USDA WASDE Report Will Not Have Complete Analysis of Chapter 1 Accord with China

Posted on 02/09/2020 11:27 AM

Trump's FY 2021 budget mostly dead on arrival, but will signal interests ahead of elections


USDA's WASDE report on Tuesday will be the first time its analysts will include forecasts of Chinese imports since the Jan. 15 signing of the Phase 1 agreement.

     The only thing important about President Trump's Monday release of proposals for FY 2021 is what his interests are heading into November elections.
Congress has largely rejected his prior budget proposals, including proposed cuts for some ag-related programs. Meanwhile, Congress may punt on the FY 2021 budget because the two-year budget accord includes funding for the fiscal year.

     Fed Chairman Jerome “Jay” Powell will deliver the central bank's semiannual report to Congress as part of two-day testimony starting Tuesday.

     On the political front, New Hampshire on Tuesday holds the first primary contest following the chaotic Iowa caucuses.

 

Odds of Congress reaching consensus on major legislation nearly evaporated last week after President Trump refused to shake House Speaker Nancy Pelosi’s (D-Calif.) outstretched hand before his State of the Union speech; and Pelosi tearing in half the speech text as she stood behind Trump on the rostrum.

     However, Democrats and Republicans have strong incentive to pass legislation on prescription drug prices, and on a measure to end surprise medical bills.

     While both sides are working on an infrastructure bill, major differences between and among both political parties continue. House Ways and Means Committee Chairman Richard Neal (D-Mass.) last week signaled cautious optimism towards achieving a compromise with the Trump administration on a broader infrastructure deal this year, despite major political impediments. Neal spoke with Treasury Secretary Steven Mnuchin on Friday to discuss the possibility of moving an infrastructure package that would be broader than the highway bill reauthorization Trump endorsed during his State of the Union address. “I think we can go well beyond that,” Neal said, adding that he liked the option of reintroducing Build America Bonds to help pay for new projects. But Trump would need to address Democrats’ concerns over climate change, he said. “Any bill that includes infrastructure is going to have to include climate consideration,” Neal said. That lowers the odds of any major infrastructure measure this Congress. Democrats, who hold a majority in the House of Representatives, can and likely will advance their own infrastructure plans on a party-line vote. Mnuchin told Fox Business last week that infrastructure would be a legislative priority for the administration this year. Otherwise, the issue “will be at the top of the list after the election,” Mnuchin said.

The House will move public lands legislation designating 1.4 million acres as wilderness or potential wilderness areas in western states, and a measure (HJRes 79) to extend the 1979 deadline in order to ratify a long since mothballed Equal Rights Amendment. The House on Monday is expected to approve a Senate-passed bill that would authorize Customs and Border Protection to hire 240 new agriculture specialties and to train and deploy 20 new inspection dog teams at ports of entry. It will take a two-thirds majority to pass the House without going through the usual legislative process.

The Senate will move five more of the President’s judicial nominations, including Andrew Brasher to the U.S. Court of Appeals for the 11th Circuit. The Senate also could vote on a resolution (SJRes 68) to direct the president to withdraw U.S. armed forces from hostilities against Iran

President Trump on Monday will release his budget proposal for fiscal year 2021, highlighting his spending priorities as he seeks re-election. Congressional Democrats will quickly declare the overall budget request dead on arrival, but the proposals could include some items farm-state lawmakers may want. Also, the budget blueprint is likely to shape GOP spending objectives as the annual appropriations process gets underway.

     During his State of the Union speech, Trump highlighted a plan to offer vocational and technical education in all U.S. high schools.

     The Trump administration plans to request $2 billion in new funding for border-wall construction, significantly less than the amount it sought last year, in the budget proposal set for release Monday, the Wall Street Journal reported, citing White House officials familiar with the planning. Link for details.

     Trump will propose increases in spending for high-speed internet and other types of rural infrastructure as part of his fiscal 2021 budget, USA Today reported (link). It will include $25 billion for a new "Revitalizing Rural America" grant program for high-speed internet and transportation projects. Key as usual will be how it is funded. The budget will request $250 million for the USDA’s ReConnect broadband loan and grant program, $300 million less than Congress provided for FY 2020. Congress authorized the program in 2018. Trump requested $200 million in budget authority for the program in FY 2020.

     The caution flag is high on whether the White House will again propose cuts to crop insurance subsidies and another effort to tighten commodity program eligibility limits, ideas that country has soundly rejected in the past. A budget veteran says “Trump's budget will recycle old cuts to ag and then disavow them the same as last year... about $20 billion in cuts.”

     FY 2021 budget from Congress: Some sources say the House won't write a budget and the Senate won't likely either. Reason: The two-year spending agreement already covers FY 2021.

On the political front, the New Hampshire primary comes Tuesday. Bernie Sanders took 60% of the vote in the primary four years ago, but he will not replicate that in a multi-candidate field. Polls continue to show him winning in New Hampshire, but by a shrinking margin over another Democratic candidate Pete Buttigieg. Both of them battled to a near-tie in Iowa.

Health care and the economy dominate voter concerns as America begins the slow formal crawl to the next presidential election. A new Rasmussen Reports national telephone and online survey finds that 23% of Likely U.S. Voters identify health care as the most important issue to their vote in the upcoming elections.

     The economy is a close second with 21% who list it as their top voting concern. For 15%, taxes and spending are most important, while 13% are most concerned with illegal immigration. Next is climate change, the most important voting issue for 11%, followed by President Trump’s impeachment (6%) and national security (5%). Another 5% rate something else as most important.

Key hearings and other events on tap this week include:

Agriculture

  • Tuesday: House Biotechnology, Horticulture, and Research Subcommittee hearing on “Economic Opportunities from Local Agricultural Markets.”
  • Wednesday: House Transportation and Infrastructure Economic Development, Public Buildings and Emergency Management Subcommittee hearing on "Animals in Disasters."

Trade

  • Thursday: Regulations pushed by the Trump admin. take effect on reviews of foreign deals’ security risks.
  • Friday: Effective date of reduction for certain tariff rates as part of the U.S./China Phase 1 deal take effect. China will halve tariffs on some $75 billion of imports from the U.S.

Budget/Tax

  • Tuesday: House Appropriations Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Subcommittee hearing on "Budget Hearing — USDA Office of the Inspector General."
  • Tuesday: House Ways and Means Cmte to hearing on “disappearing corporate income tax.”
  • Wednesday: House Appropriations Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Subcommittee hearing on "Budget Hearing: Farm Credit Administration."
  • Wednesday: OMB Acting Director Russell Vought testifies at House Budget Committee hearing to consider Trump’s FY 2021 budget.
  • Wednesday: Phillip Swagel, director, Congressional Budget Office, testifies before House House Appropriations subcommittee hearing on FY 2021 budget.
  • Wednesday: Treasury Sec. Steven Mnuchin testifies at Senate Finance Committee hearing to review Trump’s FY 2021 budget.
  • Thursday: Sec. of Health and Human Services Alex Azar testifies in committee hearing on Trump’s FY 2021 budget.

Banking/Finance

  • Monday: SEC Fixed Income Market Structure Advisory Committee meets to discuss potential recommendations from the Municipal Securities Transparency, Credit Ratings, and Technology and Electronic Trading subcommittees.
  • Wednesday: House Financial Services subcommittee hearing to review diversity and inclusion at large American banks.

Defense

  • Tuesday: House Armed Services Committee hearing considers Defense Dept. FY 2021 strategy for countering weapons of mass destruction.
  • Tuesday: Christopher Krebs, director, Cybersecurity and Infrastructure Security Agency, Homeland Security Dept., testifies to Senate Homeland Security Committee.
  • Tuesday: Senate Homeland Security Committee hearing to review the costs and benefits of the war in Afghanistan.
  • Wednesday-Thursday: NATO defense ministers meet in Brussels.
  • Thursday: House Foreign Affairs Committee hearing to assess U.S. security assistance to Mexico.

Economy/Markets

  • Tuesday: Fed Chair Jerome Powell testifies on semiannual monetary policy report at House Financial Services Committee hearing.
  • Wednesday: Powell testifies before the Senate Banking Committee on the semiannual monetary policy.

Energy

  • Monday: Energy Sec. Dan Brouillette begins visit to Vienna, Lisbon and Munich, Germany where he will meet government officials and stakeholders. In Vienna, he will attend International Atomic Energy Agency’s International Conference on Nuclear Security. Visit is through Feb. 15.

Environment

  • Tuesday: House Energy and Commerce subcommittee hearing on EPA’s lead and copper proposal and public health.
  • Thursday: Earth Day Network and Yale Program on Climate Change Communication release report and host panel discussion on “New Research and Insights On Consumer Food Habits Related to Climate Change,” at National Press Club.

Health

  • Tuesday: CDC update on Coronavirus outbreak; at the National Press Club.
  • Tuesday: House Education and Labor Committee markup for a surprise medical billing measure.
  • Tuesday: House Labor subcommittee hearing looks at the case for expanding the Family and Medical Leave Act.
  • Wednesday: House Ways and Means Committee expected to mark up its own version of a surprise medical billing measure.
  • Wednesday: Senate Homeland Security Committee hearing to examine protecting the U.S. from global pandemics.

Nominations

  • Thursday: Senate Banking Committee hearing to consider nominations including Jessie Liu to be undersecretary for terrorism and financial crimes, Treasury Dept., and Judy Shelton and Christopher Waller to be board members of the Federal Reserve.

Science/Technology

  • Tuesday: House Commerce subcommittee hearing on autonomous vehicles and new technology.
  • Wednesday: Senate Science hearing on U.S. leadership in space missions.
  • Thursday: Andy Purdy, Chief Security Office, Huawei Technologies USA, among speakers at Elliott School of International Affairs forum.

State/Geopolitics

  • Wednesday: Senate Foreign Relations Committee examines U.S.-Libya policy.
  • Thursday: Sec. of State Michael Pompeo starts overseas trip to Germany, Senegal, Angola, Ethiopia, Saudi Arabia and Oman; through Feb. 22. Visit includes speech at the Munich Security Conference, meetings with leaders including African Union Commission Chair Moussa Faki Mahamat. Pompeo will be in Riyadh Feb. 19-21 to meet with Saudi leadership to discuss Iran, Yemen and human rights.

Fed chairman to testify on Capitol Hill. Jerome Powell will deliver the central bank's semiannual report to Congress as part of two-day testimony starting Tuesday. The report says the global slowdown in manufacturing and trade appears to be nearing an end, but that possible spillovers from the coronavirus pose a new risk.

     Economic reports and Federal Reserve appearances for the week include:

Tuesday:
     — Fed Chairman Jerome Powell testifies on semiannual monetary policy report at House Financial Services Committee hearing.
     — James Bullard, St. Louis Federal Reserve president, speaks
     — National Federation of Independent Business releases its Small Business Optimism Index for January. Consensus estimates are for a 103.5 reading, up from December’s 102.7 figure.
     — Bureau of Labor Statistics (BLS) releases its Jobs Openings and Labor Turnover Survey (JOLTS) for December. Economists forecast 6.78 million job openings on the last business day of December, little changed from November.

Wednesday:
     — Jerome Powell testifies before the Senate Banking Committee on the semiannual monetary policy.
     — MBA Mortgage Applications
     — Atlanta Fed Business Inflation Expectations
     — Treasury Budget

Thursday:
     — Jobless Claims
     — BLS releases the Consumer Price Index for January. Expectations are for a 2.5% year-over-year gain, up from 2.3% in December. The core CPI, which excludes volatile food and energy prices, is seen rising 2.2%.
     — Fed Balance Sheet
     — Money Supply

Friday:
     — University of Michigan releases its Consumer Sentiment Survey for February. Consensus estimates are for a 99.2 reading, down from January’s 99.8 figure.
     — Census Bureau reports Retail Sales data for January. Economists forecast a 0.3% gain, in line with the December rise. Excluding autos and gas, retail sales are expected to climb 0.4%, after jumping 0.5%.
     — Import and Export Prices
     — Industrial Production
     — Business Inventories

USDA's supply and demand report (WASDE) comes Tuesday. It will include the first forecasts (for 2019-20 marketing year) implications of the Chapter 1 U.S./China trade agreement. But do not expect big boosts for commodity exports because history shows 70% of Chinese imports of U.S. farm products come in the October-March timeframe. USDA's first Chapter 1-related forecasts for 2020-21 comes during the USDA Ag Outlook Forum on Feb. 20-21.

     China buys

     Key USDA & international ag and energy-related reports and events :

Monday, Feb. 10

Ag reports and events:

  • Export Inspections
  • North American Potatoes
  • National Ethanol Conference, Feb. 10-12; Speakers include former U.S. President George W. Bush and USDA Undersecretary Ted McKinney
  • CFTC Chairman Heath Tarbert speaks at a lunch held by The Economic Club of New York
  • EU weekly grain, oilseed import and export data
  • Dubai Sugar Conference, Feb. 9-12
  • Malaysia’s Feb. 1-10 palm oil exports data

Energy reports and events:

  • National Ethanol Conference, Houston

Tuesday, Feb. 11

Ag reports and events:

  • WASDE
  • Cotton Ginnings
  • Crop Production
  • Cotton: World Markets and Trade
  • Grains: World Markets and Trade
  • Oilseeds: World Market and Trade
  • World Agricultural Production
  • Season Average Price Forecasts
  • Holiday: Japan
  • France agriculture ministry gives estimate for 2020 winter grain and rapeseed plantings
  • China agriculture ministry’s (CASDE) supply, demand monthly report
  • Brazil Conab soybean and corn yield, area and production

Energy reports and events:

  • API weekly U.S. oil inventory report
  • EIA monthly Short-Term Energy Outlook (STEO)
  • Genscape ARA weekly crude stockpiles report
  • Oslo Energy Forum, runs through Thursday
  • Earnings: Aker BP, Consol Energy

Wednesday, Feb. 12

Ag reports and events:

  • Broiler Hatchery
  • Feedgrains Database
  • Wheat data
  • FranceAgriMer monthly cereals balance sheet

Energy reports and events:

  • EIA Weekly Petroleum Status Report including ethanol production & stocks
  • OPEC Monthly Oil Market Report
  • S&P Global Platts 19th Annual LNG Conference in Houston
  • New BP CEO Bernard Looney to give strategy presentation in London
  • Earnings: Inpex, Marathon Oil, Cenovus

Thursday, Feb. 13

Ag reports and events:

  • Weekly Export Sales
  • Cotton and Wool Outlook Tables
  • Meat Price Spreads
  • Oil Crops Outlook
  • Dairy Monthly Tables & Dairy Quarterly Data
  • Feed Outlook
  • Rice Outlook
  • Wheat Outlook
  • Turkey Hatchery
  • Vegetables — Annual
  • Brazil’s grain exporter group Anec holds conference on 2019-20 crop outlook

Energy reports and events:

  • EIA weekly US Working Gas in Underground Storage Report
  • IEA Monthly Oil Market Report
  • Singapore onshore oil-product stockpile data
  • Russia refining maintenance schedule
  • Earnings: Woodside Petroleum, JXTG Holdings, PBF Energy, Centrica

Friday, Feb. 14

Ag reports and events:

  • CFTC weekly commitments of traders report on various U.S. futures and options contracts.
  • Peanut Prices
  • USDA Agricultural Projections to 2029
  • Agricultural Baseline Database
  • Feed Grains: Yearbook Tables
  • Tree Nuts: World Markets and Trade
  • FranceAgriMer crop conditions

Energy reports and events:

  • Baker Hughes weekly U.S. oil/gas rig counts
  • National Climate Emergency Summit in Melbourne, Australia, runs through Saturday
  • Earnings: Idemitsu Kosan, Thai Oil

 

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