Volume 17, Issue 39
October 1, 2020
In This Issue:
  • Export Demand Surges as 2020 Rice Harvest Replenishes Supplies
  • China: Evolving Demand in the World's Largest Agricultural Import Market
  • House Introduces COVID Relief Bill
  • Congress Passes CR to Avoid Government Shutdown
Export Demand Surges as Harvest Replenishes Supplies
Rice harvest throughout the USA marches on with Louisiana and Texas leading the charge at 94% and 99% complete. Growers in these two states are now largely monitoring their second crops and looking for marketing opportunities following the dramatic weather events in the region. Meanwhile, further north, harvest conditions have finally improved allowing Arkansas’ harvest to advance to 57% complete, still significantly behind the historical norm for this time of year. The story is similar in both Mississippi and Missouri where harvest progress is also behind schedule.

Field yields continue to generate optimism among growers, however, there have been a few reports of lower milling yields in some areas which has led to a pause among millers. Overall, with Arkansas just over the halfway point in harvest, milling activity slower to ramp up on diminished demand, and weather induced logistical problems, it’s still a little too early to gauge the outcome of this year’s crop. The industry will have a much stronger grasp on quality and yields in the next couple of weeks.  

While few cash sales were reported this week, there does appear to be signs that the spot market is coming back to life. Paddy sales in Texas and Louisiana point towards a sideways to slightly softening market while Mississippi is holding steady. Bids remain scarce at best in Arkansas which is expected to change in the immediate future as growers expedite their harvests.  

In Asia, export prices continued to slide as Thai 100% B fell by another $3 per ton. Although the prices offered by the major Asian exporters were only slightly down this week, the larger trend of greater interest is that Asian origins have shed 4-6% of their value from just one month ago. 

After a relatively slow week last week, export sales shot up to 127,000 MT, a marketing year high. For perspective, there were only 3 weeks last year where weekly export sales reached 6-digits. At only 10,700 MT, shipments were down sharply against last week, which is in part being attributed to the later harvest as well as port delays in the Southern states.  

Similar to the cash market, the futures market traded sideways to slightly down from last week. Average trading volume bumped 11% against last week but open interest was relatively flat.
China: Evolving Demand in the World's Largest Agricultural Import Market
While trade tensions and China’s retaliatory tariffs slashed U.S. agricultural exports to China in 2018 and 2019, China’s agricultural purchases from the rest of the world continued apace. China is now the world’s largest agricultural importer, surpassing both the European Union (EU) and the United States in 2019 with imports totaling $133.1 billion. What’s more, the composition of China’s imports is also rapidly changing. Whereas bulk commodities once dominated, higher-valued consumer-oriented products are now surging ahead, eclipsing the former for the first time in 2019. While implementation of the U.S.-China Economic and Trade (Phase One) Agreement and the economic response to Covid-19 currently overshadows the trade landscape, the biggest challenges facing U.S. agricultural exports in China are more competition from other suppliers and U.S. agriculture’s ability to meet increasingly diverse Chinese import needs.
Market Overview
Rising income and living standards, increasing urbanization, and food safety concerns have fueled China’s agricultural imports, especially since the country’s accession to the World Trade Organization (WTO) in 2001. As incomes rose, the average Chinese diet changed to include more meat, dairy, and processed foods, while grain consumption declined. Between 2000 and 2019, per capita consumption of poultry meat increased 32 percent, soybean oil consumption more than quadrupled, and fluid milk intake more than tripled.1
House Introduces COVID Relief Bill
This week, House Democrats released another coronavirus relief package estimated at $2.2 trillion commonly referred to as the updated Heroes Act. The White House has been engaging in negotiations with Speaker Pelosi to keep the price tag at $1.5 trillion, while many Senate Republicans support an even lower amount. Democrats have released the bill in an attempt to secure additional COVID-19 relief funding before the election. 

Updated Heroes includes funding for a wide range of sectors Including agriculture (see below). The bill provides $75 billion to support coronavirus testing, contact tracing and isolation measures, and treatment and funds another round of economic impact payments of $1,200 per taxpayer. Although both parties have said they support another COVID-19 relief bill, they have radically different notions of what should be included. Although the updated Heroes does not have widespread support among House Republicans, floor time and a vote this week is possible. Action on the updated Heroes (aka Heroes 2.0) could occur as early as today whether an agreement with the administration is reached or not.

Agriculture provisions in updated Heroes:

SEC. 101. ESTABLISHMENT OF TRUST FOR BENEFIT OF UNPAID CASH SELLERS OF LIVESTOCK. – The bill establishes a livestock dealer trust fund to ensure that livestock producers making cash transactions are paid for their animals.
SEC. 102. EMERGENCY ASSISTANCE FOR MARKET-READY LIVESTOCK AND POULTRY LOSSES. – The bill provides payments for livestock and poultry that are depopulated due to processing plant shut-downs and back-ups because of the health emergency. Payments may not exceed the average market value of the market ready livestock or poultry on the date of depopulation. Packer-owned animals are not eligible for coverage.
SEC. 103. ANIMAL DISEASE PREVENTION AND MANAGEMENT RESPONSE. – The bill provides $300 million to support improved animal health surveillance and laboratory capacity in this public health emergency.
SEC. 104. GRANTS FOR IMPROVEMENTS TO MEAT AND POULTRY FACILITIES TO ALLOW FOR INTERSTATE SHIPMENT. – The bill establishes a program to make facility upgrade and planning grants to existing meat and poultry processors to help them move to Federal Inspection and be able to sell their products across state lines. The bill will also require USDA to work with all States and report on ways to improve the existing Cooperative Interstate Shipment program.
SEC. 105. PAYMENTS TO CONTRACT PRODUCERS. – The bill provides $1.25 billion to assist contract growers of poultry and livestock growers who face revenue losses due to reduced placements related to COVID-19.
SEC. 106. REPORTS RELATED TO MEAT AND POULTRY PROCESSING. – The bill requires a report on the availability and structure of U.S. meat and poultry processing, including ways to develop innovative processing partnerships that would increase resiliency and flexibility of processing capacity. The bill also requires a report on the availability of financing for new and existing meat and poultry processing and provides $16m for grants for feasibility and marketing studies for new and existing meat and poultry processors

SEC. 201. DAIRY DIRECT DONATION PROGRAM. –The bill provides $500 million to pay for milk to be processed into dairy products and donated to non-profit entities (food banks, feeding programs, etc.). Under the framework of the program, the dairy processor and non-profit develop a plan for donation and distribution, that plan is reviewed by USDA, and USDA pays for the milk associated with the donated products at the current appropriate Class value. The bill allows USDA to adjust the existing Milk Donation Program payments to match the level of payment provided by this new, emergency program.

SEC. 202. SUPPLEMENTAL DAIRY MARGIN COVERAGE PAYMENTS. – The bill provides necessary cash flow assistance to small- and mid-sized dairies that have grown over the last seven years by establishing supplemental margin coverage based on the difference between 2019 actual production and Dairy Margin Coverage production history.
SEC. 203. RECOURSE LOAN PROGRAM FOR COMMERCIAL PROCESSORS OF DAIRY PRODUCTS. – The bill provides $500 million for USDA to carry out a recourse loan program for dairy processors, packagers, and merchandisers.
SEC. 204. DAIRY MARGIN COVERAGE PREMIUM DISCOUNT FOR A 3-YEAR SIGNUP. – The bill supports DMC as an effective risk management tool, reducing the cost of DMC premiums for operations that commit to participating in the program for 2021-2023 by providing a payment worth 15% of annual premium costs.

SEC. 301. SUPPORT FOR SPECIALTY CROP SECTOR. – The bill provides $500 million in additional funding to support specialty crop farmers and address COVID-19 specialty crop supply chain issues at the state level via the farm bill’s Specialty Crop Block Grant Program.
SEC. 302. SUPPORT FOR LOCAL AGRICULTURAL MARKETS – The bill provides $350 million in additional funding to support local farmers, farmers markets, and value-added production for farmers and outlets who are impacted by COVID-19 market disruptions through the farm bill’s LAMP program. The bill temporarily waives matching requirements for these additional funds.
SEC. 303. SUPPORT FOR FARMING OPPORTUNITIES TRAINING AND OUTREACH. – The bill provides $50 million to the farm bill’s FOTO grants to support groups providing beginning and socially disadvantaged farmers and ranchers with financial, operational, and marketing advice in this difficult market. The bill temporarily waives matching requirements for these additional funds.
SEC. 304. SUPPORT FOR FARM STRESS PROGRAMS. – The bill provides $84 million to be distributed as block grants to state departments of agriculture for use to support existing farm stress programs.
SEC. 305. SUPPORT FOR PROCESSED COMMODITIES. – The bill provides direct support for biofuels plants and cotton textile mills that are impacted by the COVID-19 pandemic.

SEC. 401. EMERGENCY ASSISTANCE. – The bill amends the CCC Charter Act to add authority for the Secretary to deal with removal and disposal of livestock and poultry due to supply chain interruption during a public health emergency.
SEC. 402. CONGRESSIONAL NOTIFICATION AND REPORT. – The bill amends the CCC Charter Act to require Congressional notification before disbursement of CCC funding. It clarifies the CCC reporting requirements to Congress.

SEC. 501. EMERGENCY SOIL HEALTH AND INCOME PROTECTION PILOT PROGRAM. – The bill expands the Conservation Reserve Program Soil Health Incentive Pilot Program, giving producers facing uncertain planting and market conditions an option for a 3-year contract and the ability to receive an up-front, lump sum payment.

SEC. 602. SUPPLEMENTAL NUTRITION ASSISTANCE PROGRAM – The bill increases both the SNAP benefit level by 15% and the minimum benefit from $16 to $30 per month for small households until September 30, 2021 and provides $300 million through FY2022 to defray administrative costs. Additionally, it lifts mandatory work requirements for SNAP for one year, excludes the Pandemic Unemployment Compensation as countable income for SNAP benefit calculation, increases waiver reporting requirements for USDA, and prevents students from losing SNAP eligibility due to work study or job loss during the pandemic.
SEC. 603. SNAP HOT FOOD PURCHASES. - The bill directs USDA to allow households to use SNAP to purchase hot foods at currently authorized SNAP retailers during this public health emergency.
SEC. 604. SNAP NUTRITION EDUCATION FLEXIBILITY. - The bill provides flexibility for SNAP Nutrition Education in certain situations to assist with the distribution of non-congregate school meals
SEC. 605. FLEXIBILITIES FOR SENIOR FARMERS’ MARKET NUTRITION PROGRAM – Permits easing of current in-person rules to more safely and efficiently serve seniors during the public health emergency.
SEC. 606. FLEXIBILITIES FOR THE FOOD DISTRIBUTION PROGRAM ON INDIAN RESERVATIONS. - The bill provides flexibilities for the Food Distribution Program on Indian Reservations, including waiving the non-Federal share requirement for FDPIR funds provided under the CARES Act. The bill also allows SNAP households on Indian reservations who are unable to access SNAP retailers due to the COVID-19 outbreak to receive FDPIR.

SEC. 701. ASSISTANCE FOR RURAL UTILITIES SERVICE BORROWERS. – Provides assistance via competitive grants to Rural Electrification Act electric and telecom borrowers who are dealing with impacts of the COVID-19 pandemic on their operations, including covering the cost of forgiving ratepayer debt, to ensure they may continue to provide critical services to rural communities.
Congress Passes CR to Avoid Government Shutdown
Last week, the House voted 359-57 to approve a Continuing Resolution to extend government funding through December 11. The vote comes after House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin finalized a last minute deal to restore funding to the Commodity Credit Corporation for payments to farmers and pandemic-related funding for kids who would normally receive free or reduced-price lunches at school.

The CR passed Senate voted by a vote 84-10. As a result, today to approve the legislation and defer discussion on the FY 2021 appropriations bills will not be reconciled until to the lame-duck session of Congress, if then..

The President will move quickly to signed the agreement bill into law, to avoiding a government shutdown. at midnight.
Companies launch grain marketing digital platform
GrainBridge aims to help ADM and Cargill farmer-customers streamline the grain marketing process.
Willie Vogt | Sep 29, 2020

The crunch of harvest can bring confusion, especially if you’re moving grain from farm to elevator. Those scale tickets can pile up, and tracking what you have contracted for delivery can be confusing too. A new program called GrainBridge, developed through an innovative partnership between Cargill and ADM, aims to solve that for customers.
Upcoming Events
October 13, 2020
Virtual SARE Grant Writing Workshop

October 15, 2020
Texas Rice Council Board Meeting

October 21-22, 2020
RMTC Virtual Networking Days
More information coming soon

November 17, 2020
Virtual Field Trip: An Introduction to Agricultural Sustainability
Trade Update
Legislative Update
Monthly rice exports by grade and destination and weekly export quotes for rice by grade.

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p. (713) 974-7423
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