Washington Insider-- Tuesday
New Reports Emphasize Economic Outlook Uncertainty
Here's a quick monitor of Washington farm and trade policy issues from DTN's well-placed observer.
OMB Remains Busy Reviewing Agency Plans
The Office of Management and Budget (OMB) has completed its review of the EPA plan on the application exclusion zone (AEX) requirements relative to agricultural workers. EPA is proposing changes to the AEZ under the Agricultural Worker Protection Standard.
Meanwhile, the Department of Transportation's Federal Motor Carrier Safety Administration (FMCSA) last week sent an interim final rule to OMB for review relative to hours of service issues for those transporting ag commodities.
The FMCSA developed the rule to address whether, and if so to what extent, they should revise or otherwise clarify the definitions of “agricultural commodity” or “livestock” relative to hours of service (HOS) requirements for drivers.
The agency last week wrapped up its review of USDA's plans to alter the Conservation Stewardship Program (CSP) to reflect provisions in the 2018 Farm Bill.
Canola Group Seeks Approval of the Oilseed As Renewable Fuel Source
The U.S. Canola Association has asked the Environmental Protection Agency (EPA) to approve the oilseed as a source of renewable fuel, which could feed an expected surge in demand for raw material from processing plants being developed.
In March, the group submitted a pathway petition to EPA to add canola renewable diesel as an eligible renewable fuel standards product, said Tom Hance, Washington Representative for the U.S. Canola Association. The petition is not yet publicly available and is under EPA review, according to Hance.
If approved, demand for the oilseed — and potentially its price — could rise and spur more imports from Canada. It could double the amount of Canada's crop that goes into fuel production, according to the Canola Council of Canada.
Bloomberg was mainly downbeat in its evaluation of the global economic outlook this week. It asserted overall that the global economy is entering the “final quarter of its worst year in living memory.”
The report emphasized the “darkening outlook for U.S. employment, the impending halt to a United Kingdom furlough and the expiry of a moratorium on German insolvencies” that provided a glimpse of the trouble in store. And, it reported that the International Labour Organisation estimated recently that “the world would lose working hours equivalent to 245 million full-time jobs in the last three months of 2020.”
Some of the world's biggest companies across a range of industries announced large layoffs within a 24-hour period last week, Bloomberg reported. Adding to those omens, the UK's main furlough program will end later this month — and a group representing the country's events industry predicts more than 90,000 people will be made redundant in coming weeks.
In the UK, renewed clusters of infections underscore the vulnerability of already battered economies to further damage that could ultimately hit livelihoods, Bloomberg said. And, it said that the latest outbreak in Paris may force bars and restaurants to close, while London is at a “tipping point,” according to a local health official.
The report said that Bloomberg's own economists see “a second wave of infections in the pandemic, as well as major corporate layoffs in the U.S. and the end of the furlough scheme in the UK that flag the risk that unemployment will rise into year-end.
“Bad news for the immediate outlook is also bad news for the medium term, with deeper labor market scars threatening to drag on the recovery — even after a COVID-19 vaccine is eventually found,” Tom Orlik, Bloomberg chief economist said.
The report called attention to the upcoming release on Wednesday of the U.S. Federal Reserve of minutes of its Sept. 15-16 meeting of the Federal Open Market Committee that is expected to be “especially important” for Fed watchers, “beginning with details of the debate over the committee's new guidance on the conditions that will be necessary to trigger a rate increase.”
The minutes also may reveal whether policy makers discussed increasing asset purchases and continuing to restrict bank dividends. And, there may also be a separate section summarizing discussions that preceded a special August 27 vote on the new framework, under which the Fed will allow inflation to run higher and unemployment to go lower than officials previously had tolerated.
In its global scan, the report said that that China is “shut for its Golden Week holidays,” so it focused on trends for the rest of the region. It expects a busy week in Australia with the central bank announcing its interest-rate decision on Tuesday, hours before the government unveils its budget plan. Prime Minister Scott Morrison's government will likely outline additional fiscal stimulus, including infrastructure spending and tax cuts, intended to pull the economy out of its first recession in nearly 30 years.
Bank of Japan Governor Haruhiko Kuroda will speak at events in the coming week and his remarks on the economic recovery and the outlook for prices will be closely watched for any signs of less gloom as the central bank prepares for a meeting later this month. Japanese wage and household spending data will offer the latest indication of how the economy is picking up after recent patchy signals.
For European Central Bank policy makers including President Christine Lagarde and Chief Economist Philip Lane this week will be a chance to offer any clues on whether the latest disappointing inflation data are enough to move the needle in the debate for extra stimulus. Minutes of the ECB's September meeting will be published Thursday.
Investors will also be listening closely to remarks by Bank of England officials for signs of any divergent views on the economic rebound and the potential use of negative rates. Monthly UK GDP numbers are due Friday.
In the Nordics, Norwegian central bank chief Oystein Olsen speaks after surprising markets last month with a more dovish forward guidance than anticipated. Later in the week, Norway published its economic output data for August.
Central banks in Poland, Serbia and Uganda are expected to keep interest rates unchanged, while Botswana may have room to cut.
The report also added that this week's reading of Mexico's consumer confidence may show a fourth month of improvement. In central banking, Peru on Wednesday will pause at 0.25% for a sixth month as the economy begins to turn around, while the minutes from policy makers' September 24 meeting out Thursday may cement bets that Mexico's comfortable holding at 4.25%.
Price data this week will show inflation coming off pandemic-lows in Mexico, Brazil and Chile, while still well under target in Colombia. Brazil's retail sales report for August will show monthly and annual gains with some loss of momentum.
So, we will see. Amid all the political and economic drivers of uncertainty, the president's health issues will be of primary concern, as will any new U.S. efforts — or the lack thereof — to offset impacts of the COVID — all trends producers should watch closely as the season progresses, 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 firstname.lastname@example.org
(c) Copyright 2020 DTN, LLC. All rights reserved.