First Thing Today: Japan to Hike Tariffs on Frozen Beef from the U.S.

Posted on 07/28/2017 6:26 AM

Good morning!

Light pressure on corn and soybeans overnight... Corn and soybean futures are steady to fractionally lower as of 6:30 a.m. CT as traders engage in some light profit-taking ahead of the weekend. Wheat futures are mostly 1 to 3 cents higher across all three flavors and spring wheat crop woes remain on traders' minds. The U.S. dollar index is down slightly, while crude oil futures are just above unchanged.

Japan will hike tariffs on frozen beef from the United States... Japan will hike tariffs on frozen beef from the U.S. and other countries who do not have economic partnership agreements (EPAs) with it from 38.5% to 50.0% between Aug. 1 and March 31, its ministry of finance announced today. The safeguard mechanism is triggered when Japan's imports of specific beef products from all nations or those without EPAs climb more than 17% from the year prior. Its first quarter imports of frozen beef from all nations were up 17.1% from year-ago while its imports from non-EPA nations was up nearly 25%. Last year, the U.S. sold $418 billion worth of frozen beef cuts to Japan, or around 18% of its total. And U.S. shipments to the country had thus far been running well ahead of year-ago. Japan's top supplier Australia won't be affected as it has an EPA with the country. This is the first time the safeguard has been triggered since August 2003.

'Skinny' health care plan fails... Three Republican Senators -- Susan Collins (Maine), Lisa Murkowski (Ark.) and John McCain (Ariz.) -- voted along with all Democrats to send the "skinny" healthcare reform package to defeat early Friday on a 49-51 vote. GOP leadership held a separate vote open for almost an hour as Vice President Mike Pence stood at McCain's desk, making his case — to no avail. "This is clearly a disappointing moment," Senate Majority Leader Mitch McConnell (R-Ky.) said after the vote. "I regret that our efforts were simply not enough this time... It's time to move on." He later called on Democrats to offer their ideas on fixing provisions of ObamaCare. Get more details.

Senate overwhelmingly passes Russia sanctions bill, sends to president... The U.S. Senate approved the sanctions package on a 98-2 vote, sending the bill that was overwhelmingly approved by the House to President Donald Trump. The sanctions only kick in for energy projects in which a Russian company owns 33% or a controlling stake. White House Communications Director Anthony Scaramucci on Thursday told CNN that Trump "may sign the sanctions exactly the way they are, or he may veto the sanctions and negotiate an even tougher deal against the Russians." Congress has shown it can easily override a veto.

Plans to restrict steel and aluminum imports delayed... President Donald Trump's plans to slap steel and aluminum imports with tariffs and/or quotas will be delayed, according to House lawmakers briefed Thursday afternoon by Commerce Secretary Wilbur Ross. Ross, speaking to members of the House Ways and Means Committee, "said that the current forums that we have — the World Trade Organization and the global steel forum — have not been adequate in addressing this over-dumping issue, and that he is hoping for some way to negotiate in a dialogue with these countries to resolve the problem," according to Rep. Judy Chu (D-Calif.).

Another new farm bill listening session slated... An additional farm bill listening session, in conjunction with the Farm Progress show Aug. 30 in Decatur, Illinois, has been scheduled by House Ag Chairman Mike Conaway (R-Texas). The panel has three listening sessions planned next week, starting Monday in San Angelo, Texas, followed by others in Morgan, Minn., on Thursday, and Modesto, Calif., on Saturday. The first meeting was held June 24 in Gainesville, Florida.

High RIN costs lead to big losses for CVR Refining... White House advisor Carl Icahn's CVR Refining lost $19 million in the second quarter of 2017, citing the loss on spending $106 million on credits needed to comply with the Renewable Fuel Standard (RFS), according to its income statement released Thursday. Reuters had reported that Icahn had been holding fewer credits than needed on the expectation that RIN prices would drop, but prices have risen. "As I've said many, many times before, RINs continue to be an egregious tax on independent refiners and small retailers," CVR CEO Jack Lipinski said on the earnings call. "RINs prices have been extremely volatile this year, which only proves the fact that the RINs market is manipulated... EPA continues to ignore this."

Meat groups push stay of CAFO reporting... The National Pork Producers Council (NPPC) and the U.S. Poultry & Egg Association are urging a federal judge to give EPA time to develop guidance for how livestock operations must report emissions, arguing that not doing so will create a haphazard "reporting fiasco." The motion filed Thursday in the U.S. Court of Appeals for the District of Columbia Circuit follows an April decision of the same court overturning EPA's exemption for animal waste emissions reporting requirements. Environmental groups said the court should reject the stay since the agency had plenty of time to figure out how to enforce the rule on CAFOs.

More cash action around $117... Some additional cash cattle trade was reported mostly in the $117 range across the Plains and into the Midwest on Thursday. More cash action is likely today, as sales have yet to get underway in earnest. August futures start today's session nearly $3 below the low end of this week's price action.

Lean hog traders continue to monitor the product market... Traders remain uneasy that pork bellies will soon come off their record highs, dragging down the cutout value and cash hog prices and limiting buying interest in futures. But with futures already at a healthy discount to the cash hog market, it should be well positioned to withstand any such fall.

Overnight demand news... Jordan issued another tender to buy 100,000 MT of hard milling wheat.

Today's reports:

  • No reports

Add new comment