USDA Seeking More Info Before Making Much-Delayed Payments to Hog Producers
U.N./FAO provides info on Ukraine planting impacts from war with Russia; food price impacts
In Today’s Digital Newspaper
“We are in a very challenging position where we are providing enormous amounts of support to Ukraine, as we should and need to do but, at the same time, trying not to escalate the conflict into a full-on NATO or U.S. war with Russia. That is a challenging space to manage.” — U.S. Director of National Intelligence Avril Haines to U.S. senators on March 10.
The Pentagon said Russian troops had moved three miles closer to Kyiv. They are now just nine miles from the center of the city.
The U.N. granted Russia’s request for an emergency meeting to discuss the Kremlin’s claim that America is funding the development of biological weapons in Ukraine. America and Britain have both warned that Russia might be planning to use chemical or biological weapons itself.
President Biden today is set to end normal trade relations between America and Russia. This would mean revoking Russia’s “most favored nation” trading status and allow America to impose tariffs on Russian imports, besides existing economic sanctions.
As he faces down sanctions that are bruising the Russian economy, Putin “opened the door to nationalizing the assets of Western companies pulling out of Russia and exhorted senior officials to ‘act decisively’ to preserve jobs,” per the New York Times. In response, White House press secretary Jen Psaki warned via Twitter that the move “will ultimately result in even more economic pain for Russia.”
We finally have some numbers on potential planting impacts in Ukraine relative to the ongoing war with Russia. The United Nations’ FAO gave its assessment, detailed in today’s dispatch. FAO also commented on the shipping situation and the food price inflation ahead.
USDA daily export sales:
— 128,900 MT corn to unknown destinations during MY 2021-2022
— 264,000 MT soybeans to China during MY 2022-2023
The Senate passed a $1.5 trillion spending bill that includes nearly $14 billion of aid for Ukraine. It now goes to President Joe Biden to sign. Below we have some nuggets from the huge spending package that have not been widely reported.
The huge spending package includes lots of money for the IRS to hire a lot of people to help take a paperwork pile that sits at around 20 million items and reduce it to about one million by the end of the year.
We finally have some updated information about USDA payments to hog producers. But for now, USDA is seeking more information it needs to collect under the Spot Market Hog Pandemic program.
A new study published in the Lancet estimates that around 18 million people have died from Covid-19 globally, three times more than officially reported figures.
Want some happy news? Major League Baseball and the players union yesterday reached a deal on a new collective bargaining agreement. Some of the key components of the new agreement include significant increases to minimum salaries and an expanded postseason, according to the players' union. MLB tweeted a video with the words, "Let the fun begin!" Opening Day is April 7. P.S.: Designated hitter is coming to the National League.
Equities today: Stocks are having another mixed session, with Asian indexes dropping while Europe and U.S. show some strength. The Dow opened around 180 points higher and then went to over 250 points higher. Asian equities fell lower as concerns over the Russia/Ukraine situation remained in focus. Japan’s Nikkei fell 527.62 points, 2.05%, at 25,162.78. The Hang Seng Index shed 336.47 points, 1.61%, at 20,553.79. European equities are seeing gains in early trading, with the Stoxx 600 up 1.8% with regional markets seeing gains of 1.3% to 2.9%.
U.S. equities yesterday: The Dow declined 112.18 points, 0.34%, at 33,174.07. The Nasdaq fell 125.58 points, 0.95%, at 13,129.96. The S&P 500 was down 18.36 points, 0.43%, at 4,259.52.
History shows that stock market dips caused by geopolitical turmoil should be "bought, not sold," according to Bank of America. The firm's analysts broke down previous market shocks and found that stocks mostly regained losses within three months. The S&P 500 currently is down about 9% since Russia invaded Ukraine — and BofA advises buying the dip.
Agriculture markets yesterday:
- Corn futures finished mostly 15 to 22 cents higher, with the May contract up 22 3/4 cents to $7.55 3/4. December corn firmed 15 cents to $6.51 3/4.
- Soy complex: May soybeans closed up 14 1/2 cents at $16.86 1/4 and near mid-range. May soybean meal closed up $9.00 at $483.70, nearer the session high after hitting a contract high of $490.00. May bean oil closed up 53 points at 74.68 cents and near mid-range.
- Wheat: Winter wheat futures posted sharp losses, led by a $1.14 1/2 plunge in the May SRW contract, which finished at $10.87. May HRW wheat dropped 48 3/4 cents to $10.65 3/4. May HRS wheat fell 29 cents to $10.55. Daily trading limits revert to 85 cents for winter wheat futures on Friday.
- Cotton: May cotton closed down 61 points at 116.86 cents and near the session low. December futures dropped 25 points at 101.44 cents.
- Cattle futures followed through upon Wednesday’s reversal today, with April live cattle tumbling $1.675 to close at $135.90. April feeder futures plunged $3.90 to $156.25.
- Hog futures were mixed, as the April contract led the nearby contracts lower with a $1.05 drop to $100.10.
On tap today:
• Canada's employers are expected to add 130,000 jobs in February and the jobless rate is forecast to fall to 6.2% from 6.5% one month earlier when figures are released at 8:30 a.m. ET.
• University of Michigan's consumer sentiment index, due at 10 a.m., is expected to fall to 62 in the opening weeks of March from 62.8 in February.
• Baker Hughes rig count is out at 1 p.m. ET.
• CFTC Commitments of Traders report, 3:30 p.m. ET.
Wells Fargo boosts inflation forecast. Higher petroleum prices likely will lift inflation rates even higher than Wells Fargo analysts forecasted a month ago. It looks for the overall rate of CPI inflation to average 8.2% during the second quarter and to only recede to 6.3% by the end of the year. “Higher inflation will erode growth in real income, which likely will lead to slower growth in real consumer spending. But we do not look for consumer spending to crater, unless oil prices rise significantly higher than we currently forecast. Household balance sheets are generally in solid shape at present, and the household savings rate could fall further to support continued growth in consumer spending,” the company said in a research note.
The Wells Fargo analysts now see the FOMC raising rates by 25 bps at its meetings in March, May, June, July, September and December. “We think that the uncertainties surrounding the economic outlook will convince many FOMC members that an overly aggressive pace of monetary tightening (i.e., raising rates by 50 bps or more at a given meeting) would not be warranted.”
They assume the FOMC will decide at its June 15 meeting to shrink its balance sheet starting in July, and “we anticipate that balance sheet runoff will start slowly but ramp up at a well-defined pace in following months. Balance sheet reduction will act as an additional form of monetary tightening.”
Wells Fargo lifted its oil price forecast significantly and now looks for the price of Brent oil, a global benchmark, to average $140 per barrel in Q2-2022. “We forecast that the price will slowly recede in following quarters due to the combination of demand destruction from higher prices and a ramp-up in supply from other major oil-producing countries, including the United States.”
Goldman Sachs analysts have cut their U.S. growth forecast for this year to 1.75% from 2% but have also warned that the probability of a recession in the next year may be as high as 35%.
FAO warns of escalation in food prices. The U.N. Food and Agriculture Organization (FAO) is warning the situation in Russia and Ukraine could lead to an escalation in food prices, citing “disruptions to agricultural activities of these two major exporters of staple commodities could seriously escalate food insecurity globally, when international food and input prices are already high and volatile. Global prices of food and feed could rise by 8% to 20% as a result of the conflict in Ukraine, FAO warned.
The conflict could also constrain agricultural production and purchasing power in Ukraine, leading to increased food insecurity locally.
The U.N. is currently estimating that 20% of Ukraine winter planted area will not be harvested “as a result of direct destruction, constrained access or lack of economic resources.”
For spring-planted crops of corn, and sunflowerseed, FAO said they expect 30% less area will be planted this spring and yields will decline elsewhere by 20%.
“Livestock and poultry rearing as well as production of high value crops, such as fruits and vegetables, could also be constrained in Ukraine,” the FAO said. However, the FAO said they do not see any “major impacts” on agricultural production in the Russian Federation.
FAO also addressed the shipping situation in the Black Sea. “The Ukrainian ports on the Black Sea have shuttered. Even if inland transportation infrastructure remains intact, shipping grain by rail would be impossible because of a lack of an operational railway system,” the FAO stated. “Vessels can still transit through the Turkish Straits, a critical trade juncture through which a large amount of wheat and maize shipments pass. Rising insurance premiums for the Black Sea region would exacerbate the already high costs of shipping, compounding the costs of food imports. And, whether storage and processing facilities would remain intact and staffed is also still unclear.” Two links for more information: Link and Link
As for Russia, the FAO said that Russian ports are open on the Black Sea and that “no major disruption” is expected. “However, the financial sanctions against Russia have caused an important depreciation which, if continued, could undermine productivity and growth and ultimately further elevate agricultural production costs,” the FAO said.
Inflation is now costing average U.S. household an extra $296 each month. Ryan Sweet, a senior economist at Moody’s Analytics, crunched the numbers after the latest Labor Department data showed consumer prices jumped 7.9% in February. He arrived at the figure by comparing average U.S. household spending last month to what would have been spent in 2018 and 2019, when inflation paced at 2.1%.
Ag inflation update:
A humbled Yellen says inflation is here to stay for the next year. Treasury Secretary Janet Yellen told CNBC that inflation will be “very uncomfortably high” for the next year despite a strong U.S. economy. Analysts note this clip (link) will be a punch in the gut for House and Senate Democrats who are trying to keep their majorities in November. “I think there’s a lot of uncertainty that is related to what’s going on with Russia in Ukraine,” Yellen told CNBC’s Closing Bell. “And I do think that it’s exacerbating inflation. I don’t want to make a prediction exactly as to what’s going to happen in the second half of the year,” she continued. “We’re likely to see another year in which 12-month inflation numbers remain very uncomfortably high.”
From the Russian Revolution to Vietnam, war has been a reliable precursor to inflation. History may be about to repeat as Russia’s invasion of Ukraine tilts the balance of global political and economic forces toward higher inflation, the Wall Street Journal reports (link). The main channels: First, more military spending, which strains the economy’s productive capacity. Second, embargoes, sanctions and fighting disrupt supply chains. These factors are clearly at work now. One big wildcard: whether the Fed and other central banks have the means and inclination to push inflation back down.
Russian sanctions snarl shipping even as pandemic pressure eases... Transport companies, maritime insurance executives and industry analysts say the two-week-old war, combined with uncertainty fueled by the sanctions, is causing backups of ships at some ports and could lead to longer delays in shipments, especially around Europe, the New York Times reports (link). More than 100 ships and their crews have been stranded at Ukrainian ports since Russia invaded Ukraine. Missiles have hit several commercial vessels, and an explosion on or near an Estonian dry cargo vessel sank it 20 miles off Odessa, a Ukrainian port. The Russian and Ukrainian crew members all survived. The risk has forced shipowners to pay an additional insurance premium of 1% to 5% of a ship’s value. The blockage has squeezed global grain supplies from one of the world’s biggest grain-producing regions, pushing wheat prices higher on world markets and fanning the threat of inflation. The bottlenecks are not only on the water. Sanctions against Russia are putting fresh pressure on already tight air cargo capacity, causing transport rates to spike. Ground transport is also being affected, as the conflict disrupts key rail routes between the European Union and China, slowing trade. Trucking isn’t being spared, either. Europe’s trucking industry is also facing a fresh shortage of drivers, as tens of thousands of Ukrainian truckers head back to Ukraine to join in the fight against Russia.
… But the WSJ says containers are moving faster through Southern California’s beleaguered port complex, leaving companies wondering if they’ve turned a corner. The backup of container ships waiting for a berth dipped last weekend to the lowest level since September, the WSJ writes (link), and a trip through one of the Port of Los Angeles’s big terminals suggests that cargoes are flowing more smoothly than they have in a long time. That may be largely because Los Angeles and the neighboring Long Beach port are catching their breath during the seasonal lull around the Lunar New Year. Shipping industry executives are forecasting a new wave of ships as retailers continue to replenish inventories and line up goods for the spring and summer months. Yusen Terminals CEO Alan McCorkle says operational improvements that include more container storage space are helping. Those operations may face a fresh test in the coming weeks.
Fertilizer cutbacks. European fertilizer makers including Yara International and Borealis are cutting output because of surging natural gas prices, adding to the growing risks for global food inflation. Link for details.
IRS is readying a hiring binge in a bid to clear tax-return backlog. The Internal Revenue Service plans to hire 5,000 employees over the next few months and 5,000 more by the end of September 2023. The agency’s goal is to take a paperwork pile that sits at around 20 million items and reduce it to about one million by the end of the year.
• Outside markets: The U.S. dollar index is higher today along with all major global currencies. The yield on the U.S. 10-year Treasury note was firmer ahead of U.S. market action, trading above 2.01% with a mixed-to-higher tone in global government bond yields. Gold and silver futures are under significant pressure ahead of U.S. trading, with gold under $1,978 per troy ounce and silver under $25.90 per troy ounce.
• Crude oil futures are pivoting around unchanged, with U.S. crude around $106.30 per barrel and Brent around $109.30 per barrel. In Asian action, U.S. crude was trading around $106.10 per barrel and Brent was trading around $109 per barrel.
• Tanker markets are in turmoil. Daily freight rates for medium-size Aframax tankers, the crude-oil workhorses in the Black and Baltic seas, have tripled to around $30,000. The WSJ says a small number of tankers are continuing to serve Russian ports, and owners who are willing to take the risk of sailing into the Black Sea can fetch more than $200,000 a day, but most are steering clear. Russian shipments are still moving but brokers and ship owners say customs authorities have temporarily seized or delayed at least a dozen tankers moving Russian crude at European ports over the past week.
• Russia appears to be letting some ships carrying grains exit the Azov Sea into the Black Sea, Bloomberg reports (link). Around 30 vessels have been allowed to leave Russian ports and sail out of the waterway straddled by Russia and Ukraine, Interfax reported. Saban Buttanri, owner of Istanbul-based Agrolino Grains and Oilseeds, says he’s also aware of ships carrying sunflower oils, grains and feeds sailing out of the Azov Sea toward Turkey, including three of his vessels carrying sunflower oil.
• Ag trade update: Taiwan purchased 50,000 MT of U.S. milling wheat.
• NWS weather: A significant winter storm will impact portions of the Tennessee/Ohio Valleys through the interior Eastern US late today through Saturday... ...Heavy rainfall and severe thunderstorms expected to impact the Southeast and Mid-Atlantic this weekend... ...Frigid temperatures return to much of the Central US this weekend as an Arctic airmass descends over the Great Plains and Mississippi Valley... ...New Pacific system to bring heavy snowfall to the Cascades and Northern Rockies beginning late Saturday.
Items in Pro Farmer's First Thing Today include:
• Quieter trade overnight
• Ukraine farmers to focus on food grains (details below)
• Beef prices firm, but movement slows
• Ham prices remain volatile
— Summary: Russian airstrikes pounded cities in western Ukraine as troops appeared to reposition, fueling concerns they could be preparing for a renewed push on Kyiv. Russia will send thousands of fighters from the Middle East, along with weapons, to join its forces in Ukraine, President Vladimir Putin said. U.S. officials on Thursday, including Vice President Harris while speaking in Poland, backed an ongoing international war crimes investigation of Russia’s actions, vowed additional economic punishments and warned that Putin might order the use of chemical, biological or even tactical nuclear weapons to try to seize Ukraine. China is another factor in assessing Russia’s next moves. Beijing has thus far declined to join other nations in condemning Moscow. CIA Director William Burns told lawmakers on Thursday that Chinese President Xi Jinping has been “unsettled” by the war and the unity it has inspired in the West. As The Hill’s Morgan Chalfant noted, the CIA chief argued that Xi is worried about global economic consequences as well as damage to his reputation while associated with the “ugliness” of Russia’s war.
- Senate Energy Chair Joe Manchin (D-W.Va.) called on Biden to use the Defense Production Act if necessary to rush completion of a stalled pipeline through his state to help Europe replace Russian natural gas supplies. Manchin said the 303-mile Mountain Valley Pipeline, which crosses through his home state of West Virginia into Virginia, could transport 2 billion cubic feet a day and be running in four to six months. “It’s the quickest thing that we can get — it’s more energy into the market that’s going to be needed,” he said.
- MFN status for Russia to be removed. President Joe Biden will announce today that along with the European Union and the Group of Seven countries, the U.S. will move to revoke “most favored nation” trade status for Russia over its invasion of Ukraine. This would put Russia in the company of countries like Cuba and North Korea. Top Democratic and Republican lawmakers vowed to push forward with their campaign to suspend Russia’s preferential trade relations with the U.S. and clear the way for tariff increases after the provision was removed from a House bill banning the nation’s energy imports. The moves by the heads of the trade committees could mean amending the House-passed oil ban in the Senate before it becomes law.
- U.S is willing to relax economic pressure on Venezuela depending on the outcome of upcoming talks between President Nicolas Maduro and the opposition, according to a senior Biden administration official. The comments indicate Biden wants to see progress toward restoring democratic governance before allowing Venezuela to increase oil exports to the U.S. amid a global supply crunch triggered by Russia’s invasion of Ukraine.
— Market impacts:
- There will be no stock trading on the Moscow Exchange today, as the closure of Russia's stock market reaches the two-week mark.
- Europe to weigh emergency measures to limit electricity prices. EU officials are under pressure to prepare for a winter without Russian gas as energy prices soar.
- Ukraine farmers to focus on food grains. Ukraine is likely to reduce the area sown to sunseeds, rapeseed and corn in 2022 and replace it with buckwheat, oats, millet, peas the country’s agriculture producers' union said. “For the full nutrition of its population and the armed forces, more emphasis will be placed on buckwheat, peas, those types of crops that will make it possible to harvest so that Ukraine is fully provided with food,” said Denys Marchuk, deputy head of the Ukrainian Agrarian Council. Farmers will start planting crops in the safe areas of the country as soon as possible. Deputy agriculture minister Taras Vysotskiy said a war-induced shortage of fuel would be the main problem for farmers.
- BlackRock, the world's largest money manager, has lost roughly $17 billion on Russian securities, the Financial Times reported today (link).
- Russia’s invasion of Ukraine has touched off a renewed demand for coal, as estimated fuel shortages have sent energy prices soaring. Coal prices spiked roughly 30% in one week. Asian Newcastle benchmark futures rose to $440 per metric ton, while Europe’s futures reported trading above $350 a metric ton — triple their pre-pandemic levels. Analysts said they don’t expect the prices to drop anytime soon and are bracing for an estimated supply shortage of 3-5% in 2022. "Everything related to energy is in deficit,” Siddharth Choudhary, an executive of thermal coal at global commodities trading firm Trafigura, told Reuters. “So, there is not [an] alternative. With the current crisis for Europe, coal looks to be the best option.”
- Ruble plunge perspective. It took 80 rubles to get one U.S. dollar on Feb. 23, the day before the invasion. By Thursday, it was 119 — even after Russia’s central bank took drastic measures to stop the plunge, including doubling interest rates to 20%.
- Western Union is suspending operations in Russia and Belarus. The Denver-based money-transfer and payments company said it engaged in “extensive dialogue” with various stakeholders before making the decision.
- Goldman Sachs is exiting Russia. Goldman Sachs said Thursday it was getting out of Russia — the first big U.S. bank to make a move to exit the country after the invasion of Ukraine.
- Some large companies are continuing to operate in Russia, as the Popular Information newsletter has reported (link). Hyatt and Marriott have continued running hotels there. Citi, Bridgestone Tire and Philip Morris have also continued their operations. And Halliburton has continued to operate oil fields in Russia despite a specific appeal from a top Ukrainian official.
- Rice could keep Asia’s food inflation risks from getting worse. Russia’s invasion of Ukraine has delivered a global-scale disruption that is set to cascade through food supply chains and worsen hunger, but Asia’s love for rice could limit the fallout, according to a Bloomberg article (link). Rice is more popular with many Asian consumers than wheat, which has seen supplies cut off from one of the world’s breadbaskets, said Jules Hugot, an economist at the Asian Development Bank. Rice prices have been relatively stable, and it’s easy to swap one staple for the other, he said.
— U.S. spent roughly $5 trillion on pandemic stimulus bills. Some $41 billion went to farmers, many of whom were forced to destroy their crops at the outset of the pandemic as the closing of restaurants, hotels and schools left them without buyers. Some farm money has yet to be spent — a $4 billion debt relief program for Black farmers remains in legal limbo, and no funds have yet been delivered. Link to an excellent New York Times report on the taxpayer funding for pandemic stimulus measures.
— Dierks inducted into Pork Industry Hall of Fame. For his 40 years serving U.S. pork producers, including 20 years as CEO of the National Pork Producers Council (NPPC) and his dedication and countless contributions to the pork industry, Neil Dierks was inducted into the National Pork Industry Hall of Fame at NPPC’s annual business meeting — the National Pork Industry Forum. Dierks, who retired in December 2021 after 31 years with NPPC, helped develop the organization that was born after the separation agreement that created the National Pork Board. He became the first CEO of the reconstituted NPPC.
Dierks started his career in the pork industry when he joined the Iowa Pork Producers Association in 1981 to manage the Iowa Pork Congress. He went on to head legislative state outreach for the organization. After leading field services and state legislative outreach for the Iowa Corn Growers Association, Dierks joined NPPC in 1990 to manage World Pork Expo. Prior to becoming CEO, he also served as the organization’s director of operations, vice president of research and education, and senior vice president of programs.
Becoming CEO… Six months after NPPC and the industry’s checkoff were split into independent organizations, Dierks was recruited from the National Pork Board in 2001 to be CEO of NPPC, which had five employees, and World Pork Expo was its single source of revenue. He guided NPPC’s steady growth for the next two decades, expanding sources of revenue and establishing it as a highly effective and influential national advocacy organization critical to the profitable growth of U.S. pork producers.
“Neil is a giant in the pork industry. He was there at the beginning — after the separation agreement with the Pork Board — and he guided NPPC through good and not-so-good times over the past 20 years,” said outgoing NPPC President Jen Sorenson. “Neil has made countless lasting contributions to the U.S. pork industry and established NPPC as a top-tier advocacy organization and the global voice of the U.S. pork industry. If anyone deserves to be in the industry Hall of Fame, it’s Neil Dierks.”
Comments: Neil is one of those execs who can see the big picture. He frequently led his team in search for topics that could significantly impact the hog industry. Each time I met Neil at NPPC’s many meetings he would ask me, “Hey, have you read this book by …” I then went out to get them and every one of them was must-read.”
— China issues initial quota for cotton imports. China’s National Development and Reform Commission (NDRC) has issued a 400,000-tonne quota for cotton imports with a sliding tariff rate that is for private traders only, according to a report from Reuters. The report said it was the first batch issued for 2022.
— China sells 84% of soybeans put up for auction. China sold 59,452 MT of the 71,126 MT of state-owned soybean reserves put up for auction, according to Sinograin. The state stockpiler also sold 10,172 MT, or 71%, of the rapeseed oil reserves offered. It previously sold 126,891 MT of soyoil from reserves. Sinograin will auction 295,596 MT of imported soybeans from reserves next Monday.
— Chinese new bank loans plunge. Chinese banks extended 1.23 trillion yuan ($195 billion) in new loans in February, down sharply from a record 3.98 trillion yuan in January. The sharper-than-expected drop in bank lending and a decline in credit growth increase pressure on the People’s Bank of China to ease monetary policy to support China’s slowing economy. Chinese Premier Li Keqiang said he is confident of hitting this year’s economic growth target of around 5.5%, despite China’s slowing economy and headwinds such as the war in Ukraine and surging global inflation.
ENERGY & CLIMATE CHANGE
— OMB signs off on EPA plan for canola oil pathways for renewable diesel. The Office of Management and Budget (OMB) has completed its review of a proposed rule from EPA outlining canola oil pathways to renewable diesel, het fuel, naphtha and liquid propane gas under the Renewable Fuel Standard (RFS). There was one meeting held on the proposed rule at OMB on January 31, involving a host of stakeholders and regulators, including Marathon Petroleum, Phillips 66, CHS, Bunge, Cargill, Valero, the US Canola Association, ADM, and others. The US Canola Association petitioned EPA on the matter in March 2020. The fuel would qualify as an advanced biofuel under the RFS as all renewable diesel does Under the regulatory agenda, EPA will be seeking comment on the “analysis of the lifecycle greenhouse gas emissions associated with certain biofuels that are produced from canola/rapeseed oil, specifically diesel, jet fuel, heating oil, naphtha, and liquefied petroleum gas produced from canola/rapeseed oil via a hydrotreating process.” OMB received the proposed rule from EPA January 10, finishing its review March 10. This should lead to EPA announcing the proposal soon and then publishing it in the Federal Register.
— California Democratic Gov. Gavin Newsom said he is exploring the possibility of a gas rebate program, seeking to give California residents relief from soaring gas prices, which have climbed to upwards of $7 a barrel in some parts of the state. Newsom said during his annual State of the State address that he is working with lawmakers on “a proposal to put money back in the pockets of Californians to address rising gas prices.” Though Newsom did not offer further details, a senior adviser said it “would be a rebate totaling billions of dollars.
— FERC examining LNG delays, transmission lines. Federal Energy Regulatory Commission Chairman Rich Glick is asking LNG developers this week why they haven’t started building their approved projects yet, as nine out of 18 haven’t started digging, he said yesterday during a press briefing at CERAWeek by S&P Global in Houston. The agency is also looking at ways to streamline the approval process for gas infrastructure.
Looking at the electrification push, it’s clear there is going to be “dramatic increase for the demand for electricity in the near future,” which will come from EVs, crypto miners and other sources, Glick said.
FERC is evaluating how this surge in demand will affect reliability and the need for transmission, of which the U.S. will need an “enormous” amount to take wind and solar power from more remote areas to populations, as well as for offshore wind, he added. Blackouts in Texas last year suggest that more connections between grids are needed to reduce outages, Glick said.
— Biden fails to revive cost of carbon estimates pending appeal. The Biden administration can’t use interim estimates on the social costs of certain greenhouse gases pending the government’s appeal in the Fifth Circuit, a Louisiana federal court ruled. The federal government “repeatedly insisted” that it doesn’t rely on the estimates to justify administrative actions, according to the U.S. District Court for the Western District of Louisiana. But the court “believes without a doubt” that the estimates were being used, and are still in use, to justify action s that will “artificially increase costs” and “increase regulatory burdens” on states, according to the ruling.
— CO2 emissions hit record high in 2021: IEA. Energy-related CO2 emissions reached their highest level in history last year, according to new data (link) released by the International Energy Agency (IEA). In 2021, energy-related CO2 emissions climbed by 6%, researchers found, reaching a record output of 36.3 billion metric tons. IEA cited an increased reliance on coal as being the main driver behind the spike in emissions. “The recovery of energy demand in 2021 was compounded by adverse weather and energy market conditions – notably the spikes in natural gas prices – which led to more coal being burned despite renewable power generation registering its largest ever growth,” the IEA said.
— U.S. solar prices rose 18% last year, threatening deployment of more of the renewable energy which the Biden administration and others argue is necessary to mitigate climate change. A new report (link) from the Solar Energy Industries Association and Wood Mackenzie established that solar capacity additions in 2021 reached a record 23.6 GW. But strains on global supply chains for solar products, as well as ballooning costs of critical minerals and trade actions, are projected to cut into additional growth, it said. Wood Mackenzie has adjusted its forecasts for near-term solar additions downward by 19% due to those issues.
LIVESTOCK, FOOD & BEVERAGE INDUSTRY
— USDA seeking feedback on level of information it needs for hog producer payments. USDA is now seeking comment on the information it needs to collect under the Spot Market Hog Pandemic Program (SMHPP), an aid effort under the Covid aid package. USDA is seeking comment on the information they need to collect to determine whether a producer is eligible for SMHPP and to calculate a payment. Comments are due April 11, according to a notice (link) in the Federal Register today (March 11). SMHPP will use $50 million to compensate eligible hog producers sold through a negotiated sale from April 16-September 1, 2020. USDA announced the effort March 24, 2021, but no payments have been made. USDA estimates there will be 23,113 respondents relative to the information request.
— Another HPAI case confirmed in Missouri. USDA’s Animal and Plant Health Inspection Service (APHIS) has confirmed another case of highly pathogenic avian influenza (HPAI) in Missouri, this one in Lawrence County involving a commercial turkey flock of 37,770 birds. This marks the fourth case in the state — all in commercial operations. That brings the total HPAI cases in the U.S. to 27 with 17 in commercial operations.
— Summary: Today marks two years since the World Health Organization declared the Covid-19 outbreak a pandemic. Global cases of Covid-19 are at 453,574,483 with 6,030,745 deaths, according to data compiled by the Center for Systems Science and Engineering at Johns Hopkins University. The U.S. case count is at 79,455,163 with 965,466 deaths. The Johns Hopkins University Coronavirus Resource Center said that there have been 556,252,766 doses administered, 216,449,810 have been fully vaccinated, or 65.94% of the U.S. population.
— Travelers will have to continue to wear masks until April 18 when flying commercially and in other transportation settings, including on buses, ferries and subways, officials announced Thursday. The mandate, which was first put into place by the Biden administration in early 2021 as a public health measure during the coronavirus pandemic, has been extended multiple times. It had been set to expire March 18. Nearly two-thirds of 800 unruly passenger reports this year have been about wearing masks.
Of note: Only 2% of Americans – about 7 million people – live in a county where the CDC still recommends universal indoor masking.
— China’s daily Covid-19 cases hit numbers not seen since 2020. More than 1,000 local coronavirus cases surpass tallies seen in early days of outbreak two years ago, with asymptomatic infections driving the spike.
POLITICS & ELECTIONS
— Congressional Progressive Caucus Chair Pramila Jayapal (D-Wash.) said her group would release a slate of proposed executive orders next week, to coax the Biden administration into using unilateral authority to push a more liberal agenda.
— President Biden issued a warning to his party about the possibility of Republicans taking control of Congress in the upcoming midterm elections. As Democrats work to keep control on Capitol Hill, Biden urged a revival of his party’s 2020 enthusiasm. “If we don’t do that, don’t do that, it’s going to be a sad, sad two years. Think about Republicans if they controlled the Congress these last two years,” he said during remarks to Democratic National Committee members Thursday evening.
— White House is trying to blame Putin for higher U.S. inflation, but Republicans see it another way. The NRCC was quick to make use of the issue, dropping new attack ads hitting 10 House Dems over record high gas prices, Fox News reports. The Dems being targeted: Reps. Tom O’Halleran (Ariz.), Sharice Davids (Kan.), Michigan’s Elissa Slotkin and Dan Kildee; Angie Craig (Minn.); Chris Pappas N.H.); Susie Lee (Nev.), Sean Patrick Maloney (N.Y.), Elaine Luria (Va.), and Kim Schrier (Wash.).
— Overall congressional map is heading toward balance. NYT’s Nate Cohn writes that “between 216 and 219 congressional districts, out of the 435 nationwide, appear likely to tilt toward the Democrats, according to a New York Times analysis based on recent presidential election results. An identical 216 to 219 districts appear likely to tilt toward Republicans, if the maps enacted so far withstand legal challenges.” Link.
David Wasserman, House editor for the Cook Political Report with Amy Walter, concludes: “"Overall, 2022 redistricting could curtail Democrats' expected House losses by four to five seats — perhaps not enough to save their majority from an energized GOP base, but enough to level the playing field versus old maps that tilted significantly against them."
— Senate on Thursday night cleared, 68-31, a $1.5 trillion bill to fund the government for the remainder of fiscal 2022. It now goes to the White House for President Biden’s expected signature. Of the 31 “no” votes in the Senate, all were Republicans. These GOP senators complained about the lack of time to review the 2,700-plus page bill, as well as the high level of spending, especially on social programs. Several GOP amendments were defeated before the final vote. Senate Minority Leader Mitch McConnell (R-Ky.) supported the package, noting significant GOP wins on defense spending, as well as on policy issues such as abortion and “poison pills.”
Some items in the huge spending bill that have not received a lot of media attention include:
- Environmental Regulation of Livestock: The $1.5 trillion spending bill includes major limitations on the federal government’s ability to regulate emissions from animal agriculture, despite objections from dozens of environmental groups. The measure includes two provisions that hamper the government’s ability to monitor and regulate emissions from the nation’s meat and dairy industries. One provision bars new permitting requirements under the Clean Air Act for emissions of pollutants like carbon dioxide and methane from livestock production, while the other disallows any new greenhouse gas reporting requirements from manure management systems.
- Federal firefighting: USDA’s Forest Service would receive a 6% increase to its base funding level, plus $2 billion from the Wildfire Suppression Operations Reserve. Congress directed the agency to use the money to increase its year-round staffing level, through both new hires and conversion of seasonal positions. The funding surge would “radically improve forest restoration and fire reduction efforts,” lawmakers said in a summary of the bill.
- Surprise DHS surge: Lawmakers allocated $57.5 billion to the Homeland Security Department, an increase of about 10% to its discretionary budget. That marked a significant departure from Biden’s budget, where the president requested that DHS funding stay essentially flat. After years of flat or reduced funding during the Trump administration, Congress approved a 6% bump for Immigration and Customs Enforcement. ICE’s Enforcement and Removals Office would see a small funding increase after it dropped 8% in fiscal 2021, though lawmakers declined to fund any new hires for immigration enforcement officers. CBP’s budget is down overall, but Border Patrol’s operations spending would jump by 26%. The largely fee-funded U.S. Citizenship and Immigration Services, which threatened to furlough about 70% of its staff in 2020 due to a budget crisis during the pandemic, is set to receive a massive 220% funding spike. Most of that money — about $275 million — would go to reducing backlogs in asylum, refugee and immigration benefit cases, including through hiring and increased overtime.
- Transportation and infrastructure: The Transportation Department’s budget is set to soar by 17%, in part to help implement the recent Infrastructure Investment and Jobs Act. It would see an extra $3 billion for climate resiliency and greenhouse gas reduction efforts. The bill also supports newly reauthorized earmarks, with 145 House members and 62 senators ushering through airport, highway, rail and transit projects in their districts.
— Some Democrats pushing Biden administration to support suspension of gas tax: WSJ. As gasoline prices continue to soar due to Russia’s invasion of Ukraine and its impact on crude oil markets, the Biden administration is coming under increased pressure from some Democrats to support a temporary suspension of the gasoline tax, the Wall Street Journal reported. Sens. Maggie Hassan (D-N.H.) and Mark Kelly (D-Ariz.) are urging the administration to back their bill that would lift the 18.4 cent per gallon tax for the rest of the year. “Washington must do everything possible to prevent the costs of this conflict from falling on Americans,” said Kelly. Both lawmakers are facing competitive re-election races this fall. The Democratic governors in several states have also voiced support for the push to suspend the tax.
A February estimate pegged the price tag of such a suspension at around $20 billion. Last month, centrist Sen. Joe Manchin (D-W.Va.) pointed to the cost and told WSJ the move, “doesn’t make any sense,” and that “it’s not going to change anything.”
OTHER ITEMS OF NOTE
— Census undercounts minorities. The 2020 Census “continued a longstanding trend of undercounting Black people, Latinos and Native Americans, while overcounting people who identified as white and not Latino,” according to estimates from a report the U.S. Census Bureau released Thursday. Latinos were left out of the 2020 census at more than three times the rate of a decade earlier. Among Native Americans living on reservations and Black people, the net undercount rates were numerically higher but not statistically different from the 2010 rates. Census Bureau report (Link).
— EU’s foreign policy chief said the international nuclear talks with Iran should “pause” because of unspecified “external factors.” Last week, Russia said it wanted “guarantees at least at the level of the secretary of state” that U.S. sanctions would not affect Moscow’s relationship with Tehran.
— North Korea’s ongoing weapons tests – two of which recently involved intercontinental ballistic missiles – is a "serious escalation" by Pyongyang and its leader Kim Jong Un, U.S. officials say. In response, Japanese and South Korean leaders today agreed to boost ties with the U.S. to tackle North Korea.
— Cotton AWP moves lower. The Adjusted World Price (AWP) for cotton declined to 111.71 cents per pound effective today (March 11), down from 112.71 cents per pound the prior week. However, the AWP has been at or above $1 per pound all but four weeks since the week of Nov. 12, 2021. Meanwhile, USDA said Special Import Quota #21 would be established March 17 for 46,572 bales of Upland Cotton, applying to supplies purchased not later than June 14 and entered into the U.S. not later than Sept. 12.
— Baseball is back. The MLB players' union voted to accept the league's latest deal on Thursday. When owners ratified the agreement hours later, the second-longest work stoppage in MLB history officially ended. "I am genuinely thrilled to say Major League Baseball is back and we're going to play 162 games,” said Commissioner Rob Manfred. Opening Day is Thursday, April 7 — just 27 days from now. Players must report to camp by Sunday, and spring training games begin next Thursday, March 17.
Changes: The universal designated hitter is here. No more ghost runners on second base to start extra innings. Also, the bases are three inches bigger now, which apparently will encourage more activity on the basepaths.
Vegas has the Dodgers as World Series favorites. BetMGM has them at +600 to win it all, and most other books are around that number. The Astros, Yankees and Mets are next in line.