New House Republican Effort to Avoid Gov’t Shutdown Appears Doomed

Farm bill | Corteva vs Bayer | UAW strike update | China equities plunge | Energy prices

Jim Wiesemeyer

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September 18, 2023 09:11 AM

Farm bill | Corteva vs Bayer | UAW strike update | China equities plunge | Energy prices

Today’s Digital Newspaper

MARKET FOCUS

USDA daily export sale: 123,000 MT soybeans to China, 2023-2024 marketing year
Ag markets today
Most Morgan Stanley clients expect a recession next year
Rivalry heats up in U.S. soybean market as Bayer & Corteva compete for dominance
Soft landing for the U.S. economy?
OECD to release latest global economic outlook tomorrow
Oil prices surge to 10-month high
U.S. emerges as top LNG supplier, surpassing Australia and Qatar
USDA’s ongoing refinement of U.S. cotton production forecast
Ag trade update
NWS weather outlook
Pro Farmer First Thing Today items

RUSSIA & UKRAINE

Ukraine to sue Hungary, Poland, and Slovakia over ag produce ban
Ukraine’s counteroffensive advances as it regains territory
Think Tank: Russia’s strategy to halt Ukrainian grain exports yields gains

POLICY

Climate change is making insuring crops more risky
Farm bill update Tuesday with key speakers on the agenda

CHINA

WSJ: Is China’s economic predicament as bad as Japan’s? It could be worse.
China to boost Malaysian Palm Oil imports by 250,000 metric tons annually
China’s pork exports slowed in August
U.S. intelligence suggests China’s Defense Minister Li Shangfu removed from post

TRADE POLICY

China faces trade conflict with cosmetics-producing nations over stringent regulations

ENERGY & CLIMATE CHANGE

Calif. sues major fossil fuel firms for alleged decades of climate change deception
Biden admin. considering new climate policy measures for potential second term: NYT
Saudi Arabia’s Arab light crude oil surpasses $100, signaling inflation concerns
Americans picking up pace on EV adoption, with sales surging past 3 million vehicles
EU investigates Chinese EV subsidies as UAW strike sparks trade protection in U.S.

LIVESTOCK & FOOD INDUSTRY

Munich’s beer fest has a culture war — over chicken

POLITICS & ELECTIONS

Trump, advisers discussed deeper cuts to both individual and corporate tax rates
Poll shows about third of voters believe Biden would finish second term

CONGRESS

Details about the House GOP CR plan

OTHER ITEMS OF NOTE

Five Americans detained in Iran freed today
Today’s calendar of events

MARKET FOCUS

Equities today: Asian and European stocks were mostly weaker overnight. U.S. Dow opened slightly higher and then went slightly lower. The various strikes occurring across the country (writers, UAW) contributed to Friday’s market decline and there was little positive progress over the weekend on resolving either work stoppage. In Asia, Japan closed. Hong Kong -1.4%. China +0.3%. India -0.4%. In Europe, at midday, London -0.3%. Paris -1%. Frankfurt -0.5%. Chinese stocks touched a 2023 low on property woes.

U.S. equities Friday: The Dow closed down 288.87 points, -0.83%, at 34,618.24. The S&P 500 fell 54.78 points, -1.22%, at 4450.32. The Nasdaq declined 217.72 points, -1.56%, at 13,708.33.

For the week, the Dow was up 41.65 points, the S&P 500 was down -7.17 points and the Nasdaq was down -53.19 points week-over-week.

The 10-year Treasury yield rose for a second consecutive week and settled at 4.321% on Friday, around its highest levels of the year.

Oil prices notched gains for the week, with Brent crude prices settling at the highest level since November 2022. Over the past three weeks, Brent has rallied almost 12%, its largest such gain since April. On Friday, U.S. West Texas Intermediate futures traded higher and closed up 61 cents per barrel to close at $90.77 per barrel. Brent crude futures rose 23 cents, to settle at $93.93 per barrel. Both contracts gained about 4% week over week and oil prices are on track for their biggest quarterly increase since Russia’s invasion of Ukraine in the first quarter of 2022.

Agriculture markets Friday:

Corn: December corn futures ended the session down 4 1/4 cents to $4.76 1/4, marking a 7 1/2 cent loss on the week.
Soy complex: November soybeans fell 20 1/4 cents to $13.40 1/4, losing 22 3/4 cents, while meal futures fell $7.30 to $392.10, a $9.30 drop on the week. December soyoil rose 34 points 62.06 cents, a 156-point gain on the week.
Wheat: December soft red winter wheat futures rose 10 1/2 cents to $6.04 1/4 and on the week gained 8 1/2 cents. December HRW wheat futures closed up 10 cents at $7.46 1/2, near the session high and for the week up 14 1/2 cents. December spring wheat rose 5 1/2 cents to $7.89 and gained 18 1/4 cents on the week.
Cotton: December cotton fell 136 points to 86.44 but gained 53 points on the week.
Cattle: Nearby live cattle and feeder futures ended the week at fresh all-time highs. October live cattle surged $1.45 to $186.925 at the close; that marked a weekly advance of $3.70. October feeder futures jumped $2.60 to $264.475, which represented a weekly rise of $5.325.
Hogs: October lean hog futures fell 22 1/2 cents to $83.125 and nearer the session low. On the week, October hogs gained $1.60.

Ag markets today: Winter wheat futures led losses in the grain and soy markets during overnight trade. As of 7:30 a.m. ET, corn futures were trading steady to fractionally lower, soybeans were 3 to 4 cents lower, SRW wheat futures were 6 to 8 cents lower, HRW wheat was 10 to 11 cents lower and spring wheat was mostly unchanged. Front-month crude oil futures were around 50 cents higher, and the U.S. dollar index was modestly lower.

Bullish cash cattle hopes. Live cattle futures surged to an all-time high on the continuation chart Friday, fueled by the strengthening cash market. While last week’s average cash cattle price will fall shy of the all-time high posted during summer, there are bullish cash hopes again this week as it appears packers are short-bought on near-term slaughter needs.

Hog traders likely to remain cautious. The cash hog market showed signs of a short-term low last week, though that failed to trigger sustained buyer interest in futures, despite the October contract trading below the cash index. October lean hog futures finished Friday at a $3.805 discount to today’s cash quote, which should limit seller interest in the lead-month contract but may not trigger buying.

Quotes of note:

UAW strike: The first round of strikes by members of the United Auto Workers (UAW) will likely have just a limited financial effect on Ford, GM and Stellantis, says Stephen Brown, a senior director at Fitch Ratings. “The UAW is only striking one plant each at Ford, GM and Stellantis,” he says. “It seems likely the UAW will try to ratchet up pressure on the automakers over time by shifting the strike to more impactful plants and adding more plants to the strike.” He says the effect of the strikes on individual plants “could be similar to the semiconductor-induced disruptions that we saw over the past few years.”
UAW talks’ perspective: The UAW initially asked for a 40% wage increase over four years, cost-of-living adjustments, a 32-hour workweek, job protections, and retiree benefits. Auto makers have offered raises closer to 20% over the contract, and other benefits. Rep. Nancy Pelosi (D-Calif.) said CEOs making more in one month than what some workers make in a lifetime is “just unjust.” Sen. Bernie Sanders (I-Vt.) told CNN that General Motors’ CEO makes $29 million a year, while new hires at GM make less than $17 an hour.
Most Morgan Stanley clients expect a recession next year and a more challenging outlook for stocks, strategists led by Michael Wilson said. Instead, they’re looking toward bonds, especially investment-grade credit.

— Rivalry heats up in U.S. soybean market as Bayer and Corteva compete for dominance. A fierce competition is unfolding in the American soybean market, with Corteva, a spin-off of DowDuPont, gaining ground against industry leader Bayer. For years, Bayer had held a dominant position, thanks to its genetically engineered soybean seeds that were resistant to the herbicide Roundup. However, Corteva has surged ahead with its biotech soybeans, now claiming over half of the market share, the Wall Street Journal reports (link).

Together, Bayer and Corteva now control approximately 70% of the corn and soybean seed market in the U.S., a significant increase from around 40% two decades ago, according to data from USDA. Both companies are vying for a share of the billions of dollars farmers spend on seed-and-chemical combinations to combat stubborn weeds.

The rivalry between the two giants has led to aggressive marketing tactics, court battles over patents, and even involvement in lobbying efforts for stricter regulations on competing herbicides. While Bayer introduced dicamba-resistant soybeans, Corteva launched its Enlist E3 soybeans, centered around a herbicide called 2,4-D choline, which doesn’t suffer from drift issues like dicamba.

Corteva’s Enlist soybeans have gained popularity due to fewer spraying limitations, and they are projected to make up at least 55% of soybeans planted in the U.S. this year. On the other hand, Bayer’s Xtend and XtendFlex products claim around 45% to 50% of the market.

Farmers’ preferences vary, with some favoring Bayer’s dicamba-resistant soybeans for their effectiveness against troublesome weeds. Nevertheless, the competition shows no signs of slowing down, with both companies continuing to invest in new technologies and legal disputes marking their race for soybean dominance.

— Soft landing? The recent easing of inflation and a slowdown in the labor market have generated optimism about the possibility of achieving a “soft landing” in the economy. A soft landing refers to a scenario where the economy slows down gradually without entering a recession or experiencing a sharp downturn. However, achieving a soft landing is a challenging task and a rare occurrence in economic history, a WSJ article notes (link). It suggests that while the conditions for a soft landing may seem favorable, the process is inherently difficult to manage and execute successfully.

— Note: The OECD will release its latest global economic outlook tomorrow, against a backdrop of rising energy prices and growing concerns about a slowdown.

Market perspectives:

— Outside markets: The U.S. dollar index was weaker. The yield on the 10-year U.S. Treasury note was higher, trading around 4.34%, with a higher tone in global government bond yields. Crude oil futures continued to register gains, with U.S. crude around $91.25 per barrel and Brent around $94.45 per barrel. Gold and silver futures were firmer, with gold around $1,947 per troy ounce and silver around $23.40 per troy ounce.

— Oil prices surge to 10-month high. Oil prices experienced a significant upswing, reaching their highest levels since November, with Brent crude contracts nearing $95 per barrel and West Texas Intermediate, the U.S. benchmark, also registering gains. This surge in prices is attributed to concerns about a potential supply shortage following the decision by Saudi Arabia and Russia to extend coordinated production cuts until year-end. The continued production cuts from these major oil-producing nations pose a risk of pushing the oil market into a deficit in the coming months. Additionally, there are indications of an improving Chinese economy due to recent stimulus measures, potentially increasing global oil demand and further contributing to the upward pressure on prices. Meanwhile, Chevron reported that the Wheatstone natural gas plant in Australia, which accounts for a significant portion of the world’s liquid natural gas supply, has returned to full production after recent worker strikes, with no expected impact on output. The Federal Reserve will closely monitor energy prices as it deliberates on interest rate decisions this week. Elevated fuel costs could keep inflation levels higher, potentially leading policymakers to maintain higher interest rates, which could, in turn, act as a drag on economic growth.

Of note: Total motor gasoline inventories increased by 5.6 million barrels week-over-week and are 2% below the five-year average for this time of year. Meanwhile, propane prices closed at 74 cents per gallon, up 5 cents week-over-week, but down -32 cents per gallon year-over-year.

— U.S. emerges as top LNG supplier, surpassing Australia and Qatar amid global market shifting dynamics. The U.S. is on the brink of becoming the world’s largest supplier of liquefied natural gas (LNG) for the first time, with export data from January to June revealing a shift that edges out traditional leaders Australia and Qatar. This transformation can be attributed in significant part to the resumption of operations at the Freeport LNG facility in Texas, which had been temporarily shut down due to a fire in 2022. Simultaneously, strikes have disrupted Australian LNG production at two Chevron Corp. facilities, causing concerns among traders in Europe and Asia, particularly as the Northern Hemisphere approaches its heating season. The U.S. has further benefited from heightened global interest in LNG amid the ongoing conflict in Ukraine, which has led to reduced Russian gas flows into Europe. These evolving market dynamics are reshaping the global LNG landscape, positioning the U.S. as a prominent player in the industry.

— USDA’s ongoing refinement of U.S. cotton production forecast. A Southern Ag Today article (link) discusses the continuous refinement of the U.S. cotton production forecast, which is a significant factor influencing the cotton market. USDA, through its National Agricultural Statistics Service (NASS), releases monthly forecasts for U.S. cotton production, expressed in standard 480-pound bale equivalents. The current forecast stands at 13.13 million bales.

The production forecast is based on various data sources and evolves throughout the year:

Acreage and Production Data: Initial forecasts are based on surveyed planted acreage, yield averages, and abandonment rates. As of August, grower survey data and objective yield surveys become part of the forecast process. Field sampling and data collection expand through the fall months, including areas like South Texas, Arkansas, Georgia, and Mississippi. Crop insurance and certified acres data also contribute to adjustments.
Ginnings Data: All U.S. cotton goes through ginning after harvest. USDA NASS conducts surveys of gins and publishes monthly forecasts of cumulative bales ginned.
Classing Data: USDA’s Agricultural Marketing Service samples and classifies all U.S. cotton bales for fiber quality. Cumulative counts of bales classed provide a more accurate measure of cotton production.
Reconciliation/Refinement: USDA reconciles its production forecast with final cumulative ginning and classing numbers. This process refines the production forecast to its ultimate estimate.

The article notes that the refinement process typically continues until final estimates are achieved by May of the following year, with each monthly refinement influenced by updated USDA data. It highlights the variability in production estimates compared to final estimates, emphasizing the importance of accurate data in forecasting U.S. cotton production.

— Ag trade: Algeria tendered to buy unspecified amounts of optional origin milling wheat and barley.

— USDA daily export sale: 123,000 MT soybeans to China, 2023-2024 marketing year

— NWS weather outlook: Heavy rainfall with localized flash flooding possible for New England Monday... ...Heavy rain and severe storm chances return to parts of the Southern Plains on Tuesday... ...Hot late Summer temperatures for the heartland to start the week.

Items in Pro Farmer’s First Thing Today include:

• Grains weaker in quiet overnight trade
• First ships arrive at Ukraine port to load grain
• Romania will ask to extend trade ban on Ukraine grain if import requests rise
• Firm raises Ukrainian corn export forecast
• China resumes cotton reserve sales

RUSSIA/UKRAINE

— Ukraine to sue Hungary, Poland, and Slovakia over agricultural produce ban following EU restrictions. Ukraine announced its intention to take legal action against Hungary, Poland, and Slovakia in response to their bans on Ukrainian agricultural products. The decision to pursue legal action was confirmed by a Ukrainian spokesperson in an interview with Politico. The embargoes by these three countries were imposed after the European Union’s ban on Ukrainian produce expired last Friday. The EU had initially implemented the ban in May, following protests by local farmers who claimed that Ukrainian products were causing a significant drop in prices within the EU market. This move reflects escalating tensions and trade disputes between Ukraine and its neighboring countries in the aftermath of the EU’s restrictions.

EU agriculture ministers are set to convene this week, with trade restrictions imposed by Poland, Slovakia, and Hungary expected to be a key topic of discussion. Spanish Agriculture Minister Luis Puchades indicated that it falls under the purview of the European Commission to assess whether these trade restrictions violate EU laws. France has taken issue with the actions of these three countries, expressing concerns about EU solidarity. French Agriculture Minister Marc Fesneau has revealed that efforts are underway to create a “nuanced exception” from fallow land rules. This exception is aimed at providing relief to farmers who may be impacted by the trade restrictions, potentially alleviating some of the strain on agricultural producers within the EU.

— Ukraine’s counteroffensive advances as it regains territory; Zelenskyy seeks international support. Ukraine continues its strenuous counteroffensive efforts, reclaiming two villages in the vicinity of Bakhmut in Donetsk, eastern Ukraine, and making modest gains in the southern region, recovering two square miles of territory in recent days. At the same time, there are indications of Russian troops fortifying their defenses around the occupied town of Tokmak in southern Ukraine, anticipating Ukraine’s advance.

Besides the military developments, Zelenskyy is scheduled to visit the United States, with plans to meet with senators and seek support for Ukraine’s ongoing struggle. He is expected to have discussions with President Joe Biden and participate in the United Nations General Assembly in New York City, where he will aim to garner international backing for Ukraine as the conflict persists.

— Think Tank: Russia’s strategy to halt Ukrainian grain exports yields financial and diplomatic gains. According to a report (link) by the Center for Strategic and International Studies (CSIS), Russia’s persistent efforts to curtail Ukraine’s grain exports have resulted in both financial and diplomatic advantages for President Putin. The think tank highlights the importance of securing reliable and cost-effective export routes for Ukrainian grain while emphasizing the need for increased investments in Ukraine’s agricultural sector to counter one of Russia’s most potent weapons in its conflict with Ukraine.

The ongoing warfare in Ukraine, including initiatives to revive the Black Sea grain trade, is expected to be a significant topic of discussion during the U.N. General Assembly’s annual “high-level week.”

War impact. The article points out that the USDA estimates a considerable decline in Ukraine’s wheat and corn exports compared to pre-invasion levels, with agriculture previously contributing significantly to the country’s export revenue and GDP.

The CSIS analysts note that Russia’s agricultural production has surged due to favorable conditions, leading to a nearly 50% increase in wheat exports this year. Russia is also capitalizing on its expanded agricultural exports to bolster its political influence, especially in countries reliant on Black Sea grain.

Upshot: The CSIS report underscores that Russia’s manipulation of Ukrainian agricultural exports not only impacts Ukraine’s economy but also disrupts global food security and forces the EU to contend with market disruptions caused by Ukraine’s shifting export routes. This strategy allows Russia to pursue its political objectives more effectively.

POLICY UPDATE

— Climate change is making insuring crops more risky, and observers note the federally subsidized crop insurance program’s payouts are up 500%. With a new farm bill coming, critics want to rethink the program. Link to what some are saying via an NPR interview.

— We should get a farm bill update Tuesday with two events and key speakers. They include:

USDA Secretary Tom Vilsack and House Ag Chairman G.T. Thompson (R-Pa.) speak at the Axios conference on sustainability and food insecurity, 8 a.m. ET, Washington.
Senate Ag Chair Debbie Stabenow (D-Mich.) discusses outlook for passage of farm bill in 2023 as part of a “fireside chat” with Saxby Chambliss, a former Senate Ag Committee chairman, 8:30 a.m. ET, Bipartisan Policy Center.

CHINA UPDATE

— WSJ: Is China’s economic predicament as bad as Japan’s? It could be worse. A Wall Street Journal article (link) draws parallels between China’s current economic situation and the economic challenges Japan faced in the 1990s. Japan’s economic stagnation during that period, marked by slow growth, a declining population, and deflation, is often cited as a cautionary tale. The article suggests that China’s economic predicament might be even more challenging.

Several key points are highlighted:

Debt Levels: China’s public debt levels are, in some measures, higher than Japan’s were during its economic woes in the 1990s.
Demographics: China’s demographics present a significant concern. The country is grappling with an aging population and a declining birth rate, which can have detrimental effects on economic growth and social welfare systems.
Geopolitical Tensions: China faces complex geopolitical tensions that extend beyond trade frictions with the U.S., which were a major concern for Japan during its economic difficulties.

The article implies that while Japan’s economic challenges were daunting, China’s situation might be even more complicated and intractable due to its debt, demographic, and geopolitical issues. It underscores the need for careful consideration and policy measures to address these multifaceted challenges in the Chinese economy.

— China to boost Malaysian Palm Oil imports by 250,000 metric tons annually: Malaysian prime minister. Malaysia is set to see a significant increase in its palm oil exports to China as the country plans to raise its imports by 250,000 metric tons per year. The announcement comes from a report by the Bernama news service, citing Malaysian Prime Minister Anwar Ibrahim. The prime minister revealed that he was present during the signing of an agreement between Sime Darby Oils International Ltd and China’s Guangxi Beibu Gulf International Port Group. This deal entails the establishment of a distribution and trading center for refined palm oil and fats in Qinzhou, China, further enhancing the trade ties between the two nations in the palm oil sector.

— China’s pork exports slowed in August. China imported 110,000 MT of pork during August, down 10,000 MT (8.3%) from July and 21% less than last year. Through the first eight months of 2023, China imported 1.17 MMT of pork, up 9.6% from the same period last year.

— U.S. intelligence suggests China’s Defense Minister Li Shangfu has been removed from his post, according to a U.S. official. That may eliminate a major roadblock to military talks between Washington and Beijing.

TRADE POLICY

— China faces trade conflict with cosmetics-producing nations over stringent regulations. While China’s economy grapples with various challenges, the cosmetics industry is flourishing as consumers invest in personal care products. However, foreign cosmetics companies from France, Japan, South Korea, and the U.S., despite significant investments in China, are encountering obstacles due to stringent regulations imposed by the country during the pandemic.

France’s finance minister, Bruno Le Maire, emphasized the substantial impact of this issue, revealing that for many French companies, China constitutes 30% to 35% of their total revenues.

Background. China implemented rules in 2021 that demand foreign companies to disclose every ingredient and quantity used in their products, along with the addresses of ingredient suppliers and assembly locations. Concerns arise that such transparency could enable Chinese manufacturers to replicate their products at lower costs. Additionally, a contentious requirement mandates animal testing for certain products, a practice many global cosmetics companies have abandoned.

ENERGY & CLIMATE CHANGE

— California sues major fossil fuel companies for alleged decades of climate change deception. California has filed a lawsuit against five major fossil fuel companies, including BP, ConocoPhillips, Chevron, ExxonMobil, and Shell, as well as the American Petroleum Institute, accusing them of engaging in a decades-long “disinformation campaign.” The lawsuit alleges that these companies misled consumers about the role of their products in contributing to climate change and aimed to delay the transition to a low-carbon future.

California Attorney General Rob Bonta filed the suit, seeking a judge’s order for the companies to contribute to a fund that would finance climate mitigation and adaptation efforts in the state. This lawsuit, filed in San Francisco Superior Court, is one of the most significant actions against the energy industry to date and is expected to have a significant impact on the climate change litigation landscape.

Of note: Publicly traded shares in all five sank in aftermarket trading as the lawsuit came to light, most off by about 1%. All of the firms are based outside of the state with the exception of San Ramon-based Chevron, which is the world’s third-largest oil producer with $317.61 billion in market cap, behind ExxonMobil ($467.17 billion) and Saudi Aramco, the kingdom-backed oil producer worth over $2.1 trillion. Meanwhile, the statewide average for a gallon of regular unleaded fuel reached nearly $5.58 on Saturday morning, about a nickel higher than the same gas on Friday and up 14 cents from the same time a year ago. Fuel remains cheaper than the highest prices found in June 2022 when a gallon averaged about $6.34.

— Biden administration is considering new climate policy measures for a potential second term, aiming to impose limits on industrial pollution in sectors that have historically had unchecked greenhouse gas emissions, the New York Times reports (link). This move aligns with President Biden’s goal of eliminating fossil fuel pollution by 2050 to combat climate change. However, implementing such regulations in industries like steel and cement, which are essential for American construction, may pose political risks, potentially alienating swing-state union workers who have been a target demographic for the Biden administration.

— Saudi Arabia’s Arab light crude oil surpasses $100, signaling inflation concerns. From Saudi Arabia’s perspective, the price of oil, particularly its flagship Arab Light crude, has already exceeded $100 a barrel, according to Javier Blas is a Bloomberg Opinion columnist covering energy and commodities (link). This significant premium, he writes, reflects Saudi Arabia’s pricing power, driven by its ability to charge a record premium for its oil, especially to American and European customers looking for alternatives to Russian crude.

Saudi Arabia’s pricing strategy, while bolstering its geopolitical influence, is also contributing to global inflationary pressures, potentially prompting central banks to maintain higher interest rates for an extended period, Blas notes.

The surging cost of Arab Light crude can be attributed to increased refining margins and a scarcity of Saudi-style crude in the global market due to production cuts and the unique characteristics of Saudi oil, making it indispensable for certain refineries, particularly those optimized for diesel production.

Of note: As oil prices continue to rise, central banks are closely monitoring the cost of Arab Light crude to assess inflationary concerns, potentially shaping future monetary policies.

— Americans are picking up the pace on EV adoption, with sales surging past 3 million vehicles. Electric cars’ share of new cars exceeded 7% for the first half of the year, speeding past a critical tipping point for mass adoption. In the last few months, all-time sales topped 3 million. But perhaps the most impressive of all is reaching a record-hot pace of almost 1 million new EVs per year. In the 12 months through June, Americans bought 977,445 cars that run solely on electricity, according to a Bloomberg Green analysis (link for details).

Of note: A new publication (link/pdf) from Bank of America Institute noted the number of new EV model launches over 2024-27 may exceed that of new internal combustion engine vehicles.

— EU investigates Chinese EV subsidies as UAW strike sparks trade protection speculation in the U.S. A Bloomberg article (link) delves into seemingly unrelated events — the United Auto Workers (UAW) strike in the United States and the European Union’s investigation into Chinese electric vehicle (EV) subsidies — highlighting the shared concern over the automotive industry’s shift from traditional gas-powered vehicles to electric ones, and the consequential challenges related to competitiveness and labor.

Perspective. In the EU, a surge in Chinese EV imports has triggered an investigation that could lead to the imposition of tariffs similar to the U.S.’ 27.5% barrier, which aims to counteract China’s EV subsidies. However, the article suggests that the U.S. might not follow suit due to certain factors. The U.S. already has tariffs in place, and the Biden administration is offering substantial subsidies to domestic car manufacturers to establish EV plants, fostering competition with China.

The difference. The EU’s problem is that its market is wide open to Chinese EV imports. Thanks to 25% tariffs put in place by the Trump administration on top of existing 2.5% ones, the U.S. is not.

In summary, the automotive industry’s shift to electric vehicles, coupled with trade disputes and labor issues, is shaping up to be a pivotal and complex issue with long-term implications for the global economy.

LIVESTOCK, FOOD & BEVERAGE INDUSTRY

— Munich’s beer fest has a culture war — over chicken. Rotisserie chicken is the top Oktoberfest food, and the Paulaner beer tent’s shift to all-organic hens is stoking a debate between advocates of a sustainable festival and woke-wary traditionalists. Link to details via the WSJ.

POLITICS & ELECTIONS

— Trump and his advisers “have discussed deeper cuts to both individual and corporate tax rates,” the Washington Post reports (link). “Trump has not identified a potential new corporate tax rate, but has talked publicly of using revenue from new tariffs to reduce taxes on U.S. producers.” Newt Gingrich, a Trump backer, said a corporate rate cut would “be tied with a substantial individual tax cut, too.”

— Poll shows about third of voters believe Biden would finish second term. A CBS News/YouGov poll (link) of 4,002 adults taken 9/12-15 shows former President Donald Trump leading Biden 50%-49% among likely voters. In addition, only a third of voters think that Biden would finish a second term. Asked what might happen if elected again, more think he’d leave before finishing another term, or aren’t sure. Some 34% of registered voters said they believe Biden would finish a second term, while 44% said he would leave office before the end of his second term and 22% said they are not sure. Meanwhile, 55% said they think Trump would finish his second term, 16% said they believe he would leave office before his second term is up, and 29% said they are not sure.

CONGRESS

— Details about the House GOP CR plan:

Link to text of the proposed CR
Link to summary of the proposal from the Main Street Caucus
Link to summary from the House Freedom Caucus

Bottom line: More than a dozen conservatives have said they don’t like or won’t support the measure. House Speaker McCarthy only has a four-vote margin, with some Republicans likely to miss votes due to health issues.

Timelines to watch: The Rules Committee is scheduled to mark up the CR today. The House will vote on the Defense bill on Wednesday and the CR on Thursday.

OTHER ITEMS OF NOTE

— Five Americans detained in Iran freed today. The five had been imprisoned in Iran and were released today as part of a wider U.S./Iran deal, the Iranian foreign ministry said. The U.S. gov’t had designated all five Americans as being wrongfully detained, including three who have spent years in prison there.

Bottom line: The deal will see five American-Iranians released and flown to Qatar, while the U.S. will free three Iranians. The agreement follows two years of negotiations and comes after $6 billion in Iranian oil revenue that had been frozen in South Korea was transferred to bank accounts in Qatar.

— Calendar of events today include:

Monday, Sept. 18

Larry Summers discusses the “Washington Consensus” at the Peterson Institute.
International nonprofit Climate Group hosts Climate Week NYC, through Sept. 24, New York City. Climate Week is held annually in partnership with the United Nations General Assembly and is run in coordination with the United Nations and the City of New York.
President Joe Biden In New York City to participate in the 78th Session of the U.N. General Assembly with Secretary of State Antony Blinken participating in events for the remainder of the week.
African agricultural growth. The U.S. Agency for International Development (discussion on financing Africa’s agricultural growth, including remarks from Treasury Secretary Janet Yellen.
Global issues; Yellen remarks. Clinton Foundation 2023 meeting of the Clinton Global Initiative, including Treasury Secretary Janet Yellen participating in a discussion with former Secretary of State Hillary Clinton.
Nuclear energy. Atlantic Council Nuclear Energy Policy Summit 2023 with the theme “Accelerating Net Zero Nuclear.” Runs through Tuesday.
Ukraine and MENA. Atlantic Council conference on “New Power Dynamics in the Middle East and North Africa (MENA) after the Ukraine Crisis.”
Defending Taiwan. American Enterprise Institute for Public Policy Research discussion on “Defending Taiwan: Essays on Deterrence, Alliances, and War.”
EVs and cobalt. Wilson Center’s Wahba Institute for Strategic Competition virtual discussion on “Cobalt and the Electric Vehicle (EV) Supply Chain,” focusing on the current state of cobalt extraction and processing worldwide, and the steps needed in the United States “to secure the energy transition in the automobile industry.”
Russia, Ukraine and NATO. Center for Strategic and International Studies (virtual discussion on “Russia as a Strategic Threat: Ukraine, NATO, and Beyond Europe.”
Supreme Court preview. Cato Institute 22nd annual Constitution Day with the release of the Cato Supreme Court Review and a day-long symposium on the recently concluded Supreme Court term and the important cases coming up.
Energy workforce. Department of Energy (DOE meeting of the 21st Century Energy Workforce Advisory Board for remarks from DOE program offices and a discussion of future energy workforce needs.
Great Lakes protection. Environmental Protection Agency virtual meeting of the Great Lakes Advisory Board to provide advice and recommendations on Great Lakes protection and restoration activities, and long-term goals, objectives, and priorities for Great Lakes protection and restoration.
U.S. foreign policy. Hudson Institute discussion on U.S. foreign policy.
Economic reports. Housing Market Index
Energy reports. Angola preliminary program (November) | World Petroleum Congress, Calgary; runs through Thursday | Holiday: Japan.
USDA reports. AMS. Export Inspections ERS: Livestock, Dairy, and Poultry Outlook | Sugar and Sweeteners Outlook NASS: Milk Production | Hop Stocks | Crop Progress

KEY LINKS

Policy Updates