China and Russia Central Banks Act on Dismal Economic, Current Developments

U.S. retail sales rise more than expected | China stops issuing youth unemployment info

U.S. retail sales top forecasts. Retail sales in the U.S. were up 0.7% in July, marking a fourth consecutive rise, and beating forecasts of a 0.4% increase. It follows an upwardly revised 0.3% gain in June, in another sign consumer spending remains strong despite high prices and borrowing costs. But manufacturing in New York continues to struggle, with the Empire State Manufacturing Index coming in at -19 after being at just 1.1 in July.

Goldman Sachs economists anticipate the Fed will start lowering interest rates by the end of next June, with a gradual, quarterly pace of reductions from that point.

China economic data released Tuesday showed disappointing results. Slower growth in industrial output and consumer spending was reported. China’s central bank cut its rate on its one-year loans by 0.15%, to 2.50%, in line with market expectations. That is the second rate cut this year. Upshot: China’s latest property crisis is threatening to spill over into the broader economy, worrying investors and causing a broad market selloff. Of note: China’s current is down 5% this year vs the dollar.

Russia raised its main interest rate in an emergency meeting to shore up the tattered Russian economy and the depreciating currency, the ruble. Russia raised its main rate to 12% from 8.5%.

Did you notice? One down, the other up: The central banks of Russia and China moved in opposite directions. Russia raised interest rates to stem a slide in the ruble. The People’s Bank of China unexpectedly cut rates to try to reignite growth.

Argentina reluctantly took a significant step, admitting defeat in its battle to avoid a currency devaluation that could worsen inflation and diminish its popularity.

Gas prices in the U.S. have climbed to the highest level in nearly 10 months. The national average for a gallon of regular gasoline hit $3.85 on Monday, according to AAA, with 11 states averaging $4 a gallon or higher. That’s the highest level since Oct. 19 and comes just weeks ahead of Labor Day weekend when millions of Americans will hit the roads. Gas prices have increased by 28 cents over the past month and 32 cents since July 4 because of higher oil prices caused by Russia and Saudi Arabia cutting supply and extreme heat sidelining some U.S. refineries.

European natural gas futures surge amid concerns over Australian LNG sites. Details in Markets section.

Congressional Democrats are urging the U.S. gov’t to extend longstanding biofuel incentives to electric vehicles (EVs). Meanwhile, ACE urges Biden to intervene on Midwest E15 waiver rule to get it over the finish line at EPA. More in Energy and Climate Change section.

Homelessness in the U.S. has reached an all-time high this year, even as the impact of the Covid-19 pandemic diminishes.

A Montana judge ruled that the U.S. state’s oil and gas policies infringe on young people’s constitutional rights to a safe environment, handing a big win to youth climate plaintiffs that will likely reverberate across the legal landscape.

Certain elements of the 2017 Tax Cuts and Jobs Act (TCJA/Trump tax cuts) have recently expired or undergone changes, and a significant portion of the TCJA is set to expire by the end of 2025. Details in Policy section.

Plant-based meat alternatives struggle to maintain early momentum. More in Livestock section.

GOP senators introduce bill to prevent EPA’s animal agriculture emissions reporting.

House Republicans held a conference call last night to discuss fiscal year (FY) 2024 gov’t funding. Details in Congress section.

Maui wildfires death toll reaches 99, search for remains continues. The death count has the potential to double within the next 10 days as search and rescue teams continue their efforts. The fires, which began last week, have caused extensive destruction, with about 85% of the blaze in Lahaina being contained, although some embers remain active. Over 2,200 structures in the area, mostly residential, have been damaged or destroyed, accounting for about 86% of the total.

Biden administration provides guidance on race in college admissions.

Donald Trump was indicted over efforts to overturn his 2020 defeat in Georgia. Another 18 defendants including Rudy Giuliani were charged. Details below.

Equities today: Asian and European stock markets were mixed in overnight trading. U.S. Dow opened around 150 points lower. In Asia, Japan +0.5%. Hong Kong -1%. China -0.1%. India closed. In Europe, at midday, London -1.4%. Paris -1.2%. Frankfurt -1.1%. China’s currency, the yuan, weakened past 7.31 a U.S. dollar in Hong Kong trading on Tuesday, touching its lowest level since November 2022.

U.S. equities yesterday: The Dow rose 26.23 points, 0.07%, at 35,307.63. The Nasdaq gained 143.48 points, 1.05%, at 13,788.33. The S&P 500 moved up 25.67 points, 0.58%, at 4,489.72.

Home Depot earnings beat as DIY spending performed slightly better than expected, but posted a 2% year-over-year sales decline.

UBS has agreed to pay $1.44 billion in settlement to resolve allegations from the U.S. Justice Department (DOJ) that it deceived investors who purchased mortgage-backed bonds prior to the 2008 financial crisis. This resolution marks the conclusion of a ten-year series of prosecutions against major players in Wall Street. Notably, this is the final case among over a dozen prosecutions carried out by the DOJ against financial institutions concerning securities backed by subprime loans.

$36 billion: The total amount of fines imposed by the DOJ on banks and other financial institutions over practices around the sale of subprime loans that resulted in the 2008 financial crisis.

Historically, investors have faced a significant cost for seeking safety in ultra-secure short-term government securities. For instance, if $100 was invested in three-month Treasury bills in 1928, it would have grown to just $2,141 by the end of last year. In contrast, that same investment would have reached $46,379 if put into medium-grade corporate bonds, and an impressive $624,534 if invested in stocks. These figures are based on data provided by Aswath Damodaran, a finance professor at New York University. Particularly in the years following the financial crisis, investments in short-term, secure options yielded minimal returns.

Agriculture markets yesterday:

• Corn: December corn rose 1/2 cent to $4.87 3/4, ending near the session high after touching a four-week low early on.
• Soy complex: November soybeans rose 18 1/2 cents to $13.26, ending near the intraday high. September meal futures rose $5.00 and settled at $415.30, also near the intraday high. September soyoil rose 92 points to 65.05 cents, closing on the day’s highs.
• Wheat: December SRW wheat fell 12 1/4 cents at $6.41 1/2, nearer the session low and hit a 2.5-month low. December HRW wheat closed down 6 3/4 cents at $7.59 1/4, near mid-range and hit a 3.5-month low. Spring wheat futures closed 10 1/4 cents lower at $8.20.
• Cotton: December cotton fell 142 points to 86.47 cents, marking a mid-range close.
• Cattle: October live cattle fell 65 cents to $180.675. October feeder cattle lost $1.025 at $251.85. Prices closed nearer the session lows.
• Hogs: October lean hogs fell $2.175 before settling at $79.15, while the August contract expired at $102.25 at noon CT, up 15 cents and a slight discount to the cash index.
  

Ag markets today: Corn and soybeans traded lower overnight after USDA raised crop condition ratings more than anticipated Monday afternoon. Wheat faced followthrough selling amid a lack of supportive news. As of 7:30 a.m. ET, corn futures were trading 3 to 4 cents lower, soybeans were 6 to 7 cents lower, SRW wheat was 5 to 7 cents lower, HRW wheat was steady to fractionally lower and HRS wheat was 1 to 2 cents lower. Front-month crude oil futures were around 80 cents lower, and the U.S. dollar index was more than 150 points lower.

Market quotes of note:

• Goldman Sachs economists anticipate the Fed will start lowering interest rates by the end of next June, with a gradual, quarterly pace of reductions from that point. “The cuts in our forecast are driven by this desire to normalize the funds rate from a restrictive level once inflation is closer to target,” they wrote in a note.
  
• China reaction. Bioprocessing equipment maker Danaher says its China orders were down 50% in June. Services companies generally are faring better. But some executives warn of a global knock-on effect in goods sectors as customers in other geographies also feel the pain from reduced demand in China, resulting in orders cutbacks in other parts of the world. DuPont’s sales from existing operations in China fell 14% in the second quarter, mainly because of frail demand for consumer electronics.
  
• Bank failures. “It is shocking to me that after 15 years of costly reform efforts, we still couldn’t resolve even a $200 billion bank like SVB without extraordinary government support.” — Jonathan McKernan, a Republican member of the Federal Deposit Insurance Corp.
  
• Biofuel subsidies battle. “Europe, the U.S. and China are in a subsidy competition and the losers in that competition are poorer economies with less fiscal resources.” — David Loevinger, managing director for emerging markets at TCW Group.
  

Japan’s economy grows at 6% pace in second quarter. In the second quarter of 2023, the Japanese economy demonstrated notable growth by expanding 1.5% compared to the previous quarter, surpassing expectations from the market which had predicted a 0.8% increase. This growth rate also marked an acceleration from the revised 0.9% growth experienced in the first quarter of the same year, as indicated by preliminary data. In the April-June quarter, the Japanese economy grew an annualized 6%, compared with 2.4% in the U.S.

It was the fastest quarterly growth in Japan since 2015, not counting a period of pandemic-induced gyrations in 2020. This growth was largely propelled by the favorable impact of net trade, as exports rebounded strongly, increasing by 3.2%, following a period of decline at -3.8%. In contrast, imports registered a decline for the third consecutive quarter, with a contraction of 4.3%, as opposed to the previous quarter’s contraction of 2.3%.

Some components of the economy did not contribute as significantly to this growth. Government spending remained sluggish, showing a minimal growth of 0.1%, consistent with the previous period. Capital expenditure, which refers to business investment in equipment and structures, did not experience any growth, remaining flat after a previous increase of 1.8%.

One notable trend was a decline in private consumption, which constitutes over half of the Japanese economy. Private consumption shrank by -0.5% during this period, in contrast to the preceding two quarters where it had shown growth. This decline in private consumption was attributed to intense cost pressures.

Global household wealth experienced a decline in the previous year, marking the first such contraction since the 2008 financial crisis. The decline, amounting to a reduction of approximately $11.3 trillion in asset value, was attributed to factors such as inflation and the strengthening of the U.S. dollar. According to Credit Suisse’s annual wealth report, the total net private wealth decreased by 2.4%, reaching a value of $454.4 trillion. It is important to note that while the global trend showed a decrease, certain regions managed to record gains in household wealth.

Canada’s immigration approach faces challenges. Canada’s adoption of a liberal immigration strategy has fueled remarkable economic growth, positioning it as the second-fastest expanding developed-world economy, trailing only the U.S. This strategy aimed to attract skilled professionals globally. However, the influx of newcomers is now testing the country’s capacity to accommodate them effectively, the Wall Street Journal reports (link). This surge in immigration has contributed to an overheated housing market, placing stress on the healthcare system, and causing traffic congestion in cities unaccustomed to such jams.

Homelessness in the U.S. hits record high amid pandemic fallout. Homelessness in the U.S. has reached an all-time high this year, even as the impact of the Covid-19 pandemic diminishes. The increase in homelessness is attributed to multiple factors, including escalating housing expenses, a shortage of affordable rental properties, and the ongoing opioid crisis that continues to plague the nation.

Market perspectives:

• Outside markets: The U.S. dollar index was weaker, with the euro and British pound both firmer against the greenback. The yield on the 10-year U.S. Treasury note was firmer, trading around 4.23%, with a higher tone in global government bond yields. Crude oil futures were under pressure, with U.S. crude around $81.45 per barrel and Brent around $85.35 per barrel. Gold and silver were weaker, with gold around $1,935 per troy ounce and silver around $22.49 per troy ounce.

• Argentina reluctantly took a significant step, admitting defeat in its battle to avoid a currency devaluation that could worsen inflation and diminish its popularity. President Alberto Fernandez’s administration had been striving to maintain a stable exchange rate, but after a substantial loss in a crucial primary election, it decided to concede. The 18% devaluation pushed the official peso rate to 350 per U.S. dollar, up from 287 on the previous Friday. Meanwhile, the central bank’s key interest rate saw a substantial increase of 21 percentage points, reaching 118%. Upshot: The government ran pit pf options and financial resources for defending the unsustainable exchange rate.

• BRICS creator slams ‘ridiculous’ idea for common currency. Jim O’Neill questions emerging nations bloc’s achievements as it considers expansion. Link/firewall to details via the Financial Times.

• Oil prices are approaching this year’s highs as demand hits new records and supplies tighten. But the market’s main obstacle may be what was once its biggest catalyst: China. Brent crude futures are hovering just below the six-month high near $88 a barrel reached last week — Brent futures still haven’t cracked this year’s peak of $89 a barrel. Leading forecasters from JPMorgan Chase & Co. to Standard Chartered Plc predict a further surge in the months ahead to $90 a barrel and beyond.

• European natural gas futures surge amid concerns over Australian LNG sites. European natural gas futures experienced a significant increase on Tuesday, driven by ongoing staff negotiations at three crucial liquefied natural gas (LNG) facilities in Australia. The potential for worker walkouts or stoppages at these sites has raised concerns, with Goldman Sachs Group Inc. suggesting that as much as 10% of global LNG exports could face the risk of disruption. The uncertainty surrounding these negotiations has prompted market participants to closely monitor the situation, contributing to the uptick in European natural gas futures.

• Gasoline prices in the U.S. are inching closer to $4 per gallon nationally. The average cost of regular gasoline reached $3.85 per gallon, marking the highest level since Oct. 19. This rise comes just before the upcoming Labor Day weekend, a period of increased travel. While the summer’s surge in gas prices has moderated recently, prices have been gradually increasing. The national average has risen by two cents over the past week. Over the last month, gas prices have climbed by 28 cents, and since the Fourth of July, they have gone up by 32 cents. This increase is attributed to higher oil prices, which resulted from supply cuts by Russia and Saudi Arabia, as well as operational disruptions at some US refineries due to extreme heat.

Compared to last year’s Memorial Day weekend, when gas prices were substantially lower, current savings have diminished significantly. The national average is only 11 cents lower than the same point last summer.

According to AAA, there are now 11 states where gas prices are averaging $4 or more per gallon, including states like Arizona, Illinois, and Utah, with Colorado and Michigan not far behind.

OPEC leader Saudi Arabia has extended its oil production cut until at least September. The Saudi Ministry of Energy officially announced the extension of the voluntary cut of one million barrels per day to support the stability and balance of oil markets. This move follows global efforts to regulate oil supply and maintain market equilibrium.

• Ag trade: Thailand purchased 55,000 MT of Canadian milling-grade spring wheat.

• NWS weather outlook: Dangerous heat continues across the Pacific Northwest into the Northern Rockies as much of the South sees a brief reprieve from recent oppressive heat... ...Flash flooding and severe thunderstorms possible for portions of the coastal Mid-Atlantic and Carolinas Tuesday... ...Monsoonal showers continue across the Four Corners region with some locally heavy downpours possible.

Items in Pro Farmer’s First Thing Today include:

• Grains weaker overnight
• Consultant raises U.S. corn, soybean estimates
• Corn, soybean CCI ratings improve, spring wheat slips
• Rise in NOPA soybean crush expected
• Packers trying to manage tight supplies
• Volatile wholesale pork trade

— Russia’s central bank called an extraordinary meeting after the ruble crashed through the level of 100 to the dollar for the first time since March of 2022, shortly after Vladimir Putin launched his war on Ukraine on Feb. 24 of that year. In response, the central bank increased its key interest rate from 8.5% to 12%, aiming to stabilize the ruble and counter the economic consequences of the war. Despite a partial recovery before the decision, the ruble remains down nearly 25% for the year, positioning it as one of the weakest performing currencies globally.

The situation is complex: Russia is grappling with surging inflation, the need for government borrowing to fund the war effort, sanctions, and a shortage of labor.

The prolonged conflict with Ukraine has economic implications: higher inflation due to increased government spending on weapons and social measures, and a weaker ruble leading to higher import costs. The imposition of long-lasting sanctions disrupts Russia’s international supply chains, exacerbating price pressures.

The central bank’s action follows a significant rate hike in July, with its next scheduled meeting in September. The economy’s decline poses new challenges for the Kremlin, as sustaining economic strength is crucial in protracted conflicts. Western nations are actively supporting Ukraine’s economy and war effort.

The ruble’s depreciation has been linked to Russia’s deteriorating trade situation, with Moscow selling oil at discounted prices and halting natural gas deliveries to a significant portion of Europe. The country’s current-account surplus has plummeted, indicating a substantial reduction in funds flowing into the economy compared to the previous year. This year, Russian imports of goods increased by 18%.

To stabilize the ruble, the Kremlin could reimpose capital controls to boost ruble demand. While higher interest rates could encourage local savers to retain rubles, they also weigh on economic growth by increasing borrowing costs. Moreover, such rates could raise the cost of servicing Russia’s domestic debt, a portion of which is issued with floating rates.

Though Russia’s headline inflation rate appears moderate, the recent increase from 2.5% to 4.3% indicates underlying inflationary pressures. These challenges are significant as Russia approaches presidential elections scheduled for March.

— Russia’s actions involving a cargo vessel bound for a Ukrainian Danube port have caused a ripple effect in the Black Sea’s maritime traffic. Following Russia’s warning shots and boarding of the vessel, approximately 30 merchant ships have been forced to halt their progress, anchoring around Musura Bay in the Black Sea. This area leads to a channel connecting to the Ukrainian Izmail port, where another 20 ships are currently stationed. Data from MarineTraffic revealed that there are at least 35 commercial ships waiting near the Romanian port of Constanta, which is a notable increase of 15 ships compared to the previous week. This situation underscores the impact of the incident on maritime traffic in the region, causing congestion and delays for commercial vessels navigating the affected areas.

— Certain elements of the 2017 Tax Cuts and Jobs Act (TCJA/Trump tax cuts) have recently expired or undergone changes, and a significant portion of the TCJA is set to expire by the end of 2025. Extending these provisions without offsetting costs would significantly worsen the fiscal situation. Based on projections from the Congressional Budget Office (CBO) and the Joint Committee on Taxation (JCT), here are key points, according to the Committee for a Responsible Federal Budget (link):

• Cost of Extensions: Extending the TCJA in its entirety would result in a cost exceeding $3.3 trillion through 2033, which rises to $3.8 trillion when accounting for interest.
• Impact on Debt: Extending these provisions would increase the debt-to-GDP ratio to 125 percent by 2033, compared to the projected 115 percent under current law.
• Effect on Deficits: Extending the TCJA would raise deficits to over 8 percent of GDP by 2033, as opposed to the projected 6.8 percent under current law.
• Extensions of Individual Provisions: Extending specific individual provisions set to expire at the end of 2025 would incur a cost of $3.4 trillion through 2035.

Given the substantial financial implications of extending these tax cuts, the Committee for a Responsible Federal Budget says lawmakers are advised to carefully assess which provisions warrant extension, which should be modified, and which should be allowed to expire as scheduled. It’s also recommended that any extensions be fully funded within a broader plan to mitigate, or at the very least, not exacerbate, the national debt.

In summary, the potential costs of extending various provisions of the TCJA are substantial, and lawmakers need to make informed decisions about how to balance fiscal responsibility while addressing tax policy considerations.

— ERP Phase 2 payment clear $5 million. Payments under Phase 2 of the Emergency Relief Program (ERP) totaled $5.28 million to 3,800 recipients as of Aug. 13, up from $4.41 million the prior week. The payments thus far are at an average of $1,388 per recipient. Total ERP payments for both Phase 1 and 2 remained at $7.44 billion.

— China’s central bank scrambled to cut 1-year lending rates by 15 basis points to 2.50% — the second cut in policy rates in three months — and sent the yuan sliding to 2023 lows against the dollar. The move follows another disappointing reading for industrial production and retail sales this month.

The decision was prompted by an 89% drop in new bank loans issued in China, the lowest amount since late 2009. Following a similar move earlier in the year, the central bank has now made a second reduction, this time aimed at enhancing lending conditions. This may pave the way for a potential reduction in the lending loan prime rate (LPR) in the upcoming week.

The People’s Bank of China (PBoC) also executed a seven-day reverse repurchase operation, injecting money into the financial system. The PBoC also implemented a 10 basis points reduction in borrowing costs, establishing a new rate of 1.8%.

Upshot: These coordinated actions reflect an effort by the central bank to address lending conditions and provide liquidity support to financial institutions in the context of the recent decline in new bank loans. Companies embedded in China’s ailing manufacturing, construction and export industries are reporting weaker sales. In some cases, they are warning of further trouble to come as growth grinds to a near halt and economic readings are dour. Also, the IMF has previously forecast that China would account for 35% of global growth this year, but that’s looking less likely. The slowdown is hitting everything from commodities to construction.

— Weakening trade pushes down shipping rates between China and ASEAN. Container shipping rates between China and Southeast Asia slumped 30% in the last five months as trade between the two markets slows down, highlighting weakening global demand.

— Congressional Democrats are urging the U.S. gov’t to extend longstanding biofuel incentives to electric vehicles (EVs). They are calling on the Environmental Protection Agency (EPA) to promptly establish new tradable credits linked to EV charging and adjust renewable fuel quotas accordingly (link to letter). Earlier this year, the EPA postponed its plan to allow automakers to create credits (eRINs) associated with charging EVs using renewable biomass-generated power, while simultaneously setting U.S. biofuel blending targets. The lawmakers argue that further delay in implementing these measures could introduce unnecessary risk and endanger the potential for billions of dollars in investments aimed at accelerating the adoption of electric vehicles and promoting low-carbon electricity production.

The lawmakers, led by Maine Democrat Chellie Pingree, assert that there is no apparent reason for the EPA not to finalize the requisite rules and permit the generation of eRIN credits by 2024. They emphasize that the EPA should conclude the eRINs program before the end of September, authorize credit generation by January 1, and swiftly implement relevant obligations for renewable volume.

Upshot: This move reflects efforts to integrate incentives for both biofuels and electric vehicles to achieve broader environmental and sustainable energy goals.

— ACE urges Biden to intervene on Midwest E15 waiver rule to get it over the finish line at EPA. The American Coalition for Ethanol (ACE) is urging President Joe Biden to expedite the finalization of the Environmental Protection Agency’s (EPA) proposed regulation that aims to eliminate the 1-pound per square inch (psi) Reid vapor pressure (RVP) waiver for gasoline containing 10 percent ethanol (E10) in eight states.

In a letter (link) to President Biden, ACE CEO Brian Jennings expressed concern about the prolonged process that should have been a straightforward approval of a petition submitted by eight governors on April 28, 2022. This petition aimed to allow retailers in their states to sell E15 (gasoline containing 15% ethanol) year-round. The letter acknowledges President Biden’s directive to EPA to use emergency authority to issue temporary fuel waivers to ensure E15 sales continuity during fuel supply concerns.

The letter highlights EPA’s delays in the regulatory process for this rule, emphasizing that EPA issued a proposed rule after a significant delay and set a further postponement for year-round E15 sales until April 28, 2024. ACE emphasizes that EPA’s responsiveness and compliance with the law are essential.

The letter also mentions a lawsuit filed by the Attorney Generals of Iowa and Nebraska to compel the EPA to finalize its action within the designated time frame, which is currently well past due.

The benefits of E15 year-round are outlined in the letter, including reducing harmful emissions and improving air quality, as well as cost savings for consumers compared to regular gasoline.

Bottom line: The letter concludes by requesting President Biden’s intervention to ensure swift resolution and action by the EPA on this matter, recognizing the immediate benefits for the eight states involved.

— RFS webinar set. EPA will be hosting a webinar on Sept. 7 to address compliance with the new provisions established within the Renewable Fuel Standard (RFS) final rule for the years 2023 to 2025. This webinar aims to discuss the implementation of various regulatory changes that have been introduced.

The newly introduced regulatory provisions encompass a range of aspects including updated requirements for third-party engineering reviews, new criteria for independence applicable to independent third-party auditors and professional engineers, an alternative approach to recordkeeping for entities using separated food waste, and revised regulations governing the production, distribution, and utilization of biogas as a renewable fuel.

EPA’s announcement about the webinar can be found in a notice (link), and further details regarding the agenda for the session will be posted on a provided link approximately one week prior to the webinar itself. The webinar is scheduled to take place from 1 to 4 pm Eastern Time (ET), aiming to provide insights and clarity on the new regulations within the RFS framework.

— Montana required to act on climate change, judge decides. A significant legal ruling has determined that Montana must intensify its efforts to combat climate change and safeguard its residents from its impacts. In a groundbreaking verdict, State District Judge Kathy Seeley sided with a group of young plaintiffs, asserting that a constitutional right to a clean environment exists in the state. This decision invalidates two laws that prevented state agencies from considering the consequences of greenhouse gas emissions.

The case centered around Montana’s constitution, which explicitly guarantees residents “the right to a clean and healthful environment.” The plaintiffs argued that this clause was violated by a 2011 state law, crafted by Republican lawmakers, that prevented officials from weighing climate change when reviewing large energy projects.

Montana’s attorney general called the ruling “absurd” and vowed to appeal it, which would send the case, Held v. Montana, to the state’s Supreme Court.

— Plant-based meat alternatives struggle to maintain early momentum. Despite initial strong interest, the market for plant-based meat alternatives in the U.S. is facing challenges in maintaining momentum, according to a new report (link) from CoBank’s Knowledge Exchange. Higher prices compared to traditional meat products have led to a decline in repeat purchases by consumers. The price differential, along with lingering negative perceptions about taste, value, and versatility, remain obstacles for the plant-based meat category, the report notes.

Plant-based meat sales surged in 2020 due to consumer curiosity and increased discretionary income during pandemic-induced food shortages. However, less than half of those who initially tried plant-based products continued purchasing them, according to consumer research firm Mintel.

Sales of meat alternatives have steadily decreased since 2021, with a sharp decline in the past year. Volume sales dropped by 20.9% for the 52-week period ending in July 2023, based on data from Circana, a consumer behavior research firm.

For the plant-based meat category to regain traction, the report says, diversification of formats is crucial. While frozen and refrigerated options still dominate, shelf-stable varieties have seen growth, increasing by 82% in 2022. These products, such as plant-based versions of tuna, ham, and chicken, offer convenience and appeal to a broader audience.

High prices have limited the penetration of plant-based products to higher-income households, typically around 10% of households. To achieve wider adoption, according to the report, the category needs innovation in terms of product diversity and scalability. Health and environmental concerns have driven interest, especially among younger consumers. However, addressing price, convenience, and familiarity will be pivotal for the success of plant-based alternatives.

— GOP senators introduce bill to prevent EPA’s animal agriculture emissions reporting. Sens. Roger Marshall (R-Kan.) and Deb Fischer (R-Neb.) proposed legislation aimed at preventing the Environmental Protection Agency (EPA) from requiring livestock and poultry producers to report air emissions arising from animal waste. The bill outlines that emissions from animal waste would be exempt from the Emergency Planning and Community Right-to-Know Act (EPCRA). While an exemption from the EPCRA was previously established through regulations, the ag sector has sought to enshrine this exemption into law. Sen. Marshall stated that this legislation clarifies that low-level livestock emissions, which constitute less than 4% of total U.S. greenhouse gas emissions, are not information essential or valuable to first responders. The bill is supported by 15 other Republican senators and enjoys backing from numerous agricultural and livestock organizations.

— What to know about the new dominant Covid variant. EG.5 is spreading quickly, but experts say it’s no more dangerous than previous versions. Link to New York Times article for details.

— McCarthy: House will need to pass a short-term funding patch sometime next month. House Republicans held a conference call last night to discuss fiscal year (FY) 2024 gov’t funding. House Speaker Kevin McCarthy (R-Calif.) is hosting his annual retreat in Jackson Hole, Wyo., this week. Government funding expires Sept. 30. House Republicans are deeply divided on spending, as evidenced by their failure to pass the FY 2024 Agriculture appropriations bill before the recess. Only one of 12 appropriations bills has cleared the House. McCarthy said he’s told Senate Majority Leader Chuck Schumer (D-N.Y.) that the continuing resolution (CR) would not go near the holidays. McCarthy said he still plans to bring some of the House GOP’s individual spending bills to the floor, but he provided no details.

— Trump, Giuliani, Meadows among 19 indicted in Georgia 2020 election probe. Former President Donald Trump and 18 of his associates and supporters have been indicted by a Georgia grand jury in relation to their efforts to overturn the 2020 election results in the state. The indictment, signed by Fulton County Superior Court Judge Robert McBurney, was unsealed about two hours after it was signed, and it names several notable individuals. Among those charged are former Trump attorneys Rudy Giuliani, John Eastman, Sidney Powell, Jenna Ellis, and Kenneth Chesebro. Additionally, former White House Chief of Staff Mark Meadows, former Justice Department official Jeffrey Clark, and Trump’s 2020 Election Day Director of Operations Michael Roman are also accused.

Former President Trump, 77, is facing a total of 13 counts in this case, corresponding to a docket that was inadvertently published on the Fulton County Superior Court’s website earlier in the day.

— Biden administration provides guidance on race in college admissions. The Biden administration has issued comprehensive guidance to assist colleges in navigating recent constraints on considering race in their admissions processes. This guidance offers explicit examples of permissible essay topics and outlines strategies for schools to recruit potential students without violating legal parameters. The aim is to help educational institutions uphold their admissions practices while adhering to the law regarding the consideration of race in these decisions.

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