Fed Chair Powell: ‘Quite a Bit of Progress’ on Inflation but Fed Needs More Confidence Before Cutting

(Farm Journal )

MARKET FOCUS

· Powell: Must be more confident inflation moving sustainably down toward 2%

· Goolsbee: Should consider cutting rates if inflation approaches 2% target

· Tesla reports stronger than expected deliveries

· Deere lays off 600 more U.S. employees

· Annual inflation rate in Eurozone eased to 2.5% in June 2024

· DOE awards contracts for sale of gasoline Northeast Gasoline Supply Reserve

· Gross fixed investment in Mexico surged by 18.1% year-on-year in April 2024

· Shippers brace for supply chain disruptions re: Canadian rail workers strike

Ag markets today

· USDA daily export sale: 100,000 MT corn to Colombia during 2023-2024 MY

· Report: Emerging economies to continue driving global ag markets

· Indonesia cuts rice production forecast

· Butter prices have reached a record high of $7,350 per metric ton

· Ag trade update

· Hurricane Beryl now a Category 5

· NWS weather outlook

· Pro Farmer First Thing Today items

BALTIMORE BRIDGE COLLAPSE

· Container ship “briefly lost engine power” as it departed Port of Baltimore

CONGRESS

· Stabenow to push crypto regulation bill

ISRAEL/HAMAS CONFLICT

· Israel issues new evacuation orders

RUSSIA & UKRAINE

· Ukraine thwarts alleged coup attempt

CHINA

· Hong Kong will require an FSIS-certified list to export raw meat and poultry

· Satellite images show expansion of suspected Chinese spy bases in Cuba

· China ‘at risk’ of wider decoupling after US, EU balk at imports

· Economist: China struck by floods and drought — at the same time

TRADE POLICY

· Incoming Mexican official: country will drop plans to reduce imports of corn

ENERGY & CLIMATE CHANGE

· Federal judge stops Biden admin.’s halt on new LNG export licenses

· Shell pauses construction at its biofuels facility in Rotterdam, Netherlands

· Cathay Pacific Airways Ltd. believes China can boost development of SAF

· EPA defends 2023-2025 renewable fuel standards against challenges

LIVESTOCK, NUTRITION & FOOD INDUSTRY

· USDA plans to amend Federal Milk Marketing Orders (FMMOs)

· Tyson pulls back on antibiotic-free beef

HEALTH UPDATE

· Moderna secures nearly $200 mil. to develop mRNA vaccine for pandemic influenza

POLITICS & ELECTIONS

· Over 180 candidates withdraw French parliamentary elections

· Trump edges ahead of Democrat Joe Biden, 41% to 38%

· Democrats considering formally nominating Joe Biden as early as mid-July

OTHER ITEMS OF NOTE

· Uber Technologies bring yacht service to Ibiza

· “Friendly Father” a catchy propaganda song about strongman Kim Jong Un

— Equities today: Asian and European stock indexes were mixed but mostly firmer overnight. In Asia, Japan +1.1%. Hong Kong +0.3%. China +0.1%. India flat. In Europe, at midday, London -0.3%. Paris -0.8%. Frankfurt -1.2%. U.S. Dow opened slightly lower. Federal Reserve Chair Jerome Powell expressed satisfaction Tuesday with the progress on inflation over the past year but said he wants to see more before being confident enough to start cutting interest rates.

U.S. equities yesterday: All three major indices opened July with gains coming off of a strong first half of the year. The Dow was up 50.66 points, 0.13%, at 39,169.52. The Nasdaq rose 146.70 points, 0.83%, at 17,879.30. The S&P 500 was up 14.61 points, 0.27%, at 5,475.09.

— WTI traded up $1.84 or 2.3% to close at $83.38. Brent traded up $1.60 or 1.9% to close at $86.60.

— Tesla on Tuesday reported stronger than expected deliveries for the second quarter of 2024 after Wall Street lowered its expectations.

— John Deere, the world’s largest manufacturer of agricultural machinery, has announced a significant round of layoffs affecting approximately 600 employees across its Midwest production facilities. This decision comes as the company plans to shift some of its manufacturing operations to Mexico.

Details:

Layoff details:

• Approximately 610 production staff will be laid off across plants in Illinois and Iowa.

· The affected facilities include:

o East Moline, Illinois: About 280 workers

o Davenport, Iowa: Around 230 employees

o Dubuque, Iowa: Approximately 100 staff members

· The layoffs are scheduled to take effect on Aug. 30, 2024.

Reasons for layoffs:

• John Deere cites reduced demand for products from these specific factories.
• The company also mentions rising operational costs and declining market demand as factors necessitating organizational changes.

Production shift to Mexico:

• John Deere plans to move the manufacturing of skid steer loaders and compact track loaders from its Dubuque facility to Mexico by the end of 2026.
• The company is in the process of acquiring land in Ramos, Mexico, to construct a new manufacturing facility.

Company performance:

• Despite the layoffs, John Deere reported profits of $10.166 billion in the previous year.
• The company’s market capitalization stood at approximately $102.81 billion as of the announcement date.

Support for affected employees:

• Laid-off workers will receive Supplemental Unemployment Benefits (SUB) covering about 95% of their weekly net pay for up to 26 weeks, depending on their years of service.
• They will also be offered profit-sharing opportunities and health benefits.

Industry context:

• The agricultural sector is facing challenges with lower crop prices, leading to excess inventory of tractors and combines.
• USDA has forecast a 25.5% decrease in farm income to $116.1 billion this year compared to 2023.

Previous layoffs and restructuring:

• This announcement follows earlier workforce reductions at various John Deere plants, including in East Moline, Moline, and Ankeny, Iowa.
• The company has been adjusting its operations and workforce throughout the year in response to market conditions.

— Ag markets today: Soybeans posted followthrough buying overnight, which helped support mild corrective gains in corn. Wheat pulled back from Monday’s gains. As of 7:30 a.m. ET, corn futures were trading mostly 2 cents higher, soybeans were 7 to 11 cents higher, winter wheat markets were 6 to 7 cents lower and spring wheat was mostly a penny lower. The U.S. dollar index was around 70 points higher, and front-month crude oil futures were 75 cents higher.

Cattle futures, cash fundamentals headed in opposite directions. Live cattle futures faced price pressure to open the week despite big discounts to the cash market. Traders are seemingly pricing in a seasonal price downturn during summer in the cash cattle and wholesale beef markets. Cash cattle averaged a record $195.81 last week, the third consecutive week with an all-time high. Wholesale beef prices jumped another $2.86 for Choice boxes and $1.91 for Select on Monday.

Cash hog fundamentals weaken. The CME lean hog index is down another 30 cents to $89.17 as of June 28, extending the recent pullback. The pork cutout dropped $2.48 on Monday to $95.41. Lean hog futures remain near their recent lows amid ideas the cash and product markets put in early seasonal tops and will face prolonged pressure as slaughter and pork production builds during the second half of the year.

— Agriculture markets yesterday:

· Corn: December corn fell 1/4 cent to $4.20 1/2, nearer the session high.

· Soy complex: November soybean futures firmed 7 cents to $11.11 while nearby August futures rallied 12 1/2 cents to $11.46. August meal futures rose $3.00 to $349.00 and settled nearer session highs. August bean oil future jumped 196 points to 46.03 cents.

· Wheat: December SRW wheat rose 15 1/2 cents to $6.12 1/2. December HRW wheat gained 12 cents to $6.15 1/4. Both markets closed near their session highs. December spring wheat rose 18 1/4 cents to $6.50 3/4.

· Cotton: December cotton rose 41 points to 73.10, ending the session above the 10-day moving average.

· Cattle: August live cattle fell $1.15 to $184.275 and near mid-range. August feeder cattle closed down $1.925 at $257.375 and nearer the session low.

· Hogs: Bulls couldn’t sustain early strength in hog futures, with the expiring July contract slipping 37.5 cents to $89.20 at the close, while most-active August tumbled $1.325 to $88.175.

— Quotes of note:

· Federal Reserve Chair Jerome Powell expressed satisfaction Tuesday with the progress on inflation over the past year but said he wants to see more before being confident enough to start cutting interest rates. “We’ve made quite a bit of progress and in bringing inflation back down to our target,” Powell said at a central banking forum on Sintra, Portugal. “The last ]inflation] reading and the one before it to a lesser, lesser extent, suggest that we are getting back on the disinflationary path. We want to be more confident that inflation is moving sustainably down toward 2% before we start the process of reducing type or policies of loosening policy,” he added.

· Federal Reserve Bank of Chicago President Austan Goolsbee stated that policymakers should consider cutting interest rates if U.S. inflation continues to approach the 2% target. Speaking on Bloomberg TV in Sintra, Portugal, Goolsbee expressed confidence that inflation is on track to reach 2% and emphasized that maintaining current rates while inflation falls would effectively tighten monetary policy, which should be done intentionally, not by default. His remarks follow recent data showing the Fed’s preferred inflation gauge rose by 0.1% in May, the slowest increase in six months.

· “It seemed to be a pretty good time to say hey, it’s been a great ride, and it’s time for someone else to take the reins.” — Texas A&M Chancellor John Sharp on his reason for planning to retire next year after leading the A&M system for more than 13 years.

— Emerging economies to continue driving global agricultural markets, with shifts in regional influence. Emerging economies have driven global agricultural market developments over the past 20 years and will continue to do so, with shifts due to changing demographics and economic affluence. The OECD-FAO Agricultural Outlook 2024-2033 (link) highlights the increased roles of India, Southeast Asia, and Sub-Saharan Africa, while China’s influence is expected to decline. China’s share of global agricultural and fisheries consumption growth will drop from 28% to 11% due to a declining population and stabilizing nutrition patterns. Conversely, India and Southeast Asia are projected to account for 31% of global consumption growth by 2033, driven by urbanization and increasing affluence. Sub-Saharan Africa will contribute 18% due to population growth.

Total agricultural and fisheries consumption is expected to grow by 1.1% annually, mainly in low- and middle-income countries. Middle-income countries will see a 7% increase in food calorie intake, while low-income countries will see a 4% increase, insufficient to meet the Sustainable Development Goal of zero hunger by 2030.

Key projections include a shift toward productivity improvements rather than land expansion, leading to a decline in agriculture’s global greenhouse gas emissions intensity. However, significant productivity gaps will persist, particularly in Africa and Asia, challenging food security and farm incomes. Well-functioning international agricultural markets remain crucial for global food security, with 20% of calories traded globally.

The report also simulates the impact of halving food losses and waste by 2030, projecting a 4% reduction in global agricultural GHG emissions, lower food prices, and reduced undernourishment. Commodity-specific highlights include continued growth in cereal demand for food and feed, yield challenges for oilseeds, dominance of poultry in meat consumption, and significant growth in milk production in India and Pakistan. Aquaculture will drive fish production, accounting for 55% of global fish production by 2033.

Commodity highlights based on the dedicated chapters include:

· Cereal demand is projected to continue to be led by food use, closely followed by feed use. In 2033, 41% of all cereals will be directly consumed by humans, 36% will be used as animal feed, while the remainder will be processed into biofuel and other industrial products.

· Yield challenges are projected to persist for oilseeds, with major producers experiencing slow growth or declines in yield, notably in Indonesia and Malaysia for palm oil, and the European Union and Canada for rapeseeds.

· Poultry meat will dominate the growth of the meat sector, primarily due to its relative affordability and perceived nutritional advantages. It is projected to account for 43% of total meat proteins consumed by 2033.

· World milk production is projected to grow at 1.6% per year over the next decade, faster than most other important agricultural commodities. Most of the growth will occur in India and Pakistan.

· Over 85% of the additional projected fish production will stem from aquaculture, elevating its share in global fish production to 55% by 2033.

— Annual inflation rate in the Eurozone eased to 2.5% in June 2024, down from 2.6% in May, aligning with market forecasts. Prices increased at a slower pace for food, alcohol, and tobacco (2.5% vs. 2.6%) and energy (0.2% vs. 0.3%), while inflation remained steady for non-energy industrial goods (0.7%) and services (4.1%). The Consumer Price Index (CPI) rose 0.2% from the previous month, the same as in May. Annual core inflation, excluding energy, food, alcohol, and tobacco, remained unchanged at 2.9%, against expectations of 2.8%.

Inflation eased in Germany (2.5% vs. 2.8%), France (2.5% vs. 2.6%), Spain (3.5% vs. 3.8%), and Ireland (1.5% vs. 2%), but increased in Italy (0.9% vs. 0.8%) and the Netherlands (3.4% vs. 2.7%).

— Gross fixed investment in Mexico surged by 18.1% year-on-year in April 2024, the highest since November 2023, recovering from a low growth rate of 3% in March. Machinery and equipment investment increased by 19.5%, driven by domestic transportation equipment (21%) and imports (46.8%). Construction investment rose by 16.8%, with notable growth in commercial (21.5%) and residential (11.2%) sectors. Month-on-month, gross fixed investment grew by 0.9% on a seasonally adjusted basis.

Market perspectives:

— Outside markets: The U.S. dollar index was little changed, with the euro weaker against the greenback. The yield on the 10-year U.S. Treasury note was lower, trading around 4.44%, with a mixed tone in global government bond yields. Crude oil futures were higher, with U.S. crude around $84.15 per barrel and Brent around $87.30 per barrel. Gold and silver futures were weaker, with gold around $2,329 per troy ounce and silver around $29.50 per troy ounce.

— Department of Energy (DOE) awarded contracts to five companies for the sale of gasoline from the 1-million-barrel Northeast Gasoline Supply Reserve, with an average sale price of $2.34 per gallon. BP received a contract for 500,000 barrels, Vitol for 200,000 barrels, George E. Warren LLC and Freeport Commodities for 100,000 barrels each, and Irving Oil for 98,800 barrels. The reserve, established in 2014 after Hurricane Sandy and never used, holds around 42 million gallons of gasoline. The administration announced the liquidation earlier this year to help reduce gasoline prices.

— Shippers brace for supply chain disruptions as Canadian rail workers reauthorize strike. Shippers are preparing for supply chain disruptions as Canadian rail workers, affiliated with the Teamsters Canada Rail Conference (TCRC), voted overwhelmingly to reauthorize strike action. Over the weekend, 10,000 workers at rail operators CN and CPKC voted, with 98.6% in favor of strike authorization, valid for 60 days. Previously authorized for May 22, the strike was delayed by a government request to determine if rail services were essential, which expired today. The union stated that due to the delay, they had to reauthorize strike action. If the Canada Industrial Relations Board (CIRB) decides the service is not essential, a strike could happen with just 72 hours’ notice. Both rail operators and the union claim rail services are not essential. One large shipper is planning for supply chain disruptions from mid-July.

Negotiations continue, but the parties have not reached an agreement, with the union defending against company demands on crew scheduling, hours of work, and fatigue management. The TCRC called for industrial action after five months of unsuccessful negotiations following the expiration of the previous agreement in December. The union criticizes CN and CPKC for trying to squeeze more availability out of train crews amid labor shortages and calls for improved working conditions. A strike could cause widespread disruptions to rail and ocean shipping, impacting ports including Vancouver, Prince Rupert, Montreal, and Halifax, and exacerbating port congestion across Canada.

— Butter prices have reached a record high of $7,350 per metric ton, surpassing the previous peak of $7,086 in 2022, due to limited global supply ahead of the holiday baking season. The latest Global Dairy Trade auction, which helps set dairy prices, showed this sharp increase as demand for cheese has led dairy processors to allocate more milk for cheese production. Butter has seen increased demand since the Covid-19 pandemic, with consumers stockpiling at home. U.S. manufacturers have not expanded butter production capacity, focusing instead on cheese. The tight supply is also pressured by the highly virulent bird flu virus affecting dairy cows. Food and confectionery makers are feeling the pinch as they also face high cocoa prices and inflation in other commodities like orange juice and robusta coffee. Global buyers are paying premiums for immediate delivery due to the tight supply, especially during the Northern Hemisphere summer. However, there may be some temporary relief as butter prices have historically slumped at early July auctions. Link for more via Bloomberg.

(Bloomberg)

— Indonesia cuts rice production forecast. Indonesia’s rice output in January to August this year is estimated at 21.39 MMT, down 9.5% from the same period last year, the country’s statistics agency said. The country’s rice-planted area is forecast to decline 7.5% from a year ago to 7.24 million hectares.

— USDA daily export sale: 100,000 MT corn to Colombia during 2023-2024 marketing year.

— Ag trade update: South Korea purchased 65,000 MT of South American corn. Japan is seeking 129,660 MT of milling wheat via its weekly tender.

— NWS weather outlook: Dangerously hot conditions to impact much of the southern Plains, lower Mississippi Valley, and western U.S. this week... ...Severe thunderstorms and flash flooding possible over portions of the Midwest through midweek... ...Unsettled weather with localized flash flooding chances continue across the Southeast and southern Rockies.

(NWS)

Items in Pro Farmer’s First Thing Today include:

• Corn and beans firmer, wheat lower overnight
• Corn CCI rating drops, soybeans unchanged and HRS wheat improves
• Crop Progress Report highlights
• Cordonnier adjusts corn, bean production forecasts based on acreage

—A 965-foot container ship “briefly lost engine power” as it departed the Seagirt Marine Terminal at the Port of Baltimore early Monday morning, but it was able to return to its berth according to Maryland Port Administration spokesperson Richard Scher. The ship, a Liberia-flagged vessel named the Bellavia, departed Baltimore around 2:30 a.m., but almost immediately ran into trouble. Marine tracking data indicates the ship made very little progress — no more than 1,000 or 2,000 feet — before it turned around and returned to a berth at Seagirt. “It was able to quickly reengage and return to Seagirt under its own power,” Scher wrote in an emailed response to questions from the Baltimore Sun. The ship then received repairs in Baltimore, Scher said, and less than 18 hours later, the U.S. Coast Guard cleared the ship for departure. It left Monday evening and sailed under the Chesapeake Bay Bridge near Annapolis around 8 p.m., bound for New York.

— Stabenow to push crypto regulation bill. Sen. Debbie Stabenow (D-Mich.) is planning a Senate Ag Committee hearing on cryptocurrency regulation for July 11, aiming to pass her bill before retiring at the end of the term, Politico reports. Commodity Futures Trading Commission (CFTC) Chair Rostin Behnam, a strong advocate for federal regulation of digital assets, is expected to testify. Behnam has pushed for legislation to increase CFTC’s authority over the industry, especially after the FTX exchange collapse in 2022. Momentum for Senate action has grown since 71 House Democrats supported the GOP’s digital asset regulation bill in May. Stabenow has been briefing industry stakeholders and regulators on her plans and aims to mark up her bill before the August recess. Meanwhile, Sen. J.D. Vance (R-Ohio) is developing a more industry-friendly, GOP-only bill, adding pressure on Stabenow to secure bipartisan support.

— As the war in Gaza approaches 10 months, Israel issued new evacuation orders for areas including eastern Khan Younis and Rafah, forcing already displaced residents to seek shelter elsewhere. This suggests a potential new ground operation. Israeli Prime Minister Benjamin Netanyahu stated that the military is nearing the “end of the stage of eliminating” Hamas’ army in Gaza, reaffirming Israel’s goals, including the return of hostages taken by Hamas on Oct. 7. Israeli attacks have killed over 37,700 Palestinians and injured more than 86,000, according to Gaza health officials.

— Ukraine has thwarted an alleged coup attempt aimed at overthrowing the government, which security officials claim would have benefited Russia. Authorities arrested at least four suspects who allegedly planned to incite a riot in Kyiv on June 30 as a diversion to seize control of the parliament and oust the military and political leadership. It remains unclear if the accused have any ties to Russia, which has been invading Ukraine for nearly two and a half years. If convicted, the suspects could face up to 10 years in prison.

— Hong Kong will require an FSIS-certified list of U.S. establishments eligible to export raw meat and poultry. USDA’s Food Safety and Inspection Service (FSIS) provided an initial list to Hong Kong on July 1. Once notified by Hong Kong, these establishments will be added to the FSIS Eligible Plant List for Hong Kong. Exporters should continue submitting export applications. FSIS noted that Hong Kong has not specified its requirements for new U.S. certified establishment lists after July 1 and will provide updates when available. The potential impact on U.S. raw meat and poultry exports to Hong Kong remains uncertain and needs monitoring.

— Satellite images show expansion of suspected Chinese spy bases in Cuba. Analysts identified four electronic eavesdropping stations, including a previously unreported site near a U.S. naval base. Link for details via the Wall Street Journal.

— China ‘at risk’ of wider decoupling after US, EU as Asean trade partners balk at imports flood. Word of caution comes from Chinese trade consultancy with the commerce and agricultural ministries and customs authorities among its clients. Link for more via the South China Morning Post.

— Economist: China is struck by floods and drought — at the same time. A looming water crisis threatens everything from data centers to farms. Link for details.

— Incoming Mexican official says country will drop plans to reduce imports of yellow corn. The incoming Mexican President-elect Claudia Sheinbaum will not pursue the current administration’s push to reduce imports of yellow corn, Julio Berdegue, tapped to be in the new administration, told Reuters in an interview (link). Berdegue said Mexico will drop the plan to cut yellow corn imports, which was a core goal of outgoing President Andres Manuel Lopez Obrador (AMLO).

The new administration will instead focus on maintaining self-sufficiency in white corn, which is commonly used in Mexico’s staple food, tortillas.

GM corn restrictions: AMLO’s administration had aimed to limit the use of genetically modified (GM) corn, which led to an ongoing trade dispute with the United States. The outgoing administration had already scaled back its GM corn ban to apply only to corn for human consumption.

Continued yellow corn imports: Mexico will likely continue importing large amounts of yellow corn due to increased demand in the livestock sector. This is supported by recent data showing a significant uptick in Mexico’s purchase of U.S. yellow corn, with imports reaching a 33% increase.

Growing livestock sector: The need for continued yellow corn imports is driven by the growth of Mexico’s livestock industry and increasing consumer demand for meat products.

Trade relations: This policy shift may help ease tensions with the United States, Mexico’s largest commercial trading partner, as it addresses concerns raised in the ongoing trade dispute.

Market impact: The decision to continue importing yellow corn is likely to benefit U.S. corn producers, as Mexico is a major importer of U.S. corn.

Of note: There is still the U.S.-Mexico-Canada Agreement (USMCA) case pending over Mexico’s action to bar imports of corn for food use with both countries laying out their cases before a dispute settlement panel that is expected to rule in November.

— Federal judge has stopped the Biden administration’s temporary halt on new liquefied natural gas (LNG) export licenses. The moratorium was challenged by 16 states, who claimed it violated federal law. The administration had paused approvals to study LNG exports’ climate impact. U.S. District Judge James Cain Jr. criticized the decision, calling it “completely without reason or logic” and a peak of “ideocracy.” The Department of Energy disagreed with the ruling and is considering its next steps. Despite the ruling, immediate changes in new license approvals are not expected. The states involved argued that the pause endangered projects and investments.

— Shell has paused construction at its biofuels facility in Rotterdam, Netherlands, aiming to cut costs and improve investor returns. The company will conduct an impairment review of the Shell Energy and Chemicals Park project, with further details to be provided in its upcoming second-quarter update. The facility was set to produce 820,000 metric tons of biofuels a year, including sustainable aviation fuel and renewable diesel made from waste such as cooking oil.

Shell said it remains committed to the target of achieving net-zero emissions by 2050, with low-carbon fuels being part of its strategy. The pause will reduce on-site contractors and slow activity, helping to control expenses. Shell’s Director of Downstream, Renewables, and Energy Solutions, Huibert Vigeveno, stated that this temporary halt will allow the company to reassess the project’s commercial viability. Despite the pause, Shell remains committed to its net-zero emissions target by 2050, with low-carbon fuels as part of its strategy.

— Cathay Pacific Airways Ltd. believes China can boost the development of sustainable aviation fuels (SAF) similar to its progress in the electric vehicle and solar power sectors. Despite challenges in shifting from traditional energy sources, including high costs and limited feedstock, Cathay remains committed to its goal of SAF accounting for 10% of its fuel consumption by 2030. The airline has engaged with about 50 potential suppliers globally and is collaborating with Chinese authorities and State Power Investment Corp. to explore viable SAF production, according to Bloomberg (link).

Recent setbacks, such as the collapse of Fulcrum BioEnergy, highlight the difficulties in the SAF industry. However, China’s potential advantages include abundant renewable energy and feedstock like used cooking oil. With a clear national strategy, similar to those for EV and solar developments, China could significantly impact global SAF efforts. Recent progress includes a maiden SAF test flight by Comac and the first airworthiness approval for an independent SAF supplier by the Civil Aviation Administration of China.

— EPA defended its 2023-2025 renewable fuel standards against challenges from both environmental and industry groups. EPA asserted that it set the volumes for cellulosic biofuel, biomass-based diesel, advanced biofuel, and total renewable fuel appropriately, in line with the Renewable Fuel Standard (RFS) program under the Clean Air Act. This program mandates a specific volume of renewable fuel to replace or reduce fossil fuels in transportation fuel, home heating oil, or jet fuel.

The challenged standards include volumes and percentage targets for 2023-2025, addressing previous court remands regarding the 2014-16 standards. EPA also mandated refiners and importers generate 500 million gallons in supplemental volume, split between 2022 and 2023. The EPA claims these volumes were set lawfully and reasonably, using analyses upheld by the court in a previous decision.

Challenges also include the 2023 supplemental volume requirement for an additional 250 million gallons and recordkeeping provisions for food waste used as feedstock. The EPA argued that these requirements are consistent with previous court decisions and necessary for ensuring compliance with the RFS.

Of note: EPA, along with the National Marine Fisheries Service and the U.S. Fish and Wildlife Service, also determined that the rule would not likely negatively affect any Endangered Species Act-listed species or their habitats.

The case, Am. Fuel & Petrochemical Mfrs. v. EPA, is being heard by the U.S. Court of Appeals for the D.C. Circuit, with various petitioners represented by multiple law firms.

— USDA plans to amend Federal Milk Marketing Orders (FMMOs), updating pricing formulas for all 11 orders based on a 49-day national hearing. Link.

Key changes include:

· Updating Milk Consumption Factors to 3.3% true protein, 6.0% other solids, and 9.3% nonfat solids.

· Removing 500-pound barrel cheddar cheese prices from the Dairy Product Mandatory Reporting Program survey, using only 40-pound block cheddar cheese prices for monthly average cheese price determination.

· Updating manufacturing allowances to Cheese: $0.2504; Butter: $0.2257; NFDM: $0.2268; and Dry Whey: $0.2653.

· Proposing a butterfat recovery factor update to 91%.

· Setting Base Class I Skim Milk prices at the higher of the advanced Class III or Class IV skim milk prices for the month.

· Adopting a rolling monthly Class I extended shelf life (ESL) adjustment for better price equity for ESL products.

· Updating Class I differential values to reflect increased servicing costs, with county-specific Class I differentials specified.

A 60-day comment period will follow the plan’s publication in the Federal Register in early July.

NMPF President & CEO Gregg Doud said: “Based on our initial reading, NMPF is heartened that much of what we proposed after more than two years of policy development, and another year of testimony and explanation, is reflected in USDA’s recommended Federal Milk Marketing Order modernization plan. Crafting an effective milk-pricing system for farmers is complex and requires a careful balance. USDA’s plan acknowledges that complexity and, while not matching our proposal in every detail, looks largely in keeping with the comprehensive approach painstakingly determined by the work of dairy farmers and their cooperatives over the past three years.”

“Our dairy farmers deserve to be fairly compensated for their products and for too long they have felt the economic ramifications of the 2018 farm bill pricing change,” said Sen Kirsten Gillibrand (D-N.Y.). “I look forward to working with USDA to finalize these amendments to support our New York dairy farmers.”

Impact: USDA analysts said if the “higher of” formula had been in use from 2019-23, farmers would have received $4 billion, or 10%, more for fluid milk than they actually were paid. When all the amendments are weighed, the total pool value of milk over the five years would have been $2 billion, or 1.6%, higher than it was. The pool is the combined value of the four classes of milk. Link to USDA economic analysis.

— Tyson pulls back on antibiotic-free beef. Tyson Foods Inc. is downsizing its antibiotic-free beef offerings after backing away from chicken raised without antibiotics last year. In moves pointing to a broader shift, the company told a major customer late in 2023 that it wouldn’t be able to keep supplying it with beef raised without antibiotics, according to Bloomberg citing a person familiar with the decision. Tyson also said antibiotic-free beef from its Open Prairie Natural Meats brand would be limited starting in January, according to a document seen by Bloomberg. Link for details.

— Moderna secures nearly $200 million from U.S. gov’t to develop mRNA vaccine for pandemic influenza amid a concerning bird flu strain affecting U.S. dairy farms. The Department of Health and Human Services awarded $176 million to Moderna for late-stage clinical trials starting in 2025, aiming to target multiple influenza strains, including the current H5N1 bird flu.

H5N1 has been detected in 136 cattle herds across 12 states and infected three farmworkers, but the risk to the general public remains low, according to the CDC. The government aims to be prepared if the situation changes, emphasizing the adaptability of mRNA technology, which was crucial for Covid-19 vaccines.

Results from Moderna’s early bird flu studies are expected soon. The U.S. gov’t contract, facilitated through the Biomedical Advanced Research and Development Authority, includes options for purchasing vaccine supplies, ensuring fair pricing for taxpayers. Additional contracts with other pharmaceutical companies for mRNA vaccines are anticipated, though details on negotiations with Pfizer were not disclosed.

Traditional pandemic flu vaccines are also in development. The U.S. has two candidates tailored to H5N1, with pre-filled syringes ready and plans for CSL to produce 4.8 million more doses by mid-July.

— Over 180 candidates have withdrawn from the second round of French parliamentary elections to block the National Rally (RN) from gaining a majority in the 577-seat parliament. This move aims to prevent splitting the anti-RN vote. In the first round, the RN led with 33.2% of the vote. French President Emmanuel Macron’s centrist party finished third, and Macron emphasized the priority of blocking the RN from power, even endorsing leftist France Unbowed (LFI) candidates if necessary. A hung parliament could hinder policy actions for the remainder of Macron’s presidency.

— Trump edges ahead of Democrat Joe Biden, 41% to 38%, in the aftermath of the candidates’ debate last week, according to an exclusive USA TODAY/Suffolk University Poll. That narrow advantage has opened since the previous survey in May showed the two contenders tied, 37% to 37%. The findings still signal a close contest, not a decisive lead. The difference in support and the shifts since the spring are within the polls’ margins of error of plus or minus 3.1 percentage points. The new survey of 1,000 registered voters was taken Friday through Sunday by landline and cell phone. There was little change in the standing of third-party candidates, with independent Robert F. Kennedy Jr., at 8% and three others at about 1% each.

— Democrats are considering formally nominating Joe Biden as early as mid-July to ensure he is on the presidential ballots, while also stamping out intra-party chatter on whether he should be replaced following last week’s rough debate performance. Link to more via Bloomberg.

— Uber Technologies Inc: The company said on Monday it will bring a yacht service to Ibiza and will introduce different water-transport offerings to other European cities to address the robust demand stemming from tourism in the continent. The service named “Uber Yacht” will be available to pre-book on the Spanish island of Ibiza from July 26, and will be made available in August. Starting in July, Uber will also launch a “limo boat” service in Venice, Italy, the ride-hailing platform said. The service will allow customers to travel around the Venetian Lagoon.

— “Friendly Father,” a catchy North Korean propaganda song about strongman Kim Jong Un, is going viral around the world. Link to listen.

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