Biden Wants to Speak with China’s Xi Over Downing of Alleged China Spy Balloon

Crop insurance | CRP | Rate hikes ahead | Food stamps/TFP | Price of eggs exceeds ground beef

Grain and livestock markets will trade normal hours today. Markets and government offices are closed Monday, Feb. 20, for Presidents Day. Grain markets reopen with overnight trade at 7:00 p.m. CT on Monday, Feb. 20. Livestock markets resume trade at 8:30 a.m. CT on Tuesday, Feb. 21.

Bottom line on U.S. economy: The United States is still suffering from inflation, persistent labor shortages and public debt that’s high and rising. Traders pushed up their expectations for peak rates and also pushed back the expected timeframe for policy easing.

The six-month Treasury bill traded at a 5% yield, the first U.S. gov’t obligation to reach the threshold since 2007. It will mature around the time the Congressional Budget Office expects the government’s ability to borrow using extraordinary measures will be exhausted.

The portion of every tax dollar going to interest on the debt will grow from 13 cents of every tax dollar spent on interest in 2023 to 20 cents of every tax dollar spent on interest in 2033. We have more on the debt below.

President Biden said intelligence agencies have no indication that three other objects shot down in the same week were foreign surveillance aircraft. He said they were likely tied to commercial or research ventures. Biden said he’s planning to speak soon with Xi Jinping about an alleged Chinese spy balloon brought down over U.s. territory. Making his first extended remarks about the incident, Biden said he would “responsibly manage” competition with Beijing “so that it doesn’t veer into conflict” between the world’s biggest economies.

Russia attacks Ukraine critical infrastructure. Russia on Thursday launched dozens of missiles targeting critical infrastructure across Ukraine, including the country’s largest oil refinery. Meanwhile, Volodymyr Zelenskyy, Ukraine’s president, told the BBC that he would not concede land to Russia if the countries were to broker a peace deal.

Another farm bill hearing was held Thursday by the Senate Ag Committee. It was a spirited session that focused on USDA’s controversial update to the Thrifty Food Plan. More in Policy section, which also includes other items on two GAO reports that are getting some attention.

The General Accountability Office (GAO), the so-called investigative arm of Congress, is coming under some criticism for getting aggressive in its recommendations on sensitive topics like crop insurance. Says one observer: “One would think that GAO would want to be deferential to Congress in the laws that it passes and work in that context to suggest ways in which they could be more efficiently carried out. But instead, GAO spends most of its time second guessing laws Congress passed in favor of what GAO thinks it should have passed. And this is typically approached from an angle that reflects big city perspectives on things like ag policy.” More on this topic in the Policy section.

Lawsuits are piling up against freight rail operator Norfolk Southern, which has faced a public backlash and investor scrutiny over a series of train derailments. One led to a chemical disaster in East Palestine, Ohio, on Feb. 3, while another said to be carrying hazardous materials overturned yesterday outside of Detroit, Michigan. Facing a public backlash over the chemical spill in East Palestine, Norfolk Southern CEO Alan Shaw penned a letter to address concerns about the contamination of air, water and soil. “Crews are cleaning the site thoroughly... together with local health officials, we have implemented a comprehensive testing program and established a $1 million community support fund as a down payment on our commitment to help rebuild.” Worries remain in the community of about 4,800, especially following the release of carcinogen vinyl chloride, and reports of headaches, rashes and nausea, as well as dead fish in local waterways. Michael Regan, the head of the EPA, aimed to reassure residents that authorities are focused on keeping them safe. “I want the community to know that we hear you, we see you, and that we will get to the bottom of this,” Regan said, adding that the EPA plans to hold the train company Norfolk Southern accountable for its role in the derailment.

Sen. John Fetterman (D-Pa.), 53, checked himself into Walter Reed Medical Center Wednesday night to “receive treatment for clinical depression,” Fetterman’s chief of staff said in a statement. This comes as Sen. Bob Casey, his fellow Pennsylvania Democrat up for reelection in 2024, is being treated for prostate cancer.

Equities today: Global stock markets were lower overnight. U.S. stock indexes are pointed toward lower openings. In Asia, Japan -0.7%. Hong Kong -1.3%. China -0.8%. India -0.5%. In Europe, at midday, London -0.2%. Paris -0.6%. Frankfurt -0.7%.

U.S. equities yesterday: The Dow ended down 431.20 points, 1.26%, at 33,696.85. The Nasdaq fell 214.76 points, 1.78%, at 11,855.83. The S&P 500 declined 57.19 points, 1.38%, at 4,090.41.

Agriculture markets yesterday:

• Corn: March corn fell 1/4 cent to $6.76, nearer the session high.
• Soy complex: March soybeans rose 3/4 cent to $15.26 1/4, marking a mid-range close, while new crop soybeans rose 8 3/4 cents to $13.83 3/4. March soymeal ended the session mostly flat, with a mere 50 cent gain to $491.60. March soyoil rose 66 points to close at 61.90 cents.
• Wheat: March SRW fell 4 1/4 cents to $7.65, ending the session below the 10-day moving average, while March HRW and March spring wheat each rose 4 cents to $8.98 1/2 and $9.28 3/4, respectively.
• Cotton: March cotton futures fell 130 points to 81.25 cents. May cotton dropped 87 points at 82.00 cents and nearer the session low, also hitting a five-week low.
• Cattle: Expiring February live cattle futures edged up 22.5 cents to $162.775 today, while most-active April sank 55 cents to $164.075. March feeder futures tumbled $1.10 to $186.225.
• Hogs: April lean hog futures fell 72 1/2 cents to $85.775 and nearer the session high.
  

Ag markets today: Corn, soybeans and wheat traded in relatively narrow ranges during two-sided overnight price action. As of 7:30 a.m. ET, corn futures were trading fractionally to a penny higher in most contracts, soybeans were mostly 1 to 3 cents higher, SRW wheat was 2 to 3 cents lower, HRW wheat was around a penny lower and HRS wheat was 2 to 3 cents higher. Front-month crude oil futures were more than $2.50 lower, and the U.S. dollar index was more than 700 points higher this morning.

Technical viewpoints from Jim Wyckoff:

On tap today:

• U.S. import prices for January are expected to fall 0.1% from the prior month. (8:30 a.m. ET)
• Conference Board’s leading economic index for January is expected to fall 0.3% from the prior month. (10 a.m. ET)
• WSJ Live Q&A: Redfin CEO Glenn Kelman joins WSJ’s Nicole Friedman to discuss the 2023 housing market outlook. (12:30 p.m. ET)
• Baker Hughes rig count is out at 1 p.m. ET.
• Federal Reserve speakers: Richmond’s Thomas Barkin on the economic outlook at 8:45 a.m. ET and governor Michelle Bowman to the Tennessee Bankers Association at 9:45 a.m. ET.

Turbulence ahead: inflation. The last time the U.S. had inflation problems near today’s situation, it took several presidential administrations to get a firm handle on it. This time, we already have gone from transitory inflation (last year) to disinflation ideas (this year). But financial reports this week signal inflation is lingering. And it’s also the front-page feature of the Economist magazine. Link to the Economist article (paywall).

Producer prices point to persistent inflation. U.S. supplier prices rose 6% in January from a year earlier, a sign of still stubborn inflation pressures in the economy. That increase in the Producer Price Index, which generally reflects supply conditions in the economy, was slower than December’s 6.5% gain, the Labor Department said Thursday. But the PPI increased 0.7% in January from the prior month, compared with a revised 0.2% drop in December, and significantly faster than the 0.2% average monthly rise in the year before the pandemic. The latest data added to investor concerns that the Federal Reserve will need to hold interest rates higher for longer in order to tame inflation, the Wall Street Journal reports (link).

U.S. consumer debt surges. The sum of money owed by U.S. households climbed considerably during the fourth quarter, rising by $394 billion, at $16.9 trillion. That’s the largest Q/Q increase in household debt in two decades, taking balances $2.75 trillion higher than before the pandemic at the end of 2019, according to the New York Fed’s Household Debt and Credit Report. Not helping the situation was the U.S. central bank’s rate hiking cycle, which has raised the borrowing costs on everything from credit cards to mortgages and auto loans. Serious delinquency rates of 90 days or more are creeping up too, and while the metric is not near dangerous levels yet, it will be an item to watch as the year progresses.

Ag sector companies and industry groups spent more than $165 million to lobby Congress in 2022, according to data from OpenSecrets (link), a nonprofit that collects information on money in politics.

Interest on the federal debt, which is rising fast again as the Federal Reserve raises interest rates to normal levels. CBO estimates that interest payments will gobble up 3.6% of GDP in a decade, which many say is based on optimistic assumptions about inflation and rates. Annual budget deficits will keep climbing as a share of the economy — from 5.2% of GDP in 2022 to 6.9% in 2033 when annual red ink will hit $2.7 trillion. In a single year. A Wall Street Journal commentary says, “Most of the media will ignore all this because they figure it plays into the hands of Republicans who want to use the debt limit as leverage to gain spending concessions from Mr. Biden. But these are all facts that the public deserves to know. The White House will soon release Mr. Biden’s budget, which will try to prettify all this up, so it doesn’t look so spendthrift. CBO’s numbers are a useful reality check.”

The fiscal year (FY) 2023 budget deficit is projected to be $1.4 trillion. This marks the fourth consecutive year of trillion-dollar annual deficits. And annual deficits are projected to average $2.0 trillion 2024-2033.

The interest cost of debt service in FY 2022 was $475 billion. That’s $475 billion spent just on the interest on our nation’s credit card. It’s projected to rise every year, exceeding Pentagon spending by the end of the decade and reaching $1.429 trillion by FY 2033 for a ten-year cost of $10.5 trillion. More info: CBO says net outlays for interest rise from $739 billion in FY 2024 to $1.4 trillion in 2033. “Measured relative to the size of the economy, those outlays rise from 2.7% of GDP in 2024 to 3.6% in 2033,” CBO said. “At that level, they would be 1.6 percentage points higher than their 50-year average.”

50 bp EU rate hike ahead. President Christine Lagarde reiterated that the European Central Bank intends to raise borrowing costs by another half-point next month. “In view of the underlying inflation pressures we intend to raise interest rates by another 50 basis points at our next meeting in March,” Lagarde told European Union lawmakers in Strasbourg. Several ECB officials have stressed that next month’s planned half-point rate increase is unlikely to be the last in what’s already the most aggressive monetary-tightening cycle in the institution’s history.

The feeling in Germany and in surrounding countries is that Europe has dodged a bullet. Reason: a dramatic fall in energy prices, led by natural gas, that began in late summer. Europe appears to have sufficient natural gas reserves to avert an economic downturn. “In our baseline scenario… the EU is set to get through next winter as well,” Salomon Fiedler, an economist at Berenberg Bank, wrote in a research note this morning. A possible wild card: Some observers say if China’s demand for LNG surges, amid a larger reopening of its economy, that could disrupt the global energy market.

Market perspectives:

• Outside markets: The U.S. dollar index was solidly higher and hit a five-week high overnight. Nymex crude oil futures prices were solidly lower and trading around $76.50 a barrel. The yield on the benchmark U.S. 10-year Treasury note is presently fetching 3.908% and is on the rise late this week.

• CFTC aims for Feb. 24 return of Commitments of Traders report. The Commitments of Traders (COT) report that was to be published today (Feb. 17) will be delayed, the Commodity Futures Trading Commission (CFTC) said Thursday, as “reporting firms are continuing to experience some issues submitting timely and accurate data to the CFTC.” Agency staff anticipate resuming publication of COT data Feb. 24 with the data originally scheduled to be published on Feb. 3. “Thereafter, staff intends to sequentially issue the missed COT reports in an expedited manner, subject to reporting firms submitting accurate and complete data,” CFTC said. If timely, accurate and complete information of the backlogged data can be provided by reporting firms, CFTC said the missed COT reports will be published by mid-March. Once that happens, CFTC said they anticipate publishing the data on its usual weekly schedule.

• Agricultural machinery giant Deere reported better than expected fiscal first-quarter earnings of $6.55 a share from $11.4 billion in equipment sales. Wall Street was looking for earnings of $5.57 a share from $11.3 billion in equipment sales. A year ago, Deere earned $2.92 a share from $8.5 billion in equipment sales. “Deere’s first-quarter performance is a reflection of favorable market fundamentals and healthy demand for our equipment as well as solid execution on the part of our employees, dealers, and suppliers to get products to our customers,” said CEO John May in a company press release. “We are, at the same time, benefiting from an improved operating environment, which is contributing to higher levels of production.” The company now expects fiscal 2023 net income of between $8.75 billion and $9.25 billion. In November, the company expected net income of between $8 billion and $8.5 billion. The $750 million increase is more than the roughly $300 million Deere beat first-quarter earnings estimates by. Deere expects sales in its agricultural machinery business to rise about 20% in fiscal 2023 while the overall industry rises about 5% to 10%. Deere also expects sales in its construction business to outpace the industry, rising 10% to 15% while the overall industry is up roughly 3%.

• Ag trade: South Korea purchased 138,000 MT of optional origin corn.

• NWS weather outlook: A stripe of snow, sleet, and freezing rain to stretch from the Great Lakes to northern New England into Friday... ...Severe thunderstorms and flash flooding possible through early Friday morning from the Ohio/Tennessee valleys to the central Gulf Coast.

Items in Pro Farmer’s First Thing Today include:

• Quiet grain trade overnight
• China’s winter wheat ‘better than normal’
• China to buy pork for state reserves
• Strong French wheat crop conditions
• Wholesale beef prices surging
• Big jump in pork cutout

— Russian strikes hit critical infrastructure in central and western Ukraine, and officials reported a volley of more than 30 air- and sea-based cruise missiles and an unknown number of other “strategic aviation aircraft.” About half of the missiles breached Ukraine’s missile defense system, Volodymyr Zelenskyy, the president of Ukraine, said. Meanwhile, a report from a London-based research institute said Russia had lost about half of its tanks since invading Ukraine.

• Switzerland yesterday ruled out backing proposals from Brussels to confiscate assets of sanctioned Russians and use them to fund Ukraine’s reconstruction.
• Russian President Vladimir Putin has switched his preferred mode of transportation from a private plane to an armored train out of fear that his aircraft might be tracked and shot down, investigative reporter Ilya Rozhdestvensky told CNN.

• Germany is facing a refugee crisis larger than 2015-16, when nearly a million asylum seekers arrived. The influx of Ukrainians is behind the surge.
• Black Sea grain deal talks will begin soon. Negotiations will start in a week on extending the Black Sea grain export deal, according to a senior Ukrainian official. The agreement was extended by a further 120 days on Nov. 18. “Negotiations on extending the grain corridor will begin in a week and then we will understand the positions of all parties,” Ukrainian Deputy Infrastructure Minister Yuriy Vaskov said. “We see that the enemy is starting to put forward new conditions. We understand that it will be difficult – as it was in November. I think common sense will prevail and the corridor will be extended,” he said.
• Russia’s war in Ukraine: Key events and how it’s unfolding. Link to a comprehensive Bloomberg item on a visual timeline of the war.

• Russia is on a path to lose $190 billion in gross domestic product by 2026 relative to its prewar trajectory, according to Bloomberg Economics. That’s roughly the equivalent of the entire annual GDP of Hungary.

  
  

— Want billions of dollars more for farmer safety net? Assume more billions of taxpayer funding from lawmakers via continued ad hoc disaster payments — but CBO has ZERO in for crop disaster assistance beyond crop insurance payouts. Most say this is not CBO’s role, and they cannot assume policy not written into law.

Says one policy analyst: “My point is billions of dollars in disaster assistance has been provided to provide financial support… Congress has provided ad hock support via disaster assistance and the notion that a safety net in conjunction with crop insurance has ended the reliance on ad hoc disaster assistance is a fallacy.” (Link to payments info.)

To repeat: CBO has ZERO in for ad hoc crop disaster assistance. This is the same for MFP, CFAP, WHIP and now ERP.

Regarding the CBO’s forecasts:

• Under the Dairy Margin Coverage (DMC) program, CBO forecasts FY 2023 payments will total $194 million in FY 2023, with those increasing to $248 million in FY 2024 and $266 million in FY 2025. For the rest of the period through FY 2033, they are forecast between $196 million and $265 million, for a total of $2.531 billion.
• Livestock disaster payments are expected at $621 million in FY 2023, and forecast between $562 million to $591 million over FY 2024 to FY 2033, for a total of $6.333 billion.

A crop insurance analyst responds: “In regard to crop insurance ending ad hoc aid being a fallacy, it actually worked pretty reliably from 2001 to 2017. Not perfectly but pretty reliably. Ad hoc spending was fairly rare and low. It started again in 2017 and has been renewed at some level ever since. The widespread nature of disasters and their severity have been big contributors to this. High deductibles and policies that do not meet the unique perils of a smaller crop are also reasons. Improvements in these areas can help reduce or eliminate ad hoc. It is a little ambitious to expect that crop insurance can completely eliminate ad hoc. P&C insurance is widely available to homeowners, businesses, and automobile owners and yet ad hoc disaster is frequently approved because of the widespread and severe nature of the disaster which strains the system. Remember that premiums are held down under insurance because the assumption is that few will have a loss at any one time and so most will not have a loss. Severe and widespread disasters can alter this insurance principle.”

Upshot: If Congress doesn’t provide more funding/investments for Title 1, it puts pressure on farm-state lawmakers to continue the billions via ad hoc aid. Some analysts say reforming Title I would mean spending far less than continuing ad hoc assistance. If Title I is not made more effective, farmers will keep wondering if Congress will fund more emergency aid.

Facts and figures: Link to an ERS file of federal government direct farm program payments, 2014-2023.

Bottom line: Evidence is clear: Improve the farm bill’s Title 1.

— House Agriculture Committee estimated that, compared to the 2018 farm bill (and using CBO’s latest forecasts):

• Commodity program spending drops 12% under the baseline during the five-year period
• Spending on conservation will jump 19%
• Nutrition spending increases 82%
• Federal crop insurance goes up 26%

Farm policy improvements needed. House Ag Chair GT Thompson (R-Pa.) said the baseline “underscores what I have been consistently hearing from producers across the country — in light of record high input costs and volatile markets and weather, improvements to farm policy are warranted.” He joined Boozman in criticizing the Biden administration for the increase in nutrition spending, saying it “furthers the Committee’s obligation to oversight and accountability.” Thompson wants administration oversight to be a big piece of the committee’s mission this year.

The cost of the farm bill is reaching “record heights,” said Sen. John Boozman (R-Ark.), ranking on the Senate Ag Committee. He said the Biden administration’s Thrifty Food Plan (TFP) re-evaluation is largely to blame. “We are looking at the most expensive farm bill ever, and the administration’s lack of good judgement and poor decision-making will make this farm bill a much heavier lift for Congress,” he said in a statement. “When one program constitutes more than 80% of the spending in the next farm bill, and thereby effectively crowds out the ability to make crucial investments in every other title, is there really any room left for farmers in the traditional farm bill coalition?” Boozman said in prepared remarks (link) Thursday during a farm bill hearing on food and nutrition programs.

Senate Ag Chair Debbie Stabenow (D-Mich.) commented on this and other topics during a Thursday Senate Ag panel hearing on food and nutrition ahead of the new farm bill. She defended USDA’s 2021 changes to the TFP as authorized in the 2018 Farm Bill, saying SNAP funding levels won’t impact commodity assistance as work begins on the new farm bill. Stabenow said the average SNAP benefit is only about $6 per person per day for all meals combined. The TFP update boosted the average SNAP benefit by less than $2 per day, she detailed. Link to video of hearing. Link to Stabenow statement.

Congress may consider altering how USDA conducts future re-evaluations of the TFP, Sen. John Hoeven (R-N.D.) said during Thursday’s hearing.

USDA Deputy Undersecretary for Food, Nutrition and Consumer Services Stacy Dean defended the TFP process. She reminded Hoeven that the 2018 Farm Bill directed the USDA secretary to re-evaluate the TFP by 2022. “The re-evaluation was a scientific and data-driven approach that concluded that the cost of a nutritious, practical, budget-conscious diet is 21% higher than the previous TFP,” she said in prepared remarks. “That resulted in the first permanent increase to the purchasing power of SNAP benefits since the TFP was first introduced in 1975, reflecting notable shifts in the food marketplace and consumers’ circumstances over the past 45 years.”

When Hoeven asked whether USDA consult with Congress on future re-evaluations or “do it unilaterally,” Dean replied, “We learned a lot about the process and how to do it best this go-round… We will pursue continuous improvement and are eager to consult with you,” Dean said.

The General Accountability Office (GAO) determined USDA failed to submit the TFP food basket increase to Congress as a rule as required by the Congressional Review Act.

Glaring farm bill scoring miss by CBO. The Congressional Budget Office (CBO) scored the TFP re-evaluation as zero cost before Congress passed the 2018 Farm Bill.

Stabenow said that “whether commodity programs go up and down or SNAP goes up or down, those programs are totally separate.” Stabenow added that while she had been “deeply involved in writing that farm bill,” she did not know why CBO scored the provision at zero cost. She stressed that the 2018 Farm Bill “required” USDA to re-evaluate the TFP. “I know we are going to have important discussions about all of this,” Stabenow.

— GAO: Reducing crop insurance costs could fund other priorities. The General Accountability Office (GAO) released a report (link) that those wanting to change crop insurance program features will try to use to their advantage. Crop insurance helps protect farmers protects from financial losses, such as from poor harvests and declines in market prices, and is widely considered to be a farmer’s best risk management tool. The GAO report identifies changes it says “Congress could make to the program to reduce its costs.”

GAO has suggested Congress:

• Reduce subsidies to high-income participants by creating an income limit.
• Adjust compensation to insurance companies to better align with market rates.
  

As of February 2023, GAO said Congress “hasn’t acted on these matters.”

— What one Washington veteran says about the GAO: “GAO has its own agenda. It just recently advocated more climate programs (see item in Energy & Climate Change section). Now it is urging Congress to adopt harmful changes to crop insurance (see item above). What insurance system do you know takes action to reduce good risk in the risk pool? That’s what GAO urges. That will be punitive to producers excluded from crop insurance while hurting the producers left in the pool who will pay higher premiums. That’s low hanging fruit in understanding how insurance works. The proposed cuts to private sector delivery don’t bother to consider the deep cuts from the 2011 SRA that continue. If Congress is serious about saving money and reforming, it should seriously consider eliminating GAO. That’s not hyperbole. The agency simply has not lived up to its purpose. It’s just another opinion rather than a serious and sober analysis of how to achieve efficiencies within the constructs of the law decided by Congress.”

— USDA announces CRP General signup for 2023. Feb. 27-April 7. Ag producers and private landowners can begin applying for the Conservation Reserve Program (CRP) General signup starting Feb. 27 through April 7, 2023. Producers and landowners enrolled more than 5 million acres into CRP through signups in 2022. There are currently 23 million acres enrolled in CRP, with 1.9 million set to expire this year. USDA’s Farm Service Agency (FSA) is aiming to reach the 27-million-acre cap statutorily set for fiscal year 2023, but in the past when the acreage in the program has gotten close to the caps, USDA has limited entry into the program so as not to exceed those limits set by law. Link for details.

During the prior general signup, producers offered 2.3 million acres with nearly 2 million acres accepted into the program under contracts beginning Oct. 1, 2022. There currently are 22.98 million acres in the CRP — the combination of contracts that expired on around 4 million acres of CRP ground Sept. 30 and new enrollments of around 5 million acres. That raised total CRP acres to 22.98 million as of December versus 22 million acres in September. Enrollments last year also included 3.1 million acres under the Grasslands CRP signup — working lands not required to have a cropping history for those acres. Rental rates on Grasslands CRP are considerably lower than those for acres enrolled via the general or continuous signups — $15.62 per acre for Grasslands versus $57.39 per acre for general signup acres and $147.40 per acre for continuous signup acres. There were 877,073 acres enrolled in fiscal year (FY) 2022 via continuous signup, up slightly from FY 2021 when 864,594 acres were enrolled. CRP now contains 8.46 million acres enrolled via general signups, 8.2 million acres via continuous signups and 6.3 million acres via Grasslands CRP.

— More corn, sorghum, soybean and cotton sales to China. USDA’s Export Sales update for the week ended Feb. 9 featured additional sales to China for 2022-23, including net sales of 126,000 tonnes of corn, 113,000 tonnes of sorghum, 283,645 tonnes of soybeans and 61,614 running bales of upland cotton. There were also sales for 2023-24 of 189,000 tonnes of soybeans. For 2023, there were net sales of 6,072 tonnes of beef and 4,053 tonnes of pork.

— China’s top leaders said the country has achieved a “decisive victory” over Covid as its death toll drops sharply. A meeting of the Politburo Standing Committee said the Communist Party’s judgment, policies and adjustment of Covid controls since November have been “totally right.” Its virus data and the true impact of the reopening wave, however, have been called into question.

Meanwhile, the WHO is pushing China for more cooperation to help find the source of the virus, while factories have turned to begging on the streets to attract workers who abandoned their jobs amid long lockdowns, wage freezes and violent protests (link to more via Bloomberg).

— The Pentagon’s top China official visits Taiwan, the Financial Times reported (link/paywall), marking a rare trip to the island by a senior U.S. defense policymaker that comes as relations between Washington and Beijing are mired in crisis. Michael Chase, the deputy assistant secretary of defense for China, is the first senior defense official to visit Taiwan since Heino Klinck, deputy assistant secretary for east Asia, went in 2019, then the most senior Pentagon official to visit the island in four decades.

— The Wire, a digital news magazine, examines the Chinese companies and scientists involved in balloon technology and their links to China’s armed forces. Link to article.

— The disappearance of one of China’s most prolific dealmakers over the past two decades, Bao Fan, is fueling concern about a renewed clampdown on the finance industry. His company, China Renaissance, said it had lost touch with the banker, while his family was told he’s assisting an investigation, a source told Bloomberg (link).

— The best new cars, trucks and SUVs of 2023, according to Consumer Reports top picks. Consumer Reports released its annual list of top 10 picks for new cars, trucks and SUVs Thursday, and hybrids and electric vehicles made up the majority of this year’s winners. The nonprofit research, testing, and advocacy organization says its Top Picks list features vehicles that earned the “best of the best” in its ratings. They perform well in road tests, come with key safety features and received high marks from owners for reliability and satisfaction. This year, five of the top 10 picks are hybrids and two are EVs. Six earned Consumer Reports’ Green Choice designation, which means they’re among the top 20% of vehicles that emit the lowest amount of greenhouse gasses and other pollutants.

— GAO recommends USDA actions on climate change. Following a request from Rep. Chellie Pingree (D-Maine), the Government Accountability Office (GAO) on Thursday released a report (link) recommending 13 measures USDA could implement to enhance farmers’ climate resilience and limit federal fiscal exposure from climate change. One of the options could require farmers to adopt climate-resilient practices to be eligible for crop insurance subsidies.

Several of GAO’s ideas are contained in Pingree’s Agriculture Resilience Act, such as ensuring conservation programs address climate resilience, increasing support for USDA’s Climate Hubs, and expanding the capacity of USDA’s conservation programs.

— Kentucky Fried Chicken is dropping five items from its menu, including fried chicken wings and its popcorn chicken combo, to streamline its offerings and make room for new items like its Kentucky Fried Chicken Wraps.

— Not over easy: Sen. Warren asks egg producers to explain recent price hikes. Sen. Elizabeth Warren (D-Mass.) asked Hillandale Farms, Daybreak Foods, Cal-Maine Foods, Versova Management and Rose Acre Farms to provide answers about the elevated price of eggs, in letters to the companies’ CEOs. Warren asked about “the extent to which egg producers may be using fears about avian flu and supply shocks as a cover to pad their own profits.”

— Chicken price rise next following bird flu egg price surge? Bloomberg reports (link) that egg prices have soared following the worst-ever global bird flu outbreak that’s ravaged poultry and hen flocks in Europe and U.S. Now, the disease is showing early signs of spreading in South America, putting global chicken supplies into bigger danger. While Brazil is still flu free, “a large outbreak in the country would likely have devastating consequences on global meat supplies.” Brazil is the world’s second-biggest producer, trailing the U.S.

The price of a dozen eggs in the U.S. exceeded the cost of a pound of ground beef, Bloomberg notes (link). A global bird flu outbreak that has wiped out about 100 million poultry and high production costs pushed the price of a carton of 12 eggs to a record $4.82 in January, up from less than $2 a year earlier. Meanwhile the price of a pound of ground chuck has fallen to $4.64 from a 2022 peak of $5.12 last August.

— Hy-Vee, along with several other grocery chains including Walmart and Whole Foods, are pushing food suppliers to lower their prices, according to NBC News (link). The higher costs from suppliers are largely being passed down from grocers onto consumers. The federal government recently released numbers showing grocery prices were 11.3% higher in January 2023 than at the same time last year.

— Summary:

• Global Covid-19 cases at 673,752,661 with 6,861,079 deaths.
• U.S. case count is at 103,088,328 with 1,117,113 deaths.
• Johns Hopkins University Coronavirus Resource Center says there have been 670,306,507 doses administered, 269,208,743 have received at least one vaccine, or 81.71% of the U.S. population.

— Sen. John Fetterman (D-Pa.) checked himself into Walter Reed Medical Center to seek treatment for clinical depression, his office announced. Last week, the 53-year-old Fetterman was admitted to the hospital after he experienced lightheadedness following a Senate Democratic retreat.

— Cotton AWP edges lower. The Adjusted World Price (AWP) for cotton is at 74.05 cents per pound, effective today (Feb. 17), down from 74.41 cents per pound the prior week. This marks the second weekly decline in the AWP.

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 | Student loan forgiveness | Russia/Ukraine war, lessons learned | Russia/Ukraine war timeline | Election predictions: Split-ticket | Congress to-do list | SCOTUS on WOTUS | SCOTUS on Prop 12 | New farm bill primer | China outlook | Omnibus spending package | Gov’t payments to farmers by program | Farmer working capital |