Here’s a quick monitor of Washington farm and trade policy issues from DTN’s well-placed observer.Trump Talks Biofuels In Iowa Stop
President Donald Trump talked up biofuels in his visit to Iowa Thursday.
Trump told those gathered in Iowa that the administration is "taking care of your ethanol," a nod to the fact Iowa is the biggest ethanol producing state in the US. He also noted they are "very close" to a 12-month waiver of the Reid Vapor Pressure (RVP) rules to allow for year-round sales of E15.
"I'm very close, I have to tell you, to pulling off something you have been looking forward to for many years and that's the 12-month E15 waiver," Trump said.
Acting EPA Administrator Andrew Wheeler mentioned the E15 situation in remarks earlier this week at an event in Washington, saying he would move forward with plans to sell E15 year-round, to allow renewable identification numbers (RINs) generated on exported biofuel to count toward RFS requirements and to looking requiring larger refiners to blend more ethanol into motor fuel to make up for obligations waived for small refiners. But, he also stated those efforts would not be done on a piecemeal basis, but rather as one package.
US-EU to Start Talks On Eliminating Tariffs, Trade Restrictions
President Donald Trump and European Commission President Jean-Claude Juncker announced the two sides have agreed to start discussions on eliminating tariffs and subsidies that impact trans-Atlantic trade and to resolve issues on the U.S. steel and aluminum import duties, including retaliatory tariffs put in place by the European Union (EU). The officials also said that both sides would hold off on further tariffs while the talks take place, a signal the U.S. will not impose tariffs on U.S. imports of vehicles from the EU.
The framework includes four key areas:
Strengthening cooperation on energy deals, especially the EU import of liquefied natural gas (LNG), a clear signal to Russia. Trump vowed to compete for orders in Europe, where Russia is the largest supplier. The lack of natural gas terminals means that this could take years to unfold as Juncker indicated there would be LNG terminals built;
EU increasing the import of U.S. soybeans (no details on the amount, but Trump said the EU plans to start buying "a lot of soybeans" in the coming weeks as a goodwill gesture in their ongoing trade talks) while Commerce Secretary Wilbur Ross later said that there would be more commodities than just soybeans involved;
Working on bringing tariffs and barriers on non-auto industrial tariffs down to zero (the term generally refers to cutting tariffs on manufactured goods); Juncker said it was his expectation that the talks would include phasing out auto tariffs on both sides.
***Washington Insider: Datum, Data, Dollars and the endless fight
USDA recently changed its policy of giving journalists a little time to digest new crop and livestock data ahead of the public release time, as DTN, Bloomberg and others reported—and, the general reaction was a fairly deep yawn. However, there’s a lot missing in the quick-time glance at the deep-in-the-weeds working of a huge organization like USDA and possible market impacts. It's actually all part of a super-sophisticated market war with deep, deep roots.
For example, everyone knows that USDA has reports on just about everything, but did you know they have an official report about a long-ago data leak scandal that USDA said in a 2007 report changed much about the system that had been in place over the previous century?
In fact, high-quality, almost real time data about crop and livestock supply and demand have been one of the main services USDA performs for the nation—producers as well as consumers, traders and others. And, that’s a challenge. Consider the problem of getting thousands of observations and analyses from the whole country together so that we all can have an intelligent market outlook at the same time.
It turns out that USDA has had a very sophisticated system since its early days—it accumulated the data from across the country in Washington every month and then released the overview and details at a pre-announced time. And, those analyses were worth their weight in gold to traders and others—a fact USDA was a little slow in recognizing.
Well, in 1904, rumors about a “data leak ring” surfaced—and officials set a trap. There was limited ongoing oversight of the system, since the officials doubted that anyone would stoop to data theft, but they were wrong. Signals were coming from an internal spot—a window involving how the shades were set, and conspirators were using those to anticipate subsequent market-moving announcements. The schemers were caught by a double report that smoked out the leakers.
So, since 1905, the data releases were far better controlled—and media users who applied to participate were given a short time to prepare their take on the new data. Those takes were then released at the same time as the raw data.
Now, USDA says even that needs tightening and some observers think still more care is needed. Abandoning decades of precedent, the agency has decided to only post its reports directly on the web, rather than also release them via accredited media. While that may seem like a democratic move, it actually could set the stage for a winner-takes-all arms race to grab the info first.
DTN's view on the perils of the change can be found in the recent "Editors' Notebook" blog. Bloomberg also wrote that USDA “may well be clearing the way for some Wall Street speed demons to trade on market-moving data before others.”
“Somebody will figure out the fastest way to get the information and trade on it first,” said Jim Angel, a finance professor at Georgetown University in Washington. “What it does is it changes the arms race in a different direction.”
Press organizations use high-speed fiber optic lines to get data to readers out of the so-called “lockup.” It takes the department roughly 2 seconds longer to transmit its reports to the public, according to the USDA—a gap the agency cited when announcing a policy change.
“Everyone who has interest in the USDA reports should have the same access as anyone else,” Agriculture Secretary Sonny Perdue said in a statement.
USDA said giving journalists early access “pre-determines who gets the information first,” favoring customers of media organizations that pay for fast access to info.
But as DTN has pointed out, USDA has also been sounding the alarm about the slow, inadequate internet access that is common in much of rural America.
The changes come during a volatile period for agricultural trading, Bloomberg says. USDA’s monthly World Agricultural Supply and Demand Estimates report is one of the most-followed events in the grain-trading world, and next month’s report will be the first impacted by the policy shift. The Crop Production report is also impacted, and it attracts special attention as the season’s first survey-based production estimates and forecasts for corn and soybeans.
The irony is that the USDA’s attempt to ensure everyone gets potentially market-moving information on commodities at the same time could actually do the opposite.
Because the USDA is releasing this information on a website, it’s using a transmission technology called TCP—so the “bot that first scrapes the USDA site will have an advantage over everyone else, a head start on placing trades in commodities markets.” Other means of conveying the data could have higher odds of sending the info simultaneously.
“Each server hosting a website provides thousands of simultaneous connections by which clients can retrieve information at the same time,” the USDA said. “Websites hosted by content delivery services scale this up to millions of connections which are available to any client accessing the website content. No prioritization of connections is done and data are transmitted as requested.”
“If the dissemination isn’t handled evenly, it can create the perception that the government isn’t playing fair or it’s beholden to certain vested interests or something nefarious going on,” said Larry Tabb, founder of market research firm Tabb Group LLC.
To be sure, there’s nothing illegal about grabbing and processing publicly available data faster than your competitors and trading on it. And traders have always sought to get an edge. But in this modern era, an edge can consist of getting important data a millionth of a second faster than anyone else.
USDA officials have said they notified the Labor and Census departments of the policy decision. Those agencies use different technology to publish their report and didn’t indicate they plan to cancel lockups, the USDA’s Chief Economist Robert Johansson and the USDA’s World Agricultural Outlook Chairman Seth Meyer said.
So, we will see. The officials in 1905 made assumptions and were burned, and, from a distance, USDA once again seems fairly casual about safeguarding its system However, they can be sure well informed buyers and sellers are watching closely, and producers should be doing the same, Washington Insider believes.
Want to keep up with events in Washington and elsewhere throughout the day? See DTN Top Stories, our frequently updated summary of news developments of interest to producers. You can find DTN Top Stories in DTN Ag News, which is on the Main Menu on classic DTN products and on the News and Analysis Menu of DTN’s Professional and Producer products. DTN Top Stories is also on the home page and news home page of online.dtn.com. Subscribers of MyDTN.com should check out the US Ag Policy, US Farm Bill and DTN Ag News sections on their News Homepage.
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