Market Volatility: Yuan, Pound, Silver, Wheat, OJ

Uncertain corn price benefits from carbon capture in ethanol industry | Bird flu strikes flock of 4.2 million chickens in Sioux County, Iowa

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May 29, 2024 09:15 AM

Uncertain corn price benefits from carbon capture in ethanol industry | Bird flu strikes flock of 4.2 million chickens in Sioux County, Iowa

Today’s Digital Newspaper

MARKET FOCUS

U.S.-based mutual and exchange-traded funds: net $172 billion inflows
Hess shareholders sign off on $53 billion sale to Chevron
ConocoPhillips in advanced talks to acquire smaller rival Marathon Oil
Oil extending gains on another attack in Red Sea
Kashkari: Rate hike unlikely but still possible, awaiting inflation data
Inverted yield curve anomaly raises questions
Chinese yuan traded on mainland hits six-month low vs dollar
Pound rises to strongest level vs euro in almost two years
Silver prices shot sharply higher Tuesday, challenging recent 11-year high
Bank of America notes worsening port congestion
Ag markets today
India set to import wheat after six-year gap
Orange juice prices have reached record highs
Ag trade update
Iowa farmers faced severe weather last week
NWS weather outlook
Pro Farmer First Thing Today items

BALTIMORE BRIDGE COLLAPSE

Maryland governor meets with President Joe Biden to discuss recovery efforts

ISRAEL/HAMAS CONFLICT

White House says Israel’s Rafah strike doesn’t cross red line
U.S. pier for Gaza aid being removed for repairs after rough seas

RUSSIA & UKRAINE

Ukraine grain exports surge in May
Too many U.S. goods still getting to Russia: U.S. official

CHINA

IMF lifts China growth forecast to 5% citing fast start to 2024
Canadian Finance Minister non-committal about matching U.S. tariffs on Chinese EVs
China’s state banks continue to support falling yuan
Argentina to begin corn shipments to China in July
China to send new pandas to Smithsonian’s National Zoo

TRADE POLICY

Companies shift production to avoid trade barriers

ENERGY & CLIMATE CHANGE

USDA seeks input for greenhouse gas verification program
DOE issues charging station update
SUV facts and figures
Uncertain corn price benefits from carbon capture in ethanol industry

LIVESTOCK, NUTRITION & FOOD INDUSTRY

USDA confirms first H5N1 detection in alpacas at Idaho
Bird flu strikes flock of 4.2 million chickens in Sioux County, Iowa
Agri Stats fails to dismiss DOJ meat price-fixing case.

HEALTH UPDATE

Weight-loss drug forecasts jump to $150 billion as supply grows

POLITICS & ELECTIONS

DNC to nominate Biden in virtual roll call to get on Ohio ballot
Democratic Senate candidates lead in six races with populist campaigns
Gonzales narrowly defeats hardline challenger
House GOP leaders, aggies will fundraise for Trump and Republican Party committees
WSJ: Pro-Democrat super PAC launching $100 million fund focused on abortion rights
Poll: Trump, GOP early favorites for White House, Congress
Claudia Sheinbaum poised to become Mexico’s first female president

OTHER ITEMS OF NOTE

Florida Republicans criticize Biden’s easing of Cuba banking restrictions

MARKET FOCUS

— Equities today: Stocks are sliding globally, with the U.S. Dow opening around 300 points lower, as bond yields spike on fading rate cut expectations. American Airlines is extending post-market losses after it cut its profit forecast. European shares also fell with airlines among the laggards. In Asia, Japan -0.8%. Hong Kong -1.8%. China +0.1%. India -0.9%. In Europe, at midday, London -0.2%. Paris -1%. Frankfurt -0.7%.

U.S. equities yesterday: The Dow ended lower while the Nasdaq and S&P 500 finished higher to start the holiday-shortened week. The Dow was down 216.73 points, 0.55%, at 38,852.86. The Nasdaq gained 99.09 points, 0.59%, at 17,019.88. The S&P 500 edged up 1.32 points, 0.02%, at 5,306.04.

— U.S.-based mutual and exchange-traded funds have drawn a net $172 billion of inflows so far this year, a major turnaround after they collectively bled assets in each of the past two years.

— Hess shareholders sign off on $53 billion sale to Chevron, the No. 2 U.S. oil company, according to preliminary results of the vote. The move still needs clearance by the Federal Trade Commission (FTC) and there is an arbitration case still pending over Hess’ interest in an oil field in Guyana that was brought by Exxon. That case was filed in March as Exxon contends it has the right-of-first refusal on the Hess stake in the oil field which is estimated at 11 billion barrels and it may last into 2025, according to Exxon.

— Oil is extending gains as another attack in the Red Sea added to heightened geopolitical tensions in the Middle East.

— ConocoPhillips is in advanced talks to acquire smaller rival Marathon Oil, according to the Financial Times. The all-stock proposal would value the target at slightly more than its market capitalization of about $15 billion and give ConocoPhillips control of assets in Texas, Oklahoma, North Dakota and the Permian Basin, the newspaper says. Marathon shares advanced in pre-market trading. The footprint of ConocoPhillips will expand tremendously following the acquisition, with assets in Eagle Ford, the Bakken Formation, and as far away as Equatorial Guinea.

— Ag markets today: Corn, soybeans and the winter wheat markets mildly favored the downside overnight. As of 7:30 a.m. ET, corn futures were trading a penny lower, soybeans were mostly 3 cents lower, SRW wheat was a penny lower, HRW wheat was 4 to 5 cents lower and HRS wheat was 1 to 2 cents higher. The U.S. dollar index was around 160 points higher and front-month crude oil futures were about 65 cents higher this morning.

Cattle futures remain well below cash market. Cash cattle averaged a record $190.09 last week, eclipsing the previous high posted in March. While cattle futures posted moderate gains on Tuesday, the June contract finished $5.54 below last week’s average cash price, signaling traders anticipate the cash market will weaken notably over the next month.

Cash hogs slump, pork cutout jumps. The CME lean hog index is down another 37 cents to $91.26 as of May 24, the sixth straight daily decline. After Tuesday’s drop, the premium in June lean hog futures tightened to $2.54. The pork cutout value firmed $4.26 on Tuesday to $103.40, as all cuts except butts strengthened, including a $9.37 jump in primal bellies and a $7.45 rise in hams.

— Agriculture markets yesterday:

Corn: July corn futures fell 2 1/4 cents to $4.62 1/2 and nearer the session low.
Soy complex: July soybeans slumped 18 1/2 cents to $12.29 1/2, ending the session below the 10-day moving average. July soymeal fell $9.90 to $376.60, near the session low. July soyoil rose 57 points to 45.52 cents.
Wheat: July SRW wheat closed up 3 cents at $7.00 1/4 and nearer the session low. Prices hit a 10-month high early on. July HRW futures rose 10 cents to $7.31 1/4 and near mid-range. Prices hit a nine-month high early on today. July spring wheat futures rose 4 3/4 cents to $7.57 1/2.
Cotton: July cotton rallied 191 points to 82.43 cents, ending the session above the 40-day moving average for the first time since April 1.
Cattle: June live cattle futures ground 85 cents higher to $184.55, while August feeder cattle futures surged $4.375 higher to $264.60.
Hogs: Hog futures remained under downward pressure despite a big noon surge in pork values. Nearby June futures ended the day 47.5 cents lower at $93.80.

— Quotes of note:

Fed’s Kashkari: Rate hike unlikely but still possible, awaiting inflation data. Federal Reserve Bank of Minneapolis President Neel Kashkari stated that while the likelihood of a rate hike is low, the option is not entirely off the table. He emphasized that the Fed’s current policy is restrictive and that policymakers should wait for more evidence of cooling inflation before considering rate cuts. Kashkari noted that wage growth remains robust and that there is time to evaluate the impact on demand before making further decisions. The Fed is expected to maintain interest rates at a 23-year high during their next meeting on June 11-12.
More Fed watch: Federal Reserve Bank of New York President John Williams will participate in a roundtable with local leaders to hear about business conditions and municipal and community services. Separately, Federal Reserve Bank of Atlanta President Raphael Bostic is scheduled to participate in a moderated conversation on “Economic Outlook and Leadership” before the American Economic Association Conference on Teaching and Research in Economic Education. Separately, the Federal Reserve will issue its Beige Book.
Canadian Finance Minister Chrystia Freeland is non-committal about matching U.S. tariffs on Chinese electric vehicles but promises a review to protect Canadian industry from Chinese oversupply. Freeland highlights China’s state-directed economic policy causing overcapacity in sectors like steel and aluminum. Canada already employs measures, including tariffs, to address these issues. G7 finance officials recently discussed responses to China’s industrial strategy in Italy, focusing on the expansion of state-owned companies affecting global mining investments.

— Inverted yield curve anomaly raises questions. One of Wall Street’s key recession indicators, the inverted yield curve — where short-term Treasury yields exceed long-term ones — has been inverted for a record stretch of around 400 trading sessions. Traditionally seen as a reliable sign of an impending economic downturn, this prolonged inversion has not yet resulted in a major slowdown, challenging its predictive reliability. Link to details via the WSJ.

Market perspectives:

— Outside markets: The U.S. dollar index was firmer, with weakness in the euro, British pound, and Swiss franc. The yield on the 10-year U.S. Treasury note was higher, trading around 4.57%, with a positive tone in global government bond yields. Crude oil futures were registering gains ahead of U.S. market action, with U.S. crude around $80.40 per barrel and Brent around $84.50 per barrel. Gold futures were sharply lower, trading around $2,341 per troy ounce, while silver was near unchanged around $32.13 per troy ounce.

— Chinese yuan traded on the mainland hit a six-month low against the dollar at 7.2488, reflecting the contrasting monetary policies of the U.S. and China, and its lowest since November, while the offshore yuan also declined to 7.2667. The U.S. maintains high interest rates to combat inflation, while China’s PBOC keeps interest rates stable but takes measures to stimulate economic growth. China’s central bank lowered the reference rate to 7.1106 per dollar, the lowest since January, allowing more yuan flexibility within a fixed trading band. The PBOC has scrapped minimum mortgage rates, lowered down payment ratios, and set up a financing scheme to support local governments in buying unsold homes. Analysts predict more easing from the PBOC, including potential cuts to the reserve requirement ratio. Meanwhile, the U.S. Federal Reserve’s stance remains uncertain, with continued pressure on the yuan expected.

Broker SP Angel said this morning in an email dispatch: “Similarly, the Japanese yen is at multi-year lows alongside the Thai baht and Indonesian rupiah. We suggest China may be boosting metal coffers, both base metals like copper and zinc alongside precious metals like silver and gold, to reduce longer term implications of a weaker Chinese currency.”

— The pound rose to the strongest level against the euro in almost two years, as the Bank of England is increasingly expected to trail the European Central Bank in lowering interest rates. Sterling jumped as much as 0.3% to 84.84 pence against the common currency, the highest since August 2022. The latest move comes after data showed inflation in May slowed across Germany’s regions versus a month ago, a sign the trajectory for monetary policy could diverge further.

— Silver prices shot sharply higher Tuesday and challenged the recent 11-year high. Frank Watson of Kinesis says: “Silver’s dual role as a precious and industrial metal means it has also benefited from the current environment of reasonably strong economic growth and high inflation, boosting precious metals as a hedge against rising costs, at the same time as market expectations of interest rate cuts later this year which would reduce the opportunity cost of holding non-interest-bearing assets.”

— Bank of America says worsening port congestion is consuming more than 2% of global container shipping capacity.

— India set to import wheat after six-year gap. India is poised to begin wheat imports after a six-year gap, sources told Reuters, as the approaching end of general elections removes a key hurdle. New Delhi is expected to abandon a 40% tax on wheat imports this year, officials and other sources told Reuters, paving the way for private traders and flour millers to buy foreign wheat. A gov’t source also said, “The removal of the import duty will help us ensure that our own reserves don’t fall below a psychological benchmark of 10 million tons.”

— Orange juice prices have reached record highs due to adverse weather and disease in Brazil, the world’s largest exporter. Manufacturers are considering using mandarins to make the drink as a potential solution. Orange juice futures hit $4.92 a pound, nearly double from a year ago, driven by poor harvests in Florida and Brazil. Consecutive years of reduced supply have depleted stockpiles, leading to fears of rising consumer prices. The industry is exploring the use of mandarins, which are more resilient to climate change. The International Fruit and Vegetable Juice Association (IFU) is considering regulatory changes to allow the use of citrus fruits other than oranges. Citrus greening, a disease first detected in the U.S. two decades ago, has significantly impacted orange production in Florida and Brazil. Rising costs are being passed on to consumers, and demand for orange juice remains high post-pandemic.

— Ag trade update: South Korea purchased 66,000 MT of corn expected to be sourced from South America or South Africa. Jordan tendered to buy 120,000 MT of optional origin milling wheat.

— Iowa farmers faced severe weather last week, limiting fieldwork to an average of two days. The storms brought damaging winds, nearly 30 tornadoes, and triple the usual precipitation, according to USDA. Severe weather severely restricted fieldwork. Planting delays: Corn: 88% planted, with 73% rated good or excellent, but at risk of yield losses from further delays. Soybeans: 73% planted, 10 days behind last year and three days slower than the five-year average. Some areas received over 6 inches, with Tama County reporting 8.63 inches. The statewide average was 3.41 inches, more than triple the typical amount. Wet weather has improved field moisture conditions, with 97% of fields now having adequate or surplus moisture, up from 50% last year. State Agriculture Secretary Mike Naig expressed concern for affected communities and noted that while planting is progressing, many farmers continue to face delays.

— NWS weather outlook: Active central U.S. weather pattern to continue, with heavy rains, flash flooding, and severe weather possible... ...Anomalous heat continues across far southern Texas and Florida, while hot temperatures begin to build in the Southwest and interior California Valleys.

Items in Pro Farmer’s First Thing Today include:

• Grains mostly weaker overnight
• HRW CCI rating inches up, SRW crop declines
• Crop Progress Report highlights

BALTIMORE BRIDGE COLLAPSE

— Maryland Governor Wes Moore (D) met with President Joe Biden to discuss the recovery efforts following the collapse of the Francis Scott Key Bridge. After an aerial tour of the wreckage, Moore announced that plans are on track to restore the federal channel by June 10, allowing large container ships to return. Key points from the meeting include:

Restoration of the federal channel is expected by early June.
The Army Corps of Engineers is clearing debris to restore the channel to its original dimensions.
Federal funds will cover the full cost of replacing the bridge, estimated between $1.7 and $1.9 billion, with an initial $60 million already approved.
Efforts to remove over 10,000 tons of steel from the water are ongoing and will continue even after the channel reopens.

ISRAEL/HAMAS CONFLICT

— Biden administration says only a “major” operation into Rafah would prompt it to withdraw military aid, confirming it would not change its policy towards Israel after its air strike on a tent camp on Sunday killed at least 45 people and provoked an international outcry.

Meanwhile, U.S. deliveries of humanitarian aid were interrupted when a temporary pier off the coast of Gaza was damaged by weather. The Pentagon said it was towing the pier away for repair. The Pentagon said the repairs will take “at least over a week” and then it will need to be anchored back to the beach in Gaza. “From when it was operational, it was working, and we just had sort of an unfortunate confluence of weather storms that made it inoperable for a bit,” said Sabrina Singh, a Pentagon spokeswoman, said.

RUSSIA/UKRAINE

— Ukraine grain exports surge in May. Ukraine’s ag ministry says its grain exports will reach 5 MMT this month, up from around 3 MMT in May 2023. Through 11 months, Ukraine’s 2023-24 grain exports stand at 46.4 MMT, up 1.5 MMT (3.3%) from the same period last year, including 26.2 MMT of corn, 17.2 MMT of wheat and 2.4 MMT of barley.

CHINA UPDATE

— IMF raises forecast for China’s growth over the next two years. The fund said it now expects GDP in the world’s second-largest economy to increase by 5% in 2024 and by 4.5% in 2025. Both estimates were 0.4 percentage points above its previous forecast. It cited strong exports and investment. However, it warned China’s gov’t of the perils of its industrial policy, including backing “priority sectors.”

— China’s state banks continue to support falling yuan. China’s major state-owned banks acquired U.S. dollars in the offshore foreign exchange market before selling them in the spot market to stabilize the Chinese currency in recent sessions, people with knowledge of the matter told Reuters. The state bank actions came as the Chinese yuan fell to a six-month low against the dollar. The state banks’ tactics in the offshore market differed slightly from what they have done over the past few months, when they tightened offshore yuan liquidity to raise the cost of shorting the yuan, four sources said.

— Argentina to begin corn shipments to China in July. Argentina is set to begin corn exports to China by July following Chinese regulatory approval of two GMO corn varieties. This clearance is crucial as it allows Argentina to export these GMO corn varieties to China for the first time. Agreements on phytosanitary and other issues were signed in 2023, but no shipments had occurred until now.

— China to send new pandas to Smithsonian’s National Zoo. China will send two new giant pandas, Bao Li and Qing Bao, to Washington’s Smithsonian National Zoo by the end of the year. These 2-year-old pandas will be on loan until April 2034 as part of a research and breeding agreement. This announcement follows the return of pandas Tian Tian, Mei Xiang, and their cub Xiao Qi Ji to China last November, which had marked a pause in “panda diplomacy.” However, Beijing signaled a renewed willingness to exchange pandas earlier this year. Bao Li has a connection to Washington as his mother, Bao Bao, was born at the National Zoo in 2013.

TRADE POLICY

— Companies shift production to avoid trade barriers. A growing number of companies are relocating production to avoid tariffs and trade barriers, potentially doubling exports from some Southeast Asian economies by 2030, according to a new Nomura report. Key Points:

Beneficiary countries: India, Vietnam, Malaysia, and Mexico are benefiting from the diversification away from China.
Sectors affected: The most affected sectors include automobiles, electronics, apparel, toys, capital goods, consumer durables, and semiconductors.
Investment sources: The majority of investment into India comes from the US and developed Asian countries like Japan, while Chinese companies are investing heavily in Southeast Asia.
Export projections: Vietnam’s exports are expected to double to over $750 billion annually by 2030, and Malaysia’s exports are projected to reach $652 billion.
Continued dependence on China: Despite these shifts, complete independence from China is unlikely, as many intermediate goods will still come from China.
Geopolitical trade trends: Trade between geopolitically aligned countries is more stable, while fragmentation poses challenges, as noted by the IMF.

ENERGY & CLIMATE CHANGE

— USDA seeks input for greenhouse gas verification program. USDA issued a request for information (RFI) (link) regarding the establishment of a Greenhouse Gas (GHG) Technical Assistance Provider and Third-Party Verifier Program. This initiative aims to develop regulations to support farmer, rancher, and private forest landowner participation in voluntary carbon markets, as part of the Growing Climate Solutions Act (GCSA). Key points:

Criteria and protocols: USDA seeks input on criteria for evaluating and identifying protocols for the program.
Technical assistance providers: Input is also requested on qualifications for technical assistance providers.
Next steps: Feedback will inform the development of a proposed rule.
Comment Deadline: Comments are due by June 28.
Administration’s goals: This effort aligns with the Biden administration’s principles to ensure voluntary carbon markets (VCMs) drive credible climate action and economic opportunity.

— DOE issues charging station update. Dept. of Energy Secretary Jennifer Granholm now says the U.S. should have over 200,000 public chargers available by year’s end.

— SUV facts and figures (source: Axios):

If the 360 million-plus SUVs on the world’s roads were a country of their own, their CO2 emissions would now be the fifth largest, per IEA.
The units are heavier and typically use more fuel than other passenger cars; they hit 48% of total global car sales in 2023.
In 2022 and 2023, oil consumption related to SUVs accounted for over a quarter of total global oil demand growth.
Around 30 million SUVs with internal combustion engines were added to the global fleet in 2023, comparable to the total number of electric cars on the roads today.

— Uncertain corn price benefits from carbon capture in ethanol industry. The ethanol industry aims to capture carbon emissions to stay competitive with greener energy trends, but the direct benefits to corn farmers remain unclear, according to the North Dakota Monitor (link). Of note:

Carbon capture efforts: Ethanol plants in North Dakota, such as Tharaldson Ethanol, are implementing carbon capture and storage (CCS) systems.
Economic impact: While ethanol plants and pipeline developers receive significant federal tax credits, the financial benefits for farmers supplying corn are uncertain.
Investment and costs: Significant investments, like the $35 million at Red Trail, aim to strengthen local markets but don’t guarantee immediate premiums for farmers.
Market pressures: Farmers are concerned about staying qualified for low-carbon fuel markets to avoid price drops.
Future trends: The industry anticipates closer collaboration between farmers and ethanol plants to document low-carbon practices, potentially leading to future benefits.

LIVESTOCK, NUTRITION & FOOD INDUSTRY

— USDA confirms first H5N1 detection in alpacas at Idaho farm; virus also found in New Mexico feral cats and Michigan dairy herd. USDA’s Animal and Plant Health Inspection Service (APHIS) confirmed that highly pathogenic H5N1 avian influenza has been detected in alpacas at an Idaho farm. This is the first time the virus has been found in alpacas, which belong to the camelid family. The virus was previously identified in a poultry flock on the same farm, and the environment’s high viral load likely led to its transmission to alpacas. Genetic sequencing revealed that the virus strain infecting the alpacas is the same B3.13 H5N1 genotype found in dairy cows and the infected poultry at the farm. Four out of 18 alpacas on the farm tested positive for H5N1. The affected poultry flock was depopulated earlier this month.

Additionally, H5N1 was detected in two feral cats found dead in Curry County, New Mexico, not directly linked to any known outbreak farms. Detections of H5N1 in cats at dairy farms have been reported in multiple states.

In Michigan, the Michigan Department of Agriculture and Rural Development (MDARD) reported another H5N1 outbreak in a dairy herd in Clinton County, marking the third outbreak in that county and the 22nd in the state. Nationally, H5N1 has been detected in 67 dairy herds across nine states, with recent detections in Idaho, Texas, and Michigan.

— Bird flu strikes flock of 4.2 million chickens in Sioux County, Iowa. Avian influenza that is very transmissible and lethal for domestic birds has been detected in a flock of 4.2 million egg-laying chickens in Sioux County, according to the Iowa Department of Agriculture and Land Stewardship (IDFALS). It is the first confirmation of highly pathogenic avian influenza in a commercial or backyard poultry flock this year in Iowa. IDALS reported it Tuesday.

— Agri Stats fails to dismiss DOJ meat price-fixing case. Agri Stats, an agricultural data company, lost its bid to dismiss a Justice Department lawsuit accusing it of facilitating price-fixing among major meat companies. This development marks a significant step towards trial.

The DOJ claims Agri Stats used data from chicken, turkey, and pork companies to aid price-fixing. While Agri Stats is the only defendant, nearly a dozen meat companies, including Tyson Foods, Cargill, Sanderson Farms, and Pilgrim’s Pride, are alleged co-conspirators. Agri Stats argues its data is anonymized, but the DOJ alleges it enables collective price increases affecting buyers like restaurants and consumers.

The case is crucial for the Biden administration’s efforts to combat high food prices, attributed to market consolidation and “greedflation.”

HEALTH UPDATE

— Weight-loss drug forecasts jump to $150 billion as supply grows. As millions seek access to weight-loss drugs from Novo Nordisk and Eli Lilly, increasing supplies, possible wider usage and a growing number of would-be rivals are leading some experts to raise annual global sales forecasts for the treatments to about $150 billion by the early 2030s.

POLITICS & ELECTIONS

— DNC to nominate Biden in virtual roll call to get on Ohio ballot. The Democratic National Committee plans to nominate President Joe Biden in a virtual roll call ahead of their convention to ensure that he is on the ballot in Ohio.

— Democratic Senate candidates lead in six races with populist campaigns focusing on corporate greed and China. The New York Times points out that recent polls indicate that Democratic Senate candidates are leading in six challenging races, despite President Biden trailing Donald Trump in the same states. A key factor in their success is their populist campaign strategy, which focuses on criticizing big business and China. The campaign tactics being used are:

Populist approach: The six Democratic candidates are adopting a populist stance, attacking corporate greed and China’s trade practices.
Campaign ads: Their advertisements highlight issues like corporate greed, with specific examples including:

Sherrod Brown (Ohio) fights against corporate greed.
Bob Casey (Pennsylvania) addresses “greedflation” and “shrinkflation.”
Tammy Baldwin (Wisconsin) and Jacky Rosen (Nevada) criticize Wall Street and Big Pharma.
Ruben Gallego (Arizona) emphasizes the need for advocates for working families.

China as a threat: Candidates portray China as undermining American jobs, with ads from Jon Tester (Montana) and others highlighting the threat posed by China.
Blue-collar focus: Candidates like Sherrod Brown emphasize their blue-collar credentials, linking their success to a strong populist message.
Historical context: Populism was once central to the Democratic Party, with past leaders like FDR and Truman adopting similar stances.
Biden’s campaign: While Biden incorporates some populist elements, his focus remains on Trump’s anti-democratic behavior and broader issues, which may not resonate as strongly with working-class voters.

— Gonzales narrowly defeats hardline challenger. Texas GOP Rep. Tony Gonzales narrowly defeated social media celebrity Brandon Herrera in a primary runoff, securing 50.7% of the vote to Herrera’s 49.3%, with a margin of 407 votes — the difference is within the margin of error where Herrera could request a recount. The race highlighted the tension between the GOP establishment and its insurgent right wing. Gonzales, who has been critical of GOP hardliners, received backlash and endorsements for Herrera from Reps. Matt Gaetz (R-Fla.), Eli Crane (R-Ariz.), and Chip Roy (R-Tex.). Gonzales’ district, one of the largest in the U.S., spans from San Antonio to the Texas-Mexico border and is considered a solid Republican seat, with Gonzales winning comfortably in past elections. The Cook Political Report with Amy Walter rates the seat as solid Republican. Former President Donald Trump won by seven points in 2020 and Gonzales beat his Democratic challenger by 17 points.

— House GOP leaders and other aggies will fundraise for Trump and Republican Party committees supporting his bid to return to the White House. House Natural Resources Chair Bruce Westerman (R-Ark.) and House Ag Chair GT Thompson (R-Pa.) will appear as “special guests” alongside former House Speaker Newt Gingrich (R-Ga.) and his wife, former Ambassador Callista Gingrich, at a “Farmers and Ranchers Coalition” fundraiser Monday in Washington benefiting Trump’s campaign, Trump’s leadership PAC, the Republican National Convention, and state Republican Parties. Meanwhile, agribusiness executive Charles Herbster, former UN Agencies for Food and Agriculture Ambassador Kip Tom, and RNC Chief Counsel Sean Cairncross are also listed as organizers.

— WSJ: A pro-Democrat super PAC is launching a $100 million fund focused on abortion rights. The push by the House Majority PAC is the latest sign that the party is leaning heavily on the issue this fall. The battle for the House majority is expected to be a dogfight, with the current balance of the chamber at 217 Republicans and 213 Democrats, with five vacancies. Link for details via the Wall Street Journal.

— Trump, GOP are early favorites for White House, Congress. Former President Trump and the GOP are the favorites to win the races for the White House and for both chambers of Congress a little more than five months before Election Day, according to a forecast model released Wednesday by Decision Desk HQ and The Hill. Link for details.

— Claudia Sheinbaum poised to become Mexico’s first female president. Claudia Sheinbaum, a Jewish woman with a Ph.D. in environmental sciences, is expected to make history as the first female president of Mexico. In a predominantly Catholic country, Sheinbaum’s commanding lead in polls ahead of Sunday’s election is largely due to the support of popular nationalist leader, President Andrés Manuel López Obrador, who has mentored her career for the past two decades.

OTHER ITEMS OF NOTE

— Florida Republicans criticize Biden’s easing of Cuba banking restrictions. The Biden administration announced that private business owners in Cuba can now use U.S. banks, modifying part of a decades-long embargo. This decision, aimed at alleviating Cuba’s economic crisis, allows Cubans to set up accounts and make transactions remotely. The current policy prevents Cubans from accessing U.S. bank accounts once they return home, complicating imports. Florida’s Republican congressional delegation reacted with anger. Rep. Carlos Giménez criticized the administration, claiming there is no true private enterprise in Cuba, and accused the U.S. of supporting the oppressive regime. Rep. María Elvira Salazar and Rep. Mario Díaz-Balart expressed concerns about national security and the lack of progress toward freedom in Cuba.

The announcement comes amid President Biden’s declining support from Hispanic voters in Florida, and follows other controversial decisions, such as allowing Cuban officials to tour Miami’s security facilities and removing Cuba from a list of non-cooperative countries in fighting terrorism.

KEY LINKS

Policy Updates