Washington Insider: Dealing With China

Bloomberg is reporting this week that the U.S. will soon have a new climate czar, John Kerry, the former senator, secretary of state and presidential candidate. In explaining the role's placement within the National Security Council, President-elect Joe Biden said he wanted to put “climate change on the agenda in the situation room,” the report said.

The report also notes that “critically, this structure signals that the new White House is searching for common ground with China.”

Kerry is widely credited with putting together a US-China agreement in 2014 to reduce carbon emissions, a breakthrough that paved the way for the Paris Agreement the following year. That deal was a template for the kind of collaboration that many argue is now essential. Without cooperative action, former Secretary of State Henry Kissinger warned at last week's Bloomberg New Economy Forum, “The world will slide into a catastrophe comparable to World War I.”

Kerry is clearly expected to reprise his role as the Beijing bridge-builder, Bloomberg says.

“While some have decided that we are entering a new Cold War with China, we can still cooperate on critical mutual interests,” Kerry told the New York Times last month calling for joint action to protect the Southern Ocean. Geopolitics, he insisted, “must stop at the water's edge.”

Some critics, however, contend that Kerry, under President Barack Obama, gave up too much in return for Chinese acquiescence on climate — for instance, by soft-pedaling human rights—and they fear a Biden presidency may make the same mistake. “Sending Kerry to negotiate with Chinese President Xi Jinping on climate is a recipe for returning home dressed in a barrel,” said the Wall Street Journal editorial page recently -- typically not a fan of the Obama administration.

But U.S. public attitudes on China have hardened since the Obama days and few now expect a Biden White House will go any easier on China over contentious issues like Uyghur detention camps or the militarization of the South China Sea. Indeed, Biden's expected choice to head the Pentagon, Michele Flournoy is “very much the hawk” Bloomberg says.

So, it is increasingly clear that strategic rivalry is now hard-wired into the U.S.-China relationship, and there's a growing acknowledgment by figures in both Washington and Beijing that—while it can be mitigated—it's unlikely to be resolved readily by any effort to get along.

Certainly, Chinese leaders are digging in for protracted hostilities, so much so that President Xi Jinping is reorienting the entire economy toward “self-reliance,” fearing continued U.S. tariffs, technology embargoes and financial sanctions. In congratulating Biden on his win, President Xi Jinping alluded to these gathering tensions, but also the need to manage them.

The official Xinhua News Agency quoted Xi as saying he “hopes that the two sides will uphold the spirit of non-conflict, non-confrontation, mutual respect and win-win cooperation, focus on cooperation, manage differences [and] advance the healthy and stable development of China-US ties.”

Pandemic control is an obvious area of collaboration, Bloomberg says, along with mass migration and financial stability. On climate, says Fu Ying, a former Chinese ambassador and vice foreign minister, “the world expects China and the U.S. to play a leading role and the two countries have a lot to work on together.”

While Kerry won't save the U.S.-China relationship, at least not all by himself, but one could argue that a joint effort to save the planet would increase the odds that the two countries will avert disaster, Bloomberg concludes.

So, nobody thinks Kerry's task will be easy. While trade tensions and China's retaliatory tariffs slashed US agricultural exports to China in 2018 and 2019, China's agricultural purchases from the rest of the world continued apace and it has become the world's largest agricultural importer, USDA said last fall. It is surpassed both the European Union and the United States in 2019 with imports totaling $133.1 billion.

What's more, the composition of China's imports is also rapidly changing. Whereas bulk commodities once dominated, higher-valued consumer-oriented products are now surging ahead, eclipsing the former for the first time in 2019. And, while implementation of the U.S.-China Economic and Trade (Phase One) Agreement and the economic response to Covid-19 currently overshadows the trade landscape, the biggest challenges facing U.S. agricultural exports in China may be a combination of competition from other suppliers and US agriculture's ability to meet China's increasingly diverse import needs, USDA said.

It sees a combination of rising income and living standards, increasing urbanization, and food safety concerns fueling China's future agricultural imports, already a strong trend since the country's accession to the World Trade Organization in 2001. As incomes rose, the average Chinese diet changed to include more meat, dairy, and processed foods, while grain consumption declined. Between 2000 and 2019, per capita consumption of poultry meat increased 32%, soybean oil consumption more than quadrupled, and fluid milk intake more than tripled, USDA said.

So, Kerry's job will be challenging. U.S. producers can be expected to compete strongly for China's growing markets and China will clearly need access to U.S. production to satisfy its growing consumer demand. Whether this “two way street” of trade flows can overcome the enormous bitterness arising from all the other competitive areas -- and the long history of clumsy postures on both sides remain

Surging Chinese Imports of US Corn Set To Continue: Bloomberg

China's appetite for US corn is expected to continue to strengthen in the year ahead, with imports trending towards the high end of current expectations, Bloomberg reported.

Bloomberg cited sources familiar with purchasing plans of state-owned Cofco Corp., saying the firm is likely to boost purchases of US corn beyond already robust levels. The news comes about a week after Chinese corn imports exceeded the country's annual tariff rate quota (TRQ) — currently 7.2 million metric tons — for the first time.

“The fact that China has exceeded its feed grain import quota already tells you there's a great need there,” Rabobank analyst Stephen Nicholson told the outlet. “And it doesn't seem to be slowing down.”

China's continued rebound from COVID-19 and the rebuilding of its swine herd following a devastating African swine fever (ASF) outbreak are both helping to drive corn imports higher, Bloomberg noted. Meanwhile, China has turned to the US to satisfy that demand as other suppliers—including those in South America—see more supply disruptions.

Australia to Bring WTO Case Against China Over Barley Duties

One day after China imposed preliminary antidumping duties on Australian wine, Australian trade officials said they intend to launch a World Trade Organization (WTO) dispute targeting earlier duties China levied on imports of barley.

The events mark the latest salvos in an intensifying trade and diplomatic row between the two countries. Asked about prospects for bringing a WTO dispute against China over the 80.5% barley duties, Australian Trade Minister Simon Birmingham told reporters Sunday (November 29) “I expect that will be the outcome.”

Australia is currently “working through exactly when and making sure we have the evidence lined up,” Birmingham said of a WTO complaint. “Last week, through the trading goods committee at the WTO, Australia outlined seriously our range of concerns in terms of this accumulation of instances from China of adverse trade decisions against Australia,” he detailed.

The wine duties, however, are not expected to be part of any initial WTO dispute, Birmingham noted.

Monday Watch List

 Markets

The final day of November shows a report on U.S. pending home sales for October at 9 a.m. CST, followed by USDA's weekly grain export inspections at 10 a.m. CFTC's Commitments of Traders report is released Monday afternoon and USDA's final Crop Progress report of 2020 is due out at 3 p.m.

Weather

Monday features rain and snow in the eastern Midwest, disrupting the late stages of harvest and causing some safety hazards. Dry conditions will be in place elsewhere, with more drying of soils in winter wheat areas. Freeze warnings are in effect in the Gulf Coast due to abnormally cold air.

Ag Credit Conditions Recover in Third Quarter

Farm income and loan repayment rates recovered from sharp declines in the second quarter, and demand for credit softened according to Federal Reserve Ag Credit Surveys. Although farm income generally remained low, loan repayment rates stabilized, and farmland real estate markets remained strong. Farm loan demand moderated in all Federal Reserve districts for the first time since 2013 in the third quarter. Funding at agricultural banks was likely supported by higher deposits and an influx of liquidity from Federal Reserve and government programs following the COVID-19 outbreak. The Fed says an influx of government payments and higher prices for agricultural commodities provided greater support for farm finances in the third quarter and seemed to limit demand for financing. Despite some improvements in the agricultural economy, farm income and repayment rates remained low, albeit not as low as in the second quarter. Increased uncertainty related to the pandemic may also have curbed some demand for new loans and could continue to weigh on agricultural lending conditions moving forward.

Peterson Raises Concerns Regarding Transition

Outgoing House Agriculture Committee Chairman Collin Peterson has concerns regarding President-elect Joe Biden’s transition as it relates to agriculture. In a letter to the General Services Administration, the Minnesota Democrat says, “I write to express my concerns about the impacts to farmers, ranchers and consumers from the lack of a timely Presidential transition process.” While the delayed transition is now underway, the impacts of the delay persist. Specific issues mentioned by Peterson include the Department of Agriculture's ongoing work with meat and poultry plants amid the COVID-19 pandemic, along with the risk of African swine fever entering the United States. Other issues include outbreaks of High Pathogenic Avian Influenza across Europe and Asia, and a shortage of CO2 production, impacting meatpacking plants. Peterson states, "Dedicated civil service staff in the USDA Office of Homeland Security and throughout the Department are monitoring these and other crucial situations, but it will take high-level leadership and the ability to muster funding to address them."

Organic Groups Send Recommendations to Transition Team

The Organic Trade Association and the National Organic Coalition recently sent industry recommendations to President-elect Joe Biden's transition team. In a letter to the transition team, the groups say, "here are several overarching issues that need to be addressed early in your Administration to put organic agriculture back on safe footing after the challenges of the past four years.” Those issues include implementation of the Obama-Biden Organic Animal Welfare Rule. The groups also call for the finalization of Organic Origin of Livestock Regulations, and finalization of the Strengthening Organic Enforcement Rule. Other priorities for the organic industry include restoring the Organic Certification Cost Share Program to the full Reimbursement Rates Mandated by the 2018 Farm Bill, and embracing organic agriculture as a key climate change solution. Additionally, the groups say, “We encourage your Administration to engage the U.S. food and agriculture sector in a dialogue about how we can best use the lessons learned from the pandemic to build our food system back, better than it was before.”

EPA Seeking Comments on Updated Plant Biostimulants Guidance

The Environmental Protection Agency is accepting comments on an updated Draft Guidance for Plant Regulators and Claims, Including Plant Biostimulants. Plant biostimulants are a relatively new but growing category of products, according to the EPA. Their increasing popularity arises from their ability to enhance agricultural productivity through stimulation of natural plant processes using substances and microbes already present in the environment. Plant biostimulants can also reduce the use of synthetic chemical fertilizers, making it an attractive option for sustainable agriculture and integrated pest management programs. An EPA spokesperson says, “When finalized, our Plant Biostimulants Guidance will provide sought-after certainty and transparency for this growing area of the economy.” While many plant biostimulants are not regulated as pesticides, certain mixtures and plant regulators can be pesticides under the Federal Insecticide, Fungicide and Rodenticide Act. The public comment period will be open for 30 days at www.regulations.gov. EPA anticipates finalizing the guidance in January 2021.

Deere Sales Down 9%, Net Income Down 15%

Deere & Company reported net income of $757 million for the fourth quarter that ended November 1, 2020, or $2.39 per share, compared with net income of $722 million for the quarter ending November 3, 2019. For fiscal 2020, net income attributable to Deere & Company was $2.751 billion, or $8.69 per share, compared with $3.253 billion, or $10.15 per share, last year. Chairman and CEO John May says the company "delivered another quarter of strong performance and a solid year despite the challenges associated with managing the pandemic." Net income attributable to Deere & Company for fiscal 2021 is forecast to be in a range of $3.6 billion to $4.0 billion. In the year ahead, Deere expects to benefit from improving conditions in the farm economy and stabilization in construction and forestry markets. According to May, "higher crop prices and improved fundamentals are leading to renewed optimism in the agricultural sector and improving demand for farm equipment."

Roberts, Stabenow Announce Hearing on Research and Securing America’s Food Supply

Leadership of the Senate Agriculture Committee recently announced a hearing titled “Agricultural Research and Securing the United States Food Supply.” Announced by Committee Chair Pat Roberts, a Kansas Republican, and Top Democrat Debbie Stabenow of Michigan, the hearing is scheduled for Wednesday, December 2, at 2:30 ET. The hearing will feature Amy France, a producer and member of National Sorghum Producers, and Don Glickman, Executive Director of the Aspen Institute. Additional speakers include Stephen Higgs, Director of the Biosecurity Research Institute, and Dr. Steven Rosenzweig, Senior Agricultural Scientist, Agricultural Research, General Mills. The hearing will be one of, if not the last hearing, under current leadership of the Senate Agriculture Committee. Senator Roberts of Kansas will retire at the end of the current Congressional session. While Stabenow seems likely to remain on the committee, the next chairman won’t be known until after a special election runoff in January, which will dictate which party will control the chamber.

Cattle Producers Congratulate Newhouse On Being Elected Western Caucus Chair

The National Cattlemen's Beef Association applauds Representative Dan Newhouse being unanimously elected as Chairman of the Congressional Western Caucus. Newhouse, a Washington state Republican, will serve as chairman in the upcoming 117th Congress. In a statement, NCBA Vice President of Government Affairs, Ethan Lane, says, "Congressman Newhouse is a strong advocate for cattle producers and has been instrumental in getting critical legislation across the finish line." Following the announcement, Newhouse called the caucus "the premier organization advocating for rural policy issues throughout the West and beyond.” The Western Caucus serves as a common voice for members of Congress representing western, rural and resource-based communities and fighting for the priorities of the American people in the process. Initially, the Caucus was born in the West, out of concerns of federal interference with rural, agricultural, timber, water, energy and hunting e. Over time, the Caucus has grown beyond the geographic West, allying with Members of Congress throughout the country to join.

EPA Encourages Americans to Avoid Food Waste Over the Holidays

Fresh off the Thanksgiving holiday and fridges stuffed with leftovers, the Environmental Protection Agency wants consumers to consider the environment when it comes to food waste. EPA Administrator Andrew Wheeler says more than 70 billion pounds of food waste reach U.S. landfills every year, contributing to methane emissions and wasting food supply chain resources. Wheeler says, "We must all do our part to help people and the environment by preparing only what we need, cutting down our food waste, and sharing or donating what we can to feed others." EPA estimates that more food reaches landfills than any other material in everyday trash, constituting 24 percent of municipal solid waste. Reducing food waste and redirecting excess food to people, animals, or energy production provide immediate benefits to public health and the environment. Those benefits include reducing methane emissions from landfills, saving money through thoughtful planning, shopping and storage, and supporting your community by donating untouched food that would have otherwise gone to waste.

Washington Insider: Continuing WTO Leadership Fight

The World Trade Organization has been without a boss — the Director General — since September, when Roberto Azevedo stepped down one year before the end of his mandate. Since then, the 164 members that make up the organization have been discussing who his replacement should be.

There were 8 candidates in the running but only two remain: South Korea's Yoo Myung‐hee and Nigeria's Ngozi Okonjo‐Iweala.

WTO members appoint the Director‐General by consensus, CATO reminds and consensus has been growing around the candidacy of Okonjo‐Iweala, a former finance minister and World Bank managing director. But in recent discussions in Geneva, the United States signaled that it would not support her candidacy.

The U.S. already has made the WTO's appeals court non‐functional by blocking the appointment of any new judges, making it impossible to hear appeals. By threatening to veto the appointment of a new DG the U.S. only amplifies the message that trade policy watchers have long known — the U.S. is basically interested in the WTO, CATO said.

It notes that it is not surprising that there is “some drama” over the nomination of a Director‐General, given the fact that it is a position that serves a number of important roles, including the management of the day to day operations in Geneva, and serving as an honest broker between the WTO's 164 members. The value of the Director‐General is in setting the tone for the organization, and perhaps in a more limited way, influencing the direction of the organization as well.

So, while the WTO Director‐General does not play a role in policymaking, she can serve a critical role in facilitating discussions and getting negotiations across the finish line, CATO says.

Bloomberg reports this week that sources close to US Trade Representative Robert Lighthizer say he “views Okonjo‐Iweala as being too close to pro‐trade internationalists in Washington like Robert Zoellick, a former USTR who worked with Okonjo‐Iweala when he was president of the World Bank,” even though she also holds U.S. citizenship.

Lighthizer's disdain for the WTO is well documented, as are his protectionist views, “which have not only failed to live up to his promise of manufacturing revival but have been disproportionately shouldered by US consumers,” CATO says.

Nominating someone to the Director-General's post that not only understands the benefits of trade and the costs of protectionism “works against the policies Lighthizer has pushed for as USTR,” CATO says.

Furthermore, for the U.S. to support a candidate who is highly unlikely to ever garner support from China also raises suspicion that the threat of a veto is simply exercised to enhance tension in the organization.

However, Bloomberg is reporting this week that the fight is still active to the point that wagering “in a locked-down Geneva this month” is often focused on whether South Korea's Yoo Myung-hee will withdraw from the race to lead the World Trade Organization.

But Bloomberg reports that despite what's been written in various news reports, “Yoo has not withdrawn from the race but hasn't responded to questions about whether she'll stay in the running.”

To some members, Yoo's candidacy became toxic the moment the US unilaterally blocked Okonjo-Iweala a month ago. It's still a bit of a head-scratcher why Washington vetoed a highly respected economist with verifiable reform credentials to lead the WTO. She's also an American citizen.

The office of U.S. Trade Representative offered scant details about why it opposes Okonjo-Iweala, other than to say Yoo has the “skills necessary to be an effective leader of the organization.”

So, Bloomberg takes a flyer—in the absence of a clear reason, it offers some “possible strategies that USTR Robert Lighthizer may be pursuing.”

The first may be that the U.S. “believes that Yoo is the better candidate because she has real, hands-on experience in the field” and Okonjo-Iweala doesn't, Bloomberg says.

Or, the U.S. may want to advance a third candidate to lead the global trade organization; or, it may want to extract some other concession unrelated to the WTO's leadership race; or, it may simply want to force WTO members to vote on the matter, an unprecedented exercise seen as damaging to a consensus-oriented institution.

Bloomberg also argues that the U.S. sees a leadership void and chaos at the WTO as beneficial to America's interests.

While any of these options are possible, the Cato Institute's Simon Lester told Bloomberg that the multi-dimensional outcome concerning “possible concessions” seems to be the most plausible explanation.

“The administration has been using economic leverage to extract concessions from trading partners at every opportunity, and it would not be surprising if it were to use the director-general selection process for this purpose as well,” Lester said.

President-elect Joe Biden, who has supported multilateral organizations in the past is expected by some to move to end the impasse in the WTO leadership race — but not until after his inauguration on Jan. 20.

So, for now, Geneva remains in a wait-and-see posture with low expectations that the WTO's drift into dysfunction will be resolved anytime soon. This is yet another issue that producers should watch closely as the new US trade policy continues to be discussed, and to evolve Washington Insider believes.

US Slaps Duties On Phosphate Fertilizer From Morocco And Russia

A preliminary determination imposing countervailing duties on imports of phosphate fertilizer from Russia and Morocco was announced by the Commerce Department.

The decision was scheduled to be released November 23 but came one day late. The department set preliminary duties of 23.46% on imports from Morocco's OCP Group and other producers in the country, 20.94% on those from Russia's Phosagro, 72.50% on EuroChem and 32.92% on all other Russian producers. The decision follows an investigation launched in July on petitions filed by US-based fertilizer company Mosaic Co.

The US imported about $729 million worth of phosphate fertilizer from Morocco and about $299 million from Russia in 2019, according to Commerce.

A final Commerce Department decision is expected February 8, followed by the International Trade Commission's (ITC) final decision on March 25, with the issuance of an order on April 1.

USDA Ups FY 2021 Ag Export Forecast, Notes Strong Demand from China

U.S. agricultural exports are now expected to reach a value of $152.0 billion in Fiscal Year (FY) 2021, up from $140.5 billion in August, while the value of imports is now seen at $137 billion, up from $136 billion, with higher soybean and corn export values and strong demand seen driving the forecast bump.

The outlook sees FY 2021 with an agricultural trade surplus of $15 billion. For FY 2020, USDA recorded exports of $135.9 billion, up slightly from the $135 billion forecast in August, while the value of imports is seen at $133.2 billion, up from the $131.7 billion previously forecast. Those totals put the FY 2020 agricultural trade surplus at just $2.7 billion.

Friday Watch List

 Markets

The day after Thanksgiving starts with USDA's weekly export sales report at 7:30 a.m. CST and there's always a chance for a daily export sale announcement at 8 a.m. Traders remain glued to the latest weather forecasts, especially for South America. CFTC's Commitments of Traders report will be released Monday afternoon due to this week's holiday.

Weather

Friday brings shower and thunderstorm activity to the lower Delta and Gulf Coast. Late stage cotton harvest will be disrupted with this rain. Dry conditions are in store elsewhere. Temperatures will be seasonal to above normal north and central and seasonal to below normal south.

USA Pork Producers Launch “Give-A-Ham” Food Program

The National Pork Producers Council launched the “Give-a-Ham” challenge. It’s a nationwide social media campaign encouraging hog farmers and those involved in the industry to donate pork to organizations that serve people living with food insecurity and then will challenge others to follow suit. The “Give-a-Ham” challenge will run through the end of this year. “With so many Americans struggling with COVID-related financial challenges, this year’s challenge takes on a special meaning,” says NPPC President Howard “A.V.” Roth (Rowth), a Wisconsin hog farmer. “Giving back to our communities is a core value of hog farmers nationwide; it’s so gratifying to come together as an industry this time of year to serve those in need.” Throughout COVID-19, U.S. hog farmers and their numerous state associations that represent them have donated a collective 15.7 million pounds of pork to local food banks through October 31. That total equals 222.8 million servings of pork. “I’m proud to be part of an industry that has already made significant contributions this year to help those less fortunate and look forward to participating in the ‘Give-a-Ham’ challenge, paying it forward with pork,” Roth adds. Participants are encouraged to share their stories on social media using the #GiveaHam hashtag.

Biofuel Groups Ask Court to Hold EPA Accountable on Improper 2016 Waiver

A coalition of the nation’s largest biofuels and agricultural trade groups filed a motion in the U.S. District Court of Appeals in Washington, D.C. The motion asks the court to enforce its 2017 decision that required the Environmental Protection Agency to address its improper waiver of 500 million gallons of biofuel demand in the 2016 Renewable Volume Obligation. The coalition includes groups like Growth Energy, Renewable Fuels Association, the National Biodiesel Board, and many others. A statement from the coalition after the filing says, “It’s simply unconscionable that EPA would so brazenly ignore a federal court’s order. Our coalition represents millions of American farm families that shouldn’t have to go to court to hold EPA accountable to the law.” The coalition points out that it’s well past time that the EPA restore the 500-million gallons and focus on restoring integrity to the Renewable Fuels Standard. In the motion, the coalition asks the court to require the EPA to issue a 500-million gallon “curative obligation” on obligated parties to make up for the lost gallons, and to require the EPA to do so no more than six months after the court’s order. The groups also want the court to declare it won’t extend those deadlines.

USDA Forecast for Exports Rises $11.5 billion

The USDA says U.S. agricultural exports in the Fiscal Year 2021 are projected at $152 billion. That’s up 11.5 billion from the August forecast and is driven higher by rising soybean and corn export values. The agency’s projection for soybean exports is up by 5.9 billion dollars to a record 26.3 billion due to higher unit values, strong demand from China, and record volumes. Corn exports are forecast up 4.2 billion dollars to 13.2 billion as a result of reduced competition, higher unit values, and record volumes. The agency says cotton exports are forecast up 300 million dollars to 5.3 billion based on higher values. Wheat exports are projected at 6.2 billion dollars, up by 200 million dollars on higher unit values and slightly larger volumes. The overall major agricultural bulk commodity exports are forecast to increase 24 percent from the previous projection. Livestock, poultry, and dairy exports are forecast unchanged at 32.3 billion dollars as lower exports of pork, hides, and skins offset increases in beef and poultry. China is once again projected to become the largest U.S. agricultural market, a spot it last held in 2017. Ag imports are forecast at 137 billion dollars, up one billion from August.

Unions Endorse Fudge for Agriculture Secretary

Three unions announced they are endorsing Representative Marcia Fudge of Ohio for Agriculture Secretary. The unions are the American Federation of State, County, and Municipal Employees, the American Federation of Teachers, and the United Food and Commercial Workers Union. In a letter to president-elect Joe Biden, the three unions say Fudge has been an advocate for all workers, including meat processing workers, and she has fought attempts to increase the line speeds in meat plants. As a member of the House Ag Committee, the unions say Fudge has “played a role in the recent farm bill reauthorization and for workers on issues important to farmers, ranchers, and the whole agriculture ecosystem.” The unions say Representative Fudge has consistently shown “her willingness to lend her voice to those who need theirs amplified, who listens to all sides, and who knows how to make informed and balanced decisions.” They also applaud her experience as a member of the House Education and Labor Committee, which has jurisdiction over school meals and other child nutrition programs.

How to Handle Thanksgiving Food Safely

As Americans enjoy a delicious Thanksgiving meal, USDA says taking the necessary steps toward safe food handling and sanitation will help protect you and your loved ones. The USDA is offering food safety advice to help reduce foodborne illness, including on Thanksgiving Day. “Our data shows that consumers can reduce their likelihood of foodborne illness by focusing on good hand hygiene and other food safety practices,” says Dr. Mindy Brashears, USDA’s Undersecretary for Food Safety. “As home chefs around the country prepare their Thanksgiving meals, proper handwashing, and avoiding cross-contamination in the kitchen are critical to keeping your loved ones safe.” The first step is likely the most obvious, which is washing your hands. Wash them before, during, and after preparing food, especially if it’s raw meat or poultry. Thawing turkeys should never be done on the counter or in hot water, and they must not be left at room temperature for more than two hours. The best method for thawing is in the refrigerator. Also, make sure to cook your stuffing outside the turkey to avoid cross-contamination risk. Chat with a live food safety expert at ask.udsda.gov for more tips.

FFA Members Are Giving Back to Their Communities This Fall

FFA members across the country are working together to make sure their communities have the food they need during the holiday season. It’s a part of the National Days of Service program through the National FFA Organization. Traditionally, members who attend the National FFA Convention and Expo participate in the National Days of Service, which gives back to the community hosting the event. Because the event was virtual this year, the National Days of Service program challenged members across the country to give back where they live. It’s a part of a bigger initiative by the organization to have nationwide community engagement programs for the National Days of Service. Chapters are being encouraged to explore four specific areas, including community safety, hunger, health and nutrition, environmental responsibility, and community engagement. “We know that service is an important part of the FFA experience for our members,” says Michele Sullivan, senior manager of local engagement for the National FFA Organization. “With the convention going virtual, FFA was excited to launch the first-ever National Days of Service set to take place across the country.” She says the National FFA Organization plans to continue the virtual National Days of Service beside the in-person event for years to come.

Washington Insider: New Visibility for Climate Change as Formal Transition Begins

Well, there is a beehive of political activity this week as the Trump administration begins its formal cooperation with the Biden transition. Much of the press has reported that the main picks for the next administration are fairly well-known experts.

However, one of the choices has stirred more than a little excitement. That is the “special envoy for climate” to be headed by John Kerry. This pick is being seen as elevating the issue to the highest levels in the White House, Bloomberg says.

The report says that having a so-called climate czar could help coordinate a whole-of-government approach to confronting global warming, which Biden has referred to as an “existential threat.”

Kerry helped broker the landmark Paris climate accord while serving in the Obama administration and has been viewed as a natural fit for the position and as a seasoned politician who enjoys goodwill on Capitol Hill. He said earlier this year that in addition to rejoining the climate agreement the next step is “to lift ambition significantly, on a global basis.” President Donald Trump had quit the accord.

Kerry will be a member of Biden's National Security Council, the first time it's included a spot dedicated to climate change, the transition team said.

Progressives and others have been lobbying the White House to create a special office dedicated to climate change which they say could be created through executive fiat and akin to a National Security Council on climate. However, some of them said naming Kerry isn't sufficient.

“Having held cautious optimism that President-elect Joe Biden could be persuaded to take a bold, determined approach to tacking the climate crisis from day one, we are suddenly alarmed by his choice of John Kerry for climate czar,” Food & Water Action Executive Director Wenonah Hauter said in a statement. “Kerry has been a long-time apologist for fossil fuel fracking and a reliable promoter of false climate solutions like market-based carbon-trading schemes.”

Sarah Hunt, who backs conservative energy and climate solutions as CEO of the Joseph Rainey Center for Public Policy, said the announcement signals that Biden will prioritize climate change and energy issues as critical to national security. “Hopefully Kerry will fully integrate energy security—maintaining an affordable, reliable energy supply for the protection of our economy and defense—into the Biden approach to climate security,” Hunt said.

In addition to the usual fights over positions in the new administration, National Public Radio uncovered an “even newer” effort. It noted that just over a decade ago, the American Farm Bureau Federation had declared war on legislation to slow down global warming and had had argued that a "cap-and-trade" proposal making its way through Congress would make fuel and fertilizer more expensive and put farmers out of business.

Farmers swarmed Capitol Hill wearing caps with the words "Don't Cap Our Future." And it worked. The legislation died, derailing the boldest plan Congress had crafted to cut greenhouse gas emissions.

Now the Farm Bureau might be changing course. This week, it announced that formation of a coalition that plans to push the government to adopt dozens of policy changes that would make it easier for farmers to reduce emissions from ag operations.

"We're going to have a real common sense, science-based discussion about how we protect the climate, and our farmers want to be part of that," said Zippy Duvall, president of the Farm Bureau.

The new Food and Agriculture Climate Alliance brings together groups that have often butted heads on environmental policy. "It feels like the conversation has just really shifted in the past 18 months," says Pipa Elias, director of agriculture for The Nature Conservancy. One reason is that many big food companies have promised to help reduce their greenhouse emissions and they're pushing for changes on the farm—and sometimes paying for such changes.

At the press conference launching the new alliance, Barb Glenn, chief executive of the National Association of State Departments of Agriculture, said that "everyone in this unique coalition understands and is witnessing the changing of the climate, and we all want to be involved in impacting it."

The alliance didn't quantify impacts of potential policies on greenhouse emissions. Currently, agriculture is responsible for about 10% of the country's emissions of heat-trapping gases. Some estimates are that a reduction in greenhouse emissions from agriculture combined with an increase in forests could get the country 10% to 20% of the way toward net zero emissions in 2050, NPR says.

It also notes that climate proposals remain controversial but says it sees signs that the incoming administration is interested in a number of similar approaches. For example, Robert Bonnie, who leads the Biden transition team for the US Department of Agriculture recently called on the USDA to set up a so-called Carbon Bank that would pay farmers to fight climate change.

So, we will see. The move to more broadly support climate efforts by producers with food companies in a potentially popular program would seem to have significant potential for success and should be watched closely by producers as it emerges, Washington Insider believes.

CFAP 2 Payments Top $10.6 Billion

Payments under USDA's Coronavirus Food Assistance Program 2 (CFAP 2) now stand at $10.62 billion as of November 22 with 668,067 applications approved so far.

Acreage-based payments comprise the largest share of disbursements at $5.23 billion, followed by livestock ($2.86 billion), sales commodities ($1.47 billion), dairy ($1.02 billion) and eggs/broilers ($30.9 million). Payments for corn ($2.89 billion), cattle ($2.32 billion), sales commodities ($1.4 billion), soybeans ($1.1 billion) and milk ($1 billion), are at $1 billion or more, followed by wheat ($580.6 million), hogs/pigs ($474.3 million) and upland cotton ($241.1 million).

At the state level, Iowa has seen the largest payment total at $994.1 million, with Nebraska at $723.4 million, Minnesota at $691.5 million, Illinois at $672.1 million, California at $669.3 million, Kansas at $553.3 million, Texas at $515.8 million, South Dakota at $482.5 million, Wisconsin at $456.2 million and North Dakota rounding out the top 10 at $393.9 million.

Signup for the program continues through December 11. Payments under CFAP 1 stand at $10.46 billion as USDA looks to close out that effort.

Trump Looks To Allies For Help Targeting China

Senior Trump administration officials told the Wall Street Journal this week they are looking to bring new trade pressure to bear on China as President Donald Trump prepares to leave office.

One of the ideas under consideration is creating what the WSJ called “an informal alliance of Western nations,” to take joint action against China when it engages in unfair trade practices. The plan was developed after China erected new trade barriers for Australian exports after Australia's Prime Minister called for an inquiry into the origins of COVID-19 earlier this year, WSJ reported.

Under the plan described by administration officials, when China creates trade barriers like those deployed against Australia, other allied nations would purchase the affected goods or provide compensation to the affected partner. Another option would see the group of nations jointly impose tariffs on China in retaliation, WSJ said.

The officials said even if the plan to create the new alliance is successful, it would depend on the incoming Biden administration to implement it.

Wednesday Watch List

 Markets

The day before Thanksgiving has a big lineup of economic reports, starting with weekly U.S. jobless claims, durable goods orders and an update of third-quarter U.S. GDP at 7:30 a.m. CST. At 9 a.m., we'll see reports on October new home sales, U.S. personal incomes and consumer spending. The U.S. Energy Department releases weekly energy inventories at 9:30 a.m., followed by natural gas inventory at 10 a.m. CST.

Weather

Rain will cover the central and eastern Midwest through the Delta Wednesday. Moisture will benefit winter wheat but will disrupt the final stages of row crop and cotton harvest. Periods of snow and rain are in store in the Northwest, with other crop areas dry.

Washington Insider: New Infrastructure Fight

Bloomberg is reporting this week that although union leaders and transportation advocates have looked to President-elect Joe Biden for possible action next year on a major infrastructure package, the prolonged election fight has weakened hopes for an early bipartisan breakthrough that could support a significant infusion of funding for bridges, highways and airports.

President Donald Trump had pushed hard earlier in his tenure to advance an infrastructure deal, something that had eluded Washington policy makers for years. However, those effort fell short as he and congressional leaders parted ways over how to pay for it.

Recently, advocates have been looking hard at the new administration's $2 trillion Build Back Better proposal for the U.S. economy that includes investment in schools, water systems, municipal transit and universal broadband. To move those proposals through Congress, though, would require extensive cooperation with Republicans, especially Majority Leader McConnell, R-Ky., who since May has spurned a comparably sized pandemic relief package pushed by Speaker Pelosi, D-Calif.

Now, with a one-year extension of highway funding to set to expire next year, union leaders and transportation advocates still see reason for hope. They note that President-elect Biden highlighted infrastructure in an economic summit Nov. 16 with business and union leaders via teleconference.

“We can also modernize infrastructure, roads, bridges, ports. 1.5 million new affordable housing units,” he said. In addition, he noted that most Americans favor additional investment in public works and pointed to a February 2020 poll conducted by The Pew Charitable Trusts that found 68% of US residents support increased federal infrastructure spending. The poll was conducted before the coronavirus pandemic damaged the US economy, however.

“Infrastructure is an issue where President-elect Joe Biden and Senator Mitch McConnell can find some common ground,” said Larry Willis, president of the AFL-CIO's Transportation Trades Department. “They should be able to do that.”

US Representative Peter DeFazio, an Oregon Democrat who chairs the US House Transportation and Infrastructure Committee, expressed optimism that Biden will push hard to keep his campaign commitment to rebuild the nation's infrastructure, even if McConnell is initially recalcitrant.

“The President-elect has made it clear he is ready to work with Congress to deliver results for all Americans with bold investments in infrastructure that help everyone, from large metro areas dealing with unreliable transit and soon to be jam-packed highways, to rural communities that suffer from bridges in poor condition and deteriorating roads,” DeFazio said.

Washington has been “mostly spinning its wheels on infrastructure spending under President Trump,” Bloomberg says. Early in his term, Trump proposed a $1 trillion replacement—funded mostly by private investment—but more recently that plan has been stuck in neutral.

A five-year, $305 billion transportation funding law was set to expire in 2020 but was extended until next year. The House passed a five-year, $494 billion surface transportation bill in July but the measure has not been approved by the Senate.

Now Biden promises on his transition website that his administration will “mobilize American ingenuity to build a modern infrastructure and an equitable, clean energy future.” If it comes to pass, it would be a far cry from repeated declarations of “infrastructure week” by the Trump White House that were quickly subsumed by unrelated events.

“We have to get past the point where infrastructure week is a running joke,” Willis said. “It's one of the backbones of our economy and it employs thousands of our members with good paying jobs.”

The U.S. Department of Transportation's Highway Trust Fund's balance has fallen 56.5% so far this year, according to the Federal Highway Administration. The highway fund, which is used to distribute money to states, is supported by the 18.4-cents-per-gallon federal gasoline tax.

“It's one of the few areas Republicans and Democrats should still be able to come together and agree on,” Jim Tymon, chief operating officer and director of policy and management for the American Association of State Highway and Transportation Officials, said during a post-election transportation policy forum.

Congress has turned to other areas of the federal budget in recent years to close the infrastructure funding gap, most recently transferring $70 billion to help cover five years' worth of transportation spending that will now run out in 2021.

John Porcari, a former US Deputy Secretary of Transportation in the Obama administration who advised the Biden campaign, said that he thinks there are “real prospects for a bipartisan, broad infrastructure package” in the early days of Biden's administration.

But the window for a bipartisan infrastructure compromise “is probably pretty short,” said Adrian Hemond, a Democratic strategist with the bipartisan Grassroots Midwest consulting firm in Michigan. “The first six months of the Biden administration are the best chance to get any legislation of consequence done,” he said. “There's an incentive for every incumbent facing a potentially competitive election in 2022 to have an accomplishment or two that they can run on back home.”

So, we will see. The need for investment in infrastructure is clear, and is largely bi-partisan. How it is handled early in the next administration is widely regarded as a bellwether for possible cooperative effort in the coming months and should be watched closely by producers as these issues emerge, Washington Insider believes.

Taipei Protestors Decry Easing Of US Pork Import Restrictions

Thousands of gathered in Taiwan's capital Taipei on Sunday (November 22) to protest the government's decision to ease restrictions on US pork imports, the Central News Agency (CAN) reported.

About 20,000 people joined the annual Autumn Struggle labor demonstration in Taipei, the report cited the opposition Kuomintang (KMT) party as saying. A slew of labor-rights groups organized the protest, with support from KMT and the Taiwan People's Party, to put a focus on the US pork import issue.

KMT chairman Johnny Chiang invited President Tsai Ing-wen to a debate about the imports, CNA reported. KMT is seeking a referendum aimed at overturning the government's decision to allow imports of US pork produced using the growth promoter ractopamine. 

Groups Urge Congress to Address Expiring Tax Extenders

The American Farm Bureau Federation (AFBF) and over 60 other business, energy and ag groups are urging Congress to extend a slew of tax provisions known as “tax extenders.”

The provisions include tax credits aimed at biofuel producers, like the biofuel production tax credit, and others for craft breweries and wineries, AFBF noted.

“Allowing these tax extenders to lapse at the end of 2020 would undermine their effectiveness, threaten thousands of jobs in the US economy and cause needless uncertainty for taxpayers at a time when many are coping with severe economic hardship,” the groups said in a letter to congressional leaders.

Tuesday Watch List

 Markets

With concerns about dry weather in South America, trader attention will be on the latest forecasts and any export sales news that might emerge. News about the latest coronavirus vaccines and when they might be available are also becoming of interest to investors generally. There is one report on U.S. consumer confidence due out at 9 a.m. CST.

Weather

Rain and snow will cross the central and southern Plains along with the northern and western Midwest Tuesday. Some soil moisture benefit is offered. Other crop areas will be dry.

Farmers Earn 12 Cents of Thanksgiving Food Dollar

For every dollar Americans spend on Thanksgiving dinner this year, farmers and ranchers will earn about 11.9 cents. The National Farmers Union says that marks a slight drop from 2019 when farmers claimed 12.5 cents of the Thanksgiving food dollar. Though farmers’ smaller share of food expenditures could be blamed on dropping commodity prices in previous years, it’s not the case in 2020. After bottoming out during the pandemic, prices for many ag products have mostly recovered. NFU says the shift can be attributed to higher grocery bills. In the last 12 months, the food prices have risen almost four percent, far ahead of the 1.4 percent rate of overall inflation. The higher food prices are coming at a bad time for American families, who are experiencing higher unemployment rates and food insecurity from COVID-19. Even though consumers are paying four percent more for their food, almost none of the increasing dollars are being passed on to farmers and ranchers. Instead, the NFU says it’s being captured by the processors, packers, distributors, and retailers in between the farm and the table. For example, beef prices are 10 percent higher than last year, but ranchers are getting essentially the same amount for their animals that they did a year ago.

Court Upholds Hog Verdict While Smithfield Settles Other Cases

A federal appeals court upheld a 2018 jury verdict that led to monetary damages for the neighbors of a North Carolina hog operation because of smells and noise. The plaintiffs said that made their living close to the hog operation unbearable. However, judges ruled that the jurors’ multimillion-dollar punitive damage awards were unfairly weighed against its corporate assets and must get reconsidered. The decision from the 4th Circuit Court of Appeals in Virginia came just hours before Smithfield Foods announced it put an end to this and other nuisance cases filed by other North Carolina residents. Those cases either were already on appeal by the company or hadn’t yet gone to trial. “We resolved these cases through a settlement that will take into account the divided decision of the court,” says Keira Lombardo, Chief Administrative Officer at Smithfield Foods. The company wouldn’t share the financial terms of the settlements. Attorneys representing the plaintiffs and those in other cases neither confirmed nor mentioned a settlement in the case as of late Thursday. The Houston Chronicle says a statement from the lawyers involved in the appeal praised the court’s decision to affirm the verdict.

Ethanol Recovery Threatened by Rising COVID-19 Restrictions

U.S. ethanol production has been a big source of demand for domestic corn. However, COVID-19 sharply curbed global fuel consumption. In recent weeks, Reuters says output has chipped away at its deficit versus prior years. However, the resurgence of COVID and increasing restrictions, especially just before the holiday season, threaten to halt a comeback in fuel demand before it can ramp up. The U.S. Energy Information Administration says fuel ethanol output for the week ending on November 13 totaled 962,000 barrels a day, down 1.5 percent from the previous week, which had the highest production level since the week ending on March 20. The last three weeks have been the most productive for American ethanol makers since March. The EIA says seasonal trends are part of the reason why the output is rising. However, when compared with previous years’ production levels, it shows that output is rising out of its COVID slump, though the pace is still slow. The four-week output rose to 960,000 barrels per day through last Friday, down just over eight percent compared to the same period in the previous three years. USDA says corn use for ethanol will be 5.05 billion bushels, up four percent on the year, but down 7.7 percent from the three-year average.

U.K. and Canada Close to a New Trade Agreement

The United Kingdom and Canada are close to signing a new trade agreement. Bloomberg says a new trade agreement would replace the existing deal that Britain already has through its European Union membership, which comes to an end on December 31. The agreement would be a boost for officials’ efforts to plot a new course for Britain as a standalone trading nation outside of the EU bloc. People familiar with the matter anonymously told Bloomberg that they expect an announcement within days. If they don’t reach an agreement, the U.K. and Canada would be looking at tariffs on trade starting January 1. That’s when the transition period wraps up, and the U.K. won’t be a part of the CETA agreement that came into effect in 2017. Total trade between the United Kingdom and Canada is estimated to be worth approximately 17 billion pounds, or $23 billion, in 2019. “Trade talks are advancing and making good progress,” says Britain’s Department for International Trade in a written statement. “The U.K. is committed to seeking to secure a continuity trade deal with Canada before the end of the transition period.” The U.K. is Canada’s third-largest export market after the U.S. and China.

World Ag Expo Goes Online with a Unique Approach

For the first time in its history, the World Ag Expo is going online on February 9-11. Officials at the International Agri-Center announced the cancellation of the live event back on September 14. The World Ag Expo will work with a company called Map Your Show, an industry leader in event and conference management software. The company’s team has run more than 120 digital trade shows since March. While most digital trade shows limit their online shows to their specific dates, the World Ag Expo is taking more of a year-long approach. “Instead of just a one-week show, we’ll be supporting our exhibitors and the online site throughout 2021,” says Jennifer Fawkes, International Agri-Center Marketing Manager. “Each exhibitor has a micro-site within the show to share information and hold live chats, along with many other options.” As the event organizers, she says World Ag Expo will have online seminars, the Top 10 New Products Contest, and other new content will get released throughout the year. Seminars will be presented online by exhibitors like California State University-Fresno, Irrigation Association, the Center for International Trade Development, and many more. The schedule will be finalized and available in January.

Coalition Releases Farmers’ Guide to the CSP

As farmers begin to sign up for the Conservation Stewardship Program across the country, the National Sustainable Agriculture Coalition released its updated “Farmers’ Guide to the CSP.” As interest grows in farming practices that protect natural resources and reduce the impact of climate change, it’s a good time for producers to explore the CSP. The coalition says this guide is a great resource for farmers who want to learn more about the program, as well as those who are thinking about enrolling in the CSP. The Ag Coalition has been a strong advocate for the program since it first began years ago. The CSP is designed to reward farmers who apply a conservation ethic across their entire operation. It offers five-year payments to producers who take on highly beneficial conservation practices on their farms that build soil health, improve water quality, and benefit wildlife. Some of those practices include cover crops, conservation buffers, rotational grazing, and many others. The guide also helps producers walk through the application and implementation processes for CSP. The guide is a free download at www.sustainableagriculture.net/publications.

Washington Insider: Internal Financial Policy Fight

The New York Times is reporting that Treasury Secretary Steven Mnuchin had announced last week the discontinuation of several Fed programs, including those that support the markets for corporate bonds and municipal debt and one that extends loans to midsize businesses.

The emergency efforts expire at the end of 2020 but investors had expected some or all of them to be kept operational as the virus continues to pose economic risks.

Numerous pandemic-era programs are run by the Fed but use Treasury money to insure against losses. They have provided an important backstop that has calmed critical markets and removing them could leave significant corners of the financial world vulnerable to the type of volatility that cascaded through the system as virus fears mounted in the spring.

By asking the Fed to return unused funds, Mnuchin could prevent President-elect Joe Biden's incoming Treasury secretary from quickly restarting the efforts at scale in 2021.

“The Federal Reserve would prefer that the full suite of emergency facilities established during the coronavirus pandemic continue to serve their important role as a backstop for our still-strained and vulnerable economy,” the Fed said in a statement.

The emergency programs were backed by $454 billion that Congress appropriated in March as part of a broader pandemic response package. Because of the way the Fed's emergency lending powers work, Jerome Powell, the Fed chair, needs the Treasury secretary's signoff to make major changes to the programs' terms. Extending the end date counts as one of the changes that need approval.

The decision to close these programs and remove the funding appeared to come as a surprise to the Fed, which received a letter announcing the Treasury's intent to claw the money back on Thursday afternoon. Earlier this month, Powell had said the central bank and Treasury were just beginning to discuss whether to extend the programs.

Mnuchin did agree to extend other emergency loan programs that are not backed by the congressional appropriation, including ones that service the short-term market for corporate debt, one for money market funds, and one that backstops government small-business loans.

The Fed avoids taking credit losses when extending loans and throughout the pandemic crisis it has asked for Treasury backup for its riskier programs. If it returns any unused money that the Treasury has already dedicated to support the programs, as Mr. Mnuchin requested, the Biden administration will have less financial backup to restart the programs, the Times said.

That's because the congressional appropriation—$195 billion of which has been earmarked to specific Fed programs—cannot be used to make new loans after the end of the year. But while the law prohibits the treasury from putting money into the Fed's facilities after 2020, it does not obviously prevent the Fed from using already-earmarked treasury funding to insure its own loans and bond purchases.

“The loans, loan guarantees and investing that the treasury does is the applicable language,” said Peter Conti-Brown, a lawyer and Fed historian at the University of Pennsylvania. He said that while it may be possible to read the law as preventing new Fed loans, that is not the “obvious reading.”

Still, Mnuchin's move could leave the government with fewer options to help the economy just as the new administration takes office, the Times says.

“Treasury is right that a limited set of objectives have been achieved in terms of stabilizing bond markets,” Jason Furman, a prominent Democratic economist, said. “But what is the downside to continuing them as insurance against worse developments?”

Many of the Fed's programs, including one that buys state and local debt and another that encourages banks to lend to small- and midsize businesses, have been lightly used. But that is because they were designed as backstops—meaning that borrowers would likely only use them when times are bad.

With coronavirus cases on the rise, the economy may sour again, making the programs more necessary. As recently as last week, Powell warned of the potential for economic scarring and said that the economic recovery had “a long way to go.” But Treasury officials have expressed optimism that the economy is poised for a steady rebound and that the likely rollout of a vaccine by the end of the year further improves the economic picture.

Senator Patrick Toomey, Republican of Pennsylvania, who had been pushing Mr. Mnuchin to end the programs, applauded the decision. “Congress's intent was clear: These facilities were to be temporary, to provide liquidity, and to cease operations by the end of 2020.”

However, treasury's move prompted concern from Democrats. Bharat Ramamurti, a Democrat who sits on the congressional oversight body in charge of reviewing the various Fed and treasury programs, suggested that, legally, the Fed was under no obligation to give back the funds.

And, Secretary Mnuchin said Congress wanted key economic supports to end by Dec. 31, a view he expressed only after the vote count in the presidential election.

So, we will see. It would be less than surprising if a departing administration were to leave the odd negative trap surprise for the incoming crew—but the less of that sort of thing that takes place, the better. Clearly, the public is likely to have little tolerance for such measures given the continuing fight with both the virus and the economic pullback Washington Insider believes.

Infrastructure Investments May Be On The Table In 2021

Lawmakers are looking at infrastructure one potential area ripe for bipartisan compromise under the Biden administration, the Wall Street Journal reports, as Democrats and Republicans face the possibility of another two years of divided government.

Efforts to craft a multiyear infrastructure bill repeatedly fell apart during the Trump administration, and disagreements on the scope of the legislation and how to pay for it will persist under the new president.

Congress faces the expiration of the existing spending plan known as the highway bill next Sept. 30, and a new measure could become a vehicle Joe Biden's proposed $2 trillion plan for transportation and other infrastructure. Lawmakers see the desire for economic stimulus as the country recovers from the coronavirus pandemic as a potential catalyst for a major infrastructure bill.

WTO Trade Barometer Sees Trade Rebound

World merchandise trade has rebounded strongly following major declines at the beginning of the COVID-19 pandemic, but the outlook going forward is unclear as cases again rise in Europe and North America, according to the latest update of the World Trade Organization's (WTO) Good Trade Barometer.

The barometer provides real-time information on the trajectory of world merchandise trade relative to recent trends. The index's current reading of 100.7 is just above the baseline of 100, which indicates trade growth in line with the medium-term trend. It marks a major rebound form the record low 84.5 reading seen in August.

“All of the barometer's component indices were rising in the latest months, with some climbing above their medium-run trends while others remained depressed,” WTO detailed. Export orders and agricultural raw materials sub-indices “finished firmly above trend.” Meanwhile, container shipping and automotive product indices recovered to near trend, and air freight and electronic components indices remained below trend, WTO said.

Despite the recent rebound, WTO warned “trade related uncertainty remains high.” That uncertainty is linked to the second wave of infections, which “is already under way in Europe and North America, leading to renewed lockdowns that could trigger another round of business closures and financial distress,” it said.

Monday Watch List

 Markets

Monday before Thanksgiving starts what is usually a quiet week of trading that can also be prone to surprises. Traders will check out the latest weather forecasts, especially for South America where the new crop season is getting underway. USDA releases its weekly report of grain export inspections at 10 a.m. CST, followed by monthly cold storage at 2 p.m. and crop progress at 3 p.m.

Weather

Light rain and snow showers are in store for the southwest Plains Monday, offering some moisture potential for winter wheat. Similar precipitation is also indicated for the northwestern U.S. crop areas. Dry conditions will be in place elsewhere. Temperatures will be above normal north and seasonal south.

Week Ahead Watch List

Monday, November 23

Ag Reports: Export Inspections 10:00 a.m., Cold Storage 2:00 p.m., Crop Progress 3:00 p.m.

Tuesday, November 24

No Ag Reports Scheduled

Wednesday, November 25

Ag Reports: Dairy Products Sales 2:00 p.m.

Thursday, November 26

Thanksgiving Holiday - No Ag Reports Scheduled

Friday, November 27

Ag Reports: Export Sales 7:30 a.m

FSA Reverses Rule on Family Eligibility for Farm Subsidies

The Farm Service Agency restored the previous definitions of terms like “active personal management, significant contribution, and related phrasing” in a rule regarding farm program subsidy eligibility and payment limitations. FSA Administrator Richard Fordyce says the change is more of a “correction.” He says, “These revisions mean that members of a family farm operation are not subject to the more stringent management requirements applicable to farming operations comprised of non-family members established in the 2014 Farm Bill and further supported by the 2018 Farm Bill.” USDA also says that the more restrictive definitions only apply to farming operations comprised of non-family members that are subject to a limit in the number of farm managers seeking to qualify as actively engaged in farming based on a contribution of active personal management alone, as it was established in the 2018 Farm Bill. During an interview, Fordyce says, “It wasn’t our intention to bring family farm entities under the more restrictive provisions. It wasn’t Congress’ intent for us to do that.” The Hagstrom Report says the correction to the rule will be published right away in the Federal Register and goes into effect immediately.

NCBA Pleased with National Environmental Policy Act Changes

The U.S. Forest Service updated the agency’s National Environmental Policy Act regulations, and the National Cattlemen’s Beef Association and the Public Lands Council are pleased with the changes. Kaitlynn Glover is the NCBA Director of Natural Resources and Executive Director of the Public Lands Council. She says the announcement is the product of decades of work by livestock producers who have told the Forest Service and other federal agencies for years that NEPA regulations needed serious improvement. “This rule formalizes changes that will allow the U.S. Forest Service to be better partners to ranchers and stakeholders who depend on healthy forests and grasslands,” Glover says. “These are common-sense changes that add clarity by streamlining NEPA processes and ensuring that agencies are not spending time on unnecessarily duplicative NEPA reviews.” Ag Secretary Sonny Perdue says, “these changes will ensure we do the appropriate level of environmental analysis to fit the work, locations, and conditions.” Perdue notes that the new categorical exclusions will ultimately improve our ability to maintain and repair the infrastructure people depend on to use and enjoy their national forests.”

Cost of Thanksgiving Dinner Lowest in Ten Years

Thanksgiving is going to be different this year because of COVID-19. There is one tradition that continues this year, and it’s the American Farm Bureau’s annual survey on the cost of a classic Thanksgiving dinner. The 35th Farm Bureau survey says the average cost of this year’s Thanksgiving meal for 10 is $46.90, which breaks down to less than $5 per person. It’s a $2 decrease from last year’s average cost of $48.91. “The average cost of this year’s Thanksgiving dinner is the lowest it’s been since 2010,” says Farm Bureau Chief Economist John Newton. “Pricing whole turkeys as ‘loss-leaders’ to entice shoppers and move product is a strategy we’re seeing retailers use that’s increasingly common the closer we get to the holiday.” The centerpiece on most Thanksgiving tables is the turkey, which costs less than last year. A 16-pound bird will cost $19.39, about $1.21 per pound, and is seven percent lower-priced than in 2019. Besides turkey, other foods that showed price declines include whipping cream and sweet potatoes. Foods with modest cost increases include dinner rolls, cubed bread stuffing, and pumpkin pie mix.

Lawsuit Alleges Tyson Foods Managers Bet on Health of Workers

Details are coming out about a wrongful death lawsuit against Tyson Foods and its Waterloo, Iowa, processing plant. The suit alleges that during the initial stages of COVID-19, the company ordered employees to report to work, while supervisors privately wagered money on the number of workers who would be sickened by the virus. The Iowa Capital Dispatch says the lawsuit alleges that Tyson Foods is guilty of a “willful and wanton disregard for workplace safety.” In a written statement this week, Tyson says it was “saddened by the loss of any Tyson team member and sympathize with their families.” The company won’t comment on specific aspects of the suit but did say it’s “top priority is the health and safety of its workers, and they’ve implemented a host of protective measures at Waterloo and other facilities that meet or exceed CDC and OSHA guidelines for preventing COVID-19.” At least five Waterloo plant employees have died from COVID. According to the local county health department, over 1,000 workers at the plant, or more than a third of the total workforce, contracted the virus.

Growth Energy Outlines 2021 Policy Priorities

Growth Energy CEO Emily Skor outlined the biofuels industry’s top federal priorities for 2021, highlighting key measures that elected leaders must take to protect the climate and revitalize rural communities. Some of their other key priorities will offer more consumers access to clean, affordable options to fuel their cars. “Biofuels, including plant-based ethanol, are critical tools for decarbonizing America’s existing transportation fleet and supporting our nation’s farmers and rural communities,” she says. “Solvable challenges in this area await leaders in Congress and the next administration.” While officials are looking at climate solutions, she says biofuels will be a key to meeting the nation’s goals for the transportation sector, which is America’s largest source of greenhouse gas emissions. Their priorities include restoring the integrity of the Renewable Fuels Standard, including expanded infrastructure for higher biofuel blends. Growth Energy also wants to see expanded roles for biofuels in a clean energy future both at home and abroad. They’re very interested in seeing trade barriers broken down in low-carbon ethanol markets like Brazil, Mexico, and China, as well as in leveraging the benefits of biofuels in the Paris Climate Accord.

Brexit Talks Suspended After COVID Diagnosis

Brexit negotiations are suspended after a member of the European Union’s negotiating team tested positive for COVID-19. However, Reuters says officials are still working remotely to get an EU-United Kingdom trade deal on the books that would enter into full force in less than two months. Finland’s European affairs minister says the talks could still succeed, and a comprehensive deal can be done by the time Britain’s transition out of the EU wraps up on December 31. Negotiators told Reuters in a phone interview that the negotiating stage is “critical.” They say the time pressure is huge, but both sides haven’t given up their faith that the deal will get done. The chief Brexit negotiators are the EU’s Michael Barnier and the UK’s David Frost. Barnier says on Twitter that the teams “will continue their work in full respect of safety guidelines.” Some of the EU member-states like the Netherlands, France, Belgium, and Spain have asked the executive European Commission, which is negotiating with Britain on behalf of the bloc, to update emergency plans for a possible no-deal on Brexit. France’s representative on the Commission says Britain must accept fair competition rules for companies or be shut out of the EU’s single market of 450 million consumers in 2021.

Friday Watch List

Markets

Traders will continue to keep a close eye on South American weather forecasts and any trade news that develops. At 2 p.m. CST, USDA issues its cattle on-feed report for October 1 with analysts in Dow Jones' survey expecting a 1.8% increase from a year ago.

Weather

Dry and mild conditions will cover all crop areas Friday. This combination favors the finishing of row crop harvest and fall field work. Colder conditions will be confined to far northern areas.

Washington Insider: Stimulus Fights Intensify

There is plenty to fight about now as the nation works to move forward in its transition to a new government amid a growing coronavirus outbreak. At the same time, Bloomberg is reporting that President Trump's chief of staff is moving to “put the onus on Congress” as the White House retreats on proposed stimulus packages.

Chief of Staff Mark Meadows, once a lead negotiator working on a new coronavirus stimulus package, is now proclaiming that it's up to Congress to proceed with any talks, even though the issue has been a “priority” for the president.

“Obviously those discussions — if they happen — will be dictated by the House and the Senate,” Meadows told reporters when asked about the negotiations after a meeting with Senate Majority Leader Mitch McConnell, R-Ky. “We haven't seen a real willingness by our House colleagues to look at that.”

Meadow's comments came a day after House Speaker Pelosi, D-Calif., and Senate Minority Leader Chuck Schumer D-N.Y., urged McConnell to engage in talks. McConnell then “ridiculed” the $2.4 trillion Democratic measure that Pelosi and Schumer say must be the starting point for stimulus talks. “The problem is that their proposal is a multitrillion-dollar laughingstock” that “never had a chance of becoming law,” McConnell said.

McConnell reiterated his demand that any package be “targeted” and around $500 billion. He hadn't yet replied to the Pelosi—Schumer letter by mid-day Thursday, Bloomberg said but Senate Democrats upped the ante by introducing a new proposal to provide $10 billion for personal protection equipment in the next package, another sign of how far apart the two sides remain.

The comments came as numerous press reports are highlighting new lockdowns and anticipate new months-long survival tests until Covid-19 vaccines become widely available. More than 1 million US virus cases were reported in the recent week, leading states including Michigan, New Mexico, Ohio, and California to set tighter rules on movement and commerce, Bloomberg said. A wide swath of businesses — restaurants, hotels, retail shops, bowling alleys and theaters — will confront a devastating winter, if they are able to remain open at all. Many workers face the holidays with food and shelter in doubt.

“I'm looking for a sign of life,” said Jon Forman, founder and president of Cleveland Cinemas, an operator of four independent theaters in the metropolitan area that dismissed 90% of the staff. “We will not stay open through thick and thin.”

Senior citizens in long-term care have faced the worst of the pandemic, with no signs of stopping. States last week reported more than 29,000 new Covid-19 cases in places such as nursing homes and assisted-living facilities. Counts rose about 17% week over week, the steepest acceleration since May, when the COVID Tracking Project began tallying the data. Under 1% of the US population lives in such homes, but COVID fatalities there account for 40% of the national death toll, Bloomberg said.

In addition, the New York Times reported that the US Treasury Department's Office of Financial Research (OFR) warned on Wednesday that there were “significant downside risks” to the nation's overall financial stability from the economic fallout of the coronavirus pandemic and predicted that many households and businesses might be unable to recover without additional government assistance.

In its annual report to Congress, the OFR detailed the gravity of the threat that the financial system faced earlier this year as businesses were shut down across the United States and officials imposed stay-at-home orders around much of the country. The OFR praised government efforts to support the economy but suggested that substantial uncertainty remains because of the unpredictable path of the virus.

“Due to the novelty of the virus, the unknowns of its course and the response of health policy, many businesses are unsure when or even if they will resume normal operations and what new safeguards they must erect,” the report said. “Such uncertainty can weigh heavily on economic activity.”

The OFR was created out of the Dodd-Frank Act of 2010 and is a bureau within the Treasury Department. The report said that the “considerable” monetary and fiscal stimulus implemented earlier this year did serve as a bridge to an economic recovery, but that macroeconomic risk still remains “unusually high.”

Credit risk remains one of the biggest concerns, as lenders to the commercial real estate, energy and “high touch” sectors face big losses from defaults and bankruptcies. Meanwhile, a return to elevated valuations for risky assets could lead to another round of market stress despite efforts by the Federal Reserve to stabilize markets earlier this year.

The OFR noted that the federal debt is a long-term risk but suggested that there were more immediate concerns facing the economy. “Many households and businesses may be unable to recover absent additional government support,” the report said.

So, we will see. Pressure clearly is growing for the federal government to provide new stimuli, but concerns are also associated with some of the conventional approaches proposed. The intensity of the new, more recent outbreaks adds uncertainty to the outlook, as does the real time schedule for vaccine relief. These fights are likely to be prolonged and increasingly controversial and should be watched closely as they proceed, Washington Insider believes.

House Bill Would Require EPA To Act On Biofuels Applications

A House bill that would require the Environmental Protection Agency (EPA) to act on outstanding Renewable Fuel Standard (RFS) biofuel pathway applications was introduced by Reps. Cheri Bustos, D-Ill., and Jim Hagedorn, R-Minn.

The legislation, titled the Streamlining Advanced Biofuels Registration Act, would also compel the agency to accept biofuel applications if, after 90 days, the fuel could participate in at least one state's clean transportation program.

The RFS requires energy producers to utilize low-carbon, renewable fuels such as cellulosic biomass, but EPA must approve applications on behalf of biofuels producers and has refused to act on dozens of applications, Hagedorn and Bustos said.

The changes included in the bill will help lower greenhouse gas (GHG) emissions by easing the regulatory burden for producers using cellulosic biomass to produce renewable fuel, the lawmakers said. “By cutting red tape and ensuring that producers receive a timely response from the EPA, we can encourage the use of cellulosic biomass in low-carbon, renewable fuel production and continue to create cleaner, more environmentally-friendly fuels,” Bustos said.

“By forcing the EPA to make timely decisions on these applications, we are opening new markets that will power southern Minnesota communities and the nation's economy. I'm extremely pleased to work in bipartisan fashion with Congresswoman Bustos on this important initiative,” Hagedorn said.

Sens. John Thune, R-S.D., and Jeanne Shaheen, D-N.H., have introduced companion legislation in the Senate.

FCMSA Unveils HOS Ag Commodity, Livestock Definition Rule

An interim final rule clarifying agricultural commodity and livestock definitions in hours-of-service (HOS) regulations was unveiled Thursday (November 19) by the Department of Transportation's (DOT) Federal Motor Carrier Safety Administration (FMCSA).

The rule has not yet been scheduled for publication in the Federal Register.

During state-defined harvesting and planting seasons haulers transporting agricultural commodities, including livestock, are exempt from the HOS requirements from the source of the commodities to a location within a 150-air-mile radius from the source. However, amid indications the definition of “agricultural commodities” was not well understood or enforced consistently relative to the HOS exemption, FCMSA began a rulemaking to clarify the term in July 2019.

The interim final rule defines the terms “any agricultural commodity,” “livestock,” and “non-processed food” as used in the definition of agricultural commodity under HOS regulations.

“The agriculture industry is vital to our nation, and this new rule will provide clarity and offer additional flexibility to farmers and commercial drivers, while maintaining the highest level of safety,” said US Transportation Secretary Elaine Chao.

USDA Secretary Sonny Perdue thanked DOT for working with his department “to come up with common sense definitions for agricultural commodities and livestock that meet both the needs of agricultural haulers and public safety – critical concerns for all of trucking.”

The interim final rule will take effect 15 days after publication in the Federal Register and comments will be accepted for 30 days following publication.

Ag Lender Survey Reveals Bankers Top Concerns

The Fall 2020 Agricultural Lender Survey report shows that ag lenders continue to remain focused on credit quality, even as the farm economy continues to work through the prolonged downturn caused by COVID-19. The survey is from the American Bankers Association and the Federal Agricultural Mortgage Corporation, also known as Farmer Mac. When it comes to their customers, lenders continue to be most concerned about liquidity, income, and leverage. Uncertainty regarding tariffs and trade, the weather, the impacts of COVID-19, and the resulting downturn are close behind. “Facing a global pandemic and an unprecedented economic downturn, agricultural lenders’ concerns for both their institutions and ag borrowers remain focused on business fundamentals,” says Tyler Mondres, director of research at ABA. “Nevertheless, lenders remain prepared to continue providing support to the farm economy through these challenging times.” The ag economy and farm income remain stressed in 2020. On average, lenders report that just under 51 percent of their ag borrowers were profitable in 2020, down from 57 percent last year. About half of the lenders don’t expect profitability to improve in 2021.