News/Markets/Policy Updates: Sept. 5, 2024
— Sabato’s Crystal Ball — Race for the Senate: ‘Democrats still in the game, but Republicans have the upper hand.’ The election watcher says Republicans remain favored to flip the Senate majority this year. “Democrats are still in the game, but they need to win all the closest races just to get to 50-50, and they are likely behind in at least one of those races, Montana. We aren’t making any rating changes in the top-tier races in this update, although some may be coming soon as we wait for more information. Democrats appear to retain leads in 5 seats they are defending in presidential battlegrounds, although Republicans argue that the gravity of the presidential race will allow them to catch up. We remain skeptical of the Democrats’ ability to truly put Florida and Texas in play, and the Republicans’ ability to put Maryland in play.” Link for details. — ABC News announces debate rules for Sept. 10 Trump/Harris showdown, including muted mics. Harris’ campaign expressed concerns that the format may disadvantage her, while Trump, during a Fox News town hall, claimed without evidence that Harris’ team would receive questions in advance. The debate will not allow notes, and candidates will stand behind podiums. — WSJ: Harris plans lower capital-gains tax increase, breaking from Biden. Democratic presidential nominee Kamala Harris is set to propose a more moderate increase in the top capital-gains tax rate, deviating from President Biden’s plan, according to the Wall Street Journal reports (link). While Biden aimed to nearly double the rate to 44.6%, Harris’ team is discussing a 28% rate to encourage investment and support small businesses, but that could change. Biden wanted a near doubling of the all-in top capital-gains rate to reach 44.6% — the same 39.6% top rate he wants for ordinary income plus a 5% investment-income tax. It wasn’t immediately known whether Harris’ 28% would include that additional levy. Under current law, the top long-term capital-gains rate is 23.8% — 20% plus a 3.8% tax on investment income. It is owed only when taxpayers sell assets, or realize gains, and unrealized gains escape the income tax if passed to heirs. The Biden budget tax unrealized gains at death above a $5 million per person exclusion and tax unrealized gains during life for people with a net worth of more than $100 million. The move signals a shift in Harris’ economic stance as she prepares for a debate with former President Donald Trump. Meanwhile, former President Donald Trump and JD Vance are campaigning on a mix of tax cut proposals that may collectively cost as much as $10.5 trillion over a decade — a sum that would exceed the combined budgets of every domestic federal agency. — Trump gives a speech today in New York City on his economic plans. He will speak at the Economic Club of New York. — Harris leads or ties Trump in most key battleground states: CNN poll. A new CNN/SSRS poll reveals Vice President Kamala Harris either leads or is tied with Donald Trump in five out of six battleground states. Harris leads in Georgia, Nevada, Michigan, and Wisconsin, with her largest lead in Wisconsin at 50% to 44%. Trump holds a five-point lead in Arizona, while Pennsylvania remains a deadlock, with both candidates at 47%. A significant portion of voters in these states remains undecided, indicating the race could still shift before election day. — Biden administration targets Russian efforts to influence 2024 election. The Biden administration is taking action against Russian government-backed efforts to sway American public opinion ahead of the 2024 U.S. election. These efforts involve Kremlin-controlled media like RT, disinformation campaigns, and the use of both American and foreign individuals to spread propaganda. The U.S. response includes public condemnation, sanctions on Russian entities, and legal actions to counter covert Russian operations. This follows recent U.S. moves to disrupt Russian disinformation campaigns and underscores Russia’s continued role as a foreign influence threat. According to an indictment, RT and employees including Kostiantyn Kalashnikov and Elena Afanasyeva allegedly steered nearly $10 million through various shell companies to launch a U.S.-based outlet that enlisted prominent content creators and pushed out English-language videos on various platforms. — API urges Harris to meet with energy CEOs to address inflation and energy security. The American Petroleum Institute (API) has requested a meeting between Vice President Kamala Harris and energy company CEOs to clarify her position on the industry if elected in November. API CEO Mike Sommers emphasized the need to collaborate on addressing inflation and energy security challenges, expressing the industry’s willingness to work with Harris on a long-term vision for U.S. energy leadership. — Trudeau’s coalition partner ends deal, raising chance of snap election in Canada. Jagmeet Singh, leader of Canada’s New Democratic Party (NDP), has withdrawn support from Prime Minister Justin Trudeau’s Liberal government, ending a 2022 coalition agreement. This move leaves Trudeau’s minority government vulnerable in parliament and increases the likelihood of a snap election. While Singh’s decision doesn’t automatically trigger a no-confidence vote, it has heightened political uncertainty as Trudeau’s popularity has declined amid a cost-of-living crisis and inflation. Singh warned that Trudeau may lose to Conservative leader Pierre Poilievre, who currently leads in polls. (Source: Financial Times, Link.) — Damaged ship “Dali” set to sail for repairs in China after Key Bridge collision. The 984-foot container ship Dali, which struck and collapsed the Francis Scott Key Bridge in March, killing six workers, is scheduled to depart for China on Sept. 17, 2024, for extensive repairs. After months of cleanup and legal proceedings, the ship’s owner, Grace Ocean, and manager, Synergy Marine, face multiple lawsuits. Claimants have until Sept. 24 to file claims, with some seeking to extend the deadline. The ship is expected to undergo significant repairs, including a new bow, upon arrival in China. (Source: The Baltimore Sun/Link) |
MARKET FOCUS |
— Equities today: Asian and European stock indexes were mixed overnight. In Asia, Japan -1.1%. Hong Kong -0.1%. China +0.1%. India -0.2%. In Europe, at midday, London -0.1%. Paris -0.7%. Frankfurt +0.2%.U.S. stock indexes are pointed to mixed openings. The Federal Reserve’s Beige Book showed flat or declining economic activity across most regions in recent weeks.
U.S. equities yesterday: The Nasdaq and S&P 500 finished with losses, but the Dow managed to finish higher via a late climb. The Dow rose 38.04 points, 0.09%, at 40,974.97. The Nasdaq fell 52.00 points, 0.30%, at 17,084.30. The S&P 500 declined 9.96 points, 0.16%, at 5,520.07.
— Nvidia clarified that it has not been subpoenaed by the Department of Justice in relation to an antitrust probe, as its stock continues to recover from Tuesday’s selloff. Traders are focusing on $100 per share as a key level to monitor for potential market stabilization.
— Verizon agreed to buy rival Frontier Communications for an enterprise value of $20 billion. The deal will help Verizon accelerate its plans to offer high-speed internet service more widely.
— Ag markets today: Corn, soybeans and wheat pulled back from recent corrective gains during the overnight session. As of 7:30 a.m. ET, corn futures were trading mostly 2 cents lower, soybeans were a dime lower, winter wheat markets were 4 to 7 cents lower and spring wheat was 2 cents lower. The U.S. dollar index was down around 250 points, and front-month crude oil futures were about 20 cents higher.
Beef movement surges. Choice beef prices firmed 93 cents on Wednesday, while Select dropped 72 cents. Movement totaled 169 loads, including 98.6 loads of Choice. Continued strong retailer buying of beef suggests demand may not wane much after the unofficial end of the summer grilling season.
Cash hog index firms. The CME lean hog index is up 12 cents to $86.27 as of Sept. 3, halting an extended string of seasonal price pressure. October lean hog futures finished Wednesday $4.695 below today’s cash quote, suggesting traders sense any uptick in the cash market will be brief before seasonal pressure resumes.
— Agriculture markets yesterday:
• Corn: December corn rose 3 1/2 cents to $4.12 3/4, near the session high.
• Soy complex: November soybeans rose 9 1/2 cents to $10.21 1/2, near the session high and closed at a three-week high close. December soybean meal rose $8.50 at $329.30, near the session high and hit a four-week high. December soybean oil fell 82 points to 40.16 cents, nearer the session low.
• Wheat: December SRW wheat rose 14 cents to $5.80 3/4, while December HRW futures rose 16 3/4 cents to $5.93. December HRS futures rose 16 1/4 cents to $6.23 1/2. Each closed near the session high.
• Cotton: December cotton fell 69 points to 69.81 cents and near mid-range.
• Cattle: Nearby October futures traded higher through much of the session, but settled 5 cents lower at $179.225. The ongoing rebound in grain and soy futures undercut feeder futures, with most-active October diving $1.875 to $237.45.
• Hogs: October lean hog futures sank 95 cents to $81.575 and closed nearer session lows.
— Quotes of note:
• Atlanta Fed President Bostic: Price stability and employment in balance, but cautions against premature rate cuts. Federal Reserve Bank of Atlanta President Raphael Bostic stated that the central bank’s mandates of stable prices and maximum employment are now in balance for the first time since 2021. However, he warned that risks to inflation remain, and loosening monetary policy prematurely could reignite inflation. Bostic acknowledged significant progress in reducing inflation but emphasized the need for continued vigilance. He also noted a weakening but stable labor market, with businesses experiencing less pressure to raise wages and prices. Bostic’s remarks come ahead of a potential interest rate decision by the Fed at the Sept. 17-18 FOMC meeting.
• China’s GDP likely less than 5% this year. Bank of America’s economists joined their counterparts at Goldman Sachs and JPMorgan in predicting China’s economy will grow less than 5% this year. “We find both the fiscal and monetary policy stance less accommodative than desired and insufficient to revive domestic demand growth,” BofA economists wrote in a note. Bank of America lowered its GDP growth projection for China to 4.8% for 2024, down from its previous estimate of 5%. The bank also predicts growth may slow further to 4.5% over the next two years. Factors contributing to the downward revisions of China’s growth prospects: Insufficient policy support, weak domestic demand, real estate troubles and deflationary pressures
• Steel resolve. “I don’t have the money.” — U.S. Steel CEO David Burritt, explaining that the company would close steel mills and likely move its headquarters out of Pittsburgh if its $14.1 billion planned sale to Nippon Steel collapses. The Japanese company has promised to invest nearly $3 billion in the storied steelmaker’s older mills to keep them competitive and maintain workers’ jobs. Kamala Harris said Monday that U.S. Steel should remain domestically owned and operated, and Donald Trump also opposes the deal. Meanwhile, President Joe Biden is set to block Nippon Steel’s takeover in the coming days over national security concerns.
— U.S. trade deficit increased by 7.9% from the previous month, reaching $78.8 billion in July. This was the largest trade gap since June 2022. The goods trade deficit increased 6.9% to $97.6 billion after adjusting for inflation. However, some analysts note that many imports may end up as inventory, potentially blunting some of the negative impact on GDP.
— U.S. trade deficit with China hits nearly two-year high in July 2024. The U.S. merchandise trade deficit with China widened to $27.2 billion in July 2024, the largest gap since September 2022, driven by an 11.3% surge in imports from China. The increase in imports, reaching the highest level since October 2022, is attributed to businesses frontloading goods ahead of potential tariff hikes and strong U.S. consumer demand. This $4.9 billion rise from the previous month reflects ongoing trade tensions and economic uncertainty ahead of the November 2024 election.
— Record U.S. agricultural trade deficit in July 2024, continuing a concerning trend for the fiscal year.
Key figures for July 2024:
• Exports: $13.0 billion (up 0.5% from June)
• Imports: $17.54 billion (up 6.2% from June)
• Trade deficit: $4.54 billion (a new monthly record)
Fiscal Year 2024 to date
• Total exports: $148.29 billion
• Total imports: $171.63 billion
• Cumulative deficit: $23.34 billion
This marks the ninth month out of ten in FY 2024 where the ag sector has recorded a deficit, surpassing the previous record monthly shortfall of $4.27 billion set in May.
USDA forecast and outlook for FY 2024:
• Exports: $173.5 billion
• Imports: $204 billion
• Expected trade deficit: $30.5 billion
To meet these projections, the U.S. would need to average $12.61 billion in exports and $16.19 billion in imports for each of the two remaining months in FY 2024. In the final two months of FY 2023, agricultural exports averaged $12.58 billion against imports of $15.71 billion.
Several factors are contributing to the growing agricultural trade deficit:
• Strong U.S. dollar: The continued strength of the U.S. dollar is making American exports more expensive and imports cheaper.
• Increased competition: Countries like Brazil are providing stiff competition in key markets, particularly for corn and soybeans.
• Shifting trade partners: China’s efforts to reduce dependence on U.S. agricultural imports have impacted export volumes.
• Rising import demand: U.S. consumers’ year-round demand for fresh fruits and vegetables is driving up imports.
• Lack of new trade agreements: The U.S. has not entered any new free trade agreements since 2012, while other countries continue to form new trade partnerships.
To address the growing trade deficit, several measures are being considered:
• Increased export promotion: Proposals to double funding for Market Access and Foreign Market Development programs.
• Regional Agricultural Promotion Program (RAPP): A new $1.2 billion program to promote U.S. agricultural products in markets outside the top export destinations.
• Diversification of export markets: Efforts to reduce reliance on traditional major markets like China.
— The Federal Reserve’s latest Beige Book report provides context for the Sept. 17-18 Federal Open Market Committee (FOMC) meeting, highlighting several key economic trends:
Economic activity slowing: Nine out of twelve Federal Reserve districts now report flat or declining economic activity, up from five districts in the previous report. Only three districts (Boston, Chicago, and Dallas) reported slight growth. This widespread slowdown suggests the economy may be losing momentum.
Labor market softening: While layoffs remain rare, the report indicates a cooling labor market:
• Employment levels were generally steady
• Some firms are only filling necessary positions
• There are instances of reduced hours/shifts and lower employment through attrition
Wage growth was described as “modest,” further indicating easing labor market pressures.
Consumer spending weakening: Consumer spending “ticked down” in most districts, after being mostly steady in the previous report period. This could signal reduced consumer confidence or tightening household budgets.
Inflation pressures easing: Many districts reported continued easing of inflationary pressures. This aligns with the Fed’s goal of bringing inflation back to its 2% target.
Mixed real estate activity: Residential real estate activity was mixed, with most districts reporting softer home sales. Commercial real estate reports were also mixed.
Interest rate expectations. The slowing economic activity and easing inflation pressures are fueling expectations of potential interest rate cuts:
• Markets are pricing in a 100% chance of a 25-basis point cut at the September FOMC meeting
• There’s a 44% probability of a 50-basis point cut
However, the upcoming jobs report (Friday) and inflation data will be crucial in shaping the Fed’s decision.
— The Federal Reserve’s Beige Book reported the following key points about agricultural conditions:
• Prospects for 2024 farm income declined.
• Crop prices, including corn, soybean, and wheat prices, were lower. This led to farmers being slow to sell crops from storage and hesitant to sell ahead from their anticipated fall harvest due to the low prices.
• Despite some flooding, corn and soybean planting recovered from earlier weather-related challenges in much of the Midwest, and overall crop conditions were off to a better start than in recent years.
• An early wheat harvest was already underway, which could allow for an earlier planting of second crop soybeans.
• Milk and egg prices were higher, while hog prices declined. Cattle prices remained flat at a high level.
• In the Southern United States, crop and pasture conditions generally remained favorable, though hot and dry conditions were putting strain on certain areas.
• Hurricane Beryl caused some flooding along the coast in the Southern region.
Bottom line: Farmers, especially smaller producers, were facing tough financial situations. Some contacts reported that if this year doesn’t turn out to be profitable, it could put a segment of growers out of business.
Market perspectives:
— Outside markets: The U.S. dollar index was weaker. Nymex crude oil prices are slightly firmer and trading around $69.50 a barrel. Crude overnight dropped to a nine-month low Wednesday. The benchmark 10-year U.S. Treasury note is presently fetching 3.765%.
— Norfolk Southern reached a tentative agreement with the final general committee of SMART-TD, its largest labor union. This agreement covers all Norfolk Southern conductors across the company’s 22-state network. The agreement brings the total union workforce covered by early tentative agreements to nearly 65%. It comes four months before the opening of the next collective bargaining round. Over the past two weeks, Norfolk Southern has reached tentative agreements with 9 of its 13 unions. The tentative agreement, subject to ratification, includes: A 3.5% average wage increase per year over the next five years; more vacation time earlier in employees’ careers; enhancements to the existing health care benefits package.
— Low waters on lower Mississippi River impacting barge traffic. Low water conditions have led to several barges running aground along a key stretch of the lower Mississippi River, the U.S. Coast Guard told Reuters. The Coast Guard said in an email it has received reports and responded to several groundings over the last week along the Greenville-Vicksburg sections of the lower Mississippi River. American Commercial Barge Line warned that customers should expect one- to two-day delays for river shipments “due to reduced navigable space in certain areas,” the company said. The water level at Memphis is lower than it was last year: It is forecast to drop to -7.5 feet by Sept. 18, NOAA data shows. Rates for barges coming from the St. Louis, Missouri, area were 65% higher in late August than the three-year average, according to Mike Steenhoek, executive director of the Soy Transportation Coalition, and USDA data.
— Iron ore prices dropped to their lowest level since 2022 after China’s main steel industry group urged mills to be cautious about increasing production too rapidly, warning it could jeopardize a post-summer recovery.
— StoneX lowers corn crop estimate, raises soybean production forecast. Commodity brokerage firm StoneX lowered its corn crop estimate to 15.127 billion bu. (15.207 billion bu. last month), though the yield was raised 0.6 bu. to 182.9 bu. per acre. For soybeans, StoneX raised its production forecast to 4.575 billion bu. (4.483 billion bu. last month) on a yield of 53 bu. per acre, which increased 0.4 bu. per acre. The firm’s estimates are based on surveys of its customers and assume USDA’s harvested acreage. USDA’s initial estimates in August were 15.147 billion bu. for corn on a yield of 183.1 bu. per acre and 4.589 billion bu. for soybeans on a yield of 53.2 bu. per acre.
— Ag trade update: Japan purchased 87,660 MT of milling wheat via its weekly tender, including 63,730 MT U.S. and 23,930 MT Canadian. Thailand purchased 146,000 MT of feed wheat likely to be sourced from Ukraine, EU, Serbia, U.S. and/or Australia. Indonesia bought 165,900 MT of rice expected to be sourced from Vietnam, Myanmar and Pakistan, with more purchases possible from the tender for up to 350,000 MT. Egypt tendered to buy 30,000 MT of soyoil, 10,000 MT of sunflower oil and at least 50,000 MT of raw sugar – all optional origin.
— NWS outlook: Very heavy rain and the threat for scattered to numerous instances of flash flooding continues for the Gulf Coast states the next couple of days... ...Dangerous heat wave intensifies over the Southwest and West Coast.
Items in Pro Farmer’s First Thing Today include:
• Grains pause corrective rallies overnight
• Farm group estimates 26% plunge in French wheat production
• China’s bond frenzy continues amid monetary policy easing expectations
CONGRESS |
— House to vote next week on bill restricting foreign ownership of U.S. Farmland, targeting China. The House of Representatives is preparing to vote next week on legislation aimed at restricting foreign ownership of U.S. agricultural land, particularly targeting purchases by entities connected to China.
Rep. Dan Newhouse (R-Wash.) introduced the “Protecting American Agriculture from Foreign Adversaries Act” on August 30, 2024. Rep. Newhouse, who chairs the Congressional Western Caucus and serves on the House Select Committee on the Chinese Communist Party, has made Chinese land acquisitions a key focus of his work. The bill would:
• Add the Secretary of Agriculture as a member of the Committee on Foreign Investment in the United States (CFIUS)
• Require the USDA Secretary to report to CFIUS any purchase of U.S. agricultural land by “foreign adversaries” that may pose national security risks.
This legislation aims to make permanent similar provisions included in the FY 2024 Agriculture-FDA appropriations package passed in March 2024, which are set to expire at the end of September.
The vote is part of the House’s “China Week” legislative lineup, reflecting growing concerns about Chinese land purchases in the U.S.
There are concerns that some foreign investments in U.S. agricultural land, especially near military installations, may have national security implications.
Current foreign ownership landscape
• As of 2021, foreign investment in U.S. agricultural land totaled approximately 40 million acres, a 40% increase since 2016.
• Canada owns the largest share (32%) of foreign-held U.S. agricultural land, followed by the Netherlands (12%), Italy and the United Kingdom (6% each), and Germany (5%).
• China’s ownership interest in U.S. agricultural land is relatively small at 0.9%
CFIUS is an interagency committee that reviews certain foreign investments in the U.S. for national security implications. Currently, USDA is not a permanent member of CFIUS but participates as a voting member when Treasury determines a transaction involves agricultural issues.
ISRAEL/HAMAS CONFLICT |
— Israel/Hamas hostage and ceasefire deal nears completion, but key disputes remain. A potential ceasefire and hostage exchange deal between Israel and Hamas is reportedly 90% complete, though disagreements persist over prisoner exchanges and Israeli military redeployment in Gaza. U.S., Qatari, and Egyptian officials have been mediating talks for months to end the conflict. Hamas has issued threats to kill Israeli hostages if troops approach Gaza tunnels, while an Israeli newspaper reports Prime Minister Netanyahu may have delayed a July deal by adding new demands. Negotiations continue.
CHINA UPDATE |
— Improved soy crush margins could boost Chinese demand for soybeans. Recent market talk had Chinese buyers purchasing multiple cargoes of U.S. soybeans via shipment from the Gulf and PNW. An improvement in Chinese crushing margins has increased demand for soybeans as the U.S. harvest begins. While Chinese crush margins remain negative, they have recovered to levels not seen in more than two months, according to Shanghai JC Intelligence Co.
— China to deepen ties with Africa, including agriculture. Chinese President Xi Jinping told African leaders China was willing to deepen industrial, agricultural, trade and investment cooperation with the resource-rich continent during a speech on Thursday. China and Africa would undertake 30 infrastructure connectivity projects, Xi said during the opening ceremony of the Forum on China-Africa Cooperation in Beijing. For agriculture, China will help African countries accelerate production and trade of soybeans, beef, nuts, coffee, cocoa, red wine and aquatic/fishery products. China will also seek to create shared environmental goals with African countries, he added.
TRADE POLICY |
— Chile approves trade agreement expanding U.S. cheese and meat market access. The Chilean government approved a trade agreement ensuring market access for U.S. cheese and meat products, protecting terms like cheddar, gouda, prosciutto, and salami. This follows the exchange of letters between U.S. Trade Representative Katherine Tai and Chile’s Undersecretary of International Economic Relations Claudia Sanhueza on June 21, 2024, which initially established the mutual understanding. This agreement strengthens the U.S./Chile Free Trade Agreement and supports U.S. agricultural exports.
USDA trade data indicates the U.S. exported $537.8 million in consumer-oriented agricultural products to Chile in 2023, including $91 million in dairy products, $53.1 million in pork products, and $13.2 million in meat products. Total consumer-oriented agricultural exports to Chile so far in calendar 2024 are at $310.0 million, up slightly from the same period in 2023, but on a percentage basis, the shipments of meat products were down more than 50%.
ENERGY & CLIMATE CHANGE |
— SAF coalition of airlines and biofuel producers lobbies for expanded tax incentives for Sustainable Aviation Fuel (SAF). A new coalition called the SAF Coalition (link) has formed, representing airlines, biofuel producers, Boeing, and other aviation industry stakeholders. The coalition is lobbying Congress to provide a larger and longer-lasting tax incentive for sustainable aviation fuel. The group consists of nearly 40 major airlines, airports, manufacturers, and biofuel producers.
Currently, there are two SAF-related tax credits from the Inflation Reduction Act:
1. The 40B tax credit, which expires at the end of 2024.
2. The 45Z clean fuels tax credit, which starts in 2025 and lasts for three years.
The coalition argues that the 45Z credit has two main issues:
• It doesn’t last long enough.
• Depending on the carbon intensity of the fuel, it may not be as valuable as the expiring 40B credit.
In a letter (link) to the House Ways and Means Committee, the coalition is calling for:
• Extension of the 45Z credit beyond its current three-year duration.
• Enhancement of the credit’s value to support long-term investment in U.S. SAF leadership.
The coalition believes these changes are necessary to accelerate the development and deployment of sustainable aviation fuels.
— President Biden and Vilsack to announce $7.3 billion clean energy investment for rural America. The Biden administration is allocating $7.3 billion to 16 rural electric cooperatives across 23 states, aiming to boost clean energy projects under the New Empowering Rural America (New ERA) program funded by the Inflation Reduction Act (Climate Act). This marks the largest federal investment in rural electrification since the 1930s. The initiative is expected to create 4,500 permanent jobs and 16,000 construction jobs, while leveraging $29 billion in private investments to build over 10 gigawatts of clean energy capacity. The projects will help lower energy costs and reduce greenhouse gas emissions by 43.7 million tons annually, advancing clean energy adoption in rural areas.
Dairyland Power Cooperative, based in La Crosse, Wisconsin, will receive $573 million in grants and loans and to leverage its funding for a total investment of $2.1 billion, to finance eight power purchase agreements:
• Four solar installations
• Four wind power installations
• Across Wisconsin, Iowa, Illinois, and Minnesota
• Expected to lower electricity costs for customers by nearly 42% over 10 years.
Of note: In Wisconsin, the average price of electricity to residential customers rose by 3% compared to a year before, according to a June reading by the Energy Information Administration. Dairyland Power Cooperative estimates the funding will cut rates for members by 42% over the next decade.
Great River Energy and Minnkota Power are also expected to receive funding through the New ERA program.
There are election-year overtones to the announcement. Wisconsin is one of the battleground states for the presidential election. And, Democrats are making a renewed push to flip Wisconsin’s 3rd Congressional District after losing the seat to Republican Rep. Derrick Van Orden in 2022. The Biden administration has emphasized billions in federal investments in the rural area to sway voters. Republicans, also targeting the district, recently saw Donald Trump visit for a town hall in La Crosse, signaling the region’s importance in upcoming elections.
— Bank of America invests $205 million in carbon capture at North Dakota ethanol plant in exchange for tax credits, the Wall Street Journal reports (link). This is one of the largest investments in carbon capture since the 2022 climate law increased tax incentives for the technology. Despite carbon capture’s mixed track record, the project aims to capture over 200,000 metric tons of CO2 annually, equivalent to the emissions of 42,000 cars.
LIVESTOCK, NUTRITION & FOOD INDUSTRY |
— U.S. food insecurity worsens in 2023, affecting 13.5% of households. Food insecurity in the U.S. rose to 13.5% of households in 2023, up from 12.8% in 2022, marking a concerning trend just below the 2014 peak. Approximately 18 million households were food insecure, with higher rates among families with children, Black households, and rural areas. The expiration of pandemic-era support programs, inflation, and economic challenges are key factors. The 2023 rate of 13.5% is significantly higher than pre-pandemic levels of 10.5% in 2019. Experts are urging for expanded nutrition assistance programs and reinstating policies like the Child Tax Credit to combat the rise.
— House Republicans subpoena Minnesota officials over Feeding Our Future fraud scandal. The House Education and Workforce Committee issued subpoenas to Minnesota Governor Tim Walz, Education Commissioner Willie Jett, and USDA officials as part of an investigation into the $250 million Feeding Our Future fraud scandal, one of the largest pandemic-related fraud cases. The committee seeks documents regarding oversight of federal child nutrition funds, with a submission deadline of Sept. 18, 2024. The fraud involved falsified records for children’s meals, and over 70 individuals have been charged. The investigation has gained political significance as Walz’s national profile rises.
HEALTH UPDATE |
— Obesity costs U.S. military $1.24 billion annually, hampers recruitment. A new report from the American Security Project reveals that obesity costs the U.S. military $1.24 billion each year and is the top reason for recruitment challenges, with 52,000 applicants disqualified in 2023 due to obesity. This figure surpasses the 41,000-recruitment shortfall during the same period. Obesity not only burdens military healthcare with conditions like musculoskeletal injuries and hypertension but also jeopardizes operational readiness. Despite efforts to address the issue, weight loss programs have had minimal long-term success.
POLITICS & ELECTIONS |
— Macron appoints Michel Barnier as French Prime Minister to break political deadlock. French President Emmanuel Macron appointed Michel Barnier, former EU chief Brexit negotiator, as France’s new Prime Minister to resolve the political impasse following inconclusive snap elections. Barnier’s task includes forming a government that can navigate a hung parliament divided among left, centrist, and far-right factions. His challenges include assembling a cabinet, passing key reforms, and managing immigration and electoral system changes. Barnier’s appointment has received mixed reactions, with the far-right National Rally showing potential willingness to work with him under certain conditions.
OTHER ITEMS OF NOTE |
— States rely heavily on high-income taxpayers; migration shifts impact revenues. Many states with progressive tax systems depend on high-income residents for a large share of their tax revenue. Migration data from 2022 highlights the impact: Florida gained nearly 30,000 affluent taxpayers, boosting its AGI by $28.7 billion, while California lost 24,670 high-income residents, decreasing its AGI by $16.1 billion. Texas, which also has no state income tax, was among the top gainers. Tax policy, alongside other factors like climate and job opportunities, plays a significant role in these migration patterns, affecting state finances and pushing policymakers to consider reforms to retain wealthy residents and balance budgets.
KEY LINKS |
WASDE | Crop Production | USDA weekly reports | Crop Progress | Food prices | Farm income | Export Sales weekly | ERP dashboard | California phase-out of gas-powered vehicles | RFS | IRA: Biofuels | IRA: Ag | | Russia/Ukraine war, lessons learned | | SCOTUS on WOTUS | SCOTUS on Prop 12 pork | New farm bill primer | | Gov’t payments to farmers by program | Farmer working capital | USDA Ag Outlook Forum |