Reuters writers Polina Devitt and Maha El Dahan reported earlier this week that, “Russia’s grain exports have stopped due to curbs brought in to protect domestic supply, putting big deals at risk, an influential farm lobby group said on Wednesday.”
The article indicated that, “Moscow imposed informal grain export controls with tougher quality monitoring and limits on railroad loadings earlier this month, as it tackles a financial crisis linked to plunging oil and Western sanctions.
“‘Since last Thursday not a single vessel, which had been due to sail under contracts, has left,’ Arkady Zlochevsky, the head of Russia’s Grain Union, the farmers lobby group, said.
“Officials also plan to impose duty on grain exports. Zlochevsky said its exact level was an unimportant detail, as he was sure it would be prohibitive.”
The Reuters article added that, “Zlochevsky criticised the decision to impose restrictions for the third time in six years.
“Russia imposed a duty on wheat exports in 2008 and an official ban in 2010 when a drought hit its crop.”
Bloomberg writer Anatoly Medetsky reported on Wednesday that, “Russia said Dec. 22 that it plans to introduce grain export duties, the latest step in an effort to reduce overseas shipments after the ruble plunged and food prices increased. While the country has said it won’t stop exports, the government has blocked cargoes by denying certificates that grain sellers and buyers need after sanitary inspections, and state-owned Russian Railways Co. halted deliveries to ports for exports last week.
“Wheat for March delivery slid 0.2 percent in Chicago to $6.34 a bushel as of 7:16 a.m. local time. Prices have jumped more than 20 percent in the past two months.”
Meanwhile, Reuters writer Maximiliano Rizzi reported earlier this week that, “China has approved imports of one of Argentina’s genetically modified (GMO) varieties of corn, Syngenta’s Agrisure Viptera, Argentina’s agriculture ministry said on Tuesday.
“The Argentine government had been negotiating access to the Chinese market for the corn strain for several years. The South American country is the world’s fourth-biggest exporter of corn.
“A source in the agriculture ministry said that China had previously authorized the import of other varieties of GMO corn, but that there had been few shipments to the Asian powerhouse.”
An update yesterday at China Daily Online, indicated that, “The government’s move to ease import restrictions on genetically modified corn may drive down domestic prices for the crop, which is already uncompetitive on the international markets, raising concerns among local farmers struggling with rising planting costs and low profits.”
Yesterday’s update noted that, “Hu Zengmin, an analyst at the China National Grain and Oils Information Center in Harbin, said that imported corn is mainly used in animal feed. The country’s corn-consuming regions are located along the coast in provinces like Shandong, Jiangsu and Fujian.
“The policy shift ‘will definitely encourage more GM corn from the United States and Argentina to be shipped to China sooner or later,’ said Hu.”
The China Daily article added that, “China last week also approved imports of biotech soybeans developed by DuPont Pioneer, the largest US producer of hybrid seeds for agriculture, as well as another type of GM soybean produced by Germany-based Bayer CropScience AG. The approval enables Bayer to start full commercial launch plans in the US.”
In other news, on Wednesday, USDA’s National Agricultural Statistics Service (NASS) released its monthly Livestock Slaughter report, which stated that, “Commercial red meat production for the United States totaled 3.76 billion pounds in November, down 9 percent from the 4.12 billion pounds produced in November 2013.
“Beef production, at 1.85 billion pounds, was 10 percent below the previous year. Cattle slaughter totaled 2.25 million head, down 12 percent from November 2013.”
The NASS report also pointed out that, “Pork production totaled 1.89 billion pounds, down 7 percent from the previous year. Hog slaughter totaled 8.81 million head, down 9 percent from November 2013. The average live weight was up 3 pounds from the previous year, at 286 pounds.”
In its weekly Grain Transportation report, which was released yesterday, USDA noted that, “On December 19, 2014, the President signed H.R. 5771, the Tax Increase Prevention Act of 2014, which contained provisions to increase the Inland Waterways Trust Fund (IWTF) financing rate from 20 cents per gallon of fuel used by commercial navigation operators to 29 cents per gallon. The rate change, which was promoted by many agricultural and waterway groups, will take effect on April 1, 2015. New construction and major rehabilitation on the inland waterways are typically funded through 50 percent contribution from the IWTF and a matching 50 percent appropriation from the General Treasury. The inland waterways are important to U.S. grain exports because barges transport about 54 percent of corn exports and 49 percent of soybean exports to coastal areas to be loaded onto ocean-going vessels.”
The report also indicated that, “U.S. railroads originated 24,194 carloads of grain during the week ending December 13, down 6 percent from last week, up 17 percent from last year, and 18 percent higher than the 3-year average…[and]… During the week ending December 22, U.S. average diesel fuel prices decreased 14 cents from the previous week to $3.28 per gallon–down 59 cents from the same week last year.”
CFTC- Commodity Futures Trading Commission (MF Global)
Reuters writers Douwe Miedema and Karey Van Hall reported earlier this week that, “The U.S. Commodity Futures Trading Commission said on Wednesday it had fined MF Global Holdings Ltd for wrongdoing during the collapse of the futures brokerage, but will continue its lawsuit against the firm’s former chief, Jon Corzine.
“A federal judge in Manhattan approved a settlement in which the company will pay a $100 million fine and be jointly responsible for returning $1.212 billion in client funds that another unit had been ordered to restitute last year.”
The Reuters article added that, “The CFTC said its litigation would continue against former MF Global Chief Executive Corzine and former Assistant Treasurer Edith O’Brien. If they do not settle, the former officials may have to defend themselves in court.”
Andrew Ackerman and Alan Zibel reported in today’s Wall Street Journal that, “As part of Wednesday’s settlement with the parent company, MF Global’s holding company becomes jointly responsible with its brokerage unit to pay $1.2 billion in restitution to the failed brokerage firm’s customers. The CFTC said ‘a substantial portion’ of that obligation has already been met.
“MF Global filed for bankruptcy protection in 2011 after former Chairman and Chief Executive Jon S. Corzine’s bets on European sovereign debt soured. More than $1 billion was taken out of customers’ accounts in a failed bid to keep the firm alive in October 2011.”
The Journal article pointed out that, “In June 2013, the CFTC brought a complaint against MF Global’s brokerage that accused the firm of unlawful use of customer funds. At that time the firm agreed to settle the complaint and admit to the CFTC’s allegations. Under Wednesday’s order, MF Global’s holding company also admits to the allegations in the CFTC complaint.”
Policy and Budget Issues
An update Wednesday from USDA Daily Radio included remarks from Risk Management Agency Administrator Brandon Willis on Actual Production History Yield Exclusion issues; this one-minute audio file is available here.
Additional USDA resources on this topic can be found here: Actual Production History Yield Exclusion Fact Sheet, Actual Production History Yield Exclusion FAQs, and, Actual Production History Yield Exclusion Overview of Premium Rating.
Meanwhile, Derek Willis reported in today’s New York Times that, “The top three Republican leaders in the House next year are likely to be from Ohio, California and Louisiana. But the committees will be dominated by Texans.
“When the 114th Congress opens in January, Texans will assume the leadership of six of the 21 House committees, according to recommendations issued by the House G.O.P.’s Steering Committee in November, which would be the largest number for a state delegation since at least 1979.
“The six leaders, and their committees, are: K. Michael Conaway, Agriculture; Mac Thornberry, Armed Services; Jeb Hensarling, Financial Services; Michael McCaul, Homeland Security; Pete Sessions, Rules; and Lamar Smith, Science, Space and Technology.”
With respect to budget related issues, Damian Paletta reported this week at The Wall Street Journal Online that, “House Republican leaders late Tuesday unveiled a budget rule change that could have a significant impact on tax proposals next year,directing congressional budget analysts to estimate the economic growth created by tax cuts.
“The change was part of a series of proposals posted on the House Rules Committee’s website late Tuesday. Most–if not all–of the changes are likely to easily win the committee’s support early next year since the panel is dominated by Republicans. It must also be approved by a majority of the House of Representatives, where passage is also expected.”
The Journal article explained that, “The rule change would direct the Congressional Budget Office and the Joint Committee on Taxation to take into account the ‘macroeconomic’ impact of certain pieces of legislation when determining the ‘official cost estimate’ of things such as proposed tax cuts.
“Republicans have long complained that the CBO and the joint tax panel don’t take into account the economic growth that can occur as a result of tax cuts. The rule change would require the budget scorekeepers to adopt a methodology often referred to as ‘dynamic’ scoring–an approach that has been popular with Republicans and conservative economists for decades.”
Bernie Becker reported on Wednesday at The Hill Online that, “A leading House Democrat on Wednesday accused congressional Republicans of ‘rigging the rules against working families’ by implementing budget projections that look more favorably at tax cuts.
“Rep. Chris Van Hollen (Md.), the top Democrat on the House Budget Committee, insisted Republicans were seeking to shield the true costs of a tax-cutting agenda that he says ‘has a long and proven record of failure.’
“House Republicans said late Tuesday they would put into place new budget rules, commonly known as dynamic scoring, that project that cutting taxes helps to spur economic growth.”
Lastly today, Lisa Mascaro provided an interesting perspective in Wednesday’s Los Angeles Times on how new members of Congress adjust to Washington, D.C., (“Freshman lawmaker from Inland Empire gets crash course on Congress“) which includes: “an eight-day crash-course in Congress designed to turn candidates into legislators and teach newbies how to survive and thrive.”
The article noted that, “‘It’s like your first day of high school,’ said [Norma J. Torres- Democrat elected to represent Southern California’s 35th District], a former 911 emergency dispatcher who rose to become mayor of Pomona and then a California state senator. ‘But worse. Because the responsibility that comes with this job is huge.'”