DOLLAR BOOSTED BY HIGHER-THAN-EXPECTED 3RD-QTR. GDP, ECB RATE CUT... The U.S. dollar index rose sharply in reaction to higher-than-expected 3rd-quarter gross domestic product (GDP) of 2.8%, an increase from second-quarter growth of 2.5%. The U.S. Department of Commerce says the increase primarily reflected a deceleration in imports and acceleration in private inventory investment.
Meanwhile, the European Central Bank (ECB) cut its main interest rate by a quarter-point to a record-low 0.25%, sending the euro sharply lower against the dollar. The ECB's move was a surprise and renews concerns about the euro-zone's economic recovery. Since July, the ECB has said it expects to keep its key rates "at present or lower levels" for an extended period.
ENSO-NEUTRAL EXPECTED TO PERSIST... The National Weather Service's Climate Prediction Center (CPC) says ENSO-neutral conditions persisted during October, as reflected by near-average sea surface temperatures (SSTs) across much of the equatorial Pacific Ocean. However, it notes that across the western half of the Pacific, the oceanic heat content rose from near average to slightly above average due to an eastward shift of the downwelling oceanic Kelvin wave. CPC says atmospheric and oceanic conditions reflect ENSO-neutral continuing.
Meteorologist Gail Martell of MartellCropProjections.com says the climate is showing signs of an El Nino. "Heavier fall rains in the U.S. heartland in the past six weeks may reflect an El Nino signal. Winter wheat conditions are the best in many years from heavy rains in Kansas. The harvest is bogging down in the Midwest from wetter conditions in recent weeks," she notes.
"In the Southern Hemisphere, Argentina has suddenly become very wet recently, another area that is sensitive to the ENSO signal," she adds. "In eastern Australia, it is opposite -- El Nino causes drought, but La Nina is wet. The downgrade in the New South Wales Australia wheat production estimate is due to a growing El Nino influence."
DROUGHT MONITOR REFLECTS WIDESPREAD IMPROVEMENT ACROSS MIDWEST AND SOUTH... According to the National Drought Monitor, drought covers 55.12% of the contiguous U.S., which is down marginally from 55.87% last week. Widespread improvements across the Midwest and South were reported, while only modest precip was seen across the East. Click here for related maps.
FDA PROPOSES BANNING TRANS FATS IN PROCESSED FOOD... The U.S. Food and Drug Administration (FDA) today filed a notice in the Federal Register, asking for comments on a proposed ban on trans fats in processed foods. On its website, FDA says labeling of partially hydrogenated oils (PHOs) has made consumers more aware of trans fats, but says The Center for Disease Control and Prevention estimates that a further reduction of trans fat in the food supply can prevent an additional 7,000 deaths from heart disease each year and up to 20,000 heart attacks each year.
Following a review of the submitted comments, if FDA finalizes its preliminary determination, PHOs would be considered "food additives" and could not be used in food unless authorized by regulation. If such a determination were made, the agency would provide adequate time for producers to reformulate products in order to minimize market disruption. FDA’s preliminary determination is only with regard to PHOs and does not affect trans fat that naturally occurs in small amounts in certain meat and dairy products.
The Federal Register notice will be open for comment for 60 days and is available at this link.
USDA ISSUES RACTOPAMINE-FREE PROCESS VERIFICATION INFORMATION... USDA officials have for some time told trade and officials from Russia and other countries that it would not certify ractopamine-free U.S. meat export. Nevertheless, USDA's Ag Marketing Services (AMS) last week issued information about its new Quality Systems Verification Program's Never Fed Beta Agonists Program, which provides information for companies to certify that meat has not been fed ractopamine, a feed additive to promote lean meat production. However, the USDA move is a Process Verified Program (PVP) and not an Export Verification Program (EVP).
Trade sources say the USDA move sets a precedent for lobbying by others for "all sorts of things" like, for example, a PVP for the use of no antibiotics. Contacts said it is ironic that this information comes just shortly after reports Russia will lift its ractopamine-linked bans on U.S. turkey by the end of November and on beef in 2014.
A source said, "It's about time we hold Russia's feet to the fire relative to being a legitimate trade partner. The United States helped them get into the WTO but we need to hold them accountable for playing by the rules, or in Russia's case, not playing by the rules when it suits them."