The Week Ahead: May 23-29, 2016

12:23PM May 22, 2016
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Budget | WOTUS rule | US farm economy | Livestock & poultry industries | Food prices

NOTE: This column is copyrighted material; therefore reproduction or retransmission is prohibited under U.S. copyright laws.

With a week before the Memorial Day recess, lawmakers will continue working on appropriations measures, defense legislation, a rewrite of toxic chemicals regulations, a plan to help alleviate Puerto Rico’s debt crisis, and an energy bill. The House energy and water spending bill would block the Waters of the U.S. (WOTUS) rule.

The Senate will consider its version of the defense authorization bill, which sets Pentagon funding and policy for the fiscal year that starts Oct. 1.

The House agenda includes the Energy and Water Development spending bill. The House also plans more work on a bill designed to make it easier to attack Zika-bearing mosquitoes through pesticides.

Puerto Rico. House Speaker Paul Ryan (R-Wis.) is trying to garner more GOP support backing an agreement with the Obama administration and top Democrats on legislation aimed at helping Puerto Rico address its $70 billion debt. Ryan said negotiators made sure the measure doesn’t establish damaging precedents for bondholders. GOP leaders are trying to convince conservatives concerned that a federal intervention into the commonwealth’s financial affairs could be seen as a bailout. The measure will need approval as well in the Senate, where New Jersey Democrat Bob Menendez has criticized it.

The House will debate a $37.4 billion energy and water spending bill that would block the Waters of the U.S. (WOTUS) rule, among other policy riders. The bill (HR 5055) would provide nearly $30 billion for the Energy Department, $6 billion for the Army Corps of Engineers, and $1.1 billion for the Department of Interior in fiscal 2017. The Senate passed its $37.5 billion version of the bill on a 90-8 vote May 12.

House Rules said it will take up an energy bill on Tuesday that was passed with bipartisan support in the Senate earlier this year — adding legislation that may concern Democrats, including a California drought measure that is expected to draw opposition from environmentalists. House Republicans may use the Senate's energy bill (S 2012) as a legislative vehicle for its energy bill (HR 8), which it passed last year, as well as 37 other pieces of legislation, including bills that have received presidential veto threats. Most of the bills deal with local land and water issues.

Organic, sustainability conferences. Organic farmers will be in Washington to meet with lawmakers May 23 to May 27 while the Organic Trade Association hosts its annual policy conference. The group's Organic Confluences Summit will host speakers from USDA’s Agriculture Research Service, Foreign Agricultural Service and Farm Service Agency, as well as speakers from the National Academy of Sciences and the U.S. Council on Environmental Quality. USDA Sec. Tom Vilsack will deliver an address May 25.

The Bipartisan Policy Center's CEO council on sustainability and innovation will hold a discussion on Thursday, May 26, on best practices for combating food waste in the supply chain. Featured speakers include John Bryant, chairman and CEO of the Kellogg Co.; James Collins Jr., executive vice president of DuPont; and Jeffrey Ettinger, chairman and CEO of Hormel Foods Corp.

On the hearings front, the Senate Ag Committee holds a hearing Thursday on the U.S. livestock and poultry industries, examining “opportunities and challenges.” The House Ag Committee Wednesday will examine “food waste from field to table” and the farm economy. The impact of the Clean Power Plan on states will be looked at as the Joint Economic Committee examines the growing issue of robotics.

On the international front, leaders of the Group of 7 (G7) nations gather in Ise-Shima, Japan on Thursday to discuss the global economy, investment, trade, the refugee crisis, climate change and other issues. Markets will watch for any commitments made to strengthen policy responses to global economic uncertainty.

Manufacturing, trade and consumer updates arrive this week, along with the next assessment on the overall US economy. The week's economic updates start arriving Tuesday with the PMI manufacturing flash, New Home Sales and Richmond Fed manufacturing reports. Wednesday will see the release of International Trade in Goods and the FHFA House Price Index reports. Thursday's updates include Durable Goods, weekly jobless claims, the PMI services index flash and Pending Home Sales. The week wraps up with the second reading on the first quarter GDP  figure and Consumer Sentiment. In the wake of the April FOMC minutes, the attention on each piece of data will be on how it may support or argue against a June rate increase. Any Chinese economic updates are potentially market sensitive, though things have recently appeared to stabilize.

Several Fed speakers are on tap. Monday includes remarks from St Louis Fed's Bullard, a voter this year, along with San Francisco Fed's Williams (2018 voter) and Philadelphia Fed's Harker (2017 voter). Next on the docket is Dallas Fed's Kaplan (2015 voter) and Thursday sees remarks from St. Louis Fed's Bullard and Fed Gov. Powell. But the major attention point for Fed watchers will be Friday when Fed Chairwoman Janet Yellen appears at Harvard. Whether or not she wades into monetary policy at the event remains to be seen, but she is the Fed speaker most want to hear from relative to the potential for shifts in US monetary policy.

US corn and soybean planting progress will be of note to open the week via the Crop Progress report Monday. The Cold Storage report will also be watched by livestock interests as a gauge of the level of meat in freezers as we approach the "official" start of grilling season. USDA updates its food price outlook, though it may not contain the volume of shifts made to the outlook in April. The week's ag reports wrap up on Thursday with the Weekly Export Sales report and the updated US Ag Export Forecast report. Key for the latter will be how much USDA adjusts its outlook given strength in the US dollar which has limited US exports. Weather in the US and around the globe can still be market-sensitive, particularly if there are additional downward adjustments to crop sizes in South America.


NOTE: This column is copyrighted material; therefore reproduction or retransmission is prohibited under U.S. copyright laws.