Hurricane Milton Threatening to Be One of Largest Ever Hurricanes

White House ag event | Harris interview | U.S. trade deficit narrows | Cattle market rule

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October 08, 2024 08:31 AM

News/Markets/Policy Updates: Oct. 8, 2024

— Milton strengthened into a Category 5 hurricane on a path toward Florida, with Governor Ron DeSantis declaring an emergency and millions of residents ordered to evacuate. “Unless we get extremely lucky, Milton will be one of the biggest hurricane disasters in history,” leading Fox Weather hurricane meteorologist Bryan Norcross predicted Monday, shortly after the hurricane was upgraded to a Category 5 storm with winds of 180 mph. Milton is forecast to make landfall on Florida’s west coast on Wednesday, likely between 6 PM and midnight. The center of the cone is near Tampa, but there is still uncertainty in the exact track. Norcross said it is too early to call where the storm will hit when it makes landfall Wednesday, but that if it follows the current trajectory and strikes Tampa Bay directly the city “will go underwater.” Meanwhile, Tampa’s mayor issued a dire warning before Hurricane Milton: “If you choose to stay … you are going to die.”

A forecast from the National Hurricane Center predicted storm surge for Tampa Bay could hit up to 15 feet. The storm is expected to cross the Florida peninsula and move into the Atlantic Ocean afterwards. There is an increased risk of tornadoes, with 11 million people under threat of tropical tornadoes on Tuesday and Wednesday.

Hurricane Milton is threatening to be one of the largest ever hurricanes with wind gusts already topping 200 miles per hour — leading to calls for a new Category 6 designation for such an intense superstorm. “This is nothing short of astronomical,” Florida meteorologist Noah Bergren said late Monday as Milton reached sustained winds of 180 mph and “gusts 200+ mph.” “I am at a loss for words to meteorologically describe to you the storm’s small eye and intensity,” he marveled. “This hurricane is nearing the mathematical limit of what Earth’s atmosphere over this ocean water can produce.”

Milton threatens to inflict wind damage in the northern two-thirds of Florida’s citrus belt this week, according to Commodity Weather Group. Orange juice futures rose up to 4.3% on Monday due to the threat to Florida’s citrus industry. U.S. natural gas futures fell over 4% in anticipation of reduced demand if power outages occur. Various events have been cancelled, including a championship ring ceremony for the Florida Panthers hockey team.

Citrus producers are urged to keep accurate records to document any damage or loss, including dated photos1. It’s critical for growers to report farm damage to their local USDA Service Center before starting any cleanup or repair activities. This documentation is essential for potential financial assistance from USDA.

The Florida Department of Transportation (FDOT) has suspended size and weight restrictions for vehicles transporting emergency equipment, services, supplies, and agricultural commodities, including citrus. This emergency measure allows these vehicles to travel at all hours and is set to expire on Oct. 21 or upon rescission of the executive orders.

Hurricane season generally lasts through November.

President Biden will receive an updated briefing at 10 a.m. ET on the federal government’s response to Hurricane Helene and the preparations for Hurricane Milton. Biden then will provide an update at 10:15 a.m. ET on the response and the preparations.

Of note: New estimates reveal Hurricane Helene caused more than $47 billion in losses for property owners. The price tag for climate-related disasters is growing. Last year, storms in the U.S. caused $93.1 billion in damages, according to the National Oceanic and Atmospheric Administration. Their cumulative toll, dating to 1980, now stands at $2.6 trillion.

— White House urges Congress to refill SBA disaster loan program despite recess. White House Press Secretary Karine Jean-Pierre emphasized the urgent need for Congress to refill the Small Business Administration’s (SBA) disaster loan program, which is expected to run dry within weeks. President Biden recently alerted lawmakers to the shortfall in a letter, urging action even as Congress is in recess ahead of the election. Jean-Pierre suggested Congress could use unanimous consent to address the issue quickly, though GOP resistance and the political climate make such a move unlikely. Biden has warned of the urgent need for funding, especially after Hurricane Helene, but congressional action will likely be delayed until after the election.

Meanwhile, a group of House Democrats, led by Rep. Marcy Kaptur (D-Ohio), is pressing Speaker Mike Johnson (R-La.) to call Congress back from recess to approve additional disaster relief funding. In a letter (link) to Johnson, they emphasized the need for substantial funding to ensure FEMA and the Small Business Administration (SBA) are ready to respond to natural disasters. They argue that the $20 billion included in the temporary fiscal year 2025 spending plan is a “first step” but insufficient for the required recovery efforts. As previously noted, Johnson has indicated he prefers to wait for a more accurate damage assessment before taking further action.

— Biden is slated to leave for Germany Thursday but there is chatter he may cancel the journey. Jean-Pierre said she didn’t have “anything to share about a change in travels or his schedule.”

Of note: Jean-Pierre has been promoted to senior adviser to the president, continuing in her role as chief White House communicator.

— Oil prices surge amid Middle East conflict fears, Brent crude hits $80. Oil prices surged on Monday, with Brent crude rising 3.7%, reaching a five-week high of $80.44 per barrel, as tensions escalated in the Middle East. The rise, driven by renewed violence between Hamas and Israel and the risk of disruptions to energy infrastructure, follows an 8% weekly gain spurred by Iran’s missile attack on Israel. Traders are concerned about potential supply disruptions in the region, particularly through the Strait of Hormuz. Hedge funds have started adjusting their positions, trimming short bets against Brent — traders cited a note from Goldman Sachs that estimated algorithm-driven traders known as commodity trading advisers could unleash as much as $40 billion of buying in Brent and WTI combined if prices rise significantly. Analysts predict that a prolonged disruption could push prices to the mid-$90s.

U.S. benchmark West Texas Intermediate crude also climbed 3.7%, topping $77 a barrel. Both Brent and WTI are lower this morning.

— White House today to host farmer-centered event to boost rural support ahead of election. The White House is holding an event today focused on farmers, as Democrats aim to highlight rural investments and gain support in key battleground states before the upcoming election. Key speakers include USDA Secretary Tom Vilsack, USTR chief agricultural negotiator Doug McKalip, and White House policy adviser Neera Tanden. The event follows the Biden administration’s announcement of $7.7 billion in climate-smart agriculture funding and $1.3 billion in rural energy investments, aiming to sway rural voters and reduce the GOP’s stronghold in these areas.

This event will emphasize collaboration between farmers, ranchers, and key stakeholders in the agricultural and food systems to promote sustainable practices. The organization’s mission focuses on transitioning agriculture to net-negative greenhouse gas emissions, meaning agriculture would absorb more carbon than it emits, ultimately reducing its environmental footprint and offsetting other emission sources.

The day’s agenda involves a blend of policy announcements and discussions on agricultural sustainability and resilience, kicking off with a White House tour and followed by a series of talks from prominent officials, including Steve Benjamin of the White House Office of Public Engagement, Vilsack, and other senior members of the Biden administration. These officials are expected to present updates on various initiatives to support farmers, reduce food prices, ensure fairness, and enhance the resilience of the food supply chain.

The event will allow participants to share their experiences and insights on how the Biden/Harris administration’s investments have impacted agriculture. This session aims to gather feedback and prioritize next steps for continued federal support. The day’s activities will also include a visit to USDA, where participants will hear about the department’s core programs, with a focus on supporting family farms and strengthening rural communities.

— Warren targets Coca-Cola, Pepsi, General Mills over alleged shrinkflation practices. Sen. Elizabeth Warren (D-Mass.) and Rep. Madeleine Dean (D-Pa.) called out Coca-Cola, PepsiCo, and General Mills for using “shrinkflation” to boost profits by reducing product sizes while maintaining prices. In letters to the CEOs, the lawmakers accused the companies of price gouging and contributing to inflation. They requested data on the average annual price per ounce of soda and cereal from 2018 to 2024. The lawmakers called out specific reports and public comments from the trio of firms that show smaller packages drove profits, including “Family Size” Cocoa Puffs cereal moving from 19.3 ounces to 18.1 ounces and Gatorade replacing its 32-ounce bottle with a 28-ounce version for the same price.

— Trump’s economic plans could double federal debt increase compared to Harris, analysis finds. A new report (link) from the Committee for a Responsible Federal Budget (CRFB) projects that Donald Trump’s economic proposals would raise the federal debt by $7.5 trillion by 2035, more than double the $3.5 trillion increase expected under Kamala Harris’ platform. Trump’s plans, including tax cuts and tariffs, are predicted to boost the debt significantly, while Harris’ proposals focus on expanded tax credits and corporate tax increases. The CRFB warns of potential fiscal crises and slower growth due to escalating debt under both candidates.

— A new poll shows Vice President Kamala Harris leads Donald Trump. The survey, by the Times and Siena College, has the race at 49-46, with Harris making gains among older voters and Republicans, and persuading more Americans that she represents change. But Trump is still more trusted to manage the economy.

Of note: The Times/Sienna College first poll of Florida this cycle finds Trump ahead by 13 points, 55% to 41%.

— Kamala Harris confident Congress will work with her if elected, criticizes Trump on key issues. During an interview on 60 Minutes, Democratic presidential nominee Kamala Harris expressed confidence that Congress would work with her to pass economic and tax reforms if she’s elected. Harris criticized Republican candidate Donald Trump for his divisive rhetoric and lack of focus on unity, calling his promises to end the war in Ukraine “surrender.” She also stressed the importance of bipartisan immigration reform, supporting Ukraine, and making tax policies fairer for middle-class Americans. Harris revealed her gun ownership, explaining that her law enforcement background includes owning a Glock.

Of note: Harris, asked about her flip-flops on policy issues from her 2020 presidential campaign, suggested that her time as vice president has led her to find more moderate positions. “I have been traveling our country. And I have been listening to folks and seeking what is possible in terms of common ground.”

Regarding Israeli Prime Minister Benjamin Netanyahu, Harris avoided directly calling him a close ally, instead emphasizing the alliance between the American and Israeli people. Harris reiterated Israel’s right to self-defense while acknowledging that “too many Palestinians have lost their lives” in the ongoing conflict.

When pressed on her economic proposals, Harris defended her plans to increase taxes on the wealthiest Americans and largest corporations to fund initiatives like housing assistance and tax incentives for new parents. She highlighted record low unemployment rates across demographics as evidence of a strong economy, while acknowledging high living costs remain an issue. Harris proposed a ban on price gouging for food items to address rising grocery prices.

On immigration policy, Harris defended the administration’s approach, citing recent 50% reductions in illegal immigration and fentanyl trafficking. She emphasized the need for Congressional action to fully address immigration challenges, criticizing Trump for opposing a bipartisan border security bill. Harris avoided directly answering whether earlier intervention on border issues was warranted.

Harris criticized Trump for spreading misinformation about disaster relief efforts and accused him of prioritizing personal grievances over substantive policy discussions.

— Ted Cruz and Colin Allred hold rallies in Tarrant County ahead of upcoming debate. Sen. Ted Cruz (R-Tex.) and Rep. Colin Allred (D-Tex.) held dueling rallies in Tarrant County, Texas, ahead of their in-person debate on Oct. 15. Allred, vying to become the first Democrat elected statewide in Texas in 30 years, focused his Fort Worth event on reproductive rights, voting rights, and defeating Cruz. Cruz, meanwhile, addressed supporters in Keller, criticizing the Biden administration’s economic policies and emphasizing the need to “keep Texas Texas.” Both candidates are gearing up for a closely watched Senate race as Election Day approaches.

— Vice President Kamala Harris is set to propose a new initiative that would expand in-home care services for seniors through Medicare. This proposal targets the “sandwich generation,” adults who juggle responsibilities of caring for both children and aging parents — a group that holds a significant percentage of undecided voters. With the U.S. aging rapidly, about 11,000 Americans turn retirement age daily, but Medicare’s current home health services are limited. Harris aims to revitalize a similar effort that Democrats attempted in 2021 under Medicaid but failed to implement. She will present her plan on The View, highlighting the economic relief it could provide for caregivers and seniors alike.

MARKET FOCUS

— Equities today: Asian and European stock indexes were mixed overnight. China markets are reopened after an extended public holiday. The economic briefing by China’s National Development and Reform Commission Tuesday “underwhelmed markets, offering little in the way of new stimulus measures,” said broker SP Angel. That news prompted selloffs in the Chinese stock indexes, with the Hang Seng index dropping almost 10% and its biggest one-day loss in nearly two years. U.S. Dow opened around 110 points higher, but then turned lower. In Asia, Japan -1%. Hong Kong -9.4%. China +4.6%. India +0.7%. In Europe, at midday, London -1.1%. Paris -0.7%. Frankfurt -0.2%.

U.S. equities yesterday: Rising bond yields and geopolitical tensions weighed on U.S. equities to open the week. The Dow lost 398.51 points, 0.94%, at 41.954.24. The Nasdaq declined 213.95 points, 1.18%, at 17,923.90. The S&P 500 lost 55.13 points, 0.96%, at 5,695.94.

The benchmark 10-year Treasury yield rose above 4% for the first time since August, adding more than 4 basis points to reach 4.02%.

— Google focus. A federal judge yesterday ruled that Google must allow developers to bring their own app stores to the Android operating system for three years, among other changes. This follows a jury verdict last year for “Fortnite” maker Epic Games. Google vowed to appeal. “These changes would put consumers’ privacy and security at risk, make it harder for developers to promote their apps and reduce competition on devices,” Lee-Anne Mulholland, the company’s vice president of regulatory affairs, wrote in a blog post.

— McDonald’s sues meatpacking giants for alleged beef price-fixing conspiracy. McDonald’s filed a lawsuit against major meatpacking companies, including JBS, Tyson Foods, Cargill, and National Beef Packing, accusing them of conspiring to limit beef supplies and inflate prices since 2015. The fast-food chain alleges that these companies reduced their output to drive up industry prices, violating U.S. antitrust laws. The lawsuit follows similar claims from other companies like Target and Aldi. McDonald’s is seeking monetary damages and an end to the alleged price-fixing. The case has been filed in the Eastern District of New York, with related proceedings in Minnesota.

— Samsung warns of profit miss, cites softer demand and Chinese competition. Samsung announced that its quarterly operating profit will fall about 20% below analyst expectations due to weakened demand and heightened competition from Chinese rivals. A top Samsung executive issued a rare apology for the disappointing news, highlighting the challenges the Korean tech giant faces in the current market.

— Boeing and union continue negotiations amid strike by 33,000 workers. Boeing and the union representing 33,000 striking West Coast factory workers are continuing negotiations to resolve the ongoing strike. Despite a full day of talks with federal mediators, the International Association of Machinists and Aerospace Workers reported no significant progress but confirmed discussions will resume tomorrow. The union is demanding a 40% pay increase over four years and the restoration of a defined-benefit pension, which was removed in a previous contract a decade ago.

— Oil prices spiked on Monday, with Brent exceeding $80 per barrel for the first time since August, fueled by the widening Middle East conflict.

WTI crude oil futures dropped to around $75.9 per barrel on Tuesday (Brent around $79.20), following a recent surge driven by escalating Middle East conflict. Investors are closely watching Israel’s potential response to Iran’s missile attack, though President Biden has urged against targeting Iran’s oil facilities. Easing supply concerns, including OPEC’s spare capacity and stable global supplies, also contributed to the decline. Lingering concerns about demand from China added pressure, as China’s National Development and Reform Commission offered little detail on potential economic stimulus.

— Ag markets today: Soybeans faced heavy followthrough selling overnight, while corn and wheat pulled back from Monday’s gains. As of 7:30 a.m. ET, corn futures were trading mostly 2 cents lower, soybeans were 13 to 14 cents lower and wheat futures were steady to 2 cents lower. The U.S. dollar index was about $1.00 lower, and front-month crude oil futures were around $1.40 lower.

Wholesale beef prices strengthen. Wholesale beef prices firmed $3.35 for Choice to $305.93 and $1.72 for Select to $289.33 on Monday, while movement totaled 106 loads. While the wholesale market is strengthening, packer cutting margins remain deep in the red, spurring questions about whether packers will bid up for cash cattle after four straight weeks of gains.

Cash hog index falls, pork cutout rises. The CME lean hog index is down 57 cents to $84.26 as of Oct. 4, the second straight decline after a three-day rally to end last week. The pork cutout firmed $1.74 to $96.05 on Monday as strong gains in loins, butts, picnics and bellies more offset lower prices for primal ribs and hams.

— Agriculture markets yesterday:
• Corn: December corn rose 1 1/4 cents to $4.26, closing near the session high.
• Soy complex: November soybean futures fell 3 3/4 cents to $10.34, though settled nearer session highs. December meal futures sunk $6.50 to $324.00. December bean oil futures saw relative strength, rallying 60 points to 44.57 cents.
• Wheat: December SRW wheat rose 2 3/4 cents to $5.92 1/2. December HRW wheat gained 5 1/4 cents to $6.03 1/4. Both markets closed nearer their session highs. December spring wheat futures rose 4 cents to $6.42 1/2.
• Cotton: December cotton rose 26 points to 73.53 cents but closed nearer the session low.
• Cattle: December live cattle rose 2 1/2 cents to $187.025 and near mid-range. October live cattle rose 47 1/2 cents to $187.475 and moved to a premium to the December. November feeder cattle fell 12 1/2 cents to $249.15, near mid-range and hit a nine-week high early on.
• Hogs: December lean hog futures climbed 67.5 cents to $76.825 and settled nearer session highs.

— Quotes of note:

• Federal Reserve Bank of Atlanta President Raphael Bostic will give remarks and participate in a moderated conversation on the economic outlook before the Atlanta consular corps luncheon in Atlanta. Separately, Federal Reserve Bank of Boston President Susan Collins is scheduled to speak before the 23rd annual Regional & Community Bankers Conference hosted by the Federal Reserve Bank of Boston. Additionally, Federal Reserve Vice Chair Philip Jefferson is expected to participate in “The Discount Window, 1913-2000" conversation hosted by Davidson College in Davidson, North Carolina.

• Federal Reserve Governor Adriana Kugler emphasized the need for a “balanced approach” to future interest rate cuts, focusing on both inflation and employment risks. While supporting efforts to bring inflation back to the 2% target, Kugler highlighted the importance of avoiding an undesirable slowdown in employment growth. She expressed concern about the economic impact of Hurricane Helene and geopolitical events in the Middle East, which could influence the U.S. outlook. Kugler reiterated her support for further rate cuts if inflation continues to ease, but warned that employment risks may require a faster shift to a neutral stance.

• Federal Reserve Bank of St. Louis President Alberto Musalem said he supported the U.S. central bank’s decision last month to lower interest rates by a half point, but emphasized he would prefer further reductions to be gradual. Musalem said he penciled in a rate path that was slightly higher than the median official in the Federal Open Market Committee’s Summary of Economic Projections released last month, but he would not prejudge the scale or pace of future rate moves. “Given where the economy is today, I view the costs of easing too much too soon as greater than the costs of easing too little too late,” Musalem said Monday in remarks prepared for an event organized by the Money Marketeers of New York University Inc. “I believe that further gradual reductions in the policy rate will likely be appropriate over time,” Musalem said in his remarks. “Patience has served the FOMC well in its pursuit of price stability and remains appropriate now, but I will not prejudge the size or timing of future adjustments to policy.”

— U.S. trade deficit narrows to $70.4 billion in August, lowest in five months. The U.S. trade deficit shrank to $70.4 billion in August 2024, down from $78.9 billion in July and slightly better than market forecasts. Exports rose by 2% to a record $271.8 billion, driven by telecommunications, aircraft, computer accessories, and passenger cars, along with increases in service exports such as travel. Imports decreased by 0.9% to $342.2 billion, with declines in nonmonetary gold, crude oil, and passenger cars. However, imports of services, including travel and intellectual property charges, increased.

Market perspectives:

— Outside markets: The U.S. dollar index was weaker, with the yen also weaker against the U.S. currency while most other rivals were firmer. The yield on the 10-year U.S. Treasury note remained above 4%, trading around 4.03%, with a mostly lower tone in global government bond yields. Crude oil futures remained under pressure, with U.S. crude around $75.40 per barrel and Brent around $79.20 per barrel. Gold and silver futures were mixed, with gold firmer around $2,670 per troy ounce and silver weaker around $31.62 per troy ounce.

— Oil World: Indonesia B40 biodiesel plan would be ‘catastrophic’ for world market. Oil World senior analyst David Mielke said Indonesia’s plan for the widespread use of the palm-oil based B40 biodiesel from next year would be “catastrophic” for the global market, as it would involve the additional use of 1.5 MMT to 1.7 MMT of the commodity. Mielke also said global palm oil production is expected to increase by 2.3 MMT in 2024-25 compared to the previous season.

— Western Forest Products to cut lumber production amid market challenges. Western Forest Products Inc. announced plans to reduce lumber production by approximately 30 million board feet from October to December 2024, resulting in a total estimated reduction of 90 million board feet for the year — about 10% of its annual capacity. The curtailments are driven by weak lumber demand, rising U.S. softwood lumber duties, and limited economic log supply in British Columbia. CEO Steven Hofer called for government policies to support the forestry industry, noting the potential for U.S. duties to increase further in 2025. The company will continue adjusting production based on market conditions.

— USDA daily export sale:
• 166,000 MT soybeans to China, market year 2024-2025.

— Ag trade update: Japan is seeking 115,050 MT of milling wheat in its weekly tender.

— NWS outlook: Hurricane Milton has intensified into a powerful category 5 storm and is expected to make landfall along the west coast of Florida late Wednesday evening... ...Milton will bring life-threatening impacts to much of Florida including a destructive storm surge, devastating hurricane-force winds, and considerable flash and urban flooding... ...Unseasonably hot temperatures expand over much of the western and central U.S., some record-tying/breaking highs possible.

Items in Pro Farmer’s First Thing Today include:

• Heavy pressure on soybeans overnight
• Cordonnier keeps U.S. crop estimates unchanged
• Corn, soybean CCI ratings slip but remain well above year-ago
• Crop Progress Report highlights

RUSSIA/UKRAINE

— Russia strikes Odesa cargo ship, heightening concerns over Ukraine’s export corridor. Russia launched missile strikes on a cargo ship in the Ukrainian port of Odesa, intensifying fears about the safety of Ukraine’s key maritime export route for agricultural goods. The Palau-registered Optima was hit by two Iskander-M missiles, killing one Ukrainian and injuring five crew members. This follows a similar attack on another ship the previous day and a drone assault on Odesa’s region. Kyiv officials reported that Russia has targeted 21 vessels since abandoning the UN-brokered grain deal. Despite the strikes, Ukraine’s grain exports have surged, with 70 million tonnes shipped over the past year.

POLICY UPDATE

— USDA announces $250 million in aid for distressed farm loan borrowers via automatic payments under the Inflation Reduction Act. This follows $2.4 billion already distributed to over 43,900 farmers since August 2022. The new assistance will support approximately 4,650 borrowers, helping to address delinquencies and ensure they can continue production. Farm Service Agency Administrator Zach Ducheneaux emphasized that these payments not only address immediate financial challenges but also strengthen the farm loan system for the future.

CHINA UPDATE

— China commits to economic goals but falls short of large stimulus, disappointing investors. China’s National Development and Reform Commission (NDRC) reaffirmed confidence in reaching its 2024 economic targets and announced plans to accelerate spending, but stopped short of unveiling significant new stimulus measures. The NDRC promised to bring forward 100 billion yuan in investment initially earmarked for 2025 and add another 100 billion yuan for strategic projects in 2024 (total of $23.4 billion). Despite these measures, investors were disappointed as expectations for larger fiscal stimulus were unmet. Officials emphasized increasing support for key sectors and low-income groups, but the announcement fell short of the market’s hopes for a stronger economic rebound.

— China puts duty on EU brandy in response to EV tariffs. China imposed temporary anti-dumping measures on brandy imports from the European Union after the bloc voted for tariffs on Chinese-made electric vehicles (EVs). An investigation has preliminarily determined that dumping of brandy from the EU is threatening China’s own brandy sector with “substantial damage,” the Chinese commerce ministry said. The ministry said its anti-dumping and anti-subsidy investigation into EU pork products was ongoing and would make “objective and fair” decisions at the end of the probe. The ministry also said it was considering a hike in tariffs on imports of large-engine vehicles.

— China to buy frozen beef, mutton for state reserves. China will buy 6,000 MT of frozen beef and mutton for its state reserves on Oct. 9. This is the fourth batch of purchases for state reserves this year.

— WSJ: Mexico seeks to reduce dependence on Chinese imports, asks major firms for help. The Wall Street Journal reports (link) that Mexico’s new administration, under President Claudia Sheinbaum, is urging global companies like General Motors, Stellantis, Intel, and Foxconn to help reduce reliance on imports from China and other Asian nations. The government is asking these firms to identify Chinese-made products and components that could be produced within North America, as part of a broader effort to boost local manufacturing and strengthen regional supply chains.

TRADE POLICY

— World is abandoning the WTO as the U.S. and China lead the way. Kristen Hopewell, writing in Foreign Affairs (link), says the World Trade Organization (WTO) is facing a crisis as global cooperation on trade erodes. Hopewell is Director of the Liu Institute for Global Issues and Professor and Canada Research Chair in Global Policy at the School of Public Policy and Global Affairs at the University of British Columbia. She writes that the U.S. and China, once champions of the global trade order, are now undermining WTO rules through tariffs, subsidies, and economic coercion. She says the U.S. has paralyzed the WTO’s dispute-settlement mechanism by blocking appointments to its Appellate Body, allowing countries to violate rules with impunity. Other nations, such as Indonesia and India, have followed suit by appealing WTO rulings “into the void.” With negotiations stalling and enforcement mechanisms collapsing, the future of the multilateral trading system is at risk, she cautions. Her bottom line: The potential collapse of the WTO could lead to protectionist policies, economic instability, and global conflict, resembling the conditions that led to the Great Depression and World War II.

ENERGY & CLIMATE CHANGE

— North Dakota nears decision on Summit Carbon Solutions Pipeline project. North Dakota’s Public Service Commission is closer to deciding on Summit Carbon Solutions’ proposed carbon capture pipeline, which would link 57 ethanol plants across five states to a storage site in North Dakota. The project, touted as the world’s largest carbon capture pipeline, would store captured emissions underground. The commission previously denied Summit’s route permit, but after public hearings and route adjustments, such as moving the pipeline farther east of Bismarck, a decision is pending. Summit has secured 80% of the necessary land through voluntary easements, though concerns over eminent domain and property impact persist.

LIVESTOCK, NUTRITION & FOOD INDUSTRY

— USDA set to announce new cattle market rule to boost fairness and transparency. USDA Secretary Tom Vilsack is expected to announce a new rule aimed at addressing issues in the fed cattle markets during an event at the White House today (see related item). The rule seeks to improve price discovery and transparency, and protect producers from unfair practices and market manipulation. Following an Office of Management and Budget (OMB) review, the regulation is part of the Biden administration’s broader effort to create fairer livestock markets for U.S. farmers and producers. The Agricultural Marketing Service (AMS) is expected to lead the regulatory changes to address how base prices for live cattle are determined in long-term contracts.

— Pure Prairie Poultry faces bankruptcy, chicken welfare crisis, and government intervention. Pure Prairie Poultry, a poultry processor in Iowa, filed for Chapter 11 bankruptcy in September 2024, citing financial struggles despite receiving $45.6 million in USDA funding. However, the bankruptcy was dismissed due to creditor objections. The company then notified authorities it couldn’t afford feed for 1.3 million chickens, leading to an animal welfare crisis. The Iowa Department of Agriculture intervened, obtaining an emergency court order to take custody of the chickens. Pure Prairie is now seeking restructuring options and potential buyers while curtailing operations to conserve cash. The company listed estimated assets between $50 million and $100 million, with liabilities between $100 million and $500 million. Despite receiving significant funding, including a $6.9 million grant from USDA’s Meat and Poultry Processing Expansion Program and a $38.7 million USDA loan, the company experienced substantial financial losses. Pure Prairie Poultry is currently exploring restructuring options outside of the courts and pursuing expressions of interest from potential buyers. The company has stated that it will curtail or suspend operations to conserve cash and meet commitments to quality and wholesomeness. All Pure Prairie Poultry employees remain employed by the company, but contract workers hired through local staffing agencies are no longer working at the plant.

OTHER ITEMS OF NOTE

— American Water suffers cyberattack, pauses customer billing. American Water, the largest regulated water utility in the U.S., announced it was hit by a cyberattack, leading to a temporary halt in customer billing. The New Jersey-based company, serving over 14 million people across 14 states and 18 military installations, discovered the breach on Thursday and quickly took action, including shutting down certain systems. The company is working nonstop to investigate the attack, assuring customers they will not incur late fees while systems remain offline.

— Biden administration to announce final rule on lead pipe removal. The Biden administration is set to unveil a final rule today, mandating that drinking water systems replace lead pipes within the next 10 years. OMB just finished its review yesterday. The rule, supported by $15 billion allocated in the 2021 infrastructure law, aims to close loopholes that previously allowed cities to delay replacements. The rule is part of the administration’s ongoing efforts to ensure cleaner drinking water and address public health concerns. The EPA’s plan, reviewed by the Office of Management and Budget (OMB), marks a swift move by the administration to implement these critical regulations.

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