Here's a quick monitor of Washington farm and trade policy issues from DTN's well-placed observer.
Senate Agriculture Panel Approves Moffitt For USDA Post
The Senate Agriculture Committee voted via voice vote late Monday to advance the nomination of Jennifer Moffitt to be undersecretary for marketing and regulatory programs.
Timing for a vote in the full Senate is not yet known.
A full Senate vote on another nominee -- Janie Hipp to be general counsel -- is also uncertain as Senate Agriculture Committee Chair Debbie Stabenow, D-Mich., and Ranking Member John Boozman, R-Ark., said they believe a Republican Senator has a hold on the nomination. And, it's not clear for what reason as there has been little opposition heard on the Hill about Hipp.
China's New US Ambassador Headed to Washington
China's new ambassador to the U.S., Qin Gang, is heading to Washington on Wednesday, ending speculation over who will be handed the difficult task of trying to ease fractious relations between the powers. The 55-year-old Qin has been a vice foreign minister and has had several western countries and regions in his portfolio.
However, he has no direct U.S.-related experience.
The South China Morning Post said he has spent the last several days meeting with U.S. businesses in Chin before departing for Washington. He replaces Cui Tiankai, 68, who was the longest serving ambassador to the U.S. and had passed the retirement age for senior Chinese ambassadors, according to Reuters.
Qin has also been a spokesman for the country's foreign ministry and many believe he will potentially take a tougher line than his predecessor.
Washington Insider: Fed Decision Awaited
The issue of inflation looms large as the Federal Open Market Committee (FOMC) -- the Fed's decision-making body -- concludes its two-day meeting Wednesday afternoon. And the topic of inflation has been one that continues to dominate a lot of attention throughout the country as consumers are seeing higher prices for several things, including food and fuel.
USDA recently updated its food price inflation outlook, but surprisingly did not raise its current expectations for prices. USDA maintains an outlook for all 2.5% to 3.5% in 2021, with food at home (grocery store) prices seen rising 2% to 3% in 2021. Restaurant prices, food away from home, are forecast to gain 3% to 4% from 2020 levels.
All three forecasts were steady with the prior month. That is somewhat surprising since USDA often times has made changes to its overall outlooks in July.
But prices this year are seen above the 20-year average, and come after upward revisions made in their forecast last month. But consumers are coming off a period of extended favorable prices at the grocery store.
Until 2020, prices had either risen far less than their 20-year average or had falling in two years going back to 2016. But after such a favorable run, it's no wonder that the food price inflation situation is of concern to consumers.
After all, the pandemic caused food price inflation to push even higher in 2020 compared with the forecast levels for 2021. As COVID vaccines have been given and restrictions have been lifted, consumers have been ready to get out and eat out more than they were able to for much of 2020 -- restaurant prices were up 4.2% from June 2020.
Food is one of those categories that is excluded from the Fed's favored inflation gauge -- Personal Consumption Expenditures (PCE). It is a broader reading than the Consumer Price Index (CPI) and still their favored PCE data is the one that strips out food and energy, the so-called core rate.
So what the Fed says about inflation when the meeting concludes Wednesday afternoon will be notable. They have insisted for months when each policy meeting has wrapped up that they see the higher prices as "transitory" and that they will not become established enough or significant enough to prompt a Fed response like raising interest rates.
The Fed has also been buying Treasuries and mortgage-backed securities at a pace of $120 billion per month. The concept is that buying those bonds will lower borrowing costs for consumers and businesses, and keep economic activity moving forward as we recover from the pandemic. But one of the first policy moves they will take is to "taper" those bond purchases. Fed Chairman Jerome Powell had insisted until the June meeting that it was too soon to "talk about talking about" tapering those bond buys. But after the June meeting, he acknowledged that "talk" had begun.
Expectations are that they will not have completed that discussion. But attention will be on whether or not Powell signals that they are close to a decision. That could prompt some market concerns as it will mark the start of the ending of the easy money policy by the Fed. Even so, Powell has promised there will be plenty of notice when the tapering of those bond buys start so the market will not get spooked. Still, even with all kinds of notice, some are likely to get spooked anyway.
So we will see. As the Fed moves closer and closer to removing some of the easy money from the market, it will prompt response higher in interest rates and that will start to add another cost factor in for agriculture that needs to be watched very closely, 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.
If you have questions for DTN Washington Insider, please email email@example.com
(c) Copyright 2021 DTN, LLC. All rights reserved.