Wet, severe weather in U.S. | Heavy rains threaten China’s rice crop | Rule on H-2A workers
Today’s Digital Newspaper |
Abbreviated report today as I am in Kansas City speaking at the CIPA meeting.
— The wet and getting wetting weather in portions of the Corn Belt is gaining attention. Ditto for wheat crop problems in several countries, including the U.S., Russia and Europe.
— Millions in the central U.S. are facing severe weather alerts as storms bring potential tornadoes, heavy rainfall, and large hail across multiple states. This same weather system has already resulted in fatalities, including an infant, after a series of destructive tornadoes hit Oklahoma, claiming at least four lives. The unstable weather conditions are expected to persist throughout the week across the region. Major cities such as Dallas and Austin in Texas, Oklahoma City and Tulsa in Oklahoma, as well as Wichita, Topeka in Kansas, and the Kansas City metropolitan area, are all under severe weather watches. The storms are currently moving eastward across the southern Plains.
— Beans firmer, corn near unchanged and wheat mixed overnight. Soybeans strengthened overnight, along with soymeal and soyoil, while corn traded in a tight range around unchanged and wheat was widely mixed. As of 7:30 a.m. ET, corn futures were trading fractionally lower, soybeans were 3 to 5 cents higher, SRW wheat was 7 to 9 cents lower, HRW wheat was mostly a penny higher and HRS wheat was trading fractionally on either side of unchanged. The U.S. dollar index was down more than 300 points while front-month crude oil futures were trading near unchanged.
— Wholesale beef movement stays strong. Wholesale beef prices firmed 22 cents for Choice, while Select dropped 94 cents on Friday. Packers are struggling to strengthen wholesale prices but there has been a string of 100-plus loads of movement. Despite near-record retail prices, it appears retailers are gearing up for active beef features for the upcoming grilling season and “beef” holidays.
— Cash hog index declines. The CME lean hog index is down 55 cents to $90.88 as of April 25, the second straight daily decline. May lean hog futures finished last Friday $3.395 below today’s cash quote, while the June contract held a $11.595 premium. Futures could face followthrough selling today after sharp losses and finishing on their weekly lows Friday.
— Heavy rains threaten China’s rice crop. Heavy rains are expected this week across southern China, the country’s top rice producing region. Low-lying areas face the risk of additional flooding, China’s weather bureau said. Early rice varieties, usually planted in March and harvested in July, account for about 14% of China’s total output of the grain.
— Equities: Asian and European stock indexes were mixed overnight. U.S. stock indexes are pointed to toward slightly higher openings. In Asia, Japan closed. Hong Kong +0.5%. China +0.8%. India +1.3%. In Europe, at midday, London +0.5%. Paris +0.1%. Frankfurt -0.1%.
— Outside markets: The U.S. dollar index is lower. Nymex crude oil prices are slightly down and trading around $83.75 a barrel. The yield on the benchmark 10-year U.S. Treasury note is fetching 4.64%.
— Japan’s currency slid to a fresh 34-year low on Monday when it briefly traded at 160 against the dollar. There is growing speculation that authorities will be forced to intervene in the currency market to prop up the yen later this week. On Friday the Bank of Japan left interest rates unchanged and issued new estimates that inflation will hover around 2% over the next three years. Monday is a national holiday in Japan but currency traders remain active overseas. With fewer players participating in the market, the currency movement has been volatile, and the yen began reversing its trajectory around 1 p.m., strengthening from near 160 to 155. “I won’t comment now,” said Masato Kanda, the vice finance minister for international affairs, when Japan’s top currency diplomat was asked on Monday if authorities in Tokyo had intervened to support the yen.
— APHIS issues clarification. USDA’s Animal and Plant Health Inspection Service (USDA APHIS) issued a clarification concerning the movement of lactating dairy cattle through markets and auctions to slaughter. As of the Federal Order effective on April 29, 2024, the regulations clarify that the intrastate movement of lactating dairy cows to sale barns does not fall under the Federal Order. However, if these cows are then moved interstate from the sale barns directly to slaughter facilities, they must be accompanied by a Certificate of Veterinary Inspection (CVI), which certifies that the animals are clinically healthy. No additional testing is required for these movements.
This guidance is particularly aimed at ensuring that small farms can continue to cull cattle efficiently while addressing potential animal welfare concerns. It primarily affects states where direct movements to slaughter are restricted but where cattle are typically consolidated at sale barns and auctions before being moved as a “lot” to slaughter facilities out of state. The clarification was issued promptly to assist these farms in planning and compliance ahead of the new regulations taking effect.
— The Department of Labor (DOL) finalized a new rule for agricultural workers in the U.S. under the H-2A visa program, which will take effect on June 28. This rule enhances protections for these workers, allowing them to participate in labor organization activities without fear of retaliation from employers. Although the rule does not compel employers to recognize labor organizations or engage in collective bargaining, it does require them to provide no-cost housing and daily transportation.
Significantly, the rule introduces the ability for workers to invite or accept guests in the housing provided by their employers, deviating from previous restrictions. Additionally, it specifies conditions under which a worker can be dismissed for cause, ensuring workers are aware of relevant policies. The rule also demands greater transparency from employers in the recruitment process, particularly concerning the disclosure of information about recruitment agents.
Another safety improvement is the new requirement for seatbelts in buses and vans used to transport workers. Applications for the H-2A program submitted before August 28 will be processed under the existing rules, while those filed on or after Aug. 29 will fall under the new regulations. This upcoming change may prompt a surge in applications prior to the new rule’s enforcement to avoid the new requirements. Link to rule.
— A recent CNN poll reveals that former President Donald Trump maintains a lead over President Joe Biden, with 49% of registered voters supporting Trump compared to 43% for Biden. This polling comes amid Trump’s ongoing criminal trial and the progression of both their campaigns. The poll, which surveyed 1,200 random adults, indicated a general perception of Trump’s presidency as successful, while a majority views Biden’s tenure as unsuccessful so far. Of note: Biden has expressed a strong commitment to participating in the general election debates, stating in a recent interview that he would be “happy to” debate Trump.
— President Joe Biden recently had a phone conversation with Israeli Prime Minister Benjamin Netanyahu to discuss the ongoing hostage situation in Gaza. During the call, Biden emphasized his stance against a potential Israeli invasion of Rafah, an area where over a million displaced Palestinians are currently sheltering. The U.S. has requested that Israel provide a detailed and actionable strategy for protecting civilians should military actions be undertaken. Furthermore, Secretary of State Antony Blinken is scheduled to visit the Middle East this week to engage with regional leaders on the issues of a ceasefire and continuing hostage negotiations between Israel and Hamas. These discussions have been challenging and remain unresolved, despite extensive mediation efforts by Qatar and Egypt.
— There is growing speculation among financial markets that China might consider a significant devaluation of its currency, the yuan, to rejuvenate its sluggish economy, Bloomberg reports. Advocates for this drastic step argue that a sharp depreciation would boost exports and allow the People’s Bank of China (PBOC) to lower interest rates. However, critics fear that this could trigger a cycle of capital outflows and further devaluations, potentially destabilizing global currency markets.
This contentious strategy, not employed since the impactful devaluation in 2015, is under consideration as China explores various measures to stimulate its economy and appeal to investors who have been unimpressed with the current gradual approach to economic support.
The PBOC is currently facing a dilemma, needing to support economic recovery by reducing funding costs while also maintaining the yuan’s stability to prevent further undermining its value, especially against a strengthening US dollar. This balancing act is complicated by the yuan nearing its weakest permissible level against the dollar, which poses risks in currency trading, and its strength against a basket of other currencies, which negatively impacts exports.
Bottom line: While some believe a devaluation is inevitable due to ongoing economic pressures, the PBOC has so far managed to maintain currency stability through daily rate settings and interventions by state banks. Yet, there is a consensus among some analysts that the yuan’s value is likely to decline further as the second quarter progresses, influenced by fragile market confidence.
KEY LINKS |
WASDE | Crop Production | USDA weekly reports | Crop Progress | Food prices | Farm income | Export Sales weekly | ERP dashboard | California phase-out of gas-powered vehicles | RFS | IRA: Biofuels | IRA: Ag | | Russia/Ukraine war, lessons learned | | SCOTUS on WOTUS | SCOTUS on Prop 12 pork | New farm bill primer | | Gov’t payments to farmers by program | Farmer working capital | USDA Ag Outlook Forum |