Welcome
Monday, June 1, 2020
U.S. Soy Ready to Meet the Needs of the Global Aquaculture Industry
The U.S. Soybean Export Council hosted a global digital conference called “COVID-19 and the Implications to Aquaculture.” It featured almost 900 global customers and soybean industry representatives from 60 countries. The event focused on COVID-19’s impact on global aquaculture production and marketing supply chains. USSEC says as global markets adapt to these times, U.S. soy is ready to meet the needs of the global aquaculture industry. “Our industry has always prioritized innovation and adaptability to better serve our customers and meet the needs within the global seafood industry, and the COVID-19 pandemic is no different,” says USSEC CEO Jim Sutter. “At USSEC, we’ve had an active program in aquaculture for 35 years, with partners ranging from small fish farms in Asia to other large international operations across the globe.” He says no matter who USSEC works with, their top priority is to proudly optimize and demonstrate the value and nutritional benefits of U.S. soy in aquaculture diets. By 2030, USSEC says 62 percent of all seafood produced for human consumption will be a product of aquaculture. With the help of U.S. soy, expanding feed-based aquaculture can address the needs of both supply and demand.
United Fresh says Produce Buying Climbed During COVID-19
United Fresh Produce released its first quarter of 2020 issue of Fresh Facts on Retail report that details the rising number of fresh produce purchases in 2020. The unprecedented rise in food and beverage consumption at home was brought about by shelter-in-place orders issued to slow the spread of the coronavirus. “Those closures have led to consumers drastically restructuring their eating habits, especially increasing their consumption of meals and snacks at home,” says Miriam Wolk, Vice President of Member Services with United Fresh. “Our current and future Fresh Facts reports will help the produce industry in leveraging current consumer behaviors and fresh produce purchasing trends. First-quarter data highlights show that with health as a top concern, consumers continued to buy fresh food with immune-boosting properties, while also supplementing with shelf-stable and frozen food options. Strawberries and raspberries benefited by extending their reach into more U.S. households. Among vegetables, potatoes, tomatoes, and cucumbers were purchased in higher amounts by U.S. consumers. The report also shows a variety of fruits and vegetables continue to influence overall organic growth, presenting many opportunities to innovate and attract health-conscious consumers.
U.S. Ethanol Production Continues to Slowly Rebound
Energy Information Administration data recently analyzed by the Renewable Fuels Association shows a rise in ethanol production for the week ending May 22. Production increased by 61,000 barrels a day, a nine percent increase from the previous week. The total production came in at 724,000 barrels a day, equivalent to 30.4 million gallons daily, and was the largest volume since March. That was good news unless it’s compared to the same time in 2019. COVID disruptions have tempered the production rate, which came in just over 31 percent lower than the same week last year. Still, over the past month, the four-week average ethanol production rate rose almost eight percent to 651,000 barrels per day, equivalent to an annualized rate of 9.98 billion gallons. Ethanol stocks continue to drop, even though it’s a slow decline. Stocks thinned out by 1.9 percent, coming in at a 19-week low of 23.2 million barrels. Inventories continue to tighten up in all the major ethanol production areas, except for the Rocky Mountains. Total reserves are still 2.4 percent higher than where the volume was in 2019. The volume of gasoline supplied to the U.S. market, which is considered a measure of implied demand, rebounded by 6.8 percent from the previous week but was still 23 percent lower than the same week last year.
Washington Insider: Fed Goes All Out, Approaches Red Lines
The New York Times reported this week that Jerome Powell, chair of the Federal Reserve, told a University group last week that “central bankers had seen the need to use their tools to their fullest extent” as coronavirus lockdowns shuttered economies around the globe and caused United States unemployment to soar.
“We felt called to do what we could,” Powell commented Friday during a Princeton University webinar.
His comments emphasized that the Fed “crossed a lot of red lines that had not been crossed before,” and added that he was comfortable with what the Fed had done given “this is that situation in which you do that and you figure it out afterward.”
Powell called attention to the variety of actions the Fed has taken to support the economy: cutting interest rates to near-zero, rolling out unlimited bond purchases to soothe markets and initiating emergency lending programs to keep credit flowing to businesses and state governments.
He also noted that several of those efforts “tiptoe into untested territory” for the central bank, including programs that lend to medium-sized businesses, buy corporate bonds and purchase debt from states and large cities. “We work very hard to explain ourselves to the general public,” he said, explaining that the Fed is disclosing information on its lending efforts and discussing them regularly with lawmakers.
And, he pointed out that “the programs come at a time of dire need.” Economists are bracing for a deep plunge in economic output in the second quarter -- from April through June -- and most predict only a gradual recovery over the remainder of the year. It could be months or years before output returns to its pre-crisis level, and the unemployment rate falls to the 50-year lows that prevailed before the coronavirus lockdowns precipitated a wave of layoffs, NYT said.
More than 40 million people, about one of every four American workers, have filed for unemployment benefits since mid-March, based on recent data. A report next Friday is expected to show that the unemployment rate jumped to 19.5% in May based on the median estimate in a Bloomberg survey of economists.
Powell also noted that the “burdens” of job losses are falling on those least able to bear them, in lower-paid service work, exacerbating economic inequalities.
“Those are the people being laid off, who have the least financial resources,” he said. “It’s falling on women to an extraordinary degree,” and “there’s tremendous inequality” in how the pandemic is affecting the population.
He also voiced concern that if a second round of virus infections hits America, it could lead to a more delayed economic rebound.
“A second wave would really undermine public confidence and might make for a significantly longer and weaker recovery,” he said, after explaining that “a full recovery of the economy will really depend on people being confident that it’s safe to go out.”
States are reopening bit by bit. This means that more public spaces are available for use and more and more businesses are being allowed to open again. The federal government is largely leaving the decision up to states and some state leaders are leaving the decision up to local authorities. Even if you aren’t being told to stay at home, “it’s still a good idea to limit trips outside and your interaction with other people.”
While Powell stressed the Fed’s willingness to act when it comes to emergency lending, he reiterated that the central bank is not looking to cut interest rates into negative territory, something central banks abroad have done in an effort to stimulate their economies.
Powell has frequently warned that the United States is experiencing an economic hit “without modern precedent,” one that could permanently damage the economy if Congress and the White House do not provide sufficient financial support.
For example, in mid-May he warned as discussions of additional rescue measures ran aground as Democrats proposed sweeping new programs and Republicans voiced concerns over the swelling federal budget deficit. “There is a sense, a growing sense I think, that the recovery will come more slowly than we would like. “While the economic response has been both timely and appropriately large, it may not be the final chapter, given that the path ahead is both highly uncertain and subject to significant downside risks.”
So, we will see. Given all the uncertainties that now abound, the hoped-for recovery likely is at least as fragile as the Fed believes it to be and the national debate over emergency economic policies should be watched closely as the season progresses, Washington Insider believes.
“We felt called to do what we could,” Powell commented Friday during a Princeton University webinar.
His comments emphasized that the Fed “crossed a lot of red lines that had not been crossed before,” and added that he was comfortable with what the Fed had done given “this is that situation in which you do that and you figure it out afterward.”
Powell called attention to the variety of actions the Fed has taken to support the economy: cutting interest rates to near-zero, rolling out unlimited bond purchases to soothe markets and initiating emergency lending programs to keep credit flowing to businesses and state governments.
He also noted that several of those efforts “tiptoe into untested territory” for the central bank, including programs that lend to medium-sized businesses, buy corporate bonds and purchase debt from states and large cities. “We work very hard to explain ourselves to the general public,” he said, explaining that the Fed is disclosing information on its lending efforts and discussing them regularly with lawmakers.
And, he pointed out that “the programs come at a time of dire need.” Economists are bracing for a deep plunge in economic output in the second quarter -- from April through June -- and most predict only a gradual recovery over the remainder of the year. It could be months or years before output returns to its pre-crisis level, and the unemployment rate falls to the 50-year lows that prevailed before the coronavirus lockdowns precipitated a wave of layoffs, NYT said.
More than 40 million people, about one of every four American workers, have filed for unemployment benefits since mid-March, based on recent data. A report next Friday is expected to show that the unemployment rate jumped to 19.5% in May based on the median estimate in a Bloomberg survey of economists.
Powell also noted that the “burdens” of job losses are falling on those least able to bear them, in lower-paid service work, exacerbating economic inequalities.
“Those are the people being laid off, who have the least financial resources,” he said. “It’s falling on women to an extraordinary degree,” and “there’s tremendous inequality” in how the pandemic is affecting the population.
He also voiced concern that if a second round of virus infections hits America, it could lead to a more delayed economic rebound.
“A second wave would really undermine public confidence and might make for a significantly longer and weaker recovery,” he said, after explaining that “a full recovery of the economy will really depend on people being confident that it’s safe to go out.”
States are reopening bit by bit. This means that more public spaces are available for use and more and more businesses are being allowed to open again. The federal government is largely leaving the decision up to states and some state leaders are leaving the decision up to local authorities. Even if you aren’t being told to stay at home, “it’s still a good idea to limit trips outside and your interaction with other people.”
While Powell stressed the Fed’s willingness to act when it comes to emergency lending, he reiterated that the central bank is not looking to cut interest rates into negative territory, something central banks abroad have done in an effort to stimulate their economies.
Powell has frequently warned that the United States is experiencing an economic hit “without modern precedent,” one that could permanently damage the economy if Congress and the White House do not provide sufficient financial support.
For example, in mid-May he warned as discussions of additional rescue measures ran aground as Democrats proposed sweeping new programs and Republicans voiced concerns over the swelling federal budget deficit. “There is a sense, a growing sense I think, that the recovery will come more slowly than we would like. “While the economic response has been both timely and appropriately large, it may not be the final chapter, given that the path ahead is both highly uncertain and subject to significant downside risks.”
So, we will see. Given all the uncertainties that now abound, the hoped-for recovery likely is at least as fragile as the Fed believes it to be and the national debate over emergency economic policies should be watched closely as the season progresses, Washington Insider believes.
Updated OSHA Guidance For Meat Plants
The Occupational Safety and Health Administration (OSHA) last week issued an updated guidance memo relative to reporting of COVID-19 cases.
The agency said COVID-19 can be a “recordable illness” if the worker infection was “as a result of performing their work-related duties,” if the following apply: The case is a confirmed case of COVID-19, as defined by the Centers for Disease Control and Prevention (CDC); the case is work-related as defined by law; and the case involves one or more of the general recording criteria set forth by law.
The agency also noted that it is exercising “enforcement discretion” relative to the situation, a reference made more than once in the updated guidance.
“Recording a COVID-19 illness does not, of itself, mean that the employer has violated any OSHA standard,” the agency stated. The updated guidance is sparking concern within the meat industry about the impact it could have, but it is not clear what specific impacts to things like insurance.
The agency said COVID-19 can be a “recordable illness” if the worker infection was “as a result of performing their work-related duties,” if the following apply: The case is a confirmed case of COVID-19, as defined by the Centers for Disease Control and Prevention (CDC); the case is work-related as defined by law; and the case involves one or more of the general recording criteria set forth by law.
The agency also noted that it is exercising “enforcement discretion” relative to the situation, a reference made more than once in the updated guidance.
“Recording a COVID-19 illness does not, of itself, mean that the employer has violated any OSHA standard,” the agency stated. The updated guidance is sparking concern within the meat industry about the impact it could have, but it is not clear what specific impacts to things like insurance.
USDA Clarifies What Determines Price Risk on Unsold Inventory
The Farm Service Agency (FSA) has issued some information clarifying what are eligible contracts that leave price risk open for producers under the Coronavirus Food Assistance Program (CFAP) and what tools constitute removing price risk.
Those deemed contracts that leave open price risk include: basis contracts, basis fixed contracts, delayed price contracts, deferred price contracts, and contracts where no price is established.
Those where price risk is removed (and are considered ineligible contracts) include: cash contracts, fixed price contract, forward price contract, cash forward contract, minimum price contract, hedge to arrive contract, window contract, option contract, futures fixed contract and a futures contract.
The above list applies to contracts entered into on or before January 15.
USDA’s CFAP handbook provides several examples of forward contracts that are eligible, but do not provide the breadth of examples the agency considers as eligible or ineligible contracts.
Monday Watch List
Markets
The first day of June will have traders poring over the latest weather forecasts early Monday. ISM's index of U.S. manufacturing is due out at 9 a.m. CDT, an index that will be compared with other countries dealing with coronavirus. USDA's weekly report of grain export inspections is at 10 a.m., followed by Crop Progress at 3 p.m. CDT. USDA will reveal crop ratings for both, corn and soybeans in Monday's report. Traders remain leery of news related to China.
Weather
Monday features the beginning of warm to hot conditions over the central U.S. The heat is mostly favorable due to adequate soil moisture in most areas. Rain will be limited to the northern Midwest, southern Texas and portions of the Northwest.
The first day of June will have traders poring over the latest weather forecasts early Monday. ISM's index of U.S. manufacturing is due out at 9 a.m. CDT, an index that will be compared with other countries dealing with coronavirus. USDA's weekly report of grain export inspections is at 10 a.m., followed by Crop Progress at 3 p.m. CDT. USDA will reveal crop ratings for both, corn and soybeans in Monday's report. Traders remain leery of news related to China.
Weather
Monday features the beginning of warm to hot conditions over the central U.S. The heat is mostly favorable due to adequate soil moisture in most areas. Rain will be limited to the northern Midwest, southern Texas and portions of the Northwest.
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