USDA Set to Release Seed & Livestock Industry Concentration Report

Washington Focus

Fed Chair Jerome Powell is due to testify twice this week before Congress on monetary policy, both ahead of Friday’s key Employment report update. Wednesday brings USDA’s monthly supply and demand update. President Joe Biden on Thursday will release his fiscal year (FY) 2024 budget proposals and dig at House Republicans for not yet detailing their debt-limit-released spending cuts. USDA Secretary Tom Vilsack will speak before two groups this week — NFU in California and at the Commodity Classic in Orlando, Florida.

Federal Reserve Chair Jerome Powell will deliver the central bank's "Semiannual Monetary Policy Report" to the Senate Banking Committee on Tuesday at 10 a.m. ET, and to the House Financial Services Committee at 10 a.m. ET on Wednesday. In the Fed's report, released Friday (link), the bank said officials expect to issue more rate increases as they work to tackle continuing inflation.

Powell will likely be asked by lawmakers if a half percentage-point move is under consideration. The Fed raised rates by a quarter point on Feb. 1, shifting down from a half-point hike in December that came after four consecutive 75 basis-point moves.

Meanwhile, former Treasury Secretary and Harvard economist Larry Summers joins the Peterson Institute for International Economics' Olivier Blanchard on Tuesday to debate the future of interest rates.

Federal debt limit debate continues. Moody's Chief Economist Mark Zandi on Tuesday joins a panel of economists before the Senate Banking Committee's Subcommittee on Economic Policy to discuss the financial consequences of the federal debt limit.

On Thursday, President Joe Biden is expected to present his annual budget to Congress. The fiscal year 2024 plan comes at a time of deep fiscal unrest among lawmakers as arguments over the debt ceiling — the maximum amount the federal government can borrow — rage on.

Biden tax increase proposals coming. The president has said his budget will help offset increasing costs for Medicare, Social Security and health care by increasing taxes on the ultra-wealthy. The president also proposed a "billionaire" tax last year. Other Biden proposals will likely include an increased tax on capital gains and on corporate stock buybacks. Biden wants to detail a plan to lower the deficit by $2 trillion over 10 years, and extend the solvency of the Medicare Trust Fund by at least two decades. He previously pledged to achieve those goals without cutting Social Security or Medicare benefits or raising taxes on Americans making less than $400,000 a year.

Four broad Biden budget themes. Shalanda Young, the director of the White House Office of Management and Budget, said last week (link) that Biden’s budget would focus on four broad themes: expanding the economy, lowering costs, protecting Social Security and Medicare and reducing the deficit.

House Majority Leader Kevin McCarthy (R-Calif.) has criticized the White House for releasing its budget after the statutory deadline of early February, adding that the delay will push back the release of Republicans’ budget plan. He said he hoped Biden’s plan will “show us where we can have savings.”

Republicans, who control the House, say they will not raise the limit until deep cuts are made in federal spending other than reductions in Social Security and Medicare, with conflicting information on possible defense spending cuts. That more than signals big cuts elsewhere, including for farm programs, including food and nutrition funding (SNAP/food stamps) and likely crop insurance. Some of those recommended cuts could well impact debate on a new farm bill.

Reality check: If lawmakers take raising taxes and cutting Medicare, Social Security, defense and veterans’ programs off the table, Congress would need to cut 85% of spending in all other categories to balance the budget in 10 years, according to the Committee for a Responsible Federal Budget, a nonpartisan budget group. Also, reserves for Medicare’s hospital-insurance fund are forecast to run out in 2028, at which point the program would be able to pay only about 90% of hospital coverage.

The White House has refused to negotiate the debt limit issue, calling for a “clean” increase with no conditions attached. Biden previously said he told House Speaker Kevin McCarthy (R-Calif.) that once the House GOP proposes its own budget “we should sit down” and discuss differences. “It would be interesting to see what they want to cut and what their numbers add up to,” Biden said. Republicans recall Biden himself negotiated debt-ceiling deals with the GOP when he was vice president under former President Barack Obama.

Bottom line: Both budget proposals are going nowhere. It’s all political positioning and is another reason why very little gets done in D.C

House vote coming Friday on WOTUS. The GOP-controlled House will vote on killing the Biden administration’s new rule that expands the jurisdiction of the Clean Water Act via the Waters of the U.S. (WOTUS) rule. Bottom line: Even if the measure gets to the White House, the president will veto it. The true end zone on this is a coming Supreme Court ruling.

Norfolk Southern's CEO to testify Thursday at a Senate hearing on the toxic train derailment. Shaw is likely to face tough questions when he testifies regarding the toxic train derailment last month in East Palestine, Ohio. Norfolk Southern announced last week that Shaw had personally set up a $445,000 scholarship endowment fund for seniors at East Palestine High School. An unspecified number of students will be able to use the fund to attend college or vocational schools.

Meanwhile, officials on Sunday were investigating what caused a Norfolk Southern Corp. train to leave a track near Springfield, Ohio, in the company’s second derailment in the state in recent weeks. Unlike the Feb. 3 derailment near East Palestine, Ohio, which spilled toxic chemicals, no hazardous materials were aboard the train that went off track on Saturday, officials said. About 20 of the train’s 212 cars derailed near Springfield.

Commodity Futures Trading Commission Chair Rostin Benham will testify Wednesday in an oversight hearing before the Senate Agriculture Committee. An obvious topic will be the long delay recently in issuing the CFTC Commitments of Traders report.

Farm bill update: The House Agriculture Committee holds a subcommittee hearing Wednesday on the farm bill forestry title, and then on Thursday the full House Ag panel will zero in on commodity market volatility.

Looking ahead, House Ag Committee Chair Glenn “GT” Thompson (R-Pa.) on March 15 will lead a farm bill listening session in Waco, Texas.

Acting Comptroller of the Currency Michael J. Hsu will discuss cryptocurrency Monday at the Institute of International Bankers' annual conference in Washington. Other speakers at the conference include Benham and Federal Deposit Insurance Corp. Chairman Martin Gruenberg.

Meanwhile, Federal Reserve Vice Chair for Supervision Michael Barr will discuss crypto with the Peterson Institute for International Economics on Thursday.

Securities and Exchange Commission Chair Gary Gensler will participate in a fireside chat with the Council of Institutional Investors on Monday.

Climate change is the topic Monday via a Brookings Institution panel featuring experts from the International Monetary Fund and the World Bank will discuss the economic case for tackling climate change.

CERAWeek kicks off on Monday and will last throughout the week. The conference will draw key industry players from all over the world for discussions on the energy transition, fossil fuels, renewable energy, critical minerals and electrification.

Events include talks with and speeches from officials in the Biden administration, including John Podesta (link), White House senior adviser for clean energy innovation and implementation; John Kerry (link), U.S. climate envoy; Jennifer Granholm (link), Secretary of Energy; Jigar Shah (link), director of the Energy Department's loan programs office; Willie Phillips (link), acting chairman of the Federal Energy Regulatory Commission; Michael Regan (link), head of the Environmental Protection Agency; and David Crane (link), director of the Energy Department's Office of Clean Energy Demonstrations. To wrap up the conference, Sens. Lisa Murkowski (R-Alaska) and Joe Manchin (D-W.Va.) will preview what's ahead in Washington (link).

SPR oversight. The House Oversight Subcommittee on Economic Growth, Energy Policy and Regulatory Affairs on Wednesday will hold an oversight hearing titled "Burning the Midnight Oil: Why Depleting the Strategic Petroleum Reserve (SPR) is Not a Solution to America's Energy Problem."

Recently, the House GOP passed a bill on a near party-line vote to limit drawdowns of the SPR for any reason other than a "severe energy supply disruption."

The Biden administration sold a record 180 million barrels from the reserve last year to tamp down high gasoline prices, and is planning another 26-million-barrel sale as part of an earlier congressional mandate.

President Biden this week will meet with top EU official Ursula von der Leyen. They will discuss the war in Ukraine, green energy and tensions with China.

Residents of Oklahoma will cast their votes Tuesday on whether to legalize recreational marijuana for use by adults over the age of 21. In 2018, Oklahoma voters approved a measure that legalized the sale and use of medical marijuana in the state. Recreational marijuana is currently legal in 21 states and Washington, DC. When I spoke in Oklahoma last week one attendee told me after my speech, “You didn’t talk about the biggest crop grown in the state in grow houses… marijuana.”

Larry Hogan, former Maryland governor and Trump critic, will not run for president in 2024. Hogan said that the GOP “must move on from Donald Trump” and that “the stakes are too high for me to risk being part of another multicar pileup that could help Trump recapture the nomination.”

Ag-related events on tap this week include:

Monday, March 6

Farmers for Climate Action: Rally for Resilience, through Wednesday.
National Farmers Union annual meeting, through Tuesday, San Francisco. USDA Secretary Tom Vilsack speaks at the confab on Monday.
National Rural Electric Cooperative Association annual meeting, through Wednesday, Nashville.
School Nutrition Association legislative action conference, through Tuesday.

Tuesday, March 7

Rally for Resilience, Freedom Plaza, followed by march to Capitol Hill.

Wednesday, March 8

House Agriculture subcommittee hearing on the farm bill forestry title
Senate Agriculture Committee hearing on the Commodity Futures Trading Commission
Senate Budget Committee hearing, “A Burning Issue: The Economic Costs of Wildfires”

Thursday, March 9

President Joe Biden’s fiscal year 2024 budget proposals
Commodity Classic, through Sunday, Orlando, Florida.
House Agriculture Committee hearing, “Rising Risks: Managing Volatility in Global Commodity Derivatives Markets.”
House Agriculture Appropriations Subcommittee hearing with USDA’s Office of Inspector General.
USDA Economic Research Service webinar, “Precision Agriculture in the Digital Era: Recent Adoption on U.S. Farms.”

Friday, March 10

House Ways and Means Committee hearing with Treasury Secretary Janet Yellen on the president's FY 2024 bdget request, 1100 Longworth.

Key Economic Reports for the Week

The jobs report released Friday will be the focus this week, especially after Federal Reserve governor Christopher Waller warned interest rates may have to be raised more than expected if economic data comes in hot. Investors will also be paying close attention to Treasury yields, notably the 10-year Treasury note after it again hit the 4% level. Another key focus comes from testimony by Fed Chair Jerome Powell on Tuesday and Wednesday as he delivers semi-annual monetary policy report to lawmakers.

Monday, March 6

Factory orders

Tuesday, March 7

Wholesale inventories
Federal Reserve reports consumer credit data for January. In 2022, total consumer debt increased 7.8%, the largest jump since 2001, to a record $4.78 trillion. Nonrevolving credit — mainly mortgages as well as auto and student loans — rose 5.6%, while revolving credit — mostly credit-card debt —s piked 14.8%.
Federal Reserve Chair Jerome Powell testifies on the economic outlook and monetary policy before the Senate Banking Committee.
Earnings: Dick's Sporting Goods, Caseys General Stores, Squarespace, and Dole.
Australia’s central bank sets interest rates.

Wednesday, March 8

MBA Mortgage Applications
ADP releases its National Employment report for February. Economists forecast an increase of 180,000 private-sector jobs, after a rise of 106,000 in January. The leisure and hospitality industry led the way in January.
Bureau of Labor Statistics (BLS) releases the Job Openings and Labor Turnover Survey (JOLTS). Consensus estimate is for 10.7 million job openings on the last business day of January, slightly less than in December. Job openings remained historically elevated, and there are currently nearly two openings for every unemployed person.
International Trade in Goods and Services: The Commerce Department reports on U.S. exports and imports in January. The U.S. posted its largest trade deficit on record last year. For the full year, imports exceeded exports by $948.1 billion, a 12.2% wider trade deficit from 2021.
Federal Reserve Beige Book
Federal Reserve Chair Jerome Powell testifies on the economic outlook and monetary policy before the House Financial Services Committee.
European Central Bank President Christine Lagarde speaks.
Bank of Canada announces its latest interest-rate decision.
China’s National Bureau of Statistics releases February figures on inflation. Consumer prices in China rose 2.1% in January from a year earlier, a faster pace than December’s 1.8% rise.
Earnings: Brown Forman, Campbell Soup and MongoDB.

Thursday, March 9

Jobless Claims
Federal Reserve releases the Financial Accounts of the U.S., which includes total household net worth data, for the fourth quarter. As of Sept. 30, household net worth totaled $143.3 trillion, about $7 trillion less than the record high reached in the fourth quarter of 2021.
February Challenger Job Cuts
Fed Balance Sheet
Money Supply
Earnings: Ulta Beauty, DocuSign, BJ's Wholesale Club and The Gap.

The Bank of Japan’s (BOJ) central bank sets interest rates. Forecasters say the BOJ is likely to continue to defy global trends and keep its key rate at -0.1%. Haruhiko Kuroda, the governor of the BOJ and architect of its negative interest-rate policy, will retire in April. Incoming Gov. Kazuo Ueda is expected to maintain the BOJ’s ultraloose monetary policy.

Friday, March 10

BLS releases the jobs report for February. The economy is expected to have added 215,000 nonfarm jobs, following a gain of 517,000 in January. The January data outpaced consensus estimate by more than 300,000. Economists forecast the unemployment rate to remain unchanged at 3.4%, the lowest in more than a half-century.
Earnings: Douglas Elliman.

Key USDA & international Ag & Energy Reports and Events

Wednesday brings another monthly supply and demand update from USDA. Pro Farmer expects USDA will raise its corn and wheat ending stocks amid cuts to use. Much of the focus will be on USDA’s South American production forecasts, especially for Argentina.

On the energy front, major energy companies’ chief executive officers, OPEC officials and politicians will converge on Houston for the industry’s annual CERAWeek conference, which starts on Monday. The U.S. Energy Information Administration releases its monthly Short-Term Energy Outlook on Tuesday.

Monday, March 6

Ag reports and events:

Export Inspections
Malaysia’s March 1-5 palm oil export data
Bursa Malaysia Palm Oil Conference and 2023 Outlook, Kuala Lumpur, day 1
Holiday: Thailand