Some Dems Reportedly Trying to Block Additional CCC Funding in CR

Posted on 09/15/2020 8:36 AM

Meat plants sought federal protection from local health departments

 


In Today’s Updates


 

Market Focus:
* China's retail sales rise the first time this year in August
* USDA announces corn and soybean exports under daily reporting system
* IEA painted a gloomy picture for crude oil demand the rest of this year
* Another somber oil demand report surfaced from OPEC's monthly report
* Hurricane Sally takes aim at center Gulf Coast

 

Policy Focus:
* CFAP 1 payments close in on $10 billion
* Senate Dems use requested GAO report to push stance of unfair MFP payouts
* Some Dem lawmakers trying to block additional CCC funding
* Covid aid push by House moderates
* EPA rejects 54 of 68 gap-year SRE requests

 

U.S./China update:
* Trump admin. action on China forced and imprisoned labor not as broad as feared
* China to auction another 20,000 MT of frozen pork from its state reserves
* China pledges expanded trade with EU but short on market access concessions


U.S. food & beverage industry update:
* Caffeine giant has a sleepy product
* Meat plants sought federal protection from local health departments


Update on re-opening America... and around the world:
* Hershey is trying to save Halloween from the coronavirus pandemic
* Macy’s and New York reimagine Thanksgiving Day Parade


Coronavirus update:
* Chinese coronavirus vaccine ready by November: top scientist
* Scientists discover antibody that neutralizes coronavirus
* Anti-inflammatory drug may shorten Covid-19 recovery time

 

Politics & Elections:
* Biden campaign adds top attorneys to handle post-election issues
* "The Harris administration"...


Other Items of Note:
* BNSF Railway taps Kathryn Farmer as chief executive

 


MARKET FOCUS


 

Equities today: Global stock markets were mostly up overnight. U.S. Dow opened nearly 200 points higher.

 

     U.S. equities yesterday: The Dow was up 327.69 points, 1.18%, at 27,993.33. The Nasdaq advanced 203.11 points, 1.87%, at 11,056.65. The S&P 500 gained 42.57 points, 1.27%,at 3,383.54.

 

On tap today:

 

     • New York Fed's Empire State survey for September is expected to rise to 7 from 3.7 a month earlier. (8:30 a.m. ET)
     • U.S. import prices for August are expected to rise 0.5% from a month earlier. (8:30 a.m. ET)
     • U.S. industrial production for August is expected to rise 1% from a month earlier. (9:15 a.m. ET)
     • Federal Reserve starts its two-day policy meeting (FOMC).
     • Japan's provisional trade figures for August are out at 7:50 p.m. ET.

 

China released upbeat economic data that further suggests its economy is taking off faster than other major economies, following the Covid-19 lockdowns. Retail sales, the last holdout among the economy’s major components, returned to pre-coronavirus levels by showing their first month of growth this year. Other major indicators, including factory production, investment and property activity, all gathered pace, China’s state-run statistics bureau said today, signaling a robust rebound for the world’s second-largest economy. The economic rebound has been supported by recovering global demand for Chinese-made goods and Beijing’s measures to boost growth.

 

Market perspectives:

 

     • Private exporters reported to USDA the following activity:

 

        — Export sales of 132,000 metric tons of soybeans for delivery to China during the 2020-2021 marketing year;

        — Export sales of 132,000 metric tons of soybeans for delivery to unknown destinations during the 2020-2021 marketing year; and

        — Export sales of 120,000 metric tons of corn for delivery to unknown destinations during the 2020-2021 marketing year.

 

     • International Energy Agency (IEA) painted a gloomy picture for crude oil demand the rest of this year, predicting it would decline 8.4 million barrels per day, overall, this year. "We expect the recovery in oil demand to decelerate markedly in the second half of 2020," the IEA wrote in its closely-watched monthly report, adding that "the path ahead is treacherous amid surging Covid-19 cases in many parts of the world." Global oil demand growth is now seen at 91.7 million barrels per day, marking a contraction of 8.4 million bpd Y/Y and more than the 8.1 million bpd contraction predicted in the agency's August report. "The economic slowdown will take months to reverse completely, while certain sectors such as aviation are unlikely to return to their pre-pandemic levels of consumption even next year."


     • Another somber oil demand report surfaced from OPEC's monthly report. It says the economic hit from the coronavirus pandemic will hurt global energy demand harder and for longer than previously feared. OPEC said it expects the pandemic to reduce demand by 9.5 million barrels a day, forecasting a fall in demand of 9.5% from last year. The cartel softened the amount by which it expects non-OPEC oil supply to fall this year — in part because of a recovery in U.S. output — and blunted its demand recovery forecast for next year. That was accompanied by a sharper forecast hit to the global economy: OPEC now expects a 4.1% contraction in activity.

 

     • Crude oil prices lifted higher ahead of the U.S. trading start, though demand concerns are capping advances. U.S. crude is trading around $37.80 per barrel and Brent around $40.05 per barrel. In Asian action, crude oil prices were weaker, with US crude trading around $37.17 per barrel and Brent crude around $39.50 per barrel, both down 0.2% to 0.3% from their U.S. trading finish Monday.

 

     Crude oil

 

Hurricane Sally takes aim at center Gulf Coast. Sally was located about 60 miles east-southeast of the mount of the Mississippi River as of 4 am CT, moving to the west-northwest at approximately 2 miles per hour, according to the National Hurricane Center (NHC). “The center of Sally will move near the coast of southeastern Louisiana later today, and make landfall in the hurricane warning area tonight or Wednesday morning,” NHC said. As the storm turns and heads across the Southeast, NHC said it is currently forecast to produce rainfall of 4 to 8 inches, with isolated maximum amounts of 12 inches, across portions of southeastern Mississippi, southern and central Alabama, northern Georgia, and the western Carolinas.”

 

     Rising percentage of Gulf oil, gas production shut-in ahead of Hurricane Sally. Personnel have been evacuated from 147 of 643 manned platforms in the Gulf of Mexico, or 22.9%, according to the Bureau of Safety and Environmental Enforcement (BSEE). Personnel have been evacuated from three of the 10 non-dynamically positioned rigs and two dynamically positioned rigs have been moved off location and out of the storm’s path. As of midday Monday (Sept. 14), approximately 21.4% of oil and 25.3% of natural gas production in the Gulf of Mexico has been shut-in.

 

     Sally also poses a challenge for the region's efforts to contain the coronavirus.

 


POLICY UPDATES


 

CFAP 1 payments close in on $10 billion. Payments under the Coronavirus Food Assistance Program 1 (CFAP 1) increased to $9.9 billion as of Sept. 13, including $4.9 billion for livestock, $2.6 billion for non-specialty crops, $1.7 billion for dairy and $647 million for specialty crops.

 

     Payments for cattle make up the biggest share at $4.2 billion out of the $4.8 billion paid out for livestock. Payments for hogs are at $597 million.

 

     The $2.6 billion for non-specialty crops accounts for 26% of all payments, with $1.7 billion of that for corn, $499 million for soybeans, and $255 million for upland cotton.

 

     Payouts by state have shifted slightly, with Iowa still the top state at $961 million, followed by Nebraska ($701 million), California ($606 million), Minnesota ($601 million and Texas ($598 million. Wisconsin is the only remaining state at $500 million or more at $519 million.

 

     It is not clear how much the totals for CFAP will increase in coming reports as the signup deadline was Sept. 11.

 

     CFAP 1

 

     CFAP 2

 

     CFAP 3

 

     CFAP 4

 

Here we go again... Senate Dems use requested GAO report to push their stance that MFP payouts were unfair. Farmers in U.S. Agriculture Secretary Sonny Perdue’s home state of Georgia received the highest average payments last year under President Donald Trump’s trade aid program, the Government Accountability Office (GAO) found in a report released Monday (link). That was known before but Senate Democrats said the findings confirm their long-standing complaints that Trump’s $28 billion trade aid program was unfair to family farmers in the Midwest because farms in the South got higher average payments and a large portion of aid went to bigger farms, even though total payouts in the Midwest were well above those of Georgia and other southern states.

 

     “It’s just not been fair,” said Sen. Debbie Stabenow of Michigan, the top-ranking Democrat on the Senate Agriculture Committee, who along with other Democrats requested the investigation. Perdue “certainly put together a program that favored the crops in his home state.”

 

     The GAO report didn’t draw any conclusions about the propriety of how aid was distributed. It did note that big farmers collected an additional $519 million in trade-war payments in 2019 because of the high payment limits written into the Market Facilitation Program by the Trump administration.

 

     A USDA spokesperson said that aid payments were “based on trade damage, not based on region or farm size.” Another statement accused Senate Democrats of trying to twist the data. Georgia led the nation with payments of $42,545 per farmer versus a national average of $16,507 per farmer and $119 per acre versus a national average of $57 per acre in last year’s trade aid program, the GAO found. Eight of the nine states with the highest payments per acre were in the South, according to the report. The USDA statement said the Midwest region received more than 68% of overall aid payments, with the top five recipient states Iowa, Illinois, Minnesota, Texas, and Kansas.

 

     Stabenow is using the GAO report to halt USDA from having another “blank check.” Stabenow said Midwestern states have “more individual farms” and the higher payments per farmer and per acre suggest “deep regional inequities with Southern farms benefiting more than other regions.” She said that the next installment of farm aid for Covid-19 relief should include congressional instructions on distribution rather than giving Perdue a “blank check.”

 

     To see how the information on this topic is being spun, consider comments from Minn. Farmers Union President Gary Wertish who complains about payments being spread unequally across geographic regions and favored some crops over others without economic justification and funneled windfall payments to some of the largest farms in the country. However, Minnesota got nearly $1 billion in payments, 7.4% of the total.

 

     Stabenow and other naysayers should clearly know that USDA's chief economist paid crops on the impact of China tariffs. For example, if a Michigan farmer was in a county that grew all soybeans, the producer would have gotten a big payment. But if the producer was in a county that also grows corn and little corn was exported to China during the time assessed, the payment was lower. If you are a farmer in Georgia and the county grew soybeans and cotton, you get a higher payment because both crops have had big exports to China and were heavily impacted.

 

— Some lawmakers are reportedly trying to withhold the White House request for more CCC funding as part of the coming continuing resolution. A farm group coalition letter on the topic is expected to be released today.

 

     The following is remaining CCC funding today, showing how without additional farm bill funding could be significantly delayed.

 

    CCC

 

     Perspective: One observer in the countryside says: “The reason why CFAP 1 and CFAP 2 are so underwhelming is because some Democrats have blocked replenishment of the CCC. The Ag Secretary has $14 billion to help provide relief but without replenishment in the CR he can provide no more nor can he administer ARC, PLC, marketing loans, the sugar and dairy programs, conservation programs, and trade programs. I would not want to be a rural Democrat defending that stance.”

 

Covid aid push by House moderates. A 50-member group of House Democrats and Republicans will release a $1.52 trillion coronavirus stimulus plan today in a long-shot attempt to break a months-long deadlock on providing relief to the pandemic-battered U.S. economy. The caucus proposal offers key compromises on the two thorniest issues: On aid to state and local governments, the group is backing about $500 billion, splitting the difference between the $915 billion sought by Speaker Nancy Pelosi (D-Calif.) and Senate Minority Leader Chuck Schumer (D-N.Y.), and the $150 billion put forward by the White House. On the issue of supplemental unemployment insurance, the group is backing $450 per week for eight weeks and then applies a formula for benefits capping them at 100% of previous wages or $600 per week, whichever is lower. Democrats want $600 per week while the White House, citing concerns that such an amount is a disincentive for work, has sought $300 per week. The proposal also would provide another round of $1,200 direct stimulus payments for most Americans with a $500 per child benefit.

 

     Meanwhile, Treasury Secretary Steven Mnuchin said Pelosi may oppose any spending deal due to political considerations. In an appearance on CNBC’s Squawk Box, Treasury Secretary Mnuchin was asked about the emergency spending bill blocked by Senate Democrats last week. Mnuchin said, “I think the bill clearly had components that are supporting kids and jobs and small businesses. And there’s clearly parts of the economy that need more work, and the President and I want to have more support to help those American businesses that have been impacted by this. I think there is many areas of this where there is an agreement between the Democrats and the Republicans. In some of the areas we do have differences on the amounts. But I will continue to work on this. I’ve told the Speaker I’m available any time to negotiate, no conditions. ... I understand the Problem Solvers is going to put out a bipartisan proposal this afternoon from the House, so I look forward to seeing that as well. ... I think there is a compromise if the Speaker is willing to move forward. I am somewhat concerned that she’s afraid that any deal will be good for the President. Obviously we have politics getting in the way.”

 

EPA rejects 54 of 68 gap-year SRE requests. EPA announced Monday that it has rejected 54 of 68 small refinery exemption (SRE) request for waivers of obligations under the Renewable Fuel Standard (RFS). EPA said the decision was in part due to a view that the refineries in question had demonstrated compliance with the RFS and did not demonstrate disproportionate economic hardship from compliance. If that had been the case, EPA reasoned that the refineries “likely would have petitioned for relief in each of these preceding compliance years.” However, the refineries continued to comply with the RFS and participate in the refining industry, EPA noted. Link to EPA notice.

 

     The Department of Energy has not yet provided its recommendations on 14 of the 68 SREs submitted, but indications are that the stance taken by EPA could suggest the remaining SREs will not be granted.

 

Update on China:

  • Trump administration banned cotton apparel, computer parts and other imports from companies and suppliers that allegedly relied on forced and imprisoned laborers in China’s Xinjiang region. The U.S. Customs and Border Protection (CBP) Monday issued five Withhold Release Orders (WROs) on various products from China linked to state-sponsored forced labor in the Xinjiang Uyghur Autonomous Region. The WROs direct CBP officers at ports of entry to withhold release of the following:

       All products made with labor from the Lop County No. 5 Vocational Skills Education and Training Center; hair products made in the Lop County Hair Product Industrial Park; apparel produced by Yili Zhuowan Garment Manufacturing Company, Ltd., and Baoding LYSZD Trade and Business Company; cotton produced and processed by Xinjiang Junggar Cotton and Linen Company, Ltd.; computer parts made by Hefei Bitland information Technology Company, Ltd., in Anhui, China.

    While the action is not as broad as had been feared, acting CBP Deputy Secretary Ken Cuccinelli said the new orders would be in place while the administration conducts more legal analysis of the region-wide import bans, with CBP acting Commissioner Mark Morgan telling reporters that the investigations continue. Reports indicate that some in the Trump administration raised concerns about supply chain disruptions that could evolve with broader bans.

    Cuccinelli said legal concerns were the factor in the administration opting to further investigate the situation. “We want to make sure that when we do get challenged —and we assume that we will be challenged, legally — that we will prevail and none of the goods we would ultimately would seize under such a WRO would be shaken loose and released into the United States,” he stated. Indications are the companies targeted by CBP are smaller suppliers but some remain concerned about the potential impact if the U.S. broadens the actions. China, as expected, reacted angrily to the US moves. The actions "violate the rules of international trade, and disrupt global industrial, supply and value chains," Foreign Ministry spokesman Wang Wenbin told reporters. “The so-called forced labor issue is entirely fabricated by some organizations and people in the US and the West.” He further noted China will take action to protect the rights and interests of Chinese companies.

    Bottom line: The U.S. decided to temporarily shelve a sweeping ban on products containing cotton from China’s Xinjiang province.

    Cotton futures

     
  • China announced it will auction another 20,000 MT of frozen pork from its state reserves on Sept. 18. The country has already moved 550,000 MT via such auctions this year in an effort to ease soaring pork prices due to ASF.
     
  • China pledges expanded trade with EU but stops short on market access concessions. A virtual summit between Chinese President Xi Jinping and leaders of European trading bloc leaves much work still to do. Xi pledged to expand agri-food imports from the European Union and cooperate on climate change — but he stopped short of making key concessions on the thorny issue of market access and hit back hard at EU criticism of human rights in China. Xi said he also hoped to sign a deal to protect European investors’ interests in China.

    European Commission President Ursula von der Leyen cautioned that “a lot — a lot —still remains to be done,” citing market access and sustainability. “With market access, it is not a question of meeting halfway, it is a question of rebalancing the asymmetry and a question of openness of our respective markets,” she said. “China has to convince us that it is worth having an investment agreement.”

     
  • U.S./China Phase 1 tracker: China’s purchases of U.S. goods. Link.

Food and beverage industry update:

  • Caffeine giant has a sleepy product. A new wellness product from PepsiCo, called Driftwell, is aimed at improving sleep quality. The enhanced water drink will contain L-theanine, an amino acid that is also found in green and black teas and some mushrooms, as well as 10% of the recommended daily allowance of magnesium. The product, which won't have sugar or calories, was conceived by Pepsi employees as part of an internal contest and will be distributed in grocery stores by early 2021.
     
  • Meat plants sought federal protection from local health departments. Even as thousands of their employees fell ill with Covid-19, meatpacking executives pressured federal regulators to help keep their plants open, according to a trove of emails obtained by USA Today. The emails show how a major meatpacking trade group, the North American Meat Institute, provided USDA with a draft version of an executive order that would allow plants to remain open. A week later, President Donald Trump signed an order with similar language, which caused confusion over whether local health authorities could close plants due to Covid-19 outbreaks. Link to USA Today article.

Update on reopening America... and around the world:

  • Hershey is trying to save Halloween from the coronavirus pandemic. The candy maker said Monday that it has worked with public-health experts and retailers to create a website to offer advice on how to trick-or-treat safely in different parts of the U.S., depending on the intensity of local Covid-19 transmission. Hershey is also changing the variety of candies it makes for Halloween this year and introduced them a few weeks earlier than normal, aiming to prop up business during the season that typically drives one-tenth of its $8 billion in annual sales. The pressure on Hershey is indicative of a new stage of disruption for some businesses as the pandemic advances into the fall. Airlines, hotel operators and retailers are also bracing for the pandemic to alter normal travel and shopping patterns around the end-of-year holidays. Link to WSJ article for details.

    Halloween

     
  • Macy’s and New York reimagine Thanksgiving Day Parade. Instead of the usual one-day affair over a 2.5-mile route, floats will show in and around Herald Square over two days with 75% fewer spectators, no one under 18 participating and other pandemic-era limitations. Held since 1924, one estimate last year found that the department store’s costs to put on the parade were around $10 million to $12 million annually.

Coronavirus update:

  • Summary: Source: Johns Hopkins University as of 6:30 a.m. ET.

    — 29,298,349: Confirmed cases world-wide, and 928,763 deaths
    — 33,826: New U.S. cases recorded yesterday
    — 6,554,821: Total confirmed cases in the U.S.
    — 418: Deaths in the U.S. recorded yesterday
    — 194,536: Total U.S. deaths
    — 89,603,688: Tests conducted in the U.S.

    Link to Covid Case Tracker

    Link to Our World in Data

     
  • Chinese coronavirus vaccine ready by November, top scientist says. Clinical trials have been progressing smoothly and preparations are being made to go into mass production, CDC’s chief biosafety expert Wu Guizhen says.
     
  • Scientists discover antibody that neutralizes coronavirus. Scientists at the University of Pittsburgh School of Medicine have isolated “the smallest biological molecule” that “completely and specifically neutralizes” the virus that causes coronavirus. The antibody component is 10 times smaller than a full-sized antibody, and has been used to create the drug Ab8, shared in the report (link) published by the researchers in the journal Cell on Monday. The drug is seen as a potential preventative against SARS-CoV-2. According to the report, the drug has been “highly effective in preventing and treating” the SARS-CoV-2 infections in mice and hamsters during tests. The drug also reportedly does not bind to human cells, which suggests it will not have negative side-effects in people. Link to New York Post article.
     
  • Anti-inflammatory drug may shorten Covid-19 recovery time. A drug company says that adding an anti-inflammatory medicine to a drug already widely used for hospitalized Covid-19 patients shortens their time to recovery by an additional day. Eli Lilly announced the results Monday from a 1,000-person study. The study tested baricitinib, a pill that Indianapolis-based Lilly already sells as Olumiant to treat rheumatoid arthritis, the less common form of arthritis that occurs when a mistaken or overreacting immune system attacks joints, causing inflammation. An overactive immune system also can lead to serious problems in coronavirus patients. Link to Associated Press article.
     

POLITICS & ELECTIONS


 

  • Links
    2020 Presidential Election Interactive Map
    The Green Papers
    Real Clear Politics
    — Presidential debates: Scheduled to occur Sept. 29, Oct. 15 and Oct. 22.
    — VP debate: Scheduled for Oct. 7.
    Days until election

     
  • Biden campaign adds top attorneys to handle post-election issues. Joe Biden’s campaign has reinforced its legal team to prepare for any legal contests in the aftermath of the November 3 election. The campaign announced Monday that Bob Bauer will serve as a senior campaign adviser for voter protection efforts with Dana Remus, the campaign’s general counsel. The campaign said sPerkins Coie elections attorney Marc Elias will lead a team to protect “voter access to the polls and a fair and accurate vote count” in the states. The campaign’s national special litigation unit will be led by former Solicitors General Donald Verrilli and Walter Dellinger, and former Attorney General Eric Holder will lead communications efforts with “all stakeholders in voting rights.”
     
  • "The Harris administration"... Kamala Harris, Joe Biden's running mate in the 2020 election, raised eyebrows on Monday evening after she accidentally touted economic plans under a "Harris administration." Speaking during a virtual roundtable with small business owners in Arizona, Harris vowed that they will have an ally in the White House with the campaign's "Build Back Better" initiative. However, the California senator appeared to briefly suggest that she was at the top of the Democratic ticket. "A Harris administration, together with Joe Biden as the president of the United States," she said. She quickly clarified, "The Biden-Harris administration will provide access to $100 billion in low-interest loans and investments from minority business owners." Call Freud....

 


OTHER ITEMS OF NOTE


 

  • BNSF Railway is breaking new ground in the railroad industry with its appointment of Kathryn Farmer as chief executive. The operating unit of Berkshire Hathaway named the 28-year-company veteran to replace Carl Ice in the top job, the Wall Street Journal reports (link), making her the first female CEO of a major railway operator. Farmer, 50 years old, also becomes one of the highest-ranking women at Berkshire, Warren Buffett’s conglomerate. She has been at BNSF for 28 years, most recently as executive vice president of operations. Farmer says the efficiency push “has always been our business model and will continue to be our business model.”

 

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