U.S. Inflation Soars to 7.9% in February, A Four-Decade High; Food Prices Rise 7.9% YOY

( )

U.S. export sales to all destinations topped 2 million tonnes each for corn and soybeans for week ending March 3

 

                                                In Today’s Digital Newspaper

The Biden administration is considering imposing sanctions on Russia’s state-owned atomic energy company, Rosatom, a major supplier of fuel and technology to power plants around the world, according to Bloomberg, citing people familiar with the matter. Meanwhile, the House approved legislation barring U.S. imports of Russian oil as lawmakers of both parties demanded stronger punishment for the invasion of Ukraine. Today’s dispatch reviews the sanctions already announced on Russia and additional ones being pondered.

Top diplomats from Russia and Ukraine failed to reach a cease-fire at talks in Turkey.

U.S. inflation reached a new four-decade high of 7.9% in February, the Labor Department said this morning, as Russia’s invasion of Ukraine pushed energy prices sharply higher. The rise in grocery store prices was the largest 12-month increase since April 1981 while restaurant prices increased at the highest amount since December 1981. More details below.

U.S. oil futures on Wednesday fell $15 a barrel to $108.70, their worst day since late November, when South Africa’s warning of a new and fast-spreading strain of Covid-19 called Omicron briefly sank energy markets. Gasoline futures lost 11% in New York while diesel futures dropped 22%. Natural gas futures in the Netherlands, a proxy for European electricity and heating costs, plunged 43%.

But it’s a different market tone so far today. U.S. stock-index futures are deep in the red again, and oil prices are already up almost 5%.

There’s volatility in energy policy as well as prices. The United Arab Emirates said it will call on its fellow OPEC+ members to boost oil output faster, a dramatic U-turn that could set the country against fellow members of the alliance led by Saudi Arabia and Russia. But a few hours later, Energy Minister Suhail Al-Mazrouei appeared to temper the message on Twitter, saying the UAE is committed to the OPEC+ agreement. Looking to plug a gap made by its ban on Russian oil, the U.S. is urging the Saudis to release spare capacity and entertaining the idea of easing sanctions on Venezuela. Talks with Iran are also running into trouble in Vienna, but it could lead to more crude supply if a nuclear deal is struck with Tehran.

Agricultural markets were also swept into Wednesday’s downdraft. Soft red winter wheat futures in Chicago retreated from a record set Tuesday and fell by 85 cents a bushel, the most allowed by exchange rules, to end at $12.01 1/2. Hard red winter wheat futures also fell by the maximum amount. Corn, soybeans, oats also declined.

U.S. export sales to all destinations topped 2 million tonnes each for corn and soybeans, the first time that has happened since the week ending September 24, 2020, according to the USDA weekly Export Sales figures for the week ending March 3.

The House passed a $1.5 trillion FY 2022 package, with aid for Ukraine but it axed additional Covid aid. It also cleared another stopgap spending bill so the Senate can vote on the spending package.

The European Central Bank is set to hold its first policy meeting since the war in Ukraine began. President Christine Lagarde will hold a press conference after the decision.

The Commodity Classic trade show gets started today, with policy wonks looking to see if there is actual news from the confab via comments from USDA Secretary Tom Vilsack.

South Korea in a tight election chose Yoon Suk-yeol as president, bringing back a tougher line on North Korea and possibly China.

 

MARKET FOCUS

Equities today: Global equities are a mixed bag today as Asia caught up with yesterday’s rally while Europe and the U.S. are focused on the ECB and CPI (updates below). The U.S. Dow opened up over 300 points lower. Asian equities finished with gains after the decline in energy prices Wednesday and rise in US equity markets. The Nikkei advanced 972.87 points, 3.94%, at 25,690.40. The Hang Seng Index was up 262.55 points, 1.27%, at 20,890.26. European equities are posting sizable losses in early action even as some markets opened with slight gains. The Stoxx 600 was recently down 1.8% with regional markets down 0.6% to nearly 4%.

     U.S. equities yesterday: The Dow shot up 653.61 points, 2.00%, at 33,286.25. The Nasdaq advanced 459.99 points, 3.59%, at 13,255.55 (sharpest daily gain since March 9, 2021). The S&P 500 gained 107.18 points, 2.57%, at 4,277.88 (best one-day gain since June 5, 2020).

     Stocks 030922

     Ag markets yesterday:

     Corn: May corn futures fell 20 cents to $7.33. December corn lost 7 cents at $6.36 3/4.
     Soybeans: May soybeans fell 18 cents to $16.71 3/4. May soyoil fell 160 points to 74.15 cents per pound, while May soymeal edged up $1.40 to $474.70 per ton.
     Wheat: May SRW futures dropped the 85-cent daily trading limit to $12.01 1/2. May HRW futures also fell the 85-cent limit, settling at $11.14 1/2. May spring wheat fell 60 cents to $10.84.
     Cotton: May cotton futures fell 42 points to 117.55 cents per pound.
     Cattle: April live cattle fell $1.475 to $137.575. April feeder cattle fell 17.5 cents to $160.15.
     Hogs: April lean hog futures fell $1.775 to $101.15.

On tap today:

     • European Central Bank releases an interest rate decision and monetary policy statement at 7:45 a.m. ET. See update below.
     • U.S. consumer price index for February is expected to increase 0.7% from one month earlier and 7.8% from one year earlier. Excluding food and energy, the CPI is forecast to rise 0.5% and 6.4%. (8:30 a.m. ET) See update below.
     • U.S. jobless claims are expected to tick up to 216,000 in the week ended March 5 from 215,000 one week earlier. (8:30 a.m. ET) UPDATE: The number of new applications for unemployment benefits rose by 11,000 last week to 227,000 after a surprisingly good January jobs report.
     • U.S. Treasury releases federal budget data for February at 2 p.m. ET.
     • President Biden will discuss Russia and Ukraine this morning with Turkish President Recep Tayyip Erdoğan via a phone call at 10:00 a.m. ET. Biden will meet with Colombian President Iván Duque Márquez at the White House in the afternoon (1:40 p.m. ET). Duque and other Colombian officials have questioned the Biden administration's outreach to oil-rich Venezuela as the war in Ukraine has caused gas prices to soar. “If you’ve just banned oil from what they call the Russian dictator, it’s difficult to explain why are you going to be buying oil from the Venezuelan dictator,” Diego Mesa, Colombia’s energy minister, told the Financial Times. The Wall Street Journal, in an editorial, said, “Venezuelan strongman Nicolás Maduro released two American captives on Tuesday, and it’s a relief that their long ordeal is over. But the release coincides with U.S. diplomacy that seems aimed at easing U.S. sanctions so the country can increase oil production. This would reward a rogue regime for taking American hostages with little energy benefit… Why weren’t the other five also released? The State Department isn’t saying, but one possibility is that Caracas is holding them back until the U.S. eases the oil sanctions the U.S. imposed in 2019… Other countries will be emboldened to grab more Americans as bargaining chips. Taking the foot off the neck of U.S. oil producers makes more sense than appeasing global despots.”

U.S. inflation reached a new four-decade high of 7.9% in February, the Labor Department said this morning, as Russia’s invasion of Ukraine pushed energy prices sharply higher. The Consumer Price Index (CPI) rose 0.8% in February, according to the Bureau of Labor Statistics (BLS). Core CPI was up 0.5% last month.

     Rising energy prices at the end of February would be accounted for in the inflation reading, but not March increases that put crude oil prices at their highest levels since 2008 and U.S. gasoline prices at record highs. The CPI measures what consumers pay for goods and services, including groceries, clothes, restaurant meals, recreation and vehicles.

     The rising cost of gas, food and rent all contributed to the increase, the BLS said.

     Blame Putin? As they braced for today’s CPI report today, administration officials sought to blame rising gasoline prices on Russian President Vladimir Putin. With the national average at $4.31 a gallon, according to AAA, the White House has described the rise as “Putin’s Price Spike.” The average price for a gallon of gas in California is $5.694, up from $3.775 a year ago, the group said. Even before the war further accelerated price increases, robust consumer spending, solid pay raises and persistent supply shortages had sent U.S. consumer inflation to its highest level in four decades.

     BLS reported that food prices in February were 7.9% higher on an annualized basis, having risen 1% in February from January. Grocery store prices rose 1.4% in February from January levels and were 8.6% higher on an annualized basis. The cost of eating out (restaurant prices) rose 0.4% in February and is 6.8% higher on an annualized basis. "All six major grocery store food group indexes increased in February," BLS said. "The index for fruits and vegetables had the largest increase, rising 2.3%, its largest monthly increase since March 2010. The index for fresh fruits increased 3.7% over the month, and the index for fresh vegetables rose 1.3%. The index for dairy and related products rose 1.9%, its largest monthly increase since April 2011. The index for nonalcoholic beverages increased 1.6% in February. The index for meats, poultry, fish, and eggs increased 1.2% in February as all of its major component indexes increased. The index for cereals and bakery products rose 1.1% and the index for other food at home increased 0.8% over the month."

     Upshot: The rise in grocery store prices was the largest 12-month increase since April 1981 while restaurant prices increased at the highest amount since December 1981.
     Inflation chart

ECB quickens pace of withdrawing stimulus despite Russian invasion of Ukraine. The European Central Bank (ECB) announced it could end its asset purchase effort in the third quarter of this year, quickening the pace of withdrawing economic stimulus as it views inflationary concerns as a far greater risk. The ECB will end its Pandemic Emergency Purchase Program at the end of March and purchases under its Asset Purchase Program would be 40 billion euros in April, 30 billion euros in May and 20 billion euros in June versus their original plans those would be at 40 billion euros in the second quarter, 30 billion euros in the third quarter and 20 billion euros in the fourth quarter. "If the incoming data support the expectation that the medium-term inflation outlook will not weaken even after the end of our net asset purchases, the Governing Council will conclude net purchases under the APP in the third quarter, " the ECB said. As for interest rates, the ECB said any rate increases would take place “some time” after the asset purchases ended and would be “gradual.”

Supply-chain congestion is wreaking havoc on seasonal shipping patterns. Retailers across the U.S. say they are still coming up short on inventories for key products, the Wall Street Journal reports (link), including spring lines of shorts, sandals and other time-sensitive warm-weather gear. The dilemma extends a major headache for retailers during the past two years of supply-chain disruptions. Shipping backups have delayed delivery of targeted seasonal merchandise, from summer attire to Christmas decorations. That batters the value of the goods and fractures traditional patterns of ordering, shipping and selling behind supply chains. Many chains are placing orders with overseas factories earlier, and paying hefty sums to fly the goods to the U.S. But that isn’t necessarily solving the problem, and it ties up capital in inventory. And some shippers say domestic trucking has overtaken ocean transport as their biggest distribution headache this year.

     Havoc

Biden presses plan to encourage U.S. chip making. President Biden met with executives from tech companies at the White House, as he promotes semiconductor chip manufacturing in the U.S. He said passing the Bipartisan Innovation Act would ease the global chip shortage and make the economy more productive. Although chips were invented in the U.S., the country barely makes 10% of the world’s supply, putting us “at the mercy of shortages” that can close factories, Biden said. Michigan Gov. Gretchen Whitmer said the chip shortage cost North American auto makers the production of an estimated 2.2 million vehicles in 2021, driving up costs and jeopardizing jobs. The chips also raised automobile costs nationwide, contributing to inflation. Bottom line: The Senate and House have each passed their own versions of the Bipartisan Innovation Act. Biden urged House and Senate lawmakers to reconcile their legislative differences and “get it to my desk as quickly as you can.”

2022 Land Real Estate Survey: 70% of brokers nationwide expect values to increase. National Land Realty recently released its 2022 survey of real estate brokers and agents from across the country. Key findings show that there was a significant positive sales impact on the rural land real estate sector in 2021 with more than 70% of agents seeing an increase in land values: recreational land and farmland led the way and are expected to continue that trend.

     Outlook for 2022 Optimistic: For land value appreciation, almost 12% of brokers think it’ll be more than 10%, while 16.67% think land will increase by 6-10%, and the largest group (41.67%) think it’ll increase by as much as 5%. 15.48% think it’ll remain the same and almost 6% think it could drop by as much as 5%. 

     For individual brokerages, 32.14% believe their business will grow by more than 10%, a more than 6% increase from 2021, while 19% think it’ll grow between 6-10%, a 7% drop from last year. And 16.67% say their business will grow as much as 5%, a more than 7% drop YoY. “... with all of the traumatic events of last year, people continue to look to not only invest in land outside of cities, but they also want to live on the land they buy, to be able to breathe the fresh Covid-free air and reconnect with the great outdoors without being locked down. This significant move away from urban areas is now all the more possible through the popularity of remote or hybrid working arrangements,” said Jason Walter, CEO of National Land.

Market perspectives:

     • Outside markets: The U.S. dollar index was slightly higher ahead of U.S. inflation data amid a generally weaker tone in foreign currencies versus the greenback. The yield on the 10-year U.S. Treasury note is nearly unchanged around 1.95% with a mixed tone in global government bond yields. Gold and silver futures have seen renewed buying interest ahead of U.S. market action, with gold above $2,007 per troy ounce and silver above $26.15 per troy ounce.

     • Bitcoin surges on Biden’s executive order. Bitcoin’s price rose after President Biden announced an executive order to study digital currencies. The order directed agencies across the federal gov’t to produce reports on digital currencies and consider new regulations. It outlined the risks cryptocurrencies pose to the economy, national security and climate, while also noting their possible benefits. It also asked agencies to review the possibility of issuing a digital version of the dollar. As details from the executive order leaked, the price of bitcoin, the largest cryptocurrency, rose almost 9%. Crypto advocates welcomed the absence of any imminent federal action in the order and its acknowledgment of the positive elements of the industry, such as fostering innovation and financial inclusion. BTW: The U.S. Mint said in its annual report that per-unit costs to produce pennies and nickels were higher than face value for the 16th straight fiscal year. It delivered nearly 15 billion coins to the Federal Reserve last year and recorded about $1 billion in revenue.

        Bitcoin

     • Crude oil futures have moved higher, retracing a portion of Wednesday’s sharp losses. U.S. crude is trading around $113.30 per barrel and Brent around $116 per barrel. Futures had hedged up in Asian action after plummeting in U.S. trading Wednesday.

     • Freight carloads on U.S. railroads in the category that includes fracking sand rose 36.3% in February from the year before, according to the Association of American Railroads.

     • Airfreight rates are rising sharply as airspace restrictions constrain capacity. Meanwhile, IATA says global air cargo growth slowed to 2.7% in January on an 11.4% year-over-year gain in capacity.

     • 7.38: Average number of days container ships were delayed getting to port world-wide in January, down from 7.68 days in December and the sixth straight month the figure exceeded seven days, according to Sea-Intelligence.

     • Soaring prices make nickel coins worth more than a dime. The humble nickel is worth more than a dime, after the price of the metal that makes up 25% of the coin rocketed to $100,000 a metric ton on the London Metal Exchange (LME) earlier this week — amid fears of a shortage from Russia — before trading was stopped. At $100,000 a ton, a nickel is worth about 16 cents in “melt” value, Barron’s estimates. Each 5-gram coin has 12.5 cents worth of nickel and 3.75 cents of copper, which traded at about $10,000 a metric ton on the LME. The LME doesn’t expect to restart nickel trading “earlier than” Friday after suspending trading during Tuesday’s session and canceling all trades when the metal briefly topped $100,000 a ton. Russia produces 17% of the world’s high-grade nickel supply.

     • Highlights of March 9 USDA WASDE report:

        — Russia/Ukraine impact on March WASDE Report: USDA included the following message at the top of this month’s report: “NOTE: Russia’s recent military action in Ukraine significantly increased the uncertainty of agricultural supply and demand conditions in the region and globally. The March WASDE represents an initial assessment of the short-term impacts as a result of this action.”

     — War to cut Ukraine and Russia wheat exports by 12%. The Russian invasion of Ukraine will slash wheat exports from the countries by a combined 12%, said USDA in an initial assessment of the short-term impact of the war. Nations from Europe to Asia and Africa will import somewhat less wheat in coming months in the face of higher prices and reduced supplies from the Black Sea region, it said.

       — Corn: U.S. ending stocks down 100 mil. bu. from last month to 1.44 bil. bu. 
USDA increased corn-for-ethanol use by 25 mil. bu. and hiked exports by 75 mil. bu., “reflecting expectations of sharply lower exports from Ukraine.” Global ending stocks were cut 1.25 mil. tonnes (49 mil. bu.).
           USDA 2021-22 price: $5.65, up 20 cents from last month; up $1.21 from 2020-21.

       — Soybeans: U.S. ending stocks down 40 mil. bu. from last month to 285 mil. bu. USDA 
raised exports by 40 mil. bu. due to reduced South American production & shipments.
           USDA 2021-22 price: $13.25, up 25 cents from February; up $2.45 from 2020-21.

       — Wheat: U.S. ending stocks unexpectedly up 5 mil. bu. from last month to 653 mil. 
bu. USDA cut projected exports by 10 million bu., despite Black Sea shipment questions. Global ending stocks raised 3.3 mil. tonnes (121 mil. bu.).
           USDA 2021-22 price: $7.50, up 20 cents from February; up $2.45 from 2020-21.

       — Cotton: U.S. ending stocks unchanged at 3.5 mil. bales. No supply/demand changes. 

           USDA 2021-22 price: 90.0 cents, unchanged from Feb.; up 23.7 cents from 2020-21.

     •  Brazil cuts soybean crop estimate. Conab cut its Brazilian soybean crop estimate by 2.7 MMT from last month to 122.8 MMT (USDA yesterday reduced the crop to 127 MMT). Despite the smaller production forecast, the Brazilian government’s forecasting agency kept its 2021-22 soybean export forecast at 80.2 MMT. Conab left its Brazilian corn crop estimate at 112.3 MMT. It still expects the country to export 35 MMT of corn and import 1.7 MMT during 2021-22.

     • Wheat market saw Algeria buy around a half million tons yesterday.  The reported price was about $485 C&F. Trade thinks it will be shipped from France, with some may come from Argentina. Will Russian wheat be available come July forward?

     • Ag demand: Japan purchased 163,276 MT of wheat from its weekly tender, including 83,722 MT from the U.S., 52,734 MT from Canada and 26,820 MT from Australia. Algeria purchased 600,000 to 700,000 MT of optional origin milling wheat. Jordan tendered to buy 120,000 MT of optional origin milling wheat.

     • NWS weather: Moderate to heavy snow over portions of the Southern Rockies and Central Plains this morning... ...There are Slight Risks of Excessive Rainfall and Severe Thunderstorms over parts of the Southeast on Friday night... ...Cold air expands over the Great Plains and Mississippi Valley through Friday... ...Increasing confidence in Winter Storm to impact portions of Tennessee/Ohio Valleys through interior eastern U.S late Friday through Saturday.

        NWS 030922
        Wx 031022

Items in Pro Farmer's First Thing Today include:

     • Extreme volatility continues in wheat
     • Argentine exchange cuts soybean, corn crop estimates
     • Beef movement picks up
     • Cash hog index halts recent string of declines  

 

RUSSIA/UKRAINE

Summary: A Russian airstrike hit a maternity hospital in the besieged southern Ukrainian city of Mariupol, as Moscow’s invasion has shifted to a new phase aimed at civilian targets. At least three people, including a child, were killed and 17 more were injured, officials said. Ukraine’s president called the attack the “ultimate evidence of genocide.” The U.S. formally rejected a Polish proposal to take possession of Soviet-era fighter jets and transport them to Ukraine to help that nation fend off Russia’s invasion, a Pentagon spokesman said. Ukraine’s foreign minister said the country would not “surrender.” His Russian counterpart insisted Russia “will manage” against a rising battery of Western sanctions seeking to end the war. Of note, satellite images show flooding north of Kyiv in possible sign of “hydraulic warfare.”

  • Rising casualties have forced Russia to deploy conscripted soldiers to fight in Ukraine, according to Britain’s defense ministry. Earlier this week, Vladimir Putin, Russia’s president, insisted there would be no need to do so. On Wednesday the Russian government claimed to have “discovered” that some conscripts had been sent to the war. Britain’s defense ministry also stated that there has been a “notable decrease” in Russian air activity over Ukraine. American intelligence estimates that around 5,000 Russian troops have been killed so far; the Ukrainian armed forces claim the number is above 10,000.
  • Britain imposed sanctions on Roman Abramovich, a Russian oligarch and owner of Chelsea football club, freezing all his assets. Abramovich had put the club up for sale, but the new rules are likely to disrupt his plans. Sanctions were also imposed on six other Russian businessmen, including the bosses of Rosneft and Gazprom, two Russian energy companies.
  • As of March 9, almost 5,600 sanctions had been imposed against individuals or entities from Russia, much more than the around 3,600 against people and organizations from Iran. The countries which have the most sanctions of this kind against Russia in place are Switzerland, the EU and France. And the sanctions are having an impact as a growing isolation and fear of President Vladimir Putin’s increasingly repressive rule are driving thousands of Russians out of their country.

Sanctions on Russia

Russia is getting dragged down under the weight of 5,532 sanctions — 2,778 imposed since Putin launched the invasion in late February. That makes it the most sanctioned nation in the world, ahead of Iran with 3,616, according to Castellum.ai, a global database that tracks sanctions (link for details).

  • More sanctions ahead. “We’re not done,” Undersecretary of State for Political Affairs Victoria Nuland told the Senate Foreign Relations Committee Tuesday. “There is more on the way from the [Group of Seven] and our EU partners as early as this week if President [Vladimir] Putin does not end his vicious war.”

         Some possibilities, according to reports:
​​​​​​​         • Hindering Russia’s ability to use cryptocurrencies.
         • Suspending or ending Moscow’s World Trade Organization membership.
         • Broadening restrictions on investments in Putin’s economy.
         • Sanctions on Russia’s state-owned atomic energy company, Rosatom.

  • United Arab Emirates a sanctions spoiler? Sanctions on Russian oligarchs and other allies of President Vladimir Putin may be undermined by the Gulf state, which has not condemned the invasion, and which continues to welcome the Russian figures.
  • The EU told Google to wipe Russian state media organizations RT and Sputnik from search results in Europe as part of its sanctions on the two entities, a sharp escalation in government attempts to shut down Russian propaganda.
  • A sanctions question some are asking: “If President Biden says stopping the Nord Stream 2 pipeline would hurt the Russian economy, why didn’t he say ending the Keystone XL pipeline in the United States would hurt our economy?”
  • Russia says its businesses can steal patents from anyone in ‘unfriendly’ countries. Russia has effectively legalized patent theft from anyone affiliated with countries “unfriendly” to it, declaring that unauthorized use will not be compensated. Russian officials have also raised the possibility of lifting restrictions on some trademarks, according to state media, which could allow continued use of brands such as McDonald’s that are withdrawing from Russia. The Kremlin has not issued any decree lifting protections on trademarks. But Russia’s Ministry of Economic Development said last week that authorities are considering “removing restrictions on the use of intellectual property contained in certain goods whose supply to Russia is restricted,” according to Russian state news outlet Tass, and that potential measures could affect inventions, computer programs and trademarks.

— Market impacts:

  • China widened the trading band for the yuan-ruble exchange rate, as the Russian currency’s collapse has dented trade between the increasingly close partners.
     
  • Russian car maker halts production. Lada cars have been a symbol of Russia’s self-reliance since they began rolling off assembly lines during the depths of the Cold War. On Wednesday, Lada’s factory floors ground to a halt as Western sanctions deprived its parent company of the parts and supplies it needs to make cars, according to the WSJ, citing people familiar with the matter (link). Thousands of workers have been placed on leave. The disruption shows how Russia’s economy is beginning to feel the bite of sanctions the West has imposed on Moscow.
     
  • More Western companies abandoned the Russian market. Deere & Co. suspended shipments of its farm and construction equipment to Russia and Belarus. Meanwhile, Carlsberg said it would no longer sell its beer in the country, where it is the best-selling brand. Thirsty Russians will soon have to forgo Heineken, too. Rio Tinto, an Anglo-Australian mining giant, also said it was cutting all its ties with Russian businesses. Meanwhile, Nestle, the world’s biggest food company, said it would stop investing in Russia but continue to supply essentials.
     

POLICY FOCUS

 Top Ag panel Republicans question crop insurance shifts. New crop insurance efforts that seek to link crop insurance and conservation practices are being questioned by the House and Senate Ag Committee Republican leaders on the grounds that changes by USDA’s Risk Management Agency (RMA) are bypassing the normal process of working with Congress and more importantly, may not constitute good governance on the part of the agency.

      Letter sent. Senate Agriculture Committee Ranking Member John Boozman (R-Ark.) and House Agriculture Committee Ranking Member GT Thompson (R-Pa.) said in the letter (link) to USDA chief economist Seth Meyer, also chairman of the Federal Crop Insurance Corporation, that they are concerned about efforts with ratings methodologies that consider conservation practices such as cover cropping or crop rotations. “Historically, similar efforts to link conservation and farm programs were subject to stakeholder engagement, analysis, hearings, markups, and amendments throughout the Farm Bill process,” the lawmakers said in their letter. They cautioned that “changing the rating methodology of policies without credible evidence of a change in crop production risk are many.”

     Changing the ratings methodologies could also increase premium subsidies to growers by “undercharging producers for their insurance coverage.” Such a situation could result in RMA not collecting enough in premiums that are needed to cover insurance indemnities. It could also “induce moral hazard by incentivizing producers to adopt conservation practices that are not economically optimal or risk-reducing for their farm operation” and that could “actually increase the crop production risk of the farm.”

     With a new farm bill process getting underway, the lawmakers want USDA to hold off on their plans to coordinate with Congress. This makes clear that oversight of the current USDA is going to increase if Republicans take control of the one or both chambers of Congress following Nov. 8 elections. 

— Calls grow for pause in EPA WOTUS rulemaking. EPA and the U.S. Army Corps of Engineers are being urged by most of the House Republican delegation — 201 of 211 members — to pause their rulemaking efforts on Waters of the U.S. (WOTUS). The agencies have embarked on a two-step plan to revisit the WOTUS situation: First to put the definition of WOTUS back to pre-2015 levels with adjustments for court decisions, and second to set a new definition. This comes as the U.S. Supreme Court is mulling a case which involved WOTUS and that is part of the basis that the Republican lawmakers, including House Majority Leader Kevin McCarthy (R-Calif.) and others in the Republican leadership, are citing as a reason for the agencies to put their plans on hold until the nation’s top court rules. “Any future rulemaking must be based on fully informed legal guidance,” the lawmakers stated. “The Agencies’ goal of developing a lasting rule can only be achieved if appropriate legal standards are met, and it is premature to develop a new rule until the Court’s Sackett opinion is issued.”

     EPA has also selected 10 regional roundtables out of several proposed by groups and organizations. EPA wants to use these roundtables to gather more input from stakeholders in various sectors on what the new definition of WOTUS should be.

     WOTUS has remained a source of friction and controversy since the Obama administration put forth its more-restrictive definition in 2015 which was then replaced by the Trump administration via the Navigable Waters Protection Rule. With the changes being proposed by the Biden administration, this would make the sixth change in the definition of WOTUS in the last 10 years, increasing the level of uncertainty and potential costs faced by farmers, businesses and others as they seek to comply with an ever-changing regulation.

 

PERSONNEL

— ICE nominee vote delayed. Senate Democrats delayed a vote on Ed Gonzalez, a county sheriff in Texas who was tapped to serve as President Biden’s director of U.S. Immigration and Customs Enforcement (ICE), after an allegation of domestic violence against him surfaced.

— Senate set to vote on ambassador to the WTO. The Senate is poised to vote on the nomination of U.S. Trade Representative (USTR) Deputy General Counsel Maria Pagán to serve in the role of ambassador to the WTO. The Senate voted 78-19 to invoke cloture (end debate) on the nomination. She is expected to be cleared for the post. But several other USTR nominations remain pending due to lawmaker holds that have been put in place.

— AFBF’s Moore to retire. Farm policy veteran Dale Moore will retire later this year as executive vice president of the American Farm Bureau Federation after a 40-year Washington career that included working as chief of staff for three agriculture secretaries and as a key staffer for former Rep. and Sen. Pat Roberts (R-Kan.). I have known Dale his entire “stint” in Washington. His “cowboy talk” in explaining complex issues will be missed. I still have a drawing he sent me after he thought he got me, and former colleague Roger Bernard upset. We were not. He drew us up on some podium and he was bowing down before it saying "A thousand pardons oh sage advisers of the soil."

 

CHINA UPDATE

— USDA confirms big soybean purchases by China in latest week. USDA weekly Export Sales figures for the week ending March 3 confirmed that U.S. exporters sold large quantities of U.S. soybeans to China. Activity for 2021-22 for the week included net sales of 11,097 tonnes of corn, 72,051 tonnes of sorghum, 1,096,407 tonnes of soybeans, and 170,302 running bales of upland cotton. Sales for 2022-23 included 797,000 tonnes of soybeans and 8,000 running bales of upland cotton. Net sales for 2021 included 10,367 tonnes of pork and 3,592 tonnes of beef.

     U.S. export sales to all destinations topped 2 million tonnes each for corn and soybeans, the first time that has happened since the week ending September 24, 2020, according to the USDA weekly Export Sales figures for the week ending March 3.

— China to auction soybeans from state reserves. China will auction 295,596 MT of imported soybeans from state reserves on March 14, according to the National Grain Trade Center. Given reports of tight domestic supplies held by crushers, more soybean reserves could be auctioned near-term.

— China allocates aid for winter wheat production. China has allocated 1.6 billion yuan ($253 million) to strengthen field management for winter wheat, the country’s finance ministry said. Part of the money will be used to stabilize output of winter wheat in five main production regions, including Hebei and Shandong provinces, where planting of wheat was delayed. China will also allocate money to about a dozen main production regions to prevent and control impacts of extreme weather on wheat. China’s ag ministry said the country’s winter wheat crop conditions are potentially the worst ever after heavy rains delayed planting of about a third of the normal wheat acreage.

 

ENERGY & CLIMATE CHANGE

— Energy Secretary Granholm urges energy companies to boost production. Energy Secretary Jennifer Granholm urged energy companies to boost oil and gas production as the world faces a supply crunch spurred in part by Russia’s invasion of Ukraine. “We are in an emergency, and we have to responsibly increase short-term supply where we can right now to stabilize the market and minimize harm to American families,” she said Wednesday (March 9) at the Houston-based CERAWeek by S&P Global. “I hope your investors are saying these words to you as well: In this moment of crisis, we need more supply,” she remarked. “Right now, we need oil and gas production to rise to meet current demand.” Granholm added that she did not believe boosting oil and gas output now would setback the Biden administration’s broader clean energy efforts over the long term.

     The Biden administration, and progressive Democrats, see a rapid transition to cleaner fuels, from solar farms to wind power to electric vehicles, as the best way to achieve true independence from foreign oil, and that belief is only strengthened by the crisis in Ukraine. “This conflict has made it clear to us that we should double down and triple down on the transition, and to make it broader, bigger and faster,” Amos Hochstein, the State Department’s energy envoy, said on a panel at the Houston conference.  

     “The lesson of every energy crisis is that, at a time like this, you need very close coordination between government and industry. Take all the politics out and focus on clarity of information and communication,” said Daniel Yergin, author of the oil history The Prize.

     Senate Minority Leader Mitch McConnell (R-Ky.) said on the Senate floor that gas prices began going up long before Russia invaded Ukraine, and he made it clear Republican lawmakers would continue to hammer President Biden for inflation despite many of them pushing for the ban on Russian oil and gas imports. “I expect our Democratic friends will now try to blame the entire increase in prices on our efforts to punish Russia. But don’t be fooled,” McConnell said. “This was more than a year in the making.”

— American shale drillers say there are limits to how much and how quickly they can boost shaky oil supplies following Russia’s invasion of Ukraine. Leaders of the fracking companies that helped make the U.S. the world’s top oil producer say they are responding to calls by the Biden administration and others to increase production after oil prices this week topped $130 a barrel and gasoline prices surged. But the executives say that some investors, who felt burned after shale drillers gave priority to expansion over profits last decade and lost billions, are still wary of overspending. They also say that falling investment in the fossil-fuel industry has left U.S. oil patches without enough fracking equipment to bring a ton of new wells online, and that a resurgence of drilling would deplete oil reserves in companies’ most valuable drilling locations.

     Oil investments

— EPA restores California's ability to set stricter clean car standards. The Environmental Protection Agency (EPA) said Wednesday it would reinstate California's authority to set its own clean car standards after the state's authority was revoked by the Trump administration. The standards, which had been adopted by other states, are more stringent than federal standards and are expected to push the market toward electric vehicles.

 

LIVESTOCK, FOOD & BEVERAGE INDUSTRY

— First person to have his failing heart replaced with that of a genetically altered pig died two months after the surgery. It was unclear whether his body had rejected the foreign organ. Link to details via the New York Times.

     Several biotech companies are developing pig organs for human transplant, with the heart used in the most recent operation coming from Revivicor, a subsidiary of United Therapeutics (UTHR). The organ was altered to make it more acceptable to a human, including removing and inserting 10 genes to keep the heart from growing after transplant. The team at the University of Maryland Medical Center also used a new drug made by Kiniksa Pharmaceuticals (KNSA) to help prevent the organ from being rejected by the patient's body.

     Looking ahead: A total of 106,657 people are currently on the U.S. transplant waiting list, and more than 6,200 patients die each year before getting one. In 2021, more than 40,000 organ transplants were conducted nationwide, including a record 3,800 heart transplants.

— Minneapolis food fraud. In court documents, the FBI said it had discovered a “massive fraud scheme” that cheated the government out of tens of millions of dollars in pandemic relief money intended to provide meals for thousands of children. Link for details.

— Campbell Soup: fewer people are stockpiling food as Covid demand wanes. Campbell Soup fell short of market expectations for quarterly revenue on Wednesday, in a sign that demand for its sauces and broths is slowing from the pandemic-led surge.

— Additional HPAI cases confirmed commercial flocks in three states. USDA’s Animal and Plant Health Inspection Service (APHIS) has confirmed additional cases of highly pathogenic avian influenza (HPAI) in commercial poultry operations in three states — Queen Anne’s County, Maryland (broiler flock with 150,000 birds), New Castle County, Delaware (pullet flock with 265,000 birds), and Jasper County, Missouri (turkey flock with 27,000 birds). This brings total HPAI confirmations to 26 flocks with 16 of those being commercial poultry operations located in seven states — Indiana, Kentucky, Delaware, Missouri, Maryland, Iowa and South Dakota.

 

CORONAVIRUS UPDATE

Summary: Global cases of Covid-19 are at 451,754,190 with 6,023,536 deaths, according to data compiled by the Center for Systems Science and Engineering at Johns Hopkins University. The U.S. case count is at 79,406,602 with 963,819 deaths. The Johns Hopkins University Coronavirus Resource Center said that there have been 555,897,985 doses administered, 216,355,844 have been fully vaccinated, or 65.91% of the U.S. population.

— United Airlines will allow workers who haven’t been vaccinated against Covid-19 for religious or medical reasons to return at the end of this month.

— Hong Kong update. With nearly 600,000 cases recorded so far in Hong Kong’s current outbreak, officials are rushing to build temporary isolation facilities and makeshift hospitals.

— Malaysia will reopen its borders on April 1 after two years of coronavirus restrictions.

 

POLITICS & ELECTIONS

— South Korea elects conservative Yoon Suk-yeol, 61, as president. The election of Yoon, formerly the country’s top prosecutor, ushers in an era of conservative party rule in South Korea that is expected to lead to a hardened approach toward North Korea and China. He has also vowed to fight corruption, foster justice and create a more level playing field, tapping on prevailing angst against rising inequality, unemployment and runaway housing prices that have left younger generations disillusioned. While analysts say they do not expect a sea change in South Korea’s efforts to balance relations with the US and China, Yoon has tapped into rising anti-China sentiment in the country and pledged a closer embrace of Washington. He has criticized the administration of current leader Moon Jae-in for tilting toward North Korea and China, and undermining South Korea’s decades-long alliance with the United States.

— Democratic Louisiana Gov. John Bel Edwards vetoed the redistricting map passed by the Republican-controlled state legislature, “saying it should have included a district that would allow a second Black candidate a chance to serve in the state’s congressional delegation.” Link for details.

 

CONGRESS

— House approves full-year Domestic spending increase, and another CR. The House on Wednesday passed a $1.5 trillion measure to set funding for federal agencies for the rest of fiscal 2022, finally providing full-year appropriations that will boost spending at domestic agencies by nearly 7%. Lawmakers also approved a four-day stopgap bill to give the Senate enough time to approve the omnibus measure. The upper chamber will have to act on the continuing resolution (CR) — which would be the fourth of the current fiscal year — by Friday evening to avoid a lapse in appropriations. The bill will increase non-defense spending by 6.7% ($730 billion, a $46 billion increase over fiscal year 2021 and the largest in four years) and provides a 6% bump for defense-related activities ($782 billion in defense funding — an increase of $42 billion over fiscal year 2021), meeting Republican demands.

     To pass the House, leadership divided the bill into two parts: The House passed the defense portion 361-69 and the non-defense portion 250-171. The CR passed unanimously.

     The omnibus will include $13.6 billion in emergency assistance to Ukraine and NATO allies.

     Covid-aid scrapped. The Health and Human Services Department, U.S. Agency for International Development and other agencies were set to receive a combined $15.6 billion for ongoing pandemic response efforts. Lawmakers scrapped the provision at the 11th hour. Some House Democrats objected to a Republican-demanded provision offsetting the new Covid-19 spending by canceling some of the unspent funds from the American Rescue Plan, which their home states had still planned to spend. To ensure the measure could still pass, House Speaker Nancy Pelosi (D-Calif.) opted to remove the funding from the larger package.

     Infrastructure spending. As the Transportation Department begins implementing much of the recent Infrastructure Investment and Jobs Act, it is set to receive a 17% funding increase. Lawmakers set aside more than $20 billion for research and resilience efforts related to climate change.

     The legislation includes a $675 million budget increase for the Internal Revenue Service, putting the agency’s budget at $12.6 billion, below what House Democrats had wanted, and separate from the Biden administration’s attempt in the stalled Build Back Better bill to double the agency’s size over the next decade and beef up tax enforcement. Still, the IRS will get money specifically dedicated to reducing processing backlogs.

 

OTHER ITEMS OF NOTE

— Citrus canker found at South Carolina nursery. Citrus canker, a bacterial disease that causes lesions on leaves, stems, and fruit, was discovered at a South Carolina nursery that sells plants over the internet, said USDA, adding it was tracking sales to customers in 11 states as part of efforts to contain the disease.

 Knocking it out of the park. Sen. Dick Durbin (D-Ill.) fumed about Major League Baseball’s lockout, and suggested it was time to “reconsider” MLB’s antitrust exemption. Baseball’s opening day has been postponed until at least April 14 after talks between team owners and the players’ union broke down.

— Kelly Clarkson sings the blues. Singer Kelly Clarkson reached a divorce settlement with her ex-husband. It shows love costs. The singer is on the hook to pay her ex-husband $1.3 million AND has to dish out $115,000 in monthly spousal support.

— Giant spiders expected to drop from sky across the East Coast this spring. An invasive species of spider the size of a child's hand is expected to “colonize” the entire East Coast this spring by parachuting down from the sky, researchers at the University of Georgia announced last week (link). Large Joro spiders — millions of them — are expected to begin “ballooning” up and down the East Coast as early as May. Researchers have determined that the spiders can tolerate cold weather but are harmless to humans as their fangs are too small to break human skin.


 

Latest News

H&P Report negative compared to pre-report expectations
H&P Report negative compared to pre-report expectations

Nearly every category topped the average pre-report estimates.

After the Bell | March 28, 2024
After the Bell | March 28, 2024

After the Bell | March 28, 2024

Pro Farmer's Daily Advice Monitor
Pro Farmer's Daily Advice Monitor

Pro Farmer editors provide daily updates on advice, including if now is a good time to catch up on cash sales.

PF Report Reaction: Bullish USDA data for corn
PF Report Reaction: Bullish USDA data for corn

Corn planting intentions and March 1 stocks came in lower than expected.

Report Snapshot: USDA shows lighter-than-expected corn acres and stocks
Report Snapshot: USDA shows lighter-than-expected corn acres and stocks

USDA reported corn acres of 90.036 million acres for 2024 and March 1 stocks of 8.347 billion bu., both well below trade estimates. Soybean acres were slightly lower than expectations, while stocks were higher.