in December. Economists had expected the index would fall to 110.7. The Present Situation Index fell from 144.4 to 144.1 in December, but the Expectations Index rose from 90.2 to 96.9. In a statement, Conference Board economist Lynn Franco said, “Expectations about short-term growth prospects improved, setting the stage for continued growth in early 2022. The proportion of consumers planning to purchase homes, automobiles, major appliances, and vacations over the next six months all increased.”
  • U.S. economy grew at quicker pace in third quarter than previously reported. The Commerce Department released the third estimate for gross domestic product growth for the third quarter of 2021, raising it by 0.2% to 2.3%; economists had expected no change. The agency also revised the report for personal consumption expenditures higher, from 1.7% to 2.0%; economists had again expected no change.

Supply of homes for sale dropped to a record low at the beginning of the year and has stayed well below normal all year, according to the National Association of Realtors. Home prices have soared as buyers have competed for a limited number of homes. The median existing-home price rose 13.9% in November from a year earlier to $353,900. That's 117 straight months of annual increases — more than nine years — which is the longest-running streak on record. Part of the reason the median price continues to rise is that more expensive homes are being sold. Sales of homes priced between $750,000 to $1 million were up 37% from last year, and homes over $1 million were up 50%.

     Home prices

Update on cargo flights. Cargo flights provided a solution this year for producers of consumer electronics, machine parts and toys that struggled to move goods along rails and through ports. Then the airports got clogged. Labor shortages at air-cargo hubs like Chicago O’Hare International Airport during the fall have disrupted operations for the ground-handling companies that unload planes, and left goods piling up, the Wall Street Journal reports (link).

     Cargo clog

Former Treasury Secretary Lawrence Summers warned of a testing period for the U.S. economy in coming years, with the risk of recession followed by stagnation. In an interview with the Bloomberg Economics Stephanomics podcast, Summers said that the Federal Reserve had been late to spot the dangers of inflation and that delayed action to cool prices could potentially tip the economy into a slump. “If I thought we could sustainably run the economy in a red-hot way, that would be a wonderful thing, but the consequence -- and this is the excruciating lesson we learned in the 1970s -- of an overheating economy is not merely elevated inflation, but constantly rising inflation,” said Summers, a paid contributor to Bloomberg and a professor at Harvard University. “That’s why my fear is that we are already reaching a point where it will be challenging to reduce inflation without giving rise to recession.”

‘Containergeddon’ and California agriculture. The cargo pileup at West Coast ports had a bigger impact on farm exports from California than the China/U.S. trade war, say three economists, who estimated losses of $2.1 billion in foreign sales during a five-month period because of port congestion, comparing that to economic losses of about $500 million for California agriculture during the first year of the trade war. “Due to exporters’ difficulty obtaining empty shipping containers, the value of California’s containerized agricultural exports fell by an estimated $2.1 billion, about 17 percent, from May to September 2021,” wrote the economists in a University of California magazine (link). “The lost farm exports mirror the fact that California ports are among the least efficient in the world,” they wrote. “As a result, some importers now view California as an unreliable supplier of agricultural products due to inferior port infrastructure.” California is the largest ag exporting state in the nation, with more than 40% of its production going to foreign buyers.

Market perspectives:

     • Outside markets: The U.S. dollar index is little changed with strength noted in the yen and British pound versus the greenback. The yield on the 10-year U.S. Treasury note was higher to trade around 1.48% with a higher tone seen in global government bond yields. Gold and silver futures are up, with gold around $1,807 per troy ounce and silver around $22.87 per troy ounce. 

     • Crude oil futures were modestly higher ahead of U.S. trading, with U.S. crude trading around $72.85 per barrel while Brent was trading around $75.40 per barrel. Crude oil firmed in Asian trade, with U.S. crude up 19 cents at $72.95 per barrel and Brent up 21 cents at $75.49 per barrel. 

     • Energy Secretary Jennifer Granholm has been pushing oil executives to boost production to help lower gas prices, but the climate-conscious Biden administration is running into an industry little inclined to suddenly do it favors, the Wall Street Journal reports (link). Those execs “have made few promises about raising output … and explained that it may be months before higher oil prices lead to resurgent U.S. production.” The administration argues that its long-term energy transition plans don’t mean the industry can’t ramp up right now. But oil companies also face business constraints. 

     • Europe’s energy crunch to get worse. Supplies of natural gas are tight and there is growing doubt about reserve fuel stocks. Blackouts are possible, and factories may be ordered to cut their gas use to ensure households can stay warm, reports note. Low volumes of gas from Russia have helped raise prices in recent months, while tensions over Ukraine make it very unlikely that the giant Nord Stream 2 pipeline from Russia to Germany will open anytime soon and bring relief. Analysts forecast that British consumers, who have been protected by price ceilings, could see their energy bills rise more than 50% when adjustments are announced early next year. European natural gas prices have doubled this month and are roughly 15 times what gas is selling for in the U.S. Electrical power prices are also soaring: In Britain, steady power was trading on Tuesday for about 340 pounds, about $450, per megawatt-hour — about three times the average price of electricity over the year. 

     Soaring energy prices showed up in German import prices, which rose at their fastest pace for almost 50 years in November. The year-on-year jump of 24.7% was largely driven by rising natural-gas prices. Europe’s power crunch is not ending anytime soon: the price of electricity for delivery next year touched record highs in both Germany and France on Wednesday. 

     • World could consume more oil in 2022 than ever before. Global energy demand strongly rebounded this year as pandemic restrictions eased, and it's expected to rise further in 2022. The International Energy Agency predicts that global oil demand will increase by 3.3 million barrels per day next year to 99.5 million barrels per day. That would match the previous demand record in 2019, before the pandemic. 

     • Ag demand: Taiwan purchased 110,000 MT of U.S. milling wheat. Iran bought 300,000 MT of corn, likely to be sourced from Brazil, and 240,000 MT of soymeal, likely to be sourced from Brazil or Argentina. In a separate tender, Iran purchased 240,000 MT of milling wheat from unspecified origins. Algeria is thought to have bought between 200,000 and 250,000 MT of Canadian durum wheat, though some could be Mexican origin. 

     • Grain analyst and trader Richard Crow sums up market outlook: “The general make-up of the weather is unchanged for South America. The focus point is for Parana, Rig Grande, and increasingly for Argentina. South Brazil’s forecast is dry through 10 to 14 days, with a chance of rain on Jan 5. Northern Brazil is wet. U.S. will have a hot Christmas and a dry period. The soybean market is about the potential loss of production in Brazil. The spreads would suggest a loss of 3 to 5 million tons is anticipated. Without rains, the losses will grow as Parana was planted early. The crop is in the reproduction stage today. For Rio, the first half of Jan. requires good moisture. Argentina’s crop production must have better than average moisture. The future markets are becoming a disconnect to cash. U.S. interior bean basis is weakening. The CIF is driven by freight. Today, the CIF market would say there could be deliveries on the Jan futures. That said, deliveries are not anticipated due to fear of the weather. Palm oil production is being revised lower in Malaysia. Renewable bio programs should kick in by the end of the first quarter of 2022. The corn market has the same weather issues in South America as beans. For the U.S., the domestic market keeps pushing for forward coverage with profit margins. World wheat business picked up this week. Iran was the featured buyer. Yesterday, Iraq was rumored to be tendering, but no news is available today.”

     • U.S. sugar supply boost. Responding to high sugar prices, the USDA raised by 4% the allotment of sugar allowed on the domestic market from U.S. sources and Mexican exports. Link for details. 

     • NWS weather: An active pattern will bring significant mountain snow and heavy lower elevation rain to the western U.S. into the weekend... ...Snow showers expected across the Great Lakes and Northeast Thursday before switching to a rain/snow mix on Friday... ...Persistent warm and dry conditions over the central U.S. will generate fire weather concerns over the Central/Southern High Plains on Thursday...

        NWS
        Wx Today

Items in Pro Farmer's First Thing Today include:

     • Light pre-holiday trade overnight
     • Ukraine grain traders: No need to curb wheat exports
     • Key livestock markets out this afternoon
     • Northern cash cattle market firms a little
     • Hogs may pull back in pre-holiday trade


POLICY FOCUS


— White House says administration is making progress on effort to unblock supply chains. The White House on Wednesday released an information sheet (link) to discuss progress made by the administration’s effort to unsnarl supply chains. President Biden on Wednesday convened members of his Cabinet and private sector CEOs for an update. Biden touted progress his administration has made in alleviating supply chain issues that have spurred shortages of consumer products, raised prices for Americans and contributed significantly to historic levels of inflation in the U.S. The president pointed to evidence that bottlenecks are beginning to unclog and said retail inventories are up 3% from last year. “Most of Santa Claus' products will be delivered to the consumers,” said FedEx CEO Fred Smith, at the White House meeting on supply chain issues. Meanwhile, the Transportation Department is expected to announce today an additional $230 million in grants for ports, which have struggled with significant backups due to the global supply-chain crunch. Some other updates:

  • Moving record amounts of goods to keep shelves stocked: “Due to record demand, our nation’s ports are moving more goods than ever before. The Ports of Los Angeles and Long Beach — which handle 40% of the nation’s containerized imports — moved 15% more containers between January and November this year than 2018, the previous record. That’s why the President convened our largest ports and retailers to move towards 24/7 operations to help alleviate bottlenecks in our global supply chain and ensure the smooth delivery of goods for businesses large and small. Retailers are confirming shelves are stocked and they are prepared for a robust holiday season.”
  • The administration is closely watching how the Omicron variant could compound global supply chain disruptions at Asian or U.S. ports and is “working with ports around the world to prioritize critical medical supplies and PPE.”
  • Cracking down on delays and profiteering: When cargo sit on docks for extended periods, bottlenecks worsen, goods can’t make it to stores, and prices can rise for consumers. That’s why the administration said it worked with the Ports of Los Angeles and Long Beach in early November to impose a fee on ocean carriers if their cargo sits on docks for over eight days. Since then, the number of containers sitting on the docks for over eight days has fallen by nearly 50% and the average amount of time containers sit on docks has fallen by a week. The price of shipping a container between Asia and the West Coast has fallen by more than 25% since its peak in September. “Nevertheless, the price of shipping remains elevated and, as the ocean carriers report profits nine times larger than a year ago, the president looks forward to working with Congress on bipartisan legislation to strengthen the Federal Maritime Commission.”
  • Launching the Port Action and Trucking Action Plans. This week, the administration announced $230 million in Port Infrastructure Development Grants — the only federal grant program wholly dedicated to investments in port infrastructure. “This is the latest step in the Port Action Plan (PAP) announced in November, which accelerates investments in our ports, waterways, and freight networks after passage of the Bipartisan Infrastructure Deal. The PAP helped the Port of Savannah launch three “pop-up” container yards to reduce congestion and includes $12.6 million for marine highway projects and over $50 billion in highway funding that can be used to modernize freight corridors. This builds on investments in port and freight infrastructure communities have made using the American Rescue Plan such as Florida’s $250 million investment in ports.”
  • Last week, the administration announced its Trucking Action Plan (TAP) to recruit and retain more truckers by improving job quality. The TAP will help states reduce their commercial drivers’ license backlogs, kick off a 90-day challenge to expand Registered Apprenticeships with the private sector, step up the recruitment of veterans, and launch a Driving Good Jobs Initiative to address issues that hurt retention such as unpaid wait times.
  • Taking action to reduce gasoline prices: Last month, Biden authorized the Strategic Petroleum Reserve to make 50 million barrels of crude oil available to increase global oil supplies. The administration also said it engaged with Japan, South Korea, India, and the United Kingdom, each of whom acted in parallel to boost supplies, as well as with OPEC+ members who maintained their schedule for increasing production levels heading into January. “These actions have helped contribute to falling prices at the pump… The average price at the pump is down 12 cents per gallon since the peak last month, and prices are continuing to fall.”

— Biden extends student loan repayment pause by 90 days. The White House on Wednesday, as expected, released a statement from President Biden, who extended the student loan repayment pause an additional 90 days. The extension is through May 1, 2022. Meanwhile, the Biden said the Department of Education will continue working with borrowers “to ensure they have the support they need to transition smoothly back into repayment and advance economic stability for their own households and for our nation.” About one in eight people in the U.S. currently have student loans. The Federal Reserve estimated that Americans owed $1.75 trillion in student loans in the third quarter of 2021, with the average debt around $40,000 per borrower.

     The taxpayer cost to repeated loan repayment extensions is adding up. A Wall Street Journal editorial (link) details: “Forbearance cost the government about $95 billion since Treasury hasn’t received a reprieve on its debt to fund the loans. The administration’s latest extension will bring the taxpayer tab to $110 billion, most of which hasn’t been appropriated by Congress.” Senate Majority Leader Chuck Schumer (D-N.Y.) and Sen. Elizabeth Warren (D-Mass.) want the administration to discharge $50,000 per borrower, which would cost the government $1 trillion, according to the Brookings Institution.

— Build Back Better update:

  • The Associated Press reports (link) President Biden and progressive and moderate Democrats are “determined to return to the negotiating table with Sen. Joe Manchin(D-W.Va.), the holdout Democrat who effectively tanked the party’s signature $2 trillion domestic policy initiative. Since Manchin announced he would vote no on the package, “Democrats of the left and center have joined the White House in attempting to salvage the social services and climate change bill.” Rep. Pramila Jayapal (D-WA), head of the Congressional Progressive Caucus, “said she and members of the caucus have been in conversations with White House officials about the prospects of achieving the plan’s goals through a combination of Biden’s executive powers and legislation, instead of legislation alone.” White House officials have also spoken with Rep. Suzan DelBene (D-Wash.), chair of the House’s centrist New Democrat Coalition, on its plan to scale back the number of provisions but have them stay in effect longer. Manchin said he supports that approach.”
  • Fox Business reports (link) on its website that Democrats are trying “to save a key piece of their ambitious tax-and-spending bill,” and see the expanded child tax credit “as a centerpiece of their platform ahead of the 2022 midterm elections and are hoping to extend the program by at least one year.” The American Rescue Plan “expanded the credit to $3,000 from $2,000 for the 2021 tax year, but it’s poised to expire this year.” Democrats are considering breaking up the Build Back Better legislation “and passing portions of it separately, which would almost certainly include the expanded child tax credit.” But, “even if Democrats agree to a plan to extend the tax credit, they will need to win support from an increasingly skeptical Manchin.”
  • The Washington Post reports (link) that expanded child tax credit “has helped pay for everyday items and essentials” for millions of families and it “is ending as those costs rise due to inflation. Between July, when the payments began, and November, the inflation rate rose from 5.4% to 6.8%, government data show.” Advocates “say the expanded version of the credit has largely gone toward basic necessities and smoothing out tight budgets.” The WaPo goes on to feature comments from people who benefitted from the credit.
  • The Hill says (link) progressives “are channeling their contempt” for Manchin “toward the midterms, stressing that they must consider other ways to deliver Build Back Better and talk up existing achievements in order to keep the trust of their constituents.”

AFGHANISTAN


— U.S. eases sanctions on Afghanistan. The Biden administration on Wednesday took steps to ease the pressure of sanctions as the combination of the pandemic, a drought, the loss of foreign aid and frozen currency reserves have Afghanistan’s economy on the brink of collapse. Sanctions had been put in place to cut the Taliban off from the international financial system. A cash shortage followed, crippling banks and businesses and sending prices soaring. The Treasury Department will issue new “general licenses” to make it easier for nongovernmental organizations, international aid groups and the U.S. gov’t to provide relief to the Afghan people while maintaining economic pressure on the Taliban. This month, it issued a license allowing personal remittance payments to be sent to people in Afghanistan.

     Meanwhile, the U.N. Security Council unanimously adopted a resolution that exempts humanitarian activities such as payments and delivery of goods and services from U.N. sanctions for a one-year period.


CHINA UPDATE


— Xi Jinping is already the longest-serving leader since Mao Zedong. A resolution passed by the Chinese Communist party last month paves the way for Xi to stay in office until at least 2028 and perhaps longer.

— Chinese city of Xi’an ordered its 13 million residents to stay at home and avoid unnecessary outings in one of the biggest lockdowns related to the pandemic in the country this year. The western city recorded 52 new cases on Tuesday — out of 57 indigenous cases reported nationwide. So far, the country has had only seven confirmed cases of Omicron, an infectious variant sweeping America and Europe.

— Intel, an American chipmaker, apologized to its “respected Chinese customers” for telling its suppliers not to source products or labor from Xinjiang, a Chinese region where minorities are detained in gulags. That had provoked calls for a boycott within China, whose government denies that any abuses are happening. The American government has imposed restrictions on Xinjiang-linked supply chains.

— China Evergrande said the committee helping steer its restructuring is deploying extensive resources to help contain risks and will engage with creditors.

— Beijing Olympics organizers are suddenly facing the challenge of a new coronavirus variant — and the Winter Games are only six weeks away.

— FDA takes steps to address export requirements under China’s new facility registration rules. While the U.S. continues to press China to delay by 18 months implementation of new registration requirements for foreign food companies that manufacture, store, or process food exported to China, FDA has taken a new step to help U.S. exporters to comply with the new rules. In a constituent update on Dec 21, FDA said it has reached out to the General Administration of Customs of China (GACC), providing lists of U.S. establishments seeking to be recommended for registration in China via the FDA’s Export Listing Module (ELM). FDA requested that GACC register the establishments “without delay” so they can continue to export their goods after Jan. 1, 2022. FDA said it provided this information to minimize any disruption in trade and noted that the move comes as the U.S. gov’t continues to “engage with Chinese officials to express concern about the nature of the requirements and gain clarity about how China will apply the new requirements to US products.”

     At issue is China’s Decree 248 — Regulations on Registration and Administration of Overseas Manufacturers of Imported Food which is set to take effect on Jan, 1, 2022. The Decree’s Articles 7 and 8 require that the countries’ competent authorities recommend registration of facilities involved in the export of 18 food categories. The U.S. has not been pleased with new requirements and has been pushing China to confirm that competent authority recommendation is not a requirement for U.S. facilities to register. “Given the ongoing lack of clarity, the United States is continuing to press China for a delay in implementation of these Decrees by at least 18 months,” FDA said in the latest update. “USTR has asked the GACC to confirm its understanding that US establishments that export all other categories of products may self-register,” the agency said in an update earlier this month.


TRADE POLICY


— South Korea suspends Canadian beef imports after BSE case. South Korea halted beef imports from Canada as it awaits more information about the recent atypical BSE case Canada reported before allowing beef imports from the country to resume, according to the Canadian Food Inspection Agency (CFIA). The news came just four days after an atypical case of BSE was found in an 8 1/2-year-old beef cow in Central Alberta. The CFIA reports the beef cow was euthanized on the farm and did not enter the food or animal feed chain. It's the first case of BSE in Canada in six years, and the first case since Canada received its "negligible risk" status from the World Organization for Animal Health (OIE) in May of this year.

     Background. South Korea was Canada’s sixth-largest beef export market at 1.3% of beef exports in 2019, according to the Canadian Cattlemen’s Association (CCA), who doesn’t think the ban will last long. South Korea imported over 10,000 tons of Canadian beef this year. The halting of exports stems from Canada’s particular export agreement with South Korea requiring verification of information of BSE cases by Seoul. “We would expect this suspension to be lifted very quickly,” said the CCA’s executive vice-president Dennis Laycraft. “It shouldn’t affect any of the product that’s been processed, going to be processed or shipped.”

     Alberta's Agriculture Minister Nate Horner says atypical BSE spontaneously happens at a rate of about one in one million cattle, regardless of how well a producer takes care of their herd. It has been reported six times in the U.S., most recently in 2018, as well as a few other countries. The CFIA reports that Atypical strains occurs naturally and sporadically in all cattle populations at a very low rate, and which have only been identified in older cattle.

     No other countries currently have notified Canada they plan trade actions.


ENERGY & CLIMATE CHANGE


— NFU disappointed new greenhouse gas emissions standards for cars do not boost ethanol. The National Farmers Union (NFU) voiced disappointment that the Environmental Protection Agency (EPA) did not include octane requirements aimed at boosting ethanol use in new greenhouse gas (GHG) emissions standards for cars through model year 2026. Higher octane requirements are seen boosting use of ethanol, which is a potent and price competitive octane enhancer. “The EPA missed an opportunity by not including a pathway to high octane fuels, like higher level blends of ethanol, in the final rule,” said NFU President Rob Larew. “NFU has long advocated for increased use of biofuels due to their tremendous environmental benefit and the much-needed market alternatives and economic stability biofuels provide to America’s farming and rural communities.” Larew said his group hopes the Biden administration will recognize the GHG benefits of higher-octane fuels and include provisions aimed at boosting ethanol in the next emissions rulemaking for model year 2027 cars and beyond.


LIVESTOCK, FOOD & BEVERAGE INDUSTRY


— McDonald's limits French fry sales in Japan because of potato shortage. Customers can only order the smallest size of fries due to supply chain problems. The fast-food giant will temporarily limit sales of its famous French fries to small portions and stop selling medium and large portions throughout the country from Dec 24 to Dec 30, the company said in a statement on its website. McDonald’s attributed the shortage to recent flooding in Canada and supply chain disruption because of Covid-19. It said that it imported potatoes from North America, specifically a port in Vancouver that was recently hit by delays due to flooding in the region. Paired with supply disruptions caused by the pandemic, the company faced issues getting shipments to Japan. It said that it had turned to alternative measures, including flying in frozen supplies. McDonald’s has more than 3,000 restaurants in Japan and is highly popular in the country.


CORONAVIRUS UPDATE


Summary: Global cases of Covid-19 are at 277,238,940 with 5,379,682 deaths, according to data compiled by the Center for Systems Science and Engineering at Johns Hopkins University. The U.S. case count is at 51,546,004 with 812,069 deaths. The Johns Hopkins University Coronavirus Resource Center said that there have been 496,667,620 doses administered, 204,818,717 have been fully vaccinated, or 62.40% of the U.S. population.

— World Health Organization holds a briefing today to discuss progress of the rollout of Covid-19 vaccines in Africa and the impact of the Omicron variant there.

— Biden tested for Covid again. President Joe Biden said he received another Covid-19 test on Wednesday, five days after exposure to the virus from a member of his staff. Biden again tested negative for the virus three days after he was exposed.

     Meanwhile, a member of Vice President Kamala Harris’s staff who had been with her “throughout the day” Tuesday has tested positive for the coronavirus, the White House said last night. Harris received a negative test and will be tested again soon and Monday.

— The Supreme Court has agreed to hear legal challenges to two of the Biden administration's Covid-19 vaccine mandates but will leave lower court orders in place until the oral arguments begin on Jan. 7. The first order, which is estimated to cover two-thirds of the private sector, would compel businesses with 100 or more employees to ensure their staff is vaccinated against COVID or is tested weekly for the virus. A separate healthcare worker mandate, which would require vaccinations for workers at facilities that treat federally funded Medicare and Medicaid patients, is already blocked in half of the 50 U.S. states.

     Details: While justices have backed vaccine rules in other contexts, this challenge is on whether the Occupational Safety and Health Administration (OSHA) has the authority to issue the rule at all. The more sweeping clash involves an emergency OSHA rule that requires employers with 100 or more workers to make them get vaccinated or be tested regularly. The justices will hear arguments from business groups and Republican-led states. They argue that OSHA exceeded the powers Congress gave the agency and that the federal government lacks constitutional authority to issue such a sweeping mandate. Last week, the 6th Circuit U.S. Court of Appeals reinstated the mandate for large businesses, though parties challenging the rule asked the Supreme Court to review the case. The group includes 27 states with Republican attorneys general or governors, private businesses, religious groups, and national industry associations like the National Retail Federation and the American Trucking Associations. Employers who don't adhere to the requirements could face penalties of up to $13,653 for each reported violation, while the OSHA will check on compliance through company record-keeping and some in-person inspections.

— The Omicron Covid-19 variant appears less likely to put patients in hospital than the Delta strain, according to preliminary data from several studies in South Africa, Scotland and England. Researchers in Scotland found Omicron was associated with a two-thirds lower risk of hospitalization compared to the earlier variant, though it was 10 times more likely than delta to infect people who’d already had the illness. An Imperial College London team working with a larger data set, meanwhile, found that people with omicron were almost half as likely to need an overnight hospital stay.

— Federal gov’t spending to distribute 500 million free, at-home Covid-19 test kits starting next month could result in new spending totaling $5.6 billion. The Department of Defense in coordination with the Department of Health and Human Services issued a request for information yesterday for companies with an approved or pending Food and Drug Administration emergency use authorization for the kits, amid other parameters.

— First pill to treat Covid authorized. U.S. health regulators on Wednesday authorized the first pill against Covid-19, a Pfizer drug that Americans will be able to take at home to head off the worst effects of the coronavirus. The drug, Paxlovid, is a faster, cheaper way to treat early coronavirus infections, though initial supplies will be extremely limited. All of the previously authorized drugs for Covid-19 require an IV or an injection. An antiviral pill from Merck is also expected to win authorization soon. The Food and Drug Administration authorized Pfizer’s drug for adults and children ages 12 and older with a positive coronavirus test and early Covid-19 symptoms who face the highest risks of hospitalization. That includes older people and those with conditions such as obesity and heart disease. Children eligible for the drug must weigh at least 88 pounds. The pills from Pfizer and Merck are expected to be effective against Omicron because they don’t target the spike protein where most of the variant’s worrisome mutations reside. The U.S. gov’t has agreed to purchase enough Paxlovid to treat 10 million people. Pfizer says it’s on track to produce 80 million courses globally next year, under contracts with Britain, Australia and other nations. The U.S. will pay about $500 per course of Pfizer’s treatment, which consists of three pills taken twice a day for five days. Two of the pills are Paxlovid and the third is a different antiviral. (Source: Associated Press)

— Covid-aid fraud. Some $100 billion has potentially been stolen from Covid-19 relief programs designed to help individuals and businesses, with the bulk of the potentially misused funds stemming from unemployment insurance.


POLITICS & ELECTIONS


— President Biden said “fate” and continued good health would decide if he will run again in 2024. He said he is more likely to do so if Donald Trump is his opponent. Speaking to ABC’s World News Tonight in an interview broadcast yesterday, Biden said he plans to seek re-election, before adding caveats. “Yes, but look, I’m a great respecter of fate. Fate has intervened in my life many, many times,” Biden said. “If I’m in the health I’m in now, if I’m in good health, then in fact I would run again.” Asked by anchor David Muir what he’d do if Trump were the nominee in 2024, Biden smiled. “You’re trying to tempt me now,” he said. “Sure. Why would I not run against Trump, being the nominee? That’d increase the prospect of running.”

— McConnell urging Thune to seek re-election. Senate Minority Leader Mitch McConnell (R-Ky.) is urging Sen. John Thune (R-S.D.), a close ally and his No. 2, to run for re-election next year as Thune weighs retiring.” McConnell told radio host Hugh Hewitt, “It would be a real setback from the country and our party if he retires.” Thune said that he’ll decide by the end of the year.

— Cruz: GOP presidential nominee “runner-up is almost always the next nominee.” The Washington Post reports (link) that Sen. Ted Cruz (R-Texas) is “expressing optimism about his odds of securing the 2024 Republican presidential nomination even as former president Donald Trump hints that he might run again. In an interview with the Truth Gazette, a conservative outlet run by 15-year-old Brilyn Hollyhand, Cruz said he would “absolutely” consider a run for the White House in 2024. ... Noting that he ended up “placing second” during the 2016 GOP primaries, Cruz said there is a historical precedent for runner-up candidates like him to get the nod the next time they jump into the presidential race. “There’s a reason historically that the runner-up is almost always the next nominee,” Cruz said.


CONGRESS  


— Clyburn tests positive for Covid. House Majority Whip Jim Clyburn (D-S.C.) has tested positive for Covid he announced Wednesday night. The 81-year-old is asymptomatic. "It is a huge sacrifice to miss my granddaughter's wedding, but it is an unfortunate reality that is playing out all across this country due to the proliferation of this virus," Clyburn said in a statement. After an initial rapid test on Sunday was inconclusive, it took the third ranking Democrat in the House 56 hours to get a PCR test result. Meanwhile, Rep. Jan Schakowsky (D-Ill.) also announced Wednesday that she tested positive.


OTHER ITEMS OF NOTE     


— Russia now has 122,000 troops within 120 miles of the Ukraine border, according to Ukraine’s Security and Defense Council. Satellite images show tanks, artillery and air-defense systems have been moved to border regions near Ukraine since November, according to defense-intelligence firm Janes.

— Iran negotiations. U.S. National Security Advisor Jake Sullivan has warned Iran that U.S. patience is wearing thin as negotiations in Vienna over a U.S. return to the 2015 nuclear deal stall. “We’re not circling a date on the calendar in public, but I can tell you that behind closed doors we are talking about timeframes, and they are not long,” Sullivan said on his recently concluded visit to Israel. His comments follow Friday’s joint statement from the United Kingdom, France, and Germany that talks are “rapidly reaching the end of the road.”

— A record number of Americans has signed up for ObamaCare. Over 13 million people have bought health plans through the Affordable Care Act’s marketplaces for 2022, spurred by the pandemic and Congress lowering costs. But observers note those gains may be fragile, with enhanced subsidies set to expire at the end of next year.

— EPA hit with another pesticide/endangered species lawsuit. EPA has been sued by environmentalists for failing to review the potential impacts of the insecticide cyantraniliprole on endangered species. Filed Dec. 21 by the Center for Food Safety and the Center for Biological Diversity, the complaint alleges EPA has failed to comply with a 2017 court order that required it to conduct an Endangered Species Act (ESA) review of the Corteva Agriscience pesticide known as Cyazypyr. EPA approved the active ingredient and 14 end-use products in January 2014 for use in a range of agricultural and residential applications. The two environmental groups filed suit in 2015 and the US Court of Appeals for the District of Columbia Circuit ruled in their favor on the ESA claims and remanded the registration back to EPA to complete the required review. In their new complaint, the groups ask the court to issue an order compelling EPA to comply with the earlier order within six months or be forced to vacate the registration. “EPA has violated, and is continuing to violate, its clear obligation to comply with this Court’s Remand Order and the ESA,” according to the lawsuit. “EPA’s unlawful delays are egregious, exceeding reasonable timeframes by years.”

— Branstad forms consultancy. Former Iowa Gov. Terry Branstad, making use of his tenure as U.S. ambassador to China during the Trump era, has set up a consultancy to advise companies and investors on conducting business with China. Link for details.

— Pigs still can’t fly — but maybe they will help us fly more safely. The New York Times reports that Amsterdam’s Schiphol Airport is using 20 pigs for a pilot project that aims to at reduce the number of birds striking planes. It is letting pigs roam on a plot between two runways, where they are meant to eat the leftover crops that often attracts geese.


 

 

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