U.S. Trade Representative Katherine Tai Tuesday announced the second dispute settlement panel under the U.S.-Mexico-Canada Agreement regarding Canada’s dairy tariff-rate quota allocation measures. The United States is challenging Canada’s revised dairy TRQ allocation measures that use a market-share approach for determining TRQ allocations. Through these measures, Canada undermines the market access it agreed to provide in the USMCA, according to USTR. Ambassador Tai says, “Although the United States won a previous USMCA dispute on Canada’s dairy TRQ allocation policies, the Canadian government’s revised measures have not fixed the problem.” National Milk Producers Federation president and CEO Jim Mulhern responded, "USTR's action is an important step in righting this wrong and sending a message that the U.S. will fight violations of trade deals in Canada and wherever else they may be committed." If the panel confirms that Canada has violated its obligations under USMCA, the U.S. would be granted the right to impose retaliatory duties.
Welcome
Wednesday, February 1, 2023
USDA Launches Pilot Cattle Contracts Library
The Department of Agriculture Tuesday launched the Cattle Contract Library pilot program. USDA says the pilot library will provide new disclosure to the industry and public regarding the key terms, conditions, and volumes under which cattle are contracted. The Consolidated Appropriations Act of 2022 directed USDA to create a pilot library to increase market transparency for cattle producers. The library will have the same look and feel as the working library model developed and shared with stakeholders last year but will now be populated with information from active contracts. The initial release of the library will allow users to browse a range of terms and information contained in active contracts used to purchase fed cattle. National Cattlemen's Beef Association Government Affairs Government Affairs Tanner Beymer responded, “We have been looking forward to the launch of the Cattle Contract Library pilot program and will review the product to determine if its current format provides value to cattle producers.”
FDA Proposes Redesign of Human Foods Program
The Food and Drug Administration Tuesday proposed a redesign of the Human Foods Program to enhance coordinated prevention and response activities. The proposal includes a transformative vision for the Office of Regulatory Affairs, FDA's field-based operations. The proposed structures for both groups will have clear priorities focused on protecting and promoting a safe, nutritious U.S. food supply that more quickly adapts to an ever-changing and evolving environment, according to USDA. The proposed structures for both groups will have clear priorities focused on protecting and promoting a safe, nutritious U.S. food supply that more quickly adapts to an ever-changing and evolving environment. Creating a Human Foods Program under a single leader who reports directly to the Commissioner unifies and elevates the program while removing redundancies. The Center for Food Safety and Applied Nutrition, Office of Food Policy and Response, and certain functions of ORA will be unified into a newly envisioned organization called the Human Foods Program.
Ukraine’s Exports Recover Under Black Sea Grain Initiative
USDA's Economic Research Service reports Ukraine's corn and wheat exports have almost returned to seasonal-average levels since the summer of 2022. The change follows the Black Sea Grain Initiative to reopen the Black Sea shipping routes. Russia's invasion of Ukraine in February 2022 led to elevated security risks and infrastructure damage, causing Ukraine's seaports to be almost completely cut off from March through July. As global exportable supplies diminished, international wheat export prices spiked. Signed in July 2022, the Black Sea agreement enabled the safe passage of Ukraine grain exports through three ports. That and ample corn and wheat stocks allowed Ukraine to export a larger combined volume of the two crops than the five-year average in September and October. The Black Sea Grain Initiative has increased the opportunities for Ukrainian grain to leave the country and has relieved some price pressures internationally, but uncertainty remains as the agreement is set to expire in mid-March 2023 and may not be extended.
Six of Seven States Agree on Colorado Water Management
Six states that rely on water from the Colorado River Basin recently reached an agreement regarding a model to drastically cut water use in the basin. Colorado, New Mexico, Utah, Wyoming, Arizona, and Nevada, "did exactly what we needed," according to Colorado Senator Michael Bennet. However, the agreement doesn't include California, the largest water user from the basin, which plans to release its own water use plan. In a letter to the Bureau of Reclamation, the six states admitted, "Over the past twenty-plus years, there is simply far less water flowing into the Colorado River system than the amount that leaves it, and that we have effectively run out of storage to deplete.” The states asked the Bureau of Reclamation to review their proposal as it seeks drought mitigation guidelines. Bennet says California not joining the effort was disappointing, adding, “For too long, the other six states, and particularly the Upper Basin, have carried the burden of this historic drought.”
Commodity Classic Registration up 28%
Farmers across the country are getting excited for the 2023 Commodity Classic, which has just announced registration is up 28 percent over last year's event in New Orleans. The 2023 Commodity Classic will be held March 9-11 in Orlando. Attendee surveys indicate that networking with other farmers is one of the top reasons producers enjoy Commodity Classic. Hallway conversations and in-person connections are an important part of the educational experience at Commodity Classic, as farmers share their knowledge, passion, and insight with colleagues from across the nation. 2023 Commodity Classic co-chair George Goblish of Minnesota says, “Thousands of America’s best farmers from across the nation love Commodity Classic because we share a passion for agriculture, a thirst for knowledge, and we’re all interested in how we can make our farms more profitable.” The 2023 Commodity Classic includes a lineup of educational sessions, inspiring speakers, a trade show, entertainment, and a range of technology, innovation, and agronomic information. Discover more at CommodityClassic.com.
Wednesday Watch List
Markets
Wednesday is the first of February, the day the ground hog is expected to come out and raise the federal funds rate by another quarter-percent. The Federal Reserve will make the ceremony official at 1 p.m. CST. Before that, there will be several manufacturing indices reported from around the world and the U.S. will get its turn at 9 a.m. At 9:30 a.m., the U.S. Energy Department releases its weekly report of energy inventories, including ethanol production. South American weather and crop conditions continue to get a lot of trader attention.
Weather
A stalled front across the South and Southeast remains active on Wednesday with periods of showers from Texas and Oklahoma eastward. It remains cold enough on the northern end for a mix of freezing rain, sleet, and maybe some snow from Texas and Oklahoma into the Tennessee Valley. Temperatures farther north are still cold, but higher than yesterday for most areas.