La Nina Fueling Western Drought

More than half of the United States is experiencing a drought as La Nina favors warmer and drier weather across much of the country. The latest U.S. Drought Monitor shows much of the drought west of the Mississippi River and extends into Illinois and Indiana, as well as the Northeast. Drought conditions cover 91 percent of the 11 states in the West as determined by the Drought Monitor, with extreme drought conditions covering 40 percent of the region. That drought area expands into west Texas and the Plains states. Drought conditions cover 98 percent of the High Plains states, and 35 percent of the Midwest. The southeast, including Louisiana, are largely spared from drought conditions, but at the cost of an active hurricane season. Earlier this month, the National Oceanic and Atmospheric Administration reported the ongoing La Nina is expected to expand and intensify drought across the southern and central Plains, eastern Gulf Coast, and in California during the months ahead.

Gray Wolf Delisted from Endangered Species List

The Department of the Interior this week removed the gray wolf from the endangered species list, signaling a successful recovery under the Endangered Species Act. The gray wolf spent more than four decades on the list, but the population is now thriving in the lower 48 states. State and tribal wildlife management agencies will now be responsible for the management and protection of the gray wolf. American Farm Bureau Federation President Zippy Duvall says the action shows “careful management and partnerships between federal and state agencies can result in the successful recovery of a once-threatened species.” A National Cattlemen’s Beef Association representative states, "The road to recovery and delisting has been fraught with purely political lawsuits that promoted emotion over fact, and the facts are clear: the gray wolf population is recovered.” National Association of Conservation Districts President Tim Palmer adds, “Its delisting is a credit to the hard work of locally-led conservation.” The gray wolf has been federally protected under ESA since 1967.

Cattle Groups Discuss need for Beef Industry Reforms

Cattle groups met in Florida this week to discuss reforms to the beef industry. The meetings included the U.S. Cattlemen's Association, the Organization for Competitive Markets, and R-CALF USA. The National Cattlemen's Beef Association, the nation's largest cattle group, was invited but did not participate. NCBA President Marty Smith stated, “NCBA will not participate in events with organizations litigating against NCBA or the Beef Checkoff, nor will we engage in events that lend a voice to anti-agriculture activists.” Smith claims the Organization for Competitive Markets is “solely a front for animal rights activists.” OCM is spearheading a petition calling for a referendum vote on the Beef Promotion and Research Order, or the beef checkoff. OCM claims checkoff dollars managed by NCBA "through questionable if not illegal ways…often wind up in the pockets of industrialized agriculture.” The groups included in the Florida meetings support beef checkoff reforms, country of origin labeling, and a breakup of the “big four” meatpacking companies.

NMPF: FDA Must Enforce Fake-Dairy Rules

The National Milk Producers Federation wants the Food and Drug Administration to ensure imitation dairy product rules are properly enforced. The organization Thursday made the ask to the agency's ombudsman, citing little indication of promised action. NMPF President and CEO Jim Mulhern says, “The FDA’s Office of the Ombudsman must intervene to break the bureaucratic logjam.” The FDA ombudsman, based in the agency commissioner’s office, “serves as a neutral and independent resource for members of FDA-regulated industries when they experience problems with the regulatory process,” according to the agency. NMPF urges the office to take appropriate action to remedy the FDA's lax approach to enforcing its own rules on the use of dairy terms on products containing no dairy ingredients. The organization says unlawfully labeled plant-based imitation foods "poses an immediate and growing risk to public health." NMPF last year released its own road map offering solutions to how public health, product integrity and free speech could be protected through updated regulations.

Report: Net Zero Trucks Ready in North America

A new report by the Environmental Defense Fund shows manufacturers are readying to meet demand for zero-emission trucks in North America. The report finds that that manufacturers, through their investments and product plans, recognize that the future of the commercial vehicle industry is zero-emissions. The study identifies that at least 125 zero-emission truck and bus models are in production, development or demonstration. Over the past five years, sales of zero-emission commercial vehicles have shot up by nearly a factor of ten. There are models for each of the distinct major segments of the heavy-duty vehicle market, including transit and school buses, delivery vans, box trucks and combination trucks. Every major truck and bus manufacturer is developing at least one all-electric vehicle model or is part of an industry collaboration to bring zero-emission vehicles to market. Jason Mathers of EDF says, “Leading manufacturers are ready to make these trucks and fleets are eager to drive them,” adding, “Now we need bold policy to accelerate the market.”

Radio Tag Leads Researchers to Asian Giant Hornet Next

Washington State Department of Agriculture entomologists, using a radio tag, have located and eradicated the first Asian giant hornet nest ever found in the United States. The Department of Agriculture’s Animal and Plant Health Inspection Service supplied the radio tag. Researchers tied the tag to a hornet, which led them to the nest in a dead tree. Two days later, a team of entomologists plugged the nest with foam, wrapped the tree in plastic, and vacuumed out the hornets. To complete the eradication, they injected carbon dioxide into the tree to kill any remaining hornets. In a recent press conference, a WSDA official noted that, given the radio tag’s strength, “I’m pretty confident as long as we can get live hornets, we can follow them back.” Now that they’ve shown that it’s possible to find and eradicate a nest, the hunt continues for any other nests that might be in the area.

Washington Insider: Biotech Crop Problems

National Public Radio is reporting this week about serious emerging problems with major crops that appear to be losing some of their main features.

Some of the most popular products of biotechnology — corn and cotton plants that have been genetically modified to fend off insects — are no longer offering the same protection from those bugs. Scientists say that the problem results from farmers overusing the crops, and are pushing for new regulations. These crops were the original genetically modified organisms, or GMOs. They weren't the first ones invented, but they were the first to be widely embraced by farmers, starting in the late 1990s.

They got their bug-resistant features from a kind of bacteria that lives in the soil, called Bacillus thuringiensis, or Bt, which is poisonous to the larval stage of some major insect pests, including the corn rootworm and cotton bollworm. Scientists inserted some of these bacterial genes into corn and cotton, and the plants themselves produced these insect-killing proteins.

Bt crops brought a two-fold benefit: Cotton and corn farmers didn't need to use so many chemicals to control the bollworm and related pests after they were released, starting in 1996. "Our insecticide sprays just plummeted, and there were guys who wouldn't have to treat at all," says David Kerns, an entomologist at Texas A&M University, speaking of cotton farmers.

This was also good news for the environment. The Bt proteins are toxic to a relatively small number of insects, and they're practically harmless to people and other animals. Unlike the insecticides that they replaced, they were not killing significant numbers of pollinators like bees and butterflies, or beneficial insects that prey on pests and help to keep them under control.

Farmers like Jonathan Evans in North Carolina liked Bt cotton because it made farming easier. "It's always better for the plant to protect itself, than for us to have to go out and spray for the worm," he says. "You can tend a lot more acres, with a lot less equipment." Now there are new strains of bollworms, rootworms, and other pests have emerged that are able to feed on Bt plants without dying. David Kerns says some farmers are pretty angry about it.

"There are words I can't use," he says, "but they want to know what the heck they're doing, paying for a technology but then still have to spray."

Increasingly, they are bothered by the fact that biotech companies have deployed close to a dozen slightly different Bt genes, targeting a variety of insects. In many cases, the bugs have evolved resistance to some Bt proteins, but not others, and the prevalence of Bt-resistant insects varies from place to place. "The impact can be patchy, but when it's there, it's big," says Julie Peterson, an entomologist at the University of Nebraska. "If you're the farmer who ends up with all of their corn laying down on the ground because the roots have been completely fed on by rootworm beetles, that's a huge impact to you."

Scientists have long warned about this risk. They've been engaged in a long-running argument with the companies selling Bt crops, such as Monsanto, which has been acquired by Bayer.

Even before Monsanto started selling the first Bt crops, independent scientists pushed the Environmental Protection Agency to limit the amount of land that farmers could devote to Bt crops.

If Bt crops were planted everywhere, the scientists argued, it would create a situation in which, if a few rare insects happened to be genetically capable of surviving Bt proteins, they would be the sole survivors, quickly mate with each other, and produce a new strain of resistant insects. Biologists call this "selection pressure."

The solution, they said, was a requirement that farmers devote some of their land to non-Bt crops. This would allow plenty of non-resistant insects to survive, and make it less likely that the rare resistant insects would mate with each other.

The EPA adopted this strategy, but independent scientists and biotech companies have disagreed over the years about how big these refuges need to be. In the case of some Bt crops, such as corn hybrids with genes targeting the corn rootworm, scientists have urged the EPA to require that farmers to devote at least half of their fields to non-Bt corn. The companies balked at that, since it would have limited sales of their products. They convinced the EPA that such large refuges weren't necessary.

The warnings, however, turned out to be well-founded. Over the past decade, insects like the corn rootworm, the cotton bollworm, and the Western bean cutworm have become resistant to one Bt gene after the other. Now scientists, once again, are pushing for tighter government rules.

"We are at an important point, where we've seen what can happen, and definitely do need to make some changes," Peterson says. The biggest proposed changes are an attempt to preserve one particular Bt gene, called called Vip3A, which has been incorporated into both corn and cotton plants. Vip3A came on the market a little later, and it is slightly different from other Bt genes, "so it still is effective against a lot of insects, and it's sort of carrying a lot of the weight right now," Peterson says.

The company Syngenta sells it under the trade name Agrisure Viptera.

Scientists are worried that it will soon break under the weight of overuse, especially in cotton-growing areas of the South. There, the Vip3A gene is currently deployed in both corn and cotton to fight off an insect known both as the cotton bollworm and the corn earworm. Kerns says that he and his colleagues have found a recessive genetic trait for Vip3A resistance in this insect population. If the gene is widely used, insects carrying this gene will be more likely to survive, mate, and produce fully resistant offspring.

Two years ago, a group of the EPA's outside scientific advisors recommended unanimously that the agency prohibit the use of Vip3A in corn in the South. This would preserve its effectiveness in cotton, they said, where it's much more valuable.

The company that owns the Vip3A gene — Syngenta — argued that such a prohibition wasn't necessary or fair. In its latest draft document on the issue, the EPA backed away from the idea. Instead, the agency proposed a variety of other measures. They include a requirement that companies plant and monitor "sentinel plots" of Bt crops that could provide early warning of insect resistance, and also that companies force farmers to abide by existing requirements to plant non-Bt refuges. Studies have found many farmers ignoring these rules.

Peterson says that if current farming practices don't change, it's possible that all of the Bt genes currently on the market will stop working reliably within a decade.

So, we will see. Clearly the scientists at USDA and the genetic firms who market these products are well of the problems that are emerging and likely have strategies to help customers deal with them, and have many experts work.

USDA World Board Leader Offers Defense Of China Corn Import Figure

USDA's forecast that China's 2020/21 corn imports from all sources will be at 7 million metric tons has prompted many questions about the forecast in no small part because U.S. export commitments for corn to China alone stood at 10.5 million metric tons as of October 15.

"Keep in mind that export sales ... do get canceled at times," World Ag Outlook Board (WAOB) Chairman Mark Jekanowski said during a virtual USDA data users meeting.

China's tariff rate quota for corn was maintained at 7.2 mmt for calendar 2021, but expectations are that China's government will issue additional import quotas or take other actions to bring more corn in than the announced TRQ level in 2021.

And the fact there has been no formal announcement factors into the WAOB decision, Jekanowski said. “One of the things we try not to do is forecast changes in policy, including changes in policy by foreign countries,” he noted.

Chinese corn prices have hit lofty levels as demand for corn is high in the country as they seek to rebuild their hog herd that was decimated by African swine fever (ASF) and the country has sought to dramatically reduce the use of swill to feed hogs.

Ethanol Groups Ask Federal Court To Force EPA To Disclose Refiner Exemptions

Growth Energy and the Renewable Fuels Association (RFA) asked the United States District Court for the District of Columbia to order the Environmental Protection Agency (EPA) to respond to several Freedom of Information Act (FOIA) requests filed by the biofuels industry regarding the small refinery exemption (SRE) program and EPA's escalation in granting SREs in recent years.

Growth Energy CEO Emily Skor and RFA president and CEO Geoff Cooper said in a news release, “For the last several years, biofuels interests have pleaded with EPA to lift the veil of secrecy that it has held over the issuance of small refinery exemptions under the Renewable Fuel Standard. These clandestine agency actions have destabilized markets and allowed numerous refineries to avoid their RFS compliance obligations at the expense of renewable fuel producers and supporters, including America's farmers.”

The official noted that, “Fundamentally, this request is about fairness and transparency in government. If an agency decides to relieve a refinery from the obligations Congress imposed under the Clean Air Act or any federal law, it should be done in the public view.”

Friday Watch List

 Markets

Friday's reports include the U.S. employment cost index for the third quarter and U.S. personal incomes for September, both at 7:30 a.m. CDT. The University of Michigan's consumer sentiment index for October is due out at 9 a.m. CDT. Traders will continue to pay attention to the latest weather forecasts and any export sales news.

Weather

Dry conditions will cover all primary crop areas Friday, offering improved harvest and field work conditions. Delays are still likely in the eastern Midwest and Delta following rain during the past few days. Temperatures will remain cool for the season in the eastern Midwest with moderating trends elsewhere

Ethanol Groups Seek Partial Summary Judgment in FOIA Lawsuit

Growth Energy and the Renewable Fuels Association this week filed a motion for partial summary judgment in a Freedom of Information Act lawsuit regarding Small Refinery Exemptions. The motion follows the Environmental Protection Agency’s failure to adequately respond to several FOIA requests, according to the groups. Growth Energy and the Renewable Fuels Association asked a federal district court to order EPA to make public at least the most basic information about the exemptions. The two groups say EPA should not withhold the name of the company submitting an application for an SRE nor the name and location of the refinery for which relief is requested. Additionally, they ask that EPA immediately produce the information that was unlawfully withheld for Renewable Fuel Standard compliance years 2015, 2016 and 2017. Finally, the groups say the EPA should not withhold any of the five data elements identified in the proposed Renewables Enhancement and Growth Support rule.

EPA Considering E15 Label Changes at Gas Pumps

The Environmental Protection Agency is mulling over a potential label change for E15 at gas pumps. The possible move is seen as a way to appease the biofuel industry’s concerns that current labels discourage use of the fuel, according to a report by Reuters. Current labeling warns of possible engine damage to older vehicles. An announcement could come soon, but there’s no detail yet on how the Trump Administration might alter the labeling. President Donald Trump did say via Twitter last month that he would allow states to permit fuel retailers to use their current pumps to sell E15. Expanding the market for E15 is a policy goal for farmers and the ethanol industry, including calls for the national standard to move from E10 to E15. Going from an E10 blend to an E15 blend would increase ethanol production by seven billion gallons and corn demand by over two billion bushels a year, according to Growth Energy.

Dicamba Decision Provides Certainty to Ag Retailers, Farmers

The Agricultural Retailers Association says the Environmental Protection Agency offers certainty to retailers and farmers with the recent five-year registrations for dicamba herbicides. ARA President and CEO Daren Coppock says, “Now farmers and their retailers can make firmer plans for the next five years with this critical question answered.” American Soybean Association President Bill Gordon thanked the EPA in a statement for “the many steps and time invested in coming to this decision.” EPA Administrator Andrew Wheeler late Tuesday announced the registration for three dicamba herbicides, Bayer’s ExtendiMax, BASF’s Engenia and Syngenta’s Tavium. The announcement follows a court case in June that invalidated the registrations for ExtendiMax, Engenia and Corteva’s FeXapan. The registration does include a cutoff date for over the top applications for soybeans of June 30 and cotton of July 30. Gordon of ASA points out that dicamba is “one of many tools integral to the success” of farmers facing different crop production challenges.

Consumers Are Stocking up Again Amid COVID, Political Unrest Fears

Americans are again stocking up the pantry over supply chain, coronavirus and political unrest fears. In a report from industry publication Progressive Grocer, research shows more than half of Americans say they're stockpiling groceries or plan to stockpile. The research cites worries about supply chain disruptions due to COVID-19 surges and political unrest amid the presidential election. Industry leaders are urging retailers to prepare for a rise in shoppers. Walmart CEO Doug McMIlion says, “It will be choppy for months to come as we all deal with the volatility and as things change.” Roughly 52 percent of Americans plan to stockpile this fall, according to data from the Sports and Leisure Research Group. Additionally, 38 percent of consumers stocked up at the beginning of the pandemic and would do so again with a new shutdown, while 15 percent of consumers didn't stock up earlier this year, but would do so if there's a new shutdown.

USDA Announces More Rural Community and Broadband Investments

Another day closer to the election brings another investment announcement in rural communities by the Department of Agriculture. In a recent string of investments, USDA Wednesday announced another $871 million for rural communities. This time, USDA is funding 256 projects through the Community Facilities Direct Loan and Grant Program. The investments will assist communities in building or upgrading schools, libraries, clinics and public safety facilities. The funds will benefit 3.5 million residents in 43 states and Guam. Over the last few weeks, USDA has announced investments in rural communities near-daily, including millions for rural broadband. USDA Wednesday also announced a $1.8 million investment for rural broadband in Iowa, and $5 million for areas in rural Kentucky. That announcement is part of the $550 million allocated by Congress for the second round of the ReConnect Program. Both the Community Facilities Program and the Reconnect Program are administered by USDA Rural Development.

NCBA Moves 2021 Convention to August

The National Cattlemen’s Beef Association is the latest ag organization to change the 2021 meeting schedule due to COVID-19. In a letter to event participants, the organization announced the Cattle Industry Convention will move to August 2021, delayed from February. NCBA CEO Colin Woodall says, “the limits on the number of people who can gather at an event in Nashville and the travel restrictions facing many trade show exhibitors, makes it impossible for us to put on the world-class event.” Originally scheduled for February 3-5, the convention and trade show will now take place August 10-12, 2021. NCBA will hold some of its traditional business meetings in the January or February timeframe, in accordance with the association’s bylaws. The event is one of many originally scheduled for early 2021 that is changing the meeting landscape for agriculture. The American Farm Bureau Federation earlier this month announced its annual convention will be virtual, planned for January 10-13, 2021.

Washington Insider: Keeping USA Manufacturing Jobs

The Washington Post this week is highly critical of Trump administration efforts to “jawbone” companies into producing entirely in the U.S. For example, it leaned heavily on Carrier international when it was planning invest in Mexico, but just four months after Carrier agreed to keep some jobs in Indianapolis, it broke ground on a new manufacturing facility in China. The $95 million factory would produce compressors and light commercial systems for sale in China and the region.

By May, Carrier had informed Indiana officials that it was eliminating 632 jobs from the Indianapolis plant, prompting an angry President Trump to call Carrier to complain.

But even as the administration argued for companies to stay put, other elements of its trade policies were putting them at a disadvantage.

In 2018, President Trump imposed tariffs on Chinese products, intended to punish Beijing for pilfering foreign companies' trade secrets and intellectual property. But the import taxes also raised Carrier's production costs, so in December 2018, the company requested an exclusion from the 25 percent fee for a Chinese-made electrical motor it used in its residential gas furnaces, warning of “significant price increases for consumers.”

In May 2019, the Office of the U.S. Trade Representative denied the request, saying that Carrier had not proved that the motor was available only from China.

Still, business was good. Carrier last year recalled more than 100 workers who had been let go and morale, which had crumbled amid the outsourcing talk, rebounded.

Some of the work that left Indiana ended up in Monterrey, Mexico's manufacturing heartland, in a blue-and-white building Carrier calls Plant A. Both the U.S. and Mexican flags fly out front.

Just one of several local Carrier production sites, the facility in the working-class Santa Catarina neighborhood can be a refuge from the world beyond its walls.

When the president first attacked Carrier in 2016, workers in Mexico here got nervous about what his outburst might mean for them. But plant managers reassured them that nothing would change.

For example, one worker, Omar Mendoza, 28, told the Post he had worked for Carrier for three years as a junior quality-control specialist. He is studying English in hopes of earning a promotion.

Carrier is “above the average” for employers in Monterrey, he said. “The company treats me well and in general they give the workers many benefits, like scholarships and subsidized lunch,” he said.

The Post said that local workers in Mexico tend to shrug at U.S. anger over outsourcing, saying Mexican workers in the country's more developed areas were also vulnerable to low-wage competition, from migrants from southern Mexico or Central America. “That's the way it is,” one told the Post.

The Post said that Carrier's labor costs in Mexico are about 80 percent less than in Indiana — and show little sign of rising. From 1997 to 2016, Mexico's hourly compensation costs — salary, social insurance and labor taxes — in the manufacturing sector held steady at about one-tenth the U.S. figure, according to a Conference Board database.

That's drawn Carrier and most of its competitors, including Lenox, Trane, Rheem and York, to Mexico along with their suppliers. There is no precise estimate available for the number of U.S. jobs that have moved offshore in the free-trade era.

Up to 5 million U.S. manufacturing jobs disappeared between 1997 and 2018, according Economic Policy Institute economists. But that figure includes the effects of automation and business failures as well as trade.

The U.S. government has formally certified that 202,543 jobs have been offshored during the current administration, according to a recent Public Citizen analysis of Labor Department records that the group says represents an undercount.

The loss of U.S. jobs appears to have ebbed since the 2000s, when companies took advantage of China's entry into the World Trade Organization and the earlier creation of a unified North American trading bloc to ship millions of jobs to lower-wage venues.

Hopes of stemming the flow of U.S. jobs to Mexico now rest with labor overhauls instituted by the government of President Andres Manuel Lopez Obrador as well as the terms of Trump's replacement for the 1994 North American Free Trade Agreement.

The U.S.-Mexico-Canada Agreement (USMCA) is designed to tilt investment decisions toward the United States by requiring a set percentage of auto manufacturing to be performed by workers making an hourly wage of at least $16. The new accord also includes provisions to permit collective bargaining and to close loopholes allowing Mexican employers to profit by mistreating their workers.

Labor advocates say that the Trump administration deserves credit for making the USMCA more worker friendly, including by eliminating a dispute settlement system in NAFTA that allowed corporations to sidestep corrupt local courts, thus making Mexico more attractive as an investment venue. On paper, the Mexican overhauls would allow workers to organize unions outside the company-controlled “white” unions that exist to guarantee big employers labor peace. Even before the pandemic slowed government operations, implementation was behind schedule, according to Gladys Cisneros, Mexico program director for Solidarity Center, an AFL-CIO affiliate.

“So far, on the ground, nothing is different for Mexican workers,” Cisneros said.

Robert Lighthizer, the president's chief trade negotiator, told the House Ways and Means Committee in June that “labor enforcement in Mexico is going to be a problem.”

And Richard Trumka, the president of the AFL-CIO, said last month that the labor federation already is preparing a list of complaints. Even if the overhauls are implemented, they are unlikely to have a dramatic impact. Roughly 1 of every 7 Mexican workers belongs to a union. The agreement would increase their wages by 17%, producing only a “modest” effect on the U.S. economy, according to the International Trade Commission.

Few in the Mexican business community anticipate a major shift of jobs back to the United States. “What is already in Mexico will stay. I don't see it going back,” said Armando Tamez, chief executive of Nemak, a parts supplier to global automakers. The moribund Mexican economy also keeps a lid on wages. José Valdez, CEO of Alpek, one of the largest petrochemical producers in the Americas, said wages can increase only as fast as productivity growth. If government policy tries to force them higher, it will encourage companies to automate instead.

“Whoever tells you this is a revolution has to be a Trump supporter or a political guy,” said Valdez. “No businessman would tell you that. We don't see anything changing in reality.”

Roberto Russildi, Nuevo Leon state's secretary of economy and labor, says his sales pitch to potential investors emphasizes that “in 21 years, we've had no strikes or major problems” with organized labor.

That's one of the reasons Mexico remains attractive as a production center, according to Ernesto Velarde-Danache, a prominent attorney who handles labor relations for multinational corporations. “The reforms are forcing the existing unions to demand better pay. So little by little, things are going to improve. But I don't think it will be at a pace that will be noticeable,” he said. “I don't see Mexico in the next 25 years getting close to the U.S.”

So, we will see. Certainly, U.S. trade policy, along with other key policy efforts should be watched closely in the intense policy and budget debates now underway and expected for the coming months, Washington Insider believes.

First Commercial Shipment of US Rice Unloads In China

A shipment of premium, medium grain Calrose rice grown in California and sold to China by ADM Rice was unloaded in China Tuesday (October 27), the first commercial sale of U.S. rice to China, according to USA Rice.

Under the terms of the phytosanitary agreement reached between the U.S. and China, all rice entering China must be milled and packaged according to specifications and originate from a pre-approved export facility, the group noted.

There are currently 32 approved export facilities spread across the six major rice-growing states. U.S. rice entering China under their tariff rate quota faces a 1% in-quota duty in addition to a 25% retaliatory duty, but the group noted, “In most cases, importers in China may apply to waive the retaliatory duty.”

USDA's Weekly Export Sales report recently reported the shipment of 20 metric tons of U.S. rice to China that was purchased earlier this year.

EPA Announces Actions On Dicamba Registrations

EPA announces new five-year registrations for two dicamba products and extended the registration of one dicamba product, putting additional control measures in place for their use.

New registrations for two “over-the-top” (OTT) dicamba products—XtendiMax with VaporGrip Technology and Engenia Herbicide—and extended the registration for an additional OTT dicamba product—Tavium Plus VaporGrip Technology—were announced by EPA Administrator Andrew Wheeler at a Georgia farm.

These registrations are only for use on dicamba-tolerant (DT) cotton and soybeans and will expire in 2025, the agency said.

EPA also put new control measures in place to address drift of the herbicide, including that a pH-buffering agency be tank mixed with OTT products, a downwind buffer of 240 feet and 310 feet will be required in areas where listed species are located, OTT applications will be prohibited after June 30 on soybeans and July 30 on cotton and there will be simplified label and use directions. The 2020 registration labels also offer new flexibilities for growers and states, including the use of certain hooded sprayers to reduce the downwind spray buffer.

EPA said they believe the action addresses issues raised in the June 2020 Ninth Circuit Court of Appeals ruling and the control measures now requested means the registrations “do not affect or are not likely to adversely affect endangered or threatened species.

Some environmental groups decried the EPA action and it is not clear if they will seek to challenge this latest decision in court.

Thursday Watch List

 Markets

After Wednesday's broad, commodity-based selling related to coronavirus concerns, we have to say the daily U.S. infection count will probably get traders attention Thursday. At 7:30 a.m. CDT, USDA will release its weekly export sales report, the U.S. Labor Department will release weekly jobless claims, the Commerce Department will report on third-quarter GDP and the U.S. Drought Monitor will be updated. The International Grains Council will issue its monthly Grain Market Report Thursday morning and at 9:30 a.m. CDT, the Energy Department will report on natural gas inventory.

Weather

Moderate to heavy rain is in store for the eastern Midwest, southeastern Plains and Southeast Thursday, causing harvest disruption along with flooding. Damaging tropical storm-force winds are also in store in the Southeast. Other crop areas will be dry with improving harvest conditions

EPA Extends Dicamba Registrations

The Environmental Protection Agency late Tuesday announced five-year registrations for two dicamba products and the extension of a third. EPA Administrator Andrew Wheeler says the registrations include new control measures to ensure the products can be used effectively while protecting the environment, including non-target plants and other crops not tolerant to dicamba. Bayer’s ExtendiMax and BASF’s Engenia received five-year registrations, while Syngenta’s Tavium registration was extended. Corteva’s FeXapan was not included in the announcement. A federal court in June tossed out the registrations for ExtendiMax, Engenia and FeXapan, but did not include Tavium. The registrations feature new control measures, including requiring a volatility reduction agent and specific downwind buffers. The federal regulation prohibits over the top application of dicamba on soybeans after June 30 and cotton after July 30. Farm groups have called on the EPA to reregister the products for 2021. However, a staffer at the Center for Food Safety via Twitter called the action "rushed before the election, as a political prop." American Farm Bureau President Zippy Duvall and National Cotton Council Chairman Kent Fountain joined Wheeler for the announcement in Georgia.

Wheeler Calls on DOJ to Investigate Environmental Organizations Funding

Environmental Protection Agency Administrator Andrew Wheeler wants the Department of Justice to investigate funding for environmental groups. In a letter to the Justice Department, Wheeler cited concerns the groups were receiving secret funding from foreign countries, specifically China and Russia. The action follows a previous letter by Representative Lance Gooden, a Texas Republican. Gooden requested the investigation earlier this month. Referring to China, Gooden states, “We have reason to believe they are funneling money to certain green groups to influence American foreign policy and our elections.” In Wheeler’s letter, he says foreign investments are not against the law, but says, “foreign influence should not be covert.” Wheeler did not name specific environmental groups. However, Gooden names The Sea Change Foundation, the Sierra Club and the Sunrise Movement in his letter to Wheeler. Administrator Wheeler referred the issue to DOJ, stating, “The DOJ can then determine what appropriate steps to take, if any.”

Ethanol Groups Submit Comments on Flex Fuel Vehicles

Ethanol Groups this week submitted comments to the Environmental Protection Agency regarding emissions standard compliance calculations for Flex Fuel vehicles. The Renewable Fuels Association supports the EPA approach to “maintaining some level of certainty for automakers in the absence of future guidance.” RFA also called on the EPA to provide a long-term floor and "more robust" E85 usage factors for future model years, given expected growth and the benefits provided by ethanol flex fuels. RFA Vice President for Regulatory Affairs states, “it is clear that manufacturers will hesitate to invest in certain technologies, like FFVs, unless there is some assurance that those vehicles technologies will help enable CAFE and GHG standard compliance over multiple model years." Growth Energy's comments to EPA state recent trends in government and private investment in biofuels infrastructure, and updated data on E85 availability all lead to growth in higher biofuel blends. Growth Energy says the EPA should "provide appropriate, immediate credit to automakers to continue to produce flex-fuel vehicles to run on these higher biofuel blends."

Alltech Launches Survey on Gender Equality Within The Food And Agriculture

Alltech Tuesday announced its support of the second annual Women in Food and Ag survey. The survey aims to collect feedback that empowers the agri-food industry to create a more equitable environment. The 2019 Women in Food and Ag survey results revealed specific barriers for women in agriculture and a gap between female and male perceptions but reflected an optimistic outlook. As 2020 ushered in unprecedented challenges for agriculture, new questions have been added to the survey to gauge potential inequalities uncovered by COVID-19. Alltech CEO Mark Lyons says, “Human ingenuity is our Earth’s most valuable resource, and a diverse workforce is essential to building a more sustainable future.” This initiative reflects Alltech’s commitment to the U.N. Global Compact and the U.N. Sustainable Development Goal related to gender equality. Women and men in all sectors of the food supply chain are encouraged to contribute to the survey.  The survey results will be published in January 2020.

The survey is available here: https://www.research.net/r/WFAsurvey2020?lang=en

USDA Reports Top Ten Pumpkin Producing States

Pumpkins are one of the most famous symbols of fall, and the Department of Agriculture is highlighting the top ten pumpkin producing states. Just in time before Halloween, in a report by the Economic Research Service, USDA notes production is widely dispersed throughout the United States, with all States producing some pumpkins. However, about 62 percent of pumpkin acres were cultivated in only ten States. By acreage and by weight, Illinois is consistently the Nation's largest pumpkin producer. Unlike all other States, most Illinois pumpkins are used for pie filling and other processed foods. The lower price associated with pumpkins destined for further processing explains why Illinois was second in the value of pumpkin production at $17.1 million in 2019. Pumpkins from the other states surveyed annually by USDA's National Agricultural Statistics Service were primarily intended for decorative or carving use. California leads the Nation in terms of value of production, at $22.8 million.

USDA Announces $891 Million Investment in Rural Water and Wastewater Infrastructure

The Department of Agriculture Tuesday announced an $891 million investment in rural drinking water and wastewater infrastructure in 43 states. Funding 220 projects, the investment will help improve rural water infrastructure for 787,000 residents. The projects are being funded through the Water and Waste Disposal Loan and Grant Program. USDA Deputy Under Secretary for Rural Development Bette Brand says, "Upgrading water infrastructure provides a path to economic growth and protects the health and safety of people who live and work in rural areas." The Water and Waste Disposal Loan and Grant Program provides funding for clean and reliable drinking water systems, sanitary sewage disposal, sanitary solid waste disposal, and stormwater drainage to households and businesses in eligible rural areas with populations of 10,000 or less. Meanwhile, USDA Rural Development provides loans and grants to expand economic opportunities and create jobs in rural areas. This assistance supports infrastructure improvements, among other things, in rural communities.

Washington Insider: Dealing With the Future China

In a long news article this week, Bloomberg argues that no foreign policy issue will plague the next winner of the White House more than China.

Already a debate is raging among China watchers over what Washington's next steps should be. Some favor a “reset” to tamp down tensions and return to more constructive diplomacy. Others are fearful of that and argue the U.S. mustn't stray from the hard line.

Bloomberg describes a somewhat different reality. As the U.S. struggles to contain the coronavirus outbreak and restart its economy, China appears to be gaining strength. Its gross domestic product expanded 4.9% in the third quarter, an “astounding rebound in a world still mostly mired in a pandemic-induced paralysis.”

In its own foreign policy, Beijing has barely flinched under U.S. pressure and instead has become more assertive — enhancing its influence in global institutions such as the World Health Organization, crushing the pro-democracy movement in Hong Kong, turning up the heat on Taiwan, and brawling (literally) with India along their disputed border.

In addition, Bloomberg thinks western policies are based on a serious misapprehension of the country's past largely because “Americans encountered China at one of the darkest points in its history and, as a result, hold a “skewed” view of China today.

The report points out that China has consistently been one of the world's largest economies over the past 2,000 years—and still was well into the 19th century. Rather than something startling, China's growth into the world's second-largest economy is “a return to the norm,” it says. Centuries before Vasco da Gama felt his way to India in 1498, China was the beating heart of a global economic system, with trade links stretching from South China, across Southeast Asia and the Indian Ocean, to the Persian Gulf and Red Sea.

It also argues that China has “risen” many times in the past—and its latest period of weakness, when it was subordinated to the Western world, hasn't been all that long by its historical standards. It may be more realistic to describe the country's 21st century ascent is as a “restoration,” not so unlike the several imperial restorations of the past, the report says.

Such a view would shift the way the West contends with China as it works to resurrect some of its political and economic foreign policy precepts. It also could mean acceptance of the reality that China wants to be and most likely will be a global superpower. An approach meant to “keep China down,” as they see it, likely will generate conflict but few tangible results.

A better route may be to allow China more diplomatic space in areas where it doesn't fundamentally damage U.S. interests. Rather than contesting Beijing on everything, if China wants to lose money and alienate other governments building uneconomic railways and roads, the West might “wish it the best,” Bloomberg thinks

Still, today's China does present a threat in its expectation that it will be the dominant power in East Asia — a region that is too vital for the West to concede — so the U.S. will need to protect its core interests there. This will require “deft diplomacy through international organizations or alliances rather than vitriol-filled, one-on-one slugfests,” Bloomberg thinks.

It also will require the organization of the contending parties in Southeast Asia into a collective to prod Beijing to negotiate. And, it may require cooperation with the Association of Southeast Asian Nations as well as working within the World Trade Organization to influence China, rather than outside of it.

In fact, a U.S. policy that recognizes Chinese history doesn't equal a soft one. The U.S. should still target China's bad practices — more carefully but also more forcefully. Chinese companies and officials with proven records of stealing technology or participating in human-rights abuses should be sanctioned. Duties ought to be slapped on Chinese exports that are unduly subsidized by the state and, where possible, policies should be adopted to deal with the risks China presents without making them blatantly anti-China.

However, Bloomberg does not think that contesting international outrages means a constant fight with “China,” it will need to contend with the Chinese Communist Party — which asserts that the two are equivalent, but they aren't. The scholar-statesmen who managed imperial China, steeped in Confucianism, believed good government was founded on benevolence, not brutality. Chinese history's most tyrannical rulers were usually looked upon with scorn by the Confucians.

The report also concludes that just because China has restored itself in the past doesn't automatically mean it will now. Contemporary China is still a middle-income country lacking key technologies and plagued by an artificially aging population. It has a long way to go to become a global superpower. Yet from a policy standpoint, it's wiser to recognize the historical trends that propel it forward and rejigger the world order to address Chinese aspirations--though not its autocracy. It won't be easy. Bloomberg says, but neither is denying history.

So, we will see. This is a somewhat dark period with widely and deeply held skepticism regarding trade. However, since access to growing markets will require looking overseas expanding trade will continue to be of great value to many sectors of the economy. Thus the international relationships necessary to build and expand US global market access should be re-examined and revitalized, a process producers should watch closely, Washington Insider believes.

EU Cleared To Hit US With Retaliation Over Boeing Subsidies

The WTO Dispute Settlement Body (DSB) Monday okayed the European Union (EU) request to hit $3.99 billion in U.S. goods with tariffs over subsidies paid to Boeing that were found to run counter to U.S. WTO commitments.

However, EU Trade Commissioner Valdis Dombrovskis said he would seek to negotiate a settlement with the U.S., according to a statement. The formal approval by the Dispute Settlement Body of the WTO “confirms the EU's right to impose countermeasures for illegal subsidies to the American aircraft maker, Boeing,” he said. “The European Commission is preparing the countermeasures, in close consultation with our Member States. As I have made clear all along, our preferred outcome is a negotiated settlement with the U.S.”

The U.S. has offered a proposal to the EU to resolve the Boeing and Airbus disputes that have run for some 16 years, but indications are the EU rejected that US offer.

The U.S. side indicated at the WTO session that they also want a negotiated settlement, indicating one could come in a “short period of time.”

CFAP 2 Payments Top $7.5 Billion

Payments under the Coronavirus Food Assistance Program 2 (CFAP 2) have reached $7.6 billion as of October 25, including $3.9 billion in acreage-based payments, $2.1 billion for livestock, $843.9 million for sales commodities, $790.1 million for dairy, and $17.8 million for eggs/broilers.

By commodity, the payments are led by $2.2 billion for corn, $1.7 billion for cattle. $832.2 million for soybeans, $793 million for sales commodities, $790.1 million for milk, $391.3 million for wheat, $377.9 million for hogs/pigs and $169.6 million for upland cotton.

Payouts have reached $500 million or more in five states—Iowa ($776.9 million), Nebraska ($517.9 million), Minnesota ($510.2 million) and Illinois ($505.7 million).

CFAP 1 payments stand at $10.3 billion, including $5.0 billion for livestock, $2.6 billion for non-specialty crops, $1.8 billion for dairy, $802.6 million for specialty crops and $112.8 million for aqua nursery flora.

Wednesday Watch List

 Markets

Traders will check the latest weather forecasts for North and South America and the Black Sea region and also pause at 8 a.m. CDT to see if USDA has an export sale announcement. At 9:30 a.m., the U.S. Energy Department releases its weekly energy inventory report, which includes last week's ethanol production.

Weather

Rain, ice and snow are in store from the Texas Panhandle to the Delta and Deep South Wednesday. This moisture is unfavorable for cotton and will disrupt harvest, while improving conditions for winter wheat. Other crop areas will be drier with improved harvest conditions following weekend rain and snow.

USDA: More than $7 Billion Paid in Second Round of CFAP

The Department of Agriculture has paid more than $7 billion in assistance to farmers as part of round two of the Coronavirus Food Assistance Program.  Known as CFAP 2, the program provides farmers with financial aid to help absorb some of the increased marketing costs associated with the COVID-19 pandemic. Agriculture Secretary Sonny Perdue says, “the funding builds upon the over $10 billion disbursed under the first round.” Since CFAP 2 enrollment began in September, the Farm Service Agency has approved more than 443,000 applications. The top five states for payments are Iowa, Nebraska, Minnesota, Illinois and Kansas. Through CFAP 2, USDA is making available up to $14 billion for farmers and ranchers. CFAP 2 is a separate program from the first round of funding. Farmers and ranchers who participated in the original program are not automatically enrolled and must complete a new application for the second round of funding. FSA will accept applications through December 11, 2020.

China Has Purchased 71 Percent of Its Phase One Target

The Department of Agriculture late last week announced China has followed through on 71 percent of its Phase One Economic and trade Agreement commitments. USDA and the U.S. Trade Representative’s Office says that China has purchased over $23 billion in agricultural products to date. Outstanding sales of U.S. corn to China are at an all-time high of 8.7 million tons, and U.S. soybeans sales for marketing year 2021 are off to the strongest start in history. U.S. exports of sorghum to China from January to August 2020 totaled $617 million, up from $561 million for the same period in 2017. U.S. pork exports to China hit a record in just the first five months of 2020, and beef exports to China through August are already more than triple the total for 2017. USDA expects 2020 sales to China to hit record or near-record levels for many U.S. agricultural products, including pet food, alfalfa hay, pecans, peanuts, and prepared foods.

Organic Fresh Produce Sales Continue Double-Digit Growth

Organic fresh produce in the third quarter of 2020 saw a continuation of trends established in March of this year, with elevated sales across the entire category. A report by the Organic Produce Network shows fresh produce sales topped $2.2 billion for the quarter and accounted for 12 percent of all produce sales, compared to a dollar share of 9.8 percent in the second quarter. Organic Produce Network CEO Matt Seeley says, “sales of organic fresh produce show no signs of slowing and continue to be a major growth opportunity for retailers across the country.” Packaged salads, strawberries and herbs generated the highest growth in organic dollars in the third quarter. Bananas continued to be the volume leader of organic produce offerings, generating 18 percent of total volume and increasing by 8.3 percent from the previous year. For the first half of 2020, organic fresh produce sales were up 11 percent in dollar growth and 13 percent in volume compared to last year.

USDA Releases Cattle On Feed Report

The latest Cattle on Feed report shows higher cattle inventories as of October 1, 2020. The Department of Agriculture released the monthly report Friday. USDA reported cattle and calves on feed for the slaughter market in the United States for feedlots with capacity of 1,000 or more head totaled 11.7 million head. The inventory was four percent above October 1, 2019. This is the highest October 1 inventory since the series began in 1996. Placements in feedlots during September totaled 2.23 million head, six percent above 2019. In an analysis of the report, American Farm Bureau Federation economist Michael Nepveux says, “After strong impacts from the pandemic in April and May, the number of cattle on feed has largely followed seasonal patterns.” However, the impacts of the pandemic are still contributing to market uncertainty. Nepveux adds, “It will be interesting to see how the recession eventually impacts beef demand, as recessions tend to not be kind to this particular animal protein.”

Farmers National Company Reports Higher Land Prices this Fall

Farmers National Company reports buyers are willing to bid up for good quality cropland in the heart of the Midwest this fall, citing two recent sales. In central Iowa, two separate 120-acre tracts brought $13,700 and $13,400 per tillable acre. Meanwhile, a quarter section in central Illinois sold for $13,500 per tillable acre. Randy Dickhut of Farmers National Company says, "these are definitely strong sales with prices up from where they have been the past few years." He says farmers continue to be active bidders for the good cropland that comes up for sale in their areas as they add to their operations. Local investors who are either diversifying their asset portfolio or doing a 1031 tax-deferred exchange are also active bidders in many land sales. Dickhut adds the lack of safe, alternative investments that return more than farmland, such as Treasury bonds, is also another factor in the demand for land.

Lawsuit Claims EPA Approved “Dangerous” Fungicide

The Center for Food Safety and the Center for Biological Diversity are challenging the Environmental Protection Agency's approval of a new fungicide. The EPA approved the new fungicide, inpyrfluxam (in-PEER-flux-um), in August. The two groups in a lawsuit claim the approval came "despite compelling research showing it to be very highly toxic to fish, including endangered salmon and steelhead." Additionally, the lawsuit claims the fungicide poses substantial risks to large birds, including whooping cranes. The EPA approved the fungicide for use on some of the most widely grown U.S. crops, including corn, soy, grains, beans, sugar beets, apples and peanuts. The fungicide was approved for foliar and seed treatment uses to protect against Rhizoctonia species causing seed decay, seedling damping‐off, and root rot. The Center for Biological Diversity says, “The EPA broke the law when it failed to make sure this highly toxic fungicide won't drive endangered species closer to extinction, and we're going to hold the agency accountable."

Washington Insider: Global Economic Temperature Check Ahead

Bloomberg commented this week on expectations for three Group of Seven interest-rate decisions along with data accounting for 40% of global gross domestic product. It expects these will provide a “temperature check for the crisis-disfigured world economy” this week during its most traumatic year for generations.

While the U.S. and euro regions likely have achieved unprecedented growth rebounds in the third quarter, that will only serve to underscore the volatility and disruption inflicted by the coronavirus – as opposed to any meaningful repair to the damage caused, Bloomberg says.

Concurrently, the central banks of Canada, Japan and the euro area are all likely to signal renewed anxiety at the persistence of the disease and its lingering impact at a time of resurgent infections in Europe.

The cumulative snapshot of growth and policy on three continents will form a definitive backdrop on the state of the world economy before the U.S. election the following week, Bloomberg says.

In the aftermath of that vote on Nov. 3, decisions by the Federal Reserve and the Bank of England will then complete the latest sweep of G-7 monetary authorities determining borrowing costs and stimulus across the bloc.

Bloomberg's view is that “the week ahead is set to bring good news about the past, but bad news about the future.” In the U.S., third quarter GDP will show a record expansion, but “with stimulus talks stalled and the virus case count rising, the outlook is darkening.” In Europe, the report says the group expects ECB President Christine Lagarde to acknowledge intensifying risks to the recovery and signal further support ahead.”

Bloomberg also notes that the central bank in Ottawa has made a long-term commitment to keep interest rates at historic lows and will use the upcoming rate decision to reinforce that guidance. That likely means holding the benchmark interest rate at 0.25%, reiterating that it will likely stay there for years and pledging to continue buying government bonds to support that policy.

Yet, with growing concern that the Bank of Canada could end up cornering the market for Canadian debt, officials are under pressure to provide some details on how it could temper its reliance on asset purchases without tightening policy.

With regard to developments in Asia, the report says that Bank of Japan officials are widely expected to hold fire on Thursday as governor Haruhiko Kuroda reiterates the need to monitor the effectiveness of the bank's virus-response measures and his resolve to take swift action if needed. The Bank of Japan will also release updated growth and inflation forecasts that will continue to show prices falling in the current fiscal year.

The BOJ's focus on providing funding for struggling firms and calming markets through asset buying has put its inflation campaign on the back burner for now. Policy makers are likely to argue that with only minor tweaks to the projections, the base scenario for the economy to gradually pick up remains unchanged. Still, the figures will again raise the question of what else the central bank can do to reach its distant 2% inflation target over the long run.

European Central Bank (ECB) policy makers also will meet on Thursday when discussion will be dominated by concerns regarding impacts that the sudden resurgence of the pandemic could have on the recovery – and whether more stimulus is already needed.

What ECB President Christine Lagarde described as a strong rebound over the summer months now risks turning into a double-dip recession after countries from Ireland to France and Germany imposed new restrictions to stop the spike in virus infections.

Most economists expect the ECB to keep its 1.35 trillion euro emergency bond-buying program unchanged for now, with roughly half of the money from the package still waiting to be spent. Officials also have reasons to wait until December to unveil additional stimulus when new forecasts could allow them to better calibrate the response. The expectations are that the program will get additional 500 billion euros and be extended until the end of 2021.

Overall, Bloomberg said its expectations for the evaluation of the U.S. economy likely will conclude that it probably charged ahead in the third quarter at the fastest pace in official data back to the 1940s as pandemic restrictions were lifted and that GDP increased at a 32% annualized rate, with a record gain in consumer spending. However, the devastation wrought by the coronavirus is expected to linger: total inflation-adjusted economic output is seen remaining below the $19.3 trillion at the end of 2019.

The euro-area economy probably expanded more modestly during the quarter – but still by a record. The 9% increase seen by economists likely will be insufficient to erase the contraction of the first half of the year. This could mean that the new data on Friday are overshadowed by negative economic confidence readings, falling consumer prices and forecasts of stagnation in the current three-month period because of a resurgence in coronavirus cases.

So, we will see. The overall picture includes most of the global economy working to confront the impacts of the coronavirus as uncertainty grows as to how best to proceed. These are trends and challenges for all governments and should be watched closely as they intensify, Washington Insider believes.

USDA Announces Another Round of Its Food Box Effort

USDA authorizes $500 million for a fourth round of purchases for the USDA Farmers to Families Food Box Program, with the focus on those who need food during the COVID-19 pandemic. USDA expects to award contracts by Friday for deliveries of food boxes from November 1 through December 31.

The announcement helped fuel milk futures as dairy products are a major focus.

The program will continue the purchase of combination boxes to include fresh produce, dairy products, fluid milk and meat products.

“We recently surpassed 110 million boxes delivered, and millions more are headed to Americans in need,” USDA Secretary Sonny Perdue said. “I'm very pleased that we are able to extend this program and continue our relief efforts for American farmers and families.”

USDA Now Expects 2021 Rise In Restaurant Prices To Match 2020

The consumer price index for food away from home (restaurant prices) in 2021 is now forecast to be from 2.0% to 3.0%, up from USDA's prior forecast and even with the rate of grocery store price inflation for 2020, according to the Economic Research Service (ERS).

“Forecast ranges for eight of the 22 CPI categories for 2020 have been revised upward this month, with only eggs being revised downward,” ERS said. “The forecast range for food-away-from-home was adjusted upward, while all other categories remained unchanged for 2021.” In September, USDA expected 2021 grocery store prices would rise 1.5% to 2.5% from 2020 levels.

ERS forecasts grocery store prices in 2020 will rise between 2.5% to 3.5% in 2020 with restaurant prices seen rising 2% to 3%.

In 2021, ERS expects grocery store prices to rise between 1% and 2%. Overall food price inflation is looked to be 2.5% to 3.5% in 2020 and then rise 2.0% to 3.0% in 2021.

Tuesday Watch List

 Markets

Durable goods report along with consumer confidence are two of the economic reports that we will be watching. Also, traders will be focused on new export sales, especially by China, at 8 a.m. Weather in Eastern Ukraine and southern Russia will be closely watched, as they continue to suffer through drought conditions.

Weather

Freezing rain and snow are in store for a large portion of the southern Plains and Texas Panhandle Tuesday. We'll also see rain through the remainder of Texas into the Gulf coast along with the southeastern Midwest. Other crop areas will be dry. Cold conditions in northern and central areas will keep harvest progress slow.

KC Fed: Fewer Loans Issued to Farmers Limits Overall Lending Activity

The Kansas City Federal Reserve says a slower pace of farm financing activity continued in the third quarter of 2020. The total volume of non-real estate farm loans remained subdued amid ongoing weakness in the ag sector, thanks in part to developments regarding COVID-19. The National Survey of Terms of Lending to Farmers says despite growing 15 percent from the previous year, total non-real-estate loan volumes in the third quarter of 2020 were below the 20-year trend for that period. Loans for operating expenses increased from last year but were still less than the previous three years. Loans to finance feeder livestock and farm machinery followed a similar trend, while the volume of loans for other livestock remained steady. All other loans declined for the second straight year, further weighing down the overall loan volumes. The number of new loans originated to farmers also declined for nearly all loan types. The total quantity of loans issued to farmers decreased, driven by a 12 percent decline in the number of operating loans. Similar to the prior quarter, government payments and lending programs may have offset both declines in farm revenues and financing needs of some farm borrowers in the third quarter

Stabenow Leads Opposition Against USDA Decision on Dairy Aid

Senate Ag Committee Member Debbie Stabenow is leading a group of 15 senators asking Ag Secretary Sonny Perdue to reverse a decision that excluded dairy farmers from getting coronavirus aid for losses from meat produced from breeding animals. The Hagstrom Report says the senators point out that losses from meat produced from breeding animals were included in the first Coronavirus Food Assistance Program, but not in the second, which is known as CFAP 2. “This change will affect the livestock industry and will be particularly harmful to dairy farmers, who often operate at extremely tight margins,” the senators wrote in the letter. “The decision is even more troubling considering that USDA clearly has sufficient resources to cover these losses.” Additionally, they say the move would avoid confusing farmers. “It will be less complicated for both USDA and livestock farmers to cover all livestock and avoid confusion about what animals are covered or excluded,” they add. The senators say dairy farmers were struggling with prolonged market uncertainty, unfair trade practices, and the Administration’s “chaotic trade policies” long before COVID-19 hit. Considering the industry’s tight margins, the decision to exclude dairy farm losses related to meat production will be a significant blow.

Farm Journal Report Shows Farmers Expect Stable to Higher Land Prices

Like a lot of other aspects of the economy, 2020 has put downward pressure on farmland values, thanks in part to events like trade disputes and an economic downturn. At the same time, COVID-19 restrictions and uncertainty have left the market with much less available land. Farm Journal recently took a “Pulse Poll” of farmers on what they expect land values to do over the next year. The results show farmers seem to be looking for steady land values during the year ahead, but market analysts see the potential for strength in land prices. 28-percent of the survey respondents expect higher land prices, while 60 percent say prices will be stable. Just 12 percent of responses expect lower land prices. Doug Hensley, President of Real Estate Services for Hertz Farm Management, tells Farm Journal that four factors that may lead to a stronger farmland market. They include a limited inventory of farms for sale, rising commodity prices, higher government support for farmers, and interest rates that are staying low. While local markets can sometimes vary wildly, Hensley sees the overall market as back to where it was during early 2020: “Stable, with an overall bias to stronger,” he says.

“Beef. It’s What’s for Dinner,” Returning for the Holidays

The holidays may look a little different in 2020. However, the National Cattlemen’s Beef Association and the Beef Checkoff want one thing to remain the same, and that’s beef. “Beef. It’s What’s for Holiday Dinner.” For the first time since 2003, the iconic “Beef. It’s What’s for Dinner” brand will be on television. It will air a limited number of ads during the Hallmark Channel’s Countdown to Christmas movies. The campaign released a successful video last year called the “Drool Log.” It’s a two-hour video of a Beef Prime Rib slowly cooking over an open flame, and viewers saw it more than. NCBA shortened the video to 15 seconds in the ads that will appear in late November and through December on the Hallmark Channel. In addition to bringing the brand back to television, the “Beef, It’s What’s for Dinner” brand will help consumers learn how to make the perfect holiday meal through fully integrated digital and social media work. Whether families are having a smaller family gathering or working with a tighter budget, there’s a beef option for everyone, and experts will be available through an updated landing page on www.BeefItsWhatsForDinner.com as a one-stop-shop for all cooking needs.