First Thing Today: Ryan Says Fourth U.S. Tax Bracket Coming for Wealthy
Good morning!
Firmer tone to start the week... Corn futures are fractionally higher after a quiet overnight session. Soybean futures are mixed with an upside bias. SRW wheat futures are also favoring the upside in mixed trade, while HRW and HRS wheat are posting fractional to 2-cent gains. Gains come in the face of a firmer U.S. dollar index.
The week ahead in Washington... The week's focus is whether or not the House votes to adopt the Senate-passed budget resolution and if so, shift quickly into tax-overhaul mode. Meanwhile, President Donald Trump on Tuesday visits Senate Republicans where the main topic will be tax cuts and reform, among the overall agenda. The House returns from its one-week recess. Get more details.
Ryan: Fourth U.S. tax bracket is coming for wealthy... An upcoming tax overhaul bill will include a fourth bracket for high-income earners, Speaker Paul Ryan (R-Wis.) said Friday, but he declined to reveal what that tax rate will be. "The fourth bracket that the president and others are talking about that we're going to do, we're working on those numbers," Ryan said on CBS This Morning. He added later in the interview that numbers "are going to be finalized in a matter of days." The unified tax framework Republicans released last month proposed collapsing the existing seven tax brackets into three with rates of 12%, 25% and 35%. It left often the possibility of the final tax bill including a fourth tax bracket if needed to ensure the primary benefits of proposed tax cuts were reaching middle-income earners. Currently, the highest earners are taxed at a 39.6% rate.
Health-care bill may get Senate vote... Senate Majority Leader Mitch McConnell (R-Ky.) said Sunday he would bring the Alexander-Murray bipartisan health care bill to the floor if Trump agrees to sign the measure. But McConnell said he hasn't heard from the president on what kind of health care bill Trump would sign. "If there is a need for some kind of interim step here to stabilize the market, we need a bill the president will actually sign," McConnell said.
Surge in Chinese corn imports in September... China imported 250,000 MT of corn in September, a sharp increase from the year prior, according to customs data. Temporary supply tightness spurred the strong purchases. But the country's purchases for the first nine months of the year remain well below year-ago at 2.28 MMT, a 23.6% drop from last year at this point.
China signals it will lower minimum state purchase prices for grain... "We will now link the minimum purchase prices to cost of production, market demand, foreign prices and the development of the industry," the National Development and Reform Commission (NDRC) said in a statement Sunday. This comes as the country's reserves of wheat and rice are piling up and after its first cut to minimum rice prices last year. Its soybean prices hit their lowest level in 18 months amid fears the government may lower its soybean minimum purchase price or suspend state buying of the oilseed.
Challenges for EU wheat shipping season... The European Union's crop monitoring service MARS raised its estimate of the bloc's soft wheat yield by 0.08 MT per hectare to 5.94 MT per hectare. On the other hand, MARS lowered its estimate of this year's corn crop by 0.08 MT per hectare to 6.91 MT per hectare. Meanwhile, EU exports of soft wheat are running nearly a third behind year-ago levels thus far in 2017-18, upping the importance of a strong winter shipping season. Competition from Russia and soon Argentina could make that quite the challenge. Whether the country is able to launch a strong campaign will likely depend up on the performance of the euro and the strength of Morocco's import campaign that will get off to an early start on Dec. 1.
The farm bill debate could go into 2019, or later... Sources we recently polled on this topic said the timeline for the next farm bill could slip into 2019, or later, though most of them quickly said they hope they are wrong. Not all the respondents were in that camp, but even those who said one will get done in 2018 indicated getting the final bill will take well into the year -- possibly post-election. Why? Getting a farm bill through the House will be a struggle as Republican support for farm bills has been waning and there is the added challenge of it being an election year. Getting the measure through the Senate may depend on whether Democratic senators want a bill or an issue, with politics and election pressures again coming into play. Get more details.
Poll signals Republicans to expand majority in Senate, but House could be up for grabs... Those polled also offered some early predictions about the midterm elections. They noted control of the House is definitely in play. Democrats would need a net gain of 24 seats to wrest control. That is not a formidable number based on past off-election elections and the first elections after a new president. Most observers see the House remaining under GOP control, but admit it could be a squeaker, with GOP "control" being only two to four seats. In the Senate, 25 Democratic Senate seats are up, with 10 in states President Donald Trump carried, and five in states Trump won by 19 points or more. Only eight GOP seats are up for re-election. The GOP should expand their current 52-48 majority, but only slightly. Get more election predictions and perspective.
Yellen still a top candidate for Fed job after meeting with Trump... Trump suggested Friday that Federal Reserve Chairwoman Janet Yellen remains a strong candidate to be re-nominated for the job after the two met, saying he liked her "a lot," while also highlighting two other candidates as front-runners. In an interview with Fox Business, Trump mentioned by name three candidates who are among the finalists: Yellen, Stanford University economist John Taylor and Fed governor Jerome (Jay) Powell. Trump is expected to announce a decision before his trip to Asia begins Nov. 3. The Senate must confirm the president's nominee.
Monsanto sues Arkansas plant board… Monsanto went after Arkansas agricultural officials late Friday seeking to block a decision prohibiting the use of dicamba during the summer, Reuters reports.
Better-than-expected cash cattle trade vs. bearish placements... Cash cattle trade picked up across the Plains on Friday around $111 and at $110 in the Midwest, steady with the week prior and up a bit from action earlier in the week. This was a positive signal as many feared the cash market would set back. But futures are still likely to see a round of selling since Friday's Cattle on Feed Report delivered another placements figure that was quite a bit higher than anticipated.
Followthrough buying possible in lean hogs... Lean hog futures ended last week on a strong note, with futures settling near their weekly highs. That should encourage followthrough buying to start the week, especially if cash hog prices and/or the stock market continue to climb. USDA's Cold Storage Report will also provide a read on demand strength this afternoon.
Weekend demand news... Iraq purchased 50,000 MT of hard wheat from the United States.
Today's reports:
- 10:00 a.m., Weekly Export Inspections -- AMS
- 2 :00 p.m., Chickens and Eggs -- NASS
- 2:00 p.m., Cold Storage -- NASS
- 3:00 p.m., Crop Progress -- NASS
