The deals are the first results of 100 days of trade talks that began last month, when a meeting between U.S. President Donald Trump and Chinese President Xi Jinping proved far more friendly than had been expected after last year’s U.S. presidential campaign, but the immediate impact was unclear.

“This will help us to bring down the deficit for sure,” U.S. Commerce Secretary Wilbur Ross said at media briefing in Washington. “You watch and you’ll see.”

The United States ran a trade deficit of $347 billion with China last year, U.S. Treasury figures show (all figures US$).

By July 16, the 100th day after the leaders’ meeting, China agreed to issue guidelines that would allow U.S.-owned card payment services “to begin the licensing process” in a sector where China’s UnionPay system has had a near monopoly.

China will also allow U.S. imports of beef no later than July 16, and the United States will issue a proposed rule to allow Chinese cooked poultry to enter U.S. markets.

Foreign-owned firms will also be able to provide credit rating services in China.

“We believe that Sino-U.S. economic cooperation is the trend of the times… We will continue to move forward,” Chinese Vice-Finance Minister Zhu Guangyao told a Beijing media briefing.

Trump had pledged during his presidential campaign that he would stop trade practices by China and other countries that he deemed unfair to the United States. His tough talk toward Beijing had fueled early fears of a trade war.

But Trump’s rhetoric toward China has softened in the past month, expressing admiration for Xi and saying he wanted Beijing to help deal with the North Korean nuclear threat.

Shortly after their meeting, Trump said he had told Xi that China would get a better trade deal if it worked to rein in North Korea. China is neighbouring North Korea’s lone major ally.

On Friday, when asked whether the trade talks with the U.S. were related to North Korea, Zhu said economic issues should not be politicized.

Uncertain benefits

But while the world’s two biggest economies agreed to take a number of steps by July 16, it was not clear how much these new deals would increase trade in the near term.

Ker Gibbs, the chairman of the American Chamber of Commerce in Shanghai, said the measures were a good beginning but not a breakthrough.

“Past foot-dragging means we won’t celebrate until these promises are executed,” Gibbs said, calling the opening in the electronic payments market “mainly symbolic”.

“This should have been done years ago when it would have made a difference. At this point, the domestic players are well entrenched so foreign companies will have a hard time entering the China market.”

China is the top export market for U.S. agriculture products, with the total value of exports rising by more than 1,100 per cent since 2000 to $21.412 billion in 2016, so beef sales are potentially lucrative for U.S. exporters.

China had conditionally lifted its longstanding import ban on American beef last year, but few purchases have been made. The ban was imposed in 2003 due to a case of bovine spongiform encephalopathy (BSE) in Washington state.

And U.S. credit card operators Visa and MasterCard have yet to be independently licensed to clear transactions in China, despite a 2012 WTO ruling mandating that Beijing open the sector and rules issued by the central bank to let foreign firms enter the market.

Visa said in an emailed statement it looked forward to submitting an application for a bank-card clearing institution license, which, “once granted,” would allow it to support economic development in China.

MasterCard welcomed the announcement, saying it looked forward “to having full and prompt market access in China.” The U.S. also signaled it was eager to export more liquefied natural gas, saying China could negotiate any type of contract, including long-term contracts, with U.S. suppliers.

For U.S. gas drillers, China provides a potential customer base beyond countries such as Japan and South Korea, where the long-term demand outlook is bleak due to mature economies, rising energy efficiency and falling populations.

Potential co-operation between the U.S. and China on LNG would not have any immediate impact on supplies, as China currently does not need new gas supplies and the U.S. is not yet able to deliver more.

Randal Phillips, Mintz Group’s Beijing-based managing partner for Asia, said that Washington was too focused on selling more to China and should instead seek to address structural imbalances created by Chinese industrial policies and barriers to investment.

“That’s going to be the challenge, and hopefully the Trump administration doesn’t start declaring victory,” he said.

— Reporting for Reuters by Ayesha Rascoe in Washington, Michael Martina, Kevin Yao and Matthew Miller in Beijing and John Ruwitch in Shanghai.

Factbox: Beef

China was the world’s second largest consumer (7.7 million tonnes) and importer (812,000 tonnes) of beef in 2016, behind the U.S.

China has purchased negligible amounts of U.S. beef products since imposing a ban in 2003 over BSE concerns.

Asia remains the top market for U.S. beef shipments, selling $3.77 billion worth of beef cuts to Asia in 2016, out of U.S. exporters’ total $6.34 billion. Japan ($1.51 billion) and South Korea ($1.06 billion) were the top buyers of U.S. beef exports.

Brazil was China’s top beef supplier in 2016, shipping $765.3 million dollars of frozen beef. Australia was the top fresh beef supplier (valued at $57.11 million).

Tyson Foods, Cargill and JBS are among the biggest exporters of U.S. meat.

Factbox: Poultry

China was the 21st largest market for U.S poultry exports in 2016, purchasing only $33 million out of a total $3.875 billion of U.S. poultry exports.

In 2014, the United States exported about $315 million worth of poultry products to China, including chicken feet, or paws, which are popular there.

China has banned U.S. poultry imports since the U.S. suffered its worst-ever outbreak of avian flu in 2015.

Tyson Foods, Pilgrim’s Pride and Sanderson Farms are the top three U.S. chicken producers.

(Sources: USDA, China Customs, USA Poultry and Egg Export Council.)

The post U.S., China agree to first trade steps under 100-day plan appeared first on Alberta Farmer Express.

A report from the Renewable Fuels Association this week said major oil companies have discouraged the sale of ethanol at levels of 15 per cent per gallon (E15) and 85 per cent per gallon (E85) at retail stations, by using distribution contracts that make it expensive or nearly impossible for franchises to offer the blends.

Senators Amy Klobuchar, a Democrat from Minnesota, and Chuck Grassley, a Republican from Iowa, said Wednesday the report bolstered the case for the U.S. Federal Trade Commission (FTC) to evaluate whether the oil industry has engaged in anti-competitive practices.

“This new report underscores the need for the FTC to look into these allegations, and I will continue pushing to ensure that consumers have access to the cheaper, cleaner fuels they deserve,” Klobuchar, who chairs the Senate judiciary committee’s antitrust panel, said in a statement.

The Renewable Fuel Standard (RFS) requires increasing amounts of ethanol and biodiesel to be blended into U.S. fuel supplies through 2022.

Higher blends of ethanol at the pump are needed to avoid the so-called “blend wall,” the point when federal law will require the use of more ethanol than can be absorbed at the 10 per cent per gallon level that dominates U.S. gasoline stations.

Oil companies, who have long called for repeal of the biofuel mandate, say retailers have been reluctant to sell E15 due to concerns that it could harm engines in older vehicles, and that consumer do not want to buy the product.

Without infrastructure to accommodate the widespread sale of E15, refiners have said they would be forced to sell less gasoline or export more refined products to meet the law’s requirements.

Klobuchar and Grassley have pressed the FTC for almost a year to probe whether oil industry practices regarding ethanol violate antitrust laws. It is unclear if the agency has taken action on the matter.

The RFA report found that independent, or unbranded, retail gas stations were four to six times more likely to offer E85 and 40 times more likely to carry E15 gasoline than stations associated with major oil company brands.

“Big oil interests can’t argue for repeal of the RFS because it doesn’t work when they’re the ones responsible for ensuring that consumers don’t have the choice for higher ethanol blends,” Grassley said.

He also blasted the U.S. Environmental Protection Agency (EPA) for a draft plan that would slash 2014 biofuel use targets in light of the looming blend wall, saying the agency had “fallen for Big Oil’s rhetoric.”

— Ayesha Rascoe reports on U.S. energy policy for Reuters from Washington, D.C.

The post U.S. senators urge probe of report that oil companies blocked ethanol appeared first on Alberta Farmer Express.

Representing states with strong agricultural interests, the lawmakers said the Environmental Protection Agency’s (EPA) draft proposal issued in November slashing federal requirements for biofuel use in U.S. fuel supplies this year came as a surprise.

The draft rule cut the 18.15 billion gallons (68.7 billion litres) of biofuels mandated for use by a 2007 law to 15.21 billion gallons.

The proposal prompted an intense lobbying campaign by biofuel supporters, who argued the cuts were unnecessary and curtailed investments in the industry.

“We continue to be optimistic there will be an adjustment,” said Senator Heidi Heitkamp, a Democrat from North Dakota. “We’re not sure to what level.”

Heitkamp was joined by fellow Democrats Al Franken and Amy Klobuchar, both of Minnesota, Maria Cantwell of Washington, Dick Durbin of Illinois and Joe Donnelly of Indiana, at a press conference discussing the impact of the proposed cuts on biodiesel producers.

The Renewable Fuel Standard, passed by Congress and administered by the EPA, requires increasing amounts of biofuels to be blended into gasoline and diesel supplies through 2022.

Weak gasoline demand has placed the nation on a course where the federal targets will require ethanol to be blended into gasoline at levels higher than the 10 per cent mix that dominates U.S. fuelling infrastructure.

To avoid this so-called “blend wall,” the EPA said it needed to lower the mandate.

Oil refiners obligated to adhere to the targets have called for the repeal of the biofuel program, warning that without changes they could be forced to reduce output or export more fuel.

The lawmakers rejected these claims. They said part of the problem with the blend wall is oil companies have not embraced higher ethanol blends.

Franken said he has spoken with President Barack Obama, EPA head Gina McCarthy and White House officials about the issue and he believes the push to reverse the cuts has gained traction.

“I think this has had an effect,” Franken said. “They needed to hear from us and from our producers. I think they have.”

— Ayesha Rascoe reports on U.S. energy policy and regulations for Reuters from Washington, D.C.

The post U.S. Democrats optimistic EPA to reverse course on biofuel cuts appeared first on Alberta Farmer Express.

The decision to adjust biofuel targets for 2014 should offer relief to refiners squeezed by rising prices for renewable fuel credits, known as RINs.

More than eight months overdue, the final 2013 rule will require a total of 16.55 billion gallons of biofuels to be blended into the nation’s gasoline and diesel supplies this year, up from last year’s target of 15.2 billion gallons.

But the agency gave oil refiners some breathing room: they will have an additional four months to adhere to the 2013 targets, with the deadline extended to June 30, 2014.

The U.S. Renewable Fuel Standard, last updated in 2007, has faced increasing scrutiny as the nation approaches the so-called blend wall, the point when the law will require the use of more ethanol than can be physically blended into the fuel supply at 10 per cent per gallon.

The RFS calls for renewable fuels use to rise each year until 2022. The current target for 2014 is 18.15 billion gallons, rising to an annual 36 billion gallons by 2022.

The blend wall is projected to occur in 2014, the agency said, adding that it had received comments about the problem during its rulemaking process.

In response the EPA said it intends to “use flexibilities” in the renewable fuel statute by lowering targets for 2014. Those targets are scheduled to be released in September, according to the EPA’s website.

After assessing advanced biofuel production and market constraints for 2014, the agency said it will “then propose to establish volume requirements that are reasonably attainable in light of these considerations.”

The volatile secondary market for RINs suggested traders were taking little relief in signs the EPA would relax next year’s mandate.

After dropping as much as 20 per cent earlier in the day, prices for ethanol 2013 RINs pared those losses following the EPA statement, trading at US89 cents, versus around $1 a day ago.

— Ayesha Rascoe reports on U.S. energy policy for Reuters from Washington, D.C.

Related story:
Congress eyes change to U.S. biofuels mandate, July 30, 2013

The post U.S. EPA expects to reduce biofuels volumes for 2014 appeared first on Alberta Farmer Express.

Requiring increasing amounts of biofuels to be blended into the nation’s gasoline and diesel supplies, the renewable fuel program has been hailed as an unmitigated success by supporters, who see knock-on effects in boosting the nation’s agricultural economy, and slammed as fundamentally flawed by detractors.

The Environmental Protection Agency’s overdue final rule on 2013 biofuel production targets is at the White House’s Office of Management and Budget for review and could be released any day. Initial targets for 2014 could follow within weeks.

Meanwhile, after getting input from more than a dozen groups – from biofuel producers to chicken farmers – at a two-day hearing last week, leaders of the House Energy and Commerce panel have pledged action on the Renewable Fuel Standard.

In rare bipartisanship for the often-divided committee, lawmakers on both sides signaled a willingness to take on a policy that jumpstart the U.S. biofuel industry and helped to pump up U.S. corn production, shoring up the farm economy.

“This is not an issue that you’re going to just shove through with the majority party, because there are differences in our own party,” Republican Congressman John Shimkus, of Illinois, who heads the panel’s subcommittee on environment and economy, told Reuters.

Committee members will work during the August recess to seek consensus on potential adjustments to the renewable fuel program. Shimkus is one of four Republicans chosen by committee chairman Fred Upton to lead the reform efforts.

OPINIONS DEEPLY DIVIDED

Lawmakers are divided largely on regional lines. Biofuel backers say the targets have decreased U.S. dependence on oil and created a healthy renewable fuels industry and new jobs.

Oil refiners argue that soft U.S. demand for gasoline – which reflects economic weakness and rising fuel economy – has dramatically raised the cost of compliance with the program.

Refiners need to accumulate ethanol credits, or Renewable Identification Numbers (RINS), instruments created by the EPA, to prove they have blended their share of renewable fuels into gasoline and diesel. If they do not blend, they need to buy a RIN for each gallon of ethanol.

The opaque ethanol RIN market has exploded this year, with prices spiraling from a few cents in January to almost $1.50 last week.

Oil refiners have decried the costs of complying with the biofuel mandate. One, LyondellBasell, which operates a Houston refinery, said last week its RIN obligations could reach $200 million this year, up from $30 million in 2012.

FULL REPEAL UNLIKELY

While major oil groups have called for the full repeal of the targets, several lawmakers have said there is not enough support for that course of action.

Shimkus represents both corn growers and oil producers in his district, which covers a wide swathe of central and southern Illinois. He said the committee may be able to agree on a plan to modify targets for biofuel use, while still promoting growth over time.

“Are those numbers sacred?” Shimkus asked. “I would say no.”

A Republican aide said no timeline has been set on legislation, and there has been no major action on the issue in the Senate so far, meaning passage of a bill into law is still far from assured.

Oil refiners said the need for action is urgent, and that the United States is close to the so-called blend wall, the point when the federal targets will require the use of more ethanol than can be physically blended into the fuel supply at 10 per cent per gallon.

“Given the consumer preference for improved fuel economy and the surge in new vehicle fuel efficiency … the shortfall from projected gasoline demand could increase three to five percentage points per year,” energy analyst Philip Verleger told the Commodity Futures Trading Commission last week.

By 2015 the required renewable fuels blend could be between 12.2 per cent and 13.7 per cent compared with about 9.6 per cent in 2013, Verleger estimated. The blend wall will force refiners to export more refined products or cut back on production, refiners argue.

The American Petroleum Institute, which has led the charge to dismantle the renewable fuels mandate, last week presented to White House officials a proposal to cap the overall target at 10 per cent of U.S. gasoline demand.

The post Congress eyes change to U.S. biofuels mandate appeared first on Alberta Farmer Express.

“The large majority of that drought we expect to persist,” Halpert said. “We even see drought expanding westward… into Montana, Idaho and part of Oregon and Washington.”

Drier-than-usual winter weather is expected in much of the Pacific Northwest, with higher-than-normal precipitation predicted for the Gulf Coast, according to NOAA forecasts.

For much of the country, a three-month (December-February) winter forecast is hard to pin down. The vast majority of states have what the experts said was an equal chance of below-normal, normal or above-normal precipitation.

Less certain upper Midwest

The densely populated East Coast, along with the southern tier of states from Texas to Florida and the upper Midwest also have an equal chance of colder, normal or warmer weather this winter, according to the forecasters.

Still, there is enough data to predict a warm winter overall, said Deke Arndt, chief of climate monitoring at NOAA’s National Climatic Data Center. The first nine months of 2012 were the warmest of any year on record in the contiguous United States, and this has been the third-hottest summer since record-keeping began.

“The main issues facing the U.S. going into this (winter) outlook period stem from persistent heat and drought,” Arndt said at a telephone briefing. “It is likely that 2012 will be the warmest of the 118-year record for the contiguous United States.”

An El Niño pattern — a recurring patch of warmer-than-usual water in the equatorial Pacific that can have a potent effect on U.S. weather — gave hints of developing in September but then subsided, the first time this has happened in approximately 60 years of record-keeping on this phenomenon, Halpert said.

“This is one of the most challenging outlooks we’ve produced in recent years because El Niño decided not to show up as expected,” he said.

A record-warm winter would be in line with NOAA’s latest report on global temperatures, which found September 2012 tied for the hottest September in world records going back to 1880.

The post U.S. winter likely to continue hot weather trend appeared first on Alberta Farmer Express.

"The large majority of that drought we expect to persist," Halpert said. "We even see drought expanding westward… into Montana, Idaho and part of Oregon and Washington."

Drier-than-usual winter weather is expected in much of the Pacific Northwest, with higher-than-normal precipitation predicted for the Gulf Coast, according to NOAA forecasts.

For much of the country, a three-month (December-February) winter forecast is hard to pin down. The vast majority of states have what the experts said was an equal chance of below-normal, normal or above-normal precipitation.

The densely populated East Coast, along with the southern tier of states from Texas to Florida and the upper Midwest also have an equal chance of colder, normal or warmer weather this winter, according to the forecasters.

Still, there is enough data to predict a warm winter overall, said Deke Arndt, chief of climate monitoring at NOAA’s National Climatic Data Center. The first nine months of 2012 were the warmest of any year on record in the contiguous United States, and this has been the third-hottest summer since record-keeping began.

"The main issues facing the U.S. going into this (winter) outlook period stem from persistent heat and drought," Arndt said at a telephone briefing. "It is likely that 2012 will be the warmest of the 118-year record for the contiguous United States."

An El Niño pattern — a recurring patch of warmer-than-usual water in the equatorial Pacific that can have a potent effect on U.S. weather — gave hints of developing in September but then subsided, the first time this has happened in approximately 60 years of record-keeping on this phenomenon, Halpert said.

"This is one of the most challenging outlooks we’ve produced in recent years because El Niño decided not to show up as expected," he said.
A record-warm winter would be in line with NOAA’s latest report on global temperatures, which found September 2012 tied for the hottest September in world records going back to 1880.

The post U.S. winter likely to continue hot weather trend appeared first on Alberta Farmer Express.