China Launches Anti-Dumping Probe on Pork Imports from European Union

Biden administration prepared to release more oil from Strategic Petroleum Reserve (SPR)

MARKET FOCUS

• Treasury yields rose after Kashkari told CBS the Fed is well placed to take its time
• Brent rose 4% to $82.62, on Friday one of the best weekly gains in months
• Gates prepared to put billions into nuclear power plant project in Wyoming
• Malanga looks ahead at U.S. economy, rates
• French bond yields stabilized after Marine Le Pen comments
• Mountain Valley Pipeline expected to start operating soon
• Commercial ships in Red Sea region face new dangers as disruptions deepen
• CBO on Tuesday releases “An update to the budget and economic outlook: 2024-34”
• Ag markets today
• Pakistan experiencing record levels of rice exports, capitalizing on trade restrictions
• Brazil’s floods will have long-lasting impacts
• Nearly 200 high-temperature records could be tied or broken this week
• California’s water abundance fails to reach farms amid regulatory restrictions: WSJ
• NWS weather outlook
• Pro Farmer First Thing Today items
  

CHINA

• Beijing launches anti-dumping probe on pork imports from the EU
• Philippine ship collides w/Chinese vessel near disputed Spratly Islands, So China Sea
• China’s new home prices in 70 cities saw significant year-on-year decrease of 3.9%
• China’s retail sales experienced year-on-year growth of 3.7% in May 2024
• China’s industrial output growth slowed last month
• Australia’s trade with China at record levels, following lifting of tariffs & sanctions
  

ENERGY & CLIMATE CHANGE

• Biden admin prepared to release more oil from Strategic Petroleum Reserve
• TDK announces breakthrough in “newly developed material for solid-state batteries”
• Growth Energy highlights findings from study on the U.S. industrial bioeconomy
  

LIVESTOCK, NUTRITION & FOOD INDUSTRY

• HSUS criticizes Vilsack for opposing California’s Proposition 12 in farm bill
  

HEALTH UPDATE

• Ozempic fuels hunt for smaller clothes
  

POLITICS & ELECTIONS

• 2024 election cycle heating up, with several key political events approaching
• Trump’s proposal to exempt tips from taxation may add $250 bil. to federal deficit
• Yellen criticizes Trump’s proposal to replace federal income tax with tariffs
  

— Equities today: Asian and European stock indexes were mixed overnight. U.S. Dow is currently down around 110 points. In Asia, Japan -1.8%. Hong Kong flat. China -0.6%. India closed. In Europe, at midday, London flat. Paris +0.3%. Frankfurt +0.1%.

U.S. equities last week: The Nasdaq rose 0.1% to a fresh high on Friday, bringing its weekly gain to 3.2%. The S&P 500 slipped from its record, but logged a weekly gain of 1.6%. For the year, the S&P 500 is up 14%. The Dow also declined, shedding 0.5% for the week.

Both the consumer and producer price indexes came in softer than expected this past week, putting the economy back on track toward the Fed’s 2% inflation target.

— Brent rose 4% to $82.62, on Friday one of the best weekly gains in months, as gasoline and diesel markets strengthened. U.S. crude oil futures settled Friday at $78.45 per barrel, up 3.9% for the week. Crude prices could rise a bit over the next 100 days as seasonal demand picks up and refineries start drawing down inventories, according to Tom Kloza, global head of energy analysis at OPIS. Beyond that, the outlook is worse. OPEC+ is expected to unwind voluntary production cuts in late 2024 and 2025, adding to a global surplus. The International Energy Agency forecast a potential glut of 8 million barrels per day by 2030, as the clean-energy transition picks up.

— Gold futures rose 1.4% Friday to settle at $2331.40 per troy ounce.

— Ag markets today: Soybeans and wheat posted sharp losses during the overnight session, while corn followed to the downside. As of 7:30 a.m. ET, corn futures were trading mostly 3 cents lower, soybeans were 9 to 12 cents lower, winter wheat markets were 12 to 15 cents lower and spring wheat was 8 to 10 cents lower. The U.S. dollar index was trading just below unchanged, and front-month crude oil futures were modestly firmer.

Cattle cash fundamentals strengthen. Cash cattle prices firmed last week, as strengthening wholesale beef prices supported packer margins. Wholesale beef firmed $1.58 for Choice to $319.89 and $4.56 for Select to $303.81 on Friday, though movement slowed to 101 loads. Retailers should have the bulk of their features purchased for the Fourth of July, so traders will closely monitor beef movement for signs of a short-term top.

Cash hog index slips, pork cutout rebounds. The CME lean hog index is down 14 cents to $91.44 as of June 13, keeping prices in a tight range in the low $90.00 area for the past two months. After falling below the $100.000 level for a couple days, the pork cutout value jumped $4.33 on Friday to $101.35. Pork cutout has traded in a $3.00 band on either side of $100.00 for two-plus months.

— Agriculture markets Friday and for the week:

• Corn: July corn futures plunged 8 1/2 cents to $4.50, with selling accelerating into the close. Prices lost 1/4 cent on the week.
• Soy complex: July soybeans fell 9 3/4 cents to $11.79 3/4 but marked a 1/2-cent gain on the week. July soymeal closed 10 cents higher to $368.40, and marked a $7.70 week-over-week gain, while July soyoil fell 18 points to 43.68 cents but picked up 5 points on the week.
• Wheat: July soft red winter wheat futures fell 7 1/4 cents to $6.12 3/4, near the session low and for the week down 14 3/4 cents. July HRW fell 9 1/4 cents to $6.27 1/2, near the session low and hit a six-week low. For the week, July HRW fell 38 1/4 cents. July spring wheat futures fell 11 1/2 cents to $6.55 1/2 and lost 39 cents on the week.
• Cotton: July cotton fell 38 points to 70.97 cents and marked a 287-point weekly loss.
• Cattle: August live cattle futures rose $3.675 to $183.175, near the session high and hit an 11-week high. For the week, August live cattle rose $6.00. August feeder cattle futures gained $4.50 to $261.975, nearer the daily high and on the week up $7.05.
• Hogs: The June contract expired 57.5 cents lower at $91.175, with July rising 87.5 cents to $93.65. Most-active August settled at $90.45, up $1.85 on the day, but down $1.225 on the week.
  

— Quotes of note:

• Fedspeak. Fed officials are set to speak. Philadelphia Fed President Patrick Harker is expected to speak about the economic outlook at a conference later today, while Richmond Fed President Thomas Barker is scheduled to appear on the MNI webcast to talk about the same topic on Tuesday. Fed Governor Lisa Cook speaks at the 2024 Marshall Forum at 9 p.m. ET
  
• Treasury yields rose after Neel Kashkari told CBS the Fed is well placed to take its time and watch incoming data before starting to cut interest rates.
  
• Microsoft co-founder Bill Gates said he’s prepared to put billions into a nuclear power plant project in Wyoming. TerraPower expects to complete the new reactor in 2030. “Of all the climate-related work I’m doing, I’d say the one that has the most bipartisan energy behind it is actually this nuclear work,” Gates said.
  
• “We’re headed for a wild future. Wild, wild, wild.” — Tesla CEO Elon Musk to investors after approval of his $48 billion pay package.
  

— Malanga looks ahead at U.S. economy, rates. The FOMC held its benchmark rate steady at this past week’s meeting. In his post-meeting conference, the chairman did not express any urgency to alter the rate structure at its next meeting in late July, depending on the data of course. Considering that inflation is showing stickiness above the targeted 2% rate as measured by May’s yearly CPI and core rate of 3.3% and 3.4% respectively, this is not surprising, says Dr. Vince Malanga, president of LaSalle Economics. Added to this, wage growth showed some reacceleration in May.

But Malanga notes there are other considerations which may begin to come into focus. First off, real GDP growth was a below trend 1.3% rate in the first quarter. Through May, the past three-month growth rate of aggregate hours worked was 1.7% and a paltry 1.4% over the past year. Meanwhile, productivity growth is holding well, and overall cost pressures are under control.

Indeed, Malanga says the broad swath of commodity prices has been under pressure lately. Grain markets are weak in reaction to favorable supply prospects. Industrial metals prices are easing as are energy prices upon easing mid-east tensions. Inventories are above year-earlier levels even as energy demand remains firm. With precious metals prices also declining, were the FOMC following a price rule, a downward rate adjustment would be a topic for discussion, Malanga observes.

There is more: In the past two months, even as bond rates drifted down, the housing market is moribund in Malanga’s judgment. Pending home sales collapsed in April and there was no recovery in purchase applications in May. Some may call this a buyer’s strike, but Malanga says he would more aptly term it an affordability strike. Prices are up, mortgage rates are high, and utility and insurance costs have soared far above the inflation rate. Unless rates drop during summer, more demand weakness can be expected, he believes.

The labor market is not offering a counterweight in Malanga’s view. Payroll gains continued in May, but the increases over the past two months have slowed and jobless claims showed a surprising spike so far in June. Moreover, he adds that recent job growth has been tilted toward part-timers versus full-timers with the sectors of government, healthcare, and leisure only showing gains. Household survey employment actually declined in May to a level below that of March. The jobless rate hit the magic 4% level in May, and it would have been higher were it not for a drop in the participation rate among younger cohorts, Malanga details. Historically, Malanga says the FOMC prefers that markets clamor for a rate cut before it swings into action. Also: The strength of the dollar exchange rate, especially vis-à-vis Japan and China, is hurting competitiveness. Commercial real estate is still in turmoil and the avalanche of government debt continues.

So far, the drive for price stability carries the day. Calendar effects this summer will make progress difficult, but the reverse will occur in the autumn, Malanga warns. Malanga’s upshot: We may well be left with below trend growth and above trend inflation, with the FOMC suddenly finding itself behind the proverbial curve.

— Congressional Budget Office on Tuesday releases “An update to the budget and economic outlook: 2024-34,” 2 p.m. ET.

Market perspectives:

— Outside markets: The U.S. dollar index was little changed, with the euro and yen stronger and the British pound weaker against the greenback. The yield on the 10-year U.S> Treasury note rose, trading around 4.27%, with a mixed-to-positive tone in global gov’t bond yields. Crude oil futures were higher, with U.S. crude around $78.85 per barrel and Brent around $83.00 per barrel. Gold and silver were down, with gold trading around $2,334 per troy ounce and silver around $29.37 per troy ounce.

— French bond yields stabilized after Marine Le Pen, leader of the far-right National Rally, stated she would cooperate with President Emmanuel Macron if her party won the legislative elections starting on June 30. The ten-year yield spread over safer German bonds experienced its worst week since 1990 following Macron’s announcement of the vote. Macron’s party is trailing Le Pen’s in the polls.

— Copper slides to eight-week low after more soft data from China. Copper fell 0.9% to $9,655 a ton by 2:42 p.m. in Shanghai, heading for its lowest close on the London Metal Exchange in two months. The world’s second-biggest economy released figures on Monday that bolstered concerns over a disappointing demand recovery. While retail sales were stronger in May, industrial output and fixed-asset investment both posted slower growth, and the housing slump deepened.

— Mountain Valley Pipeline, the largest natural gas pipeline in the Northeast, is expected to start operating soon after receiving final regulatory approvals. This $7.9 billion project has a capacity of 2 billion cubic feet per day, linking West Virginia’s Marcellus and Utica shale basins to utilities in the Mid- and South Atlantic regions, including Virginia, where power demand is rising due to data centers. The pipeline is owned by NextEra Energy, Consolidated Edison, and Equitrans Midstream. Despite facing significant opposition due to environmental and climate concerns, the project is moving forward. Analysts predict a gradual increase in output despite potential downstream constraints. Additionally, EQT plans to reacquire Equitrans by the end of the year.

— Commercial ships in the Red Sea region face new dangers as disruptions to maritime shipping deepen, the Wall Street Journal reports (link). A Greek-owned bulk ship was attacked using a remote-controlled sea drone, marking the first successful deployment of such a device by Yemen’s Houthi rebels. This development allows the Iran-backed group to bypass U.S.-led efforts to counter their missile and aerial drone attacks. The crew of the coal-carrying ship, Tutor, was forced to abandon and evacuate. Similarly, the crew of a Ukrainian-owned vessel abandoned ship after being hit by Houthi missiles. British security firm Ambrey noted that the potential loss of two vessels within a few days indicates a significant increase in the Houthis’ effectiveness, with no immediate end in sight for global trade disruptions.

— Pakistan is currently experiencing record levels of rice exports, capitalizing on trade restrictions imposed last year by India, the world’s largest exporter of rice. Pakistan, now the fourth-largest exporter, saw its rice exports surge nearly 60% to almost 5.6 million tonnes in the 11 months up to May, compared to the same period the previous year. The value of these exports rose to $3.6 billion from $2 billion in the previous year. This significant growth follows India’s decision to restrict rice exports to control rising. Global rice prices reached decade highs following India’s export restrictions, heavily impacting poorer countries in Africa that rely on Indian rice. However, the Red Sea crisis, marked by attacks on commercial ships since last November, has disrupted shipping routes and decreased demand for Pakistani rice from the Middle East, Europe, and the U.S. Despite this, Pakistan is expected to have another strong harvest this year, although farmers might face lower prices if India relaxes or ends its export restrictions following its elections. Link for more via the Financial Times.

— Brazil’s floods will have long-lasting impacts. The historic weather has already hurt this season’s soybean harvest and soaked soils will make it harder for farmers to plant crops including rice and wheat for next season, according to a Bloomberg article (link).

— Nearly 200 high-temperature records could be tied or broken this week as a severe heat wave affects the Midwest and Northeast. The heat wave hit the South and Midwest during Father’s Day celebrations, prompting warnings to stay cool amid 90-degree temperatures in some areas. The National Weather Service has indicated the most extreme heat risk is now from the Great Lakes to the Northeast, affecting major cities like Chicago, St. Louis, Detroit, Cleveland, Pittsburgh, New York City, and Boston. In Southern California, windy conditions are exacerbating the Post Fire in Los Angeles County, which has burned nearly 15,000 acres and was only 2% contained as of midday Sunday.

— California’s water abundance fails to reach farms amid regulatory restrictions: WSJ. California is experiencing an abundance of water following record-breaking rains that ended years of drought, but the state’s farms tell a different story. Farmers in Central Valley, a crucial hub for fruit, vegetable, and agricultural exports, are set to receive only 40% of their federal water allocation this year. The Wall Street Journal reports (link) this situation highlights the flaws in California’s extensive water-delivery system. U.S. and state regulators are restricting water access to protect endangered fish species like the migrating smelt and steelhead, forcing farmers to reduce crop planting despite being surrounded by water. This regulatory decision has sparked significant controversy and threatens to disrupt the region just as it was beginning to recover. Central Valley is a leading producer of almonds, pistachios, tomatoes, and other crops, with almond exports alone valued at $4.5 billion in 2022.

— NWS weather outlook: Heavy rain and severe thunderstorms possible today across the north-central Plains, shifting north into the northern Plains and northern Minnesota late tonight into Tuesday... ...Heavy rain and severe thunderstorms will shift farther south from the central Plains to the upper Midwest Tuesday night to Wednesday morning... ...A heat wave will expand from the central Plains across the Great Lakes, Ohio Valley and the Northeast today and remain across the Northeast through midweek... ...Heavy rain threat emerging along the central Gulf Coast today, following by an increasing heavy rain threat toward the Texas Gulf Coast later Tuesday and especially Wednesday... ...Late-season wet snow will persist across the high-elevations of the northern Rockies for the next couple of days.

Items in Pro Farmer’s First Thing Today include:

• Grains under pressure to start the week
• Wet in northern areas, dry elsewhere this week
• NOPA crush expected to rebound

— China has launched an anti-dumping investigation into certain pork products imported from the European Union, as announced by the Ministry of Commerce (Mofcom) on Monday. This action follows the EU’s recent decision to impose tariffs of up to 38% on Chinese electric vehicles (EVs), effective from July 4.

The products under scrutiny include fresh, cold, and frozen pork, pork offal, pig fat without lean meat, and pig intestines, bladders, and stomachs. The investigation will cover import activities from Jan. 1 to Dec. 31 of the previous year, with an industrial damage evaluation period spanning from Jan. 1, 2020, to Dec. 31, 2023. Mofcom noted that the investigation could last up to a year, with a possible six-month extension.

The investigation was initiated following a formal application from the China Animal Agriculture Association, which represents the domestic pork industry. The association requested an anti-dumping investigation into EU pork imports on June 6. Mofcom confirmed that the application met the necessary conditions under Chinese laws and World Trade Organization rules, prompting the start of the investigation.

Mofcom assured that the investigation would adhere to legal standards, protect the rights of all interested parties, and result in objective and fair rulings based on the findings.

Bottom line: This move marks a significant escalation in trade tensions between China and the EU, following the EU’s tariffs on Chinese EVs.

— A Philippine ship collided with a Chinese vessel near the disputed Spratly Islands in the South China Sea, according to China’s coast guard. Chinese officials claimed that the Philippine ship ignored warnings and illegally entered Chinese waters. They did not specify if either vessel was damaged. Both China and the Philippines have recently accused each other of dangerous maneuvers in the area.

The Philippines, however, has a different account of the events. Philippine officials accused the Chinese Coast Guard of executing dangerous maneuvers and harassing their vessels during a resupply mission to the BRP Sierra Madre, a grounded warship used to assert Manila’s claims in the area.

— China’s housing slump is getting worse. China’s new home prices in 70 cities saw a significant year-on-year decrease of 3.9% in May 2024, marking the most substantial drop since June 2015 and exceeding the 3.1% decline in April. This marks the 11th consecutive month of decline, even after the introduction of a broad real estate rescue package last month.

The decline in home prices was widespread, with 68 out of the 70 cities surveyed by the government experiencing drops, up from 64 in April. Notably, the rate of decline accelerated in several major cities:

• Guangzhou: Prices fell by 8.3%, compared to 6.9% in April.
• Beijing: Prices decreased by 1.8%, compared to 0.5% in April.
• Shenzhen: Prices dropped by 7.4%, compared to 6.7% in April.

Meanwhile, Tianjin saw a 0.7% decline in prices after previously stabilizing, and Shanghai continued to see price increases, rising by 4.5% compared to 4.2% in April.

On a monthly basis, new home prices fell by 0.7% in May, the largest decline since October 2014, following a 0.6% decrease in the previous period.

— China’s retail sales experienced a year-on-year growth of 3.7% in May 2024, up from a fifteen-month low of 2.3% in April and surpassing market forecasts of a 3% increase. This marks the 16th consecutive month of growth in retail trade and the sharpest rise since February 2024.

Key areas contributing to this growth include:

• Grain, oils & food: Sales grew by 9.3%, up from 8.5% in April.
• Home appliances: Sales surged by 12.9%, compared to 4.5% in April.
• Oil products: Sales increased by 5.1%, up from 1.6%.
• Personal care: Sales rose by 7.7%, compared to 4.4% in April.
• Furniture: Sales grew by 4.8%, up from 1.2%.
• Communications equipment: Sales increased by 16.6%, compared to 13.3%.

Additionally, there were rebounds in:

• Clothing: Sales grew by 4.4%, compared to a decline of 2% in April.
• Office supplies: Sales rose by 4.3%, reversing a 4.4% decline.

The decline in car sales eased, decreasing by 4.4% compared to a 5.6% drop in April.

However, some areas saw slower growth:

• Tobacco & alcohol: Sales grew by 7.7%, down from 8.4%.
• Chinese & Western medicine: Sales increased by 4.3%, compared to 7.8%.

On a monthly basis, retail trade rose by 0.51% in May, the highest since October 2023, following a revised 0.06% increase in April. For the first five months of the year, retail turnover grew by 4.1%.

— China’s industrial output growth slowed last month. Industrial production expanded 5.6% year on year in May, data from the National Bureau of Statistics showed on Monday, lagging an analyst forecast of 6% in a Reuters poll and April’s growth rate of 6.7%.

— Australia’s trade with China has reached record levels, following the lifting of tariffs and sanctions. Total trade between the two countries surged to A$219 billion (US$145 billion) in 2023, up from A$168 billion in 2019, the last year before the imposition of trade barriers. This growth occurred despite ongoing security tensions in the region.

Chinese Premier Li Qiang’s recent four-day visit to Australia highlights the importance of this trade relationship. His itinerary included visits to Australia’s mining and winemaking regions, underscoring the critical role of Australian commodities in the Chinese economy. This visit is the first by a senior Chinese leader since 2017 and follows high-level meetings aimed at mending ties, including visits by Australian Prime Minister Anthony Albanese and Foreign Minister Penny Wong.

The trade recovery has been driven by rising prices of iron ore, Australia’s key export, and a rebound in services such as travel and tourism. Relations had soured in 2020 when China enacted tariffs and sanctions on A$20 billion worth of Australian goods, including coal, barley, and wine, in response to Australia’s call for an inquiry into the origins of Covid-19 and the banning of Huawei from its 5G network.

The election of Albanese in 2022 marked a turning point, according to the Financial Times (link), with Australia managing to withstand the sanctions due to high global commodity prices and diversification into other markets. Despite this, Australian iron ore and lithium continued to flow to China, maintaining economic resilience. Lobsters are the only major export still under restriction, but there is optimism that this will soon change.

Recent trade data shows promising signs: A$86 million worth of wine was shipped to China in April following the removal of tariffs, and officials are optimistic about a full recovery in this sector. The Chinese premier’s visit also included stops at Fortescue’s green energy research facility and a lithium hydroxide refinery, highlighting the critical minerals sector’s importance.

Some experts have expressed concerns about Australia’s strategy to both expand trade with China and address security concerns in the Indo-Pacific region. Australia’s commitment to the Aukus security alliance with the U.S. and UK, along with increased defense spending, underscores the complex balancing act between economic interests and security policies. Critics argue that Australia’s approach may become more challenging over time, given the ongoing geopolitical dynamics.

— Biden administration is prepared to release more oil from the Strategic Petroleum Reserve (SPR) to prevent a rise in gas prices this summer, as the White House strives to manage inflation before the November 5 election. Amos Hochstein, President Biden’s top energy adviser, emphasized the administration’s commitment to ensuring a well-supplied market to maintain low prices for American consumers. He expressed confidence in the adequacy of the SPR for this purpose.

Hochstein’s remarks, reported by the Financial Times, come as Biden faces voter concerns about economic management with less than five months until the election. The administration has also implemented measures to curb healthcare costs and banking fees, aiming to mitigate inflation, which has significantly decreased since its peak in 2022.

The potential decision to draw more oil from the SPR, already utilized extensively by Biden, could provoke criticism from Republicans who accuse him of misusing the reserve for political gain. U.S. petrol prices currently average $3.45 per gallon, down slightly from last year but still considerably higher than when Biden took office. Despite record levels of oil and gas production under Biden, many drivers blame him for high fuel costs.

Former President Donald Trump has criticized Biden’s energy policies, claiming they restrict U.S. oil production. In contrast, Trump advocates for increased drilling to reduce energy costs. The SPR, established nearly 50 years ago as a safeguard against oil price spikes, has been tapped by Biden in response to rising prices following Russia’s invasion of Ukraine.

OPEC+ recently extended oil supply cuts to support prices, with Brent crude reaching $82.62 per barrel. Goldman Sachs forecasts it may rise to $86 per barrel next quarter. Bob McNally, a former energy adviser to George W. Bush, noted that any president facing re-election would be concerned about potential gasoline price spikes.

In a recent letter to Energy Secretary Jennifer Granholm, senior Republican politicians urged the administration to avoid using the SPR for political purposes during the election year, criticizing the 2022 release as an attempt to influence midterm elections.

The administration has been slowly refilling the SPR, which reached its lowest levels since 1983 under Biden, arguing that the strategy has provided a good return for taxpayers by selling oil at high prices and repurchasing it at lower levels. Hochstein confirmed the ongoing replenishment of the reserve until it is sufficiently restored for energy security purposes.

— TDK, a Japanese electronics firm, announced a breakthrough in a “newly developed material for solid-state batteries.” This ceramic material enables batteries to store significantly more electric charge, enhancing the performance of devices like smartwatches and wireless headphones. TDK plans to ship the new battery prototype to clients, including tech giant Apple, next year.

— Growth Energy, a biofuel trade group, highlighted findings from a new study on the U.S. industrial bioeconomy. The study revealed that the sector contributes $210 billion annually to the U.S. GDP and supports nearly 650,000 jobs, paying $49 billion in wages. Additionally, it found that for every job created in the bioeconomy, another 11 jobs are generated elsewhere in the supply chain. This job creation rate surpasses that of other clean energy industries such as solar photovoltaics and wind turbines.

— HSUS criticizes Vilsack for opposing California’s Proposition 12 in farm bill. The Humane Society of the U.S. (HSUS) criticized USDA Secretary Tom Vilsack for supporting the pork industry’s efforts to override California’s Proposition 12. This controversy has extended to the farm bill, a five-year plan for agricultural operations. The House Ag Committee recently passed a farm bill limiting states’ and localities’ ability to impose livestock production conditions outside their borders, a response to Prop 12, which bans the sale of pork not raised under specific animal welfare standards and prohibits gestation crates.

HSUS accused Vilsack of promoting zero-welfare pork producers and using the farm bill to dismantle Prop 12 and similar laws. The group urged the White House to intervene, stating Vilsack’s actions could harm the administration’s animal welfare policies. They argued that Vilsack is undermining the interests of thousands of farmers and major public health associations opposing the cruel confinement of farm animals.

— Ozempic fuels hunt for smaller clothes. Retailers see nascent sales boost fueled by people switching to smaller sizes. “Not something we’ve seen before.” says an analyst. Link for more via the Wall Street Journal.

— The 2024 election cycle is heating up as summer begins, with several key political events approaching, according to an article in The Hill (link). Both President Biden and former President Trump are set to formally become their respective parties’ nominees for the White House. Additionally, Trump will face the first criminal sentencing of a former president, and there will be the first debate between Biden and Trump since 2020. The Hill’s list of five things to watch:

Biden and Trump agreed to participate in two debates this summer, with the first on June 27 hosted by CNN in Atlanta and the second on September 10 hosted by ABC. This will be the first time they debate each other since the contentious debates of 2020.

Sentencing. Trump, convicted of 34 felony counts of falsifying business records related to payments made before the 2016 election, will be sentenced on July 11, just days before the Republican National Convention where he is set to become the GOP nominee. Although Trump’s sentence is unlikely to be severe, Democrats will use his conviction to argue his unfitness for office, while Republicans will highlight Hunter Biden’s recent conviction on three felony gun charges to criticize President Biden’s family.

National conventions. The Republican National Convention will be held from July 15 to 18, and the Democratic National Convention from August 19 to 22. There is some uncertainty about Trump’s attendance at the Republican convention due to his sentencing, with preparations being made for him to potentially accept the nomination remotely. The Democratic National Committee faces an issue with Biden’s ballot eligibility in Ohio, which they plan to address with a virtual nomination ahead of the convention.

Several significant congressional primaries will take place this summer. Rep. Bob Good faces a challenge from state Senator John McGuire in Virginia, while Rep. Jamaal Bowman will try to defend his seat against George Latimer in New York. Key Senate race matchups will also be decided, with likely nominees including Ruben Gallego and Kari Lake in Arizona, and Elissa Slotkin and Mike Rogers in Michigan.

Historically, unexpected developments, often referred to as “October surprises,” have the potential to shake up the presidential race. With Biden and Trump being the oldest major party nominees in U.S. history, health events or other unforeseen issues could significantly impact the election. Ongoing conflicts in Ukraine and Israel, or another unexpected crisis, could also shift national focus and influence the race.

— Trump’s tip tax exemption plan could add up to $250 billion to deficit: CRFB. Donald Trump’s proposal to exempt tips from taxation is projected to add between $150 billion to $250 billion to the federal budget deficit over the next decade, according to the Committee for a Responsible Federal Budget (CRFB). The nonpartisan watchdog group warns that the cost could be even higher if employers and employees shift more compensation towards tips to take advantage of the tax exemption. With a 10% shift, the cost could rise to $275 billion, and with a doubling of tips offset by lower wages, it could soar to $500 billion.

This plan, announced at a campaign rally in Nevada, is part of Trump’s strategy to attract younger voters and service industry workers, particularly in states like Nevada which has a high concentration of food service and accommodation workers. Trump encouraged supporters to leave notes on receipts advocating for his proposal.

Perspective: The potential deficit impact of this plan is comparable to, and possibly larger than, the $172 billion revenue loss projected from extending the 2017 tax cuts for small businesses, which are set to expire next year. Additionally, Trump has proposed extending individual and estate tax cuts from 2017, which the Congressional Budget Office (CBO) estimates would cost $4.6 trillion over 10 years.

Further complicating the fiscal landscape, Trump suggested lowering the corporate tax rate from 21% to 20% and offsetting the revenue loss by increasing tariffs on imported goods. This suggestion has caused division among Republicans, with debates on whether to offset tax cuts with spending reductions or other revenue sources. The 2017 tax cuts were not fully paid for and added $1.5 trillion to budget deficits according to the CBO.

House Speaker Mike Johnson (R-La.) and other Republicans are pushing for significant federal spending cuts to prioritize slowing the growth of the national debt. House Budget Committee Chairman Jodey Arrington (R-Tex.) emphasized the necessity of a rigorous debate on this issue next year, noting the current high debt levels and interest rates compared to 2017.

— Treasury Secretary Janet Yellen criticized Donald Trump’s proposal to replace the federal income tax with enhanced tariffs, stating it would “make life unaffordable for working-class Americans and would harm American businesses.” Yellen told ABC News that such a plan would necessitate tariffs of “well over 100%.” Although Trump mentioned the idea during meetings on Capitol Hill last Thursday, his campaign quickly downplayed it.

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 |