News/Markets/Policy Updates: Aug. 19, 2024
— Election calendar: September 2024 Election Digest: Upcoming Key Dates: — President Biden’s speech this evening at the Democratic National Convention is strategically timed to emphasize key themes of his presidency while also supporting Vice President Kamala Harris. By speaking on the first night of the convention, rather than just before Harris, Biden is signaling a departure from tradition that aims to highlight Harris as an independent leader within the Democratic Party. This move is likely intended to bolster her identity and political stature as she continues to serve as vice president. In his speech, Biden plans to cast former President Donald Trump as a significant threat to democracy, a message that resonates with his broader campaign narrative. Additionally, Biden will focus on solidifying his legacy as the president who guided the nation through the economic challenges brought on by the coronavirus pandemic, positioning himself as a leader who delivered stability during a critical time. The theme of the night, “For the People,” underscores the Democratic Party’s focus on issues that resonate with the general public. The program will also feature remarks from prominent figures like First Lady Jill Biden and former Secretary of State Hillary Clinton. We have more details about the convention in The Week Ahead (link).
— Illinois Gov. J.B. Pritzker confirmed that “about 250" members of the state’s National Guard will be on standby as tens of thousands of protesters prepare to march on the convention this week. A significant protest is expected outside the venue, where demonstrators will criticize the Biden administration’s support for Israel’s actions in Gaza. Organizers anticipate around 20,000 protesters, reflecting strong opposition to the administration’s stance. While pro-Palestinian Democrats are somewhat less critical of Vice President Kamala Harris on this issue compared to President Biden, the protest still highlights internal divisions within the party. Inside the convention, the pro-Palestinian cause will also have representation. A small group of “uncommitted” delegates, who support the pro-Palestinian movement rather than any specific presidential candidate, secured their positions through primary victories. This signals that the issue of U.S. policy toward Israel is a contentious topic within the Democratic Party, both outside and inside the convention hall. — Donald Trump’s campaign faces significant challenges in Georgia, a state crucial for his prospects in the upcoming election. One of these challenges is largely self-inflicted: Trump’s ongoing public feud with Georgia’s Republican Governor Brian Kemp. This tension escalated after Kemp skipped a Trump fundraiser, and his wife suggested she would write in Kemp’s name for president. Trump’s attacks on Kemp, who remains popular among Georgia Republicans, could alienate key voters in the state. Adding to Trump’s difficulties, Vice President Kamala Harris is closing the gap between herself and Trump in Georgia. A recent New York Times/Siena College poll shows Trump leading by only 4 percentage points, indicating a tight race. In response to these pressures, the Trump campaign has significantly increased its spending on TV ads in Georgia, doubling its expenditure between August and September. — Sen. Lindsey Graham (R-S.C.) urged Donald Trump to shift his campaign focus towards policy issues and Vice President Kamala Harris’ record rather than relying on his usual provocative and showman tactics. During an appearance on NBC, Graham cautioned that Trump’s typical approach might not be successful in the upcoming election, suggesting that a more substantive focus on policy could improve his chances. This advice reflects concerns within the Republican Party about the effectiveness of Trump’s campaign strategy as the election draws closer. |
| MARKET FOCUS |
— Equities today: Asian and European stock indexes were mixed overnight. U.S. Dow opened up around 40 points higher. In Asia, Japan -1.8%. Hong Kong +0.8%. China +0.5%. India flat. In Europe, at midday, London flat. Paris +0.3%. Frankfurt +0.1%. Investors are focusing on Federal Reserve Chair Jerome Powell’s Friday speech at Jackson Hole, which could provide clues about future rate cuts. Today: Christopher Waller, a Fed governor and an influential voice on rate setting, talks at the Fed’s summer workshop on money, banking, payments and finance.
U.S. equities Friday and for the week: All three major indices finished higher Friday and registered gains for the week, with the Dow up 2.94%, the Nasdaq gained 5.29%, and the S&P 500 moved up 3.93%. The Dow was up 96.70 points, 0.24%, at 40,659.76. The Nasdaq rose 37.22 points, 0.21%, at 17,631.72. The S&P 500 gained 11.03 points, 0.20%, at 5,554.25.
— The U.S. Securities and Exchange Commission (SEC) has charged billionaire activist investor Carl Icahn with failing to disclose billions of dollars in personal margin loans that were secured by his shares in Icahn Enterprises. These loans, which were pledged against the value of his stock, are significant in size and were not properly disclosed as required by securities regulations. The charges come amid a challenging period for Icahn Enterprises, which has faced scrutiny following a report by Hindenburg Research. The report accused the company of being over-leveraged and trading at an excessively high premium relative to its net asset value. This led to a significant drop in the company’s stock price and prompted Icahn to renegotiate loan terms to mitigate the risk of margin calls.
Icahn has been known to use his shares as collateral for personal loans, a practice not uncommon among billionaires, but one that carries risks if the value of the collateral declines.
— General Motors is planning to lay off more than 1,000 software engineers, with most of the job cuts occurring in the United States. This move is part of the company’s broader efforts to streamline operations and reduce costs amid the ongoing shift towards electric vehicles and advanced automotive technologies. “As we build GM’s future, we must simplify for speed and excellence, make bold choices, and prioritize the investments that will have the greatest impact,” GM said in a statement, which did not specify the number of cuts. “As a result, we’re reducing certain teams within the software and services organization. We are grateful to those who helped establish a strong foundation that positions GM to lead moving forward.”
— AMD to acquire ZT Systems for nearly $5 billion in AI data center push. Advanced Micro Devices (AMD) agreed to purchase ZT Systems, a designer of data-center equipment for cloud computing and artificial intelligence, in a deal valued at nearly $5 billion. This acquisition, one of AMD’s largest, is aimed at strengthening its competitive position against Nvidia by offering a broader range of chips, software, and system designs to major data-center customers like Microsoft and Meta. ZT Systems, based in Secaucus, N.J., specializes in servers and infrastructure for AI systems. AMD plans to retain ZT’s system-design business while selling off its manufacturing operations. The acquisition is expected to close in the first half of next year, pending regulatory approvals, and is part of AMD’s ongoing strategy to expand its presence in the AI and data-center markets.
— This week, investors will gain further insights into the state of the American consumer with a series of key retail earnings reports. The most anticipated report comes from Target, which is set to release its results on Wednesday before the market opens. Alongside Target, several other major retailers and companies will also report their earnings, providing a broader picture of consumer spending and market trends. The lineup includes:
• Monday: Palo Alto Networks (reporting after the bell)
• Tuesday: Lowe’s (reporting before the bell)
• Wednesday: Target, Macy’s, TJX Companies (all reporting before the bell); Snowflake, Zoom Video, Urban Outfitters (all reporting after the bell)
• Thursday: Peloton (reporting before the bell); Workday, Ross (both reporting after the bell)
These reports will be closely watched, particularly as they reflect consumer behavior in a challenging economic environment, with Target’s performance being a key indicator of retail health.
— Ag markets today: Corn and soybeans rebounded of Friday’s weakness overnight though are trading well off session highs, while wheat futures fell. As of 7:00 a.m. ET, corn futures were trading 1 to 2 cents higher, soybeans were 4 to 5 cents higher and winter wheat futures were 4 to 7 cents lower. The U.S. dollar index was down over 200 points, and front-month crude oil futures were modestly lower.
Cash cattle decline expected. Trade into Friday of last week was light though was averaging about $1.50 below the prior week. Weakness in futures likely favored packers in negotiations late in the week, causing weakness in the cash market. Trade is likely to be pushed late into the week with USDA releasing their monthly Cattle on Feed report on Friday. Wholesale beef ended the week strong, as Choice rising 51 cents and Select firming 56 cents.
Cash hog fundamentals weaken. The bounce in the CME lean hog index was short lived, as the index is down 11 cents to $90.09 as of Aug. 15. After bouncing mid-week, wholesale pork prices continue to fall under pressure, with most cuts lower on Friday. Whole cutout was down $1.20 to $98.67.
— Agriculture markets Friday and for the week:
• Corn: December corn futures saw continued selling pressure, settling 4 1/2 cents lower to $3.92 1/2, marking a 2 1/2 cent loss on the week.
• Soy complex: November soybeans fell 11 1/2 cents to $9.57 and lost 45 1/2 cents on the week. December soymeal fell $5.60 to $302.10, down $8.30 week-over-week. September soyoil rose 29 points to 39.18 cents but faded 247 points on the week.
• Wheat: December SRW wheat futures rose 2 1/4 cents to $5.52 1/2 and nearer the daily high. For the week December SRW fell 13 1/4 cents. December HRW wheat futures gained 2 1/4 cents at $5.55 and nearer the session high after hitting a contract low early on. For the week, December HRW lost 15 1/2 cents. December spring wheat futures rose 7 cents to $6.09 and rose 1/2 cent on the week.
• Cotton: December cotton rose 9 points to 67.24 cents but lost 110 points on the week.
• Cattle: October live cattle futures fell $2.45 to $178.30 and nearer the session low. For the week, October cattle lost $2.85. October feeder cattle futures dropped $4.95 to $235.95, nearer the session low and hit a contract low today. On the week, October feeders lost $3.825.
• Hogs: Pork weakness undercut hog futures, with the October contract falling $1.425 to $75.075. That represented a weekly rise of $1.10.
— Quotes of note:
• Chicago Fed President Austan Goolsbee discussed the Federal Reserve’s potential decision regarding interest rates on CBS’ Face the Nation. Goolsbee emphasized that it is not certain the Fed will lower rates in September, as economic conditions have changed significantly since the rates were initially set to combat inflation over a year ago. He highlighted that upcoming inflation data will be crucial in informing the Fed’s decision. Goolsbee also mentioned that the Fed aims to communicate its “reaction function” clearly, which involves outlining the economic conditions that would justify changing interest rates. He noted that while some economic indicators are positive, others, like rising small business defaults and consumer credit delinquencies, are concerning and require caution.
• Goldman lowers the odds of a U.S. recession within the next year from 25% to 20%, based on positive retail sales and jobless claims data. The bank indicated that if the August jobs report, to be released on Sept. 6, is strong, they might further lower the recession risk to 15%. Recent economic data showing resilience has boosted stocks, and Goldman now expects the Federal Reserve to likely cut interest rates by 25 basis points Sept. 18, though a significant drop in jobs could lead to a 50-basis point cut.
They also note that, with regard to the Sahm Rule having been triggered by the July unemployment-rate increase, analysis of a group of other advanced economies shows that only 70% of the time did a recession follow hitting the Sahm Rule.
• “Utilities around the country are kind of going into panic mode.” — Michelle Solomon of Energy Innovation, on the demand AI is placing on the power grid, making it tougher to move away from fossil fuels.
— Since February 2023, analysts at D.A. Davidson have been monitoring online prices for a representative set of products. Their findings indicate that 38% of the products tracked have experienced price increases, 29% have seen price decreases, and 33% have remained stable. Notably, the most significant price changes have been observed in the price of eggs — the cost of beef roasts has risen by 11.2%, steaks by 7.2%, and ground beef by 6.2%. Eggs have also experienced substantial price hikes, with their cost increasing by 5.8% over a similar period.
The initiative to track these prices is part of a broader effort by retailers to adjust their pricing strategies. Retailers, including Walmart Inc., are increasingly focusing on lowering the costs of common goods to capture a larger market share. This effort is supported by D.A. Davidson’s new exclusive price-monitoring database, which has been in development for over a year.
— The July 2024 NABE Economic Policy Survey was released. Key findings from the survey include:
• Monetary policy views: A significant portion of respondents, 35%, now consider monetary policy to be “too restrictive,” a notable increase from 21% in February 2024 and 14% in August 2023. This is the highest share since February 1996. While a majority (58%) still feel that monetary policy is “about right,” this percentage has decreased from 70% in February 2024.
• Fiscal policy perspectives: Views on fiscal policy remain consistent with previous surveys. Fifty-six percent of respondents believe current fiscal policy is “too stimulative,” slightly down from 57% in February 2024 but up from 54% a year ago. This concern about fiscal policy being too stimulative has been gradually rising since August 2020.
• Top policy issues: The most pressing issues for the next presidential administration, as identified by respondents, are budget deficits (59%) and immigration reform (55%). Other significant issues include the economy (28%), entitlement reform and affordable housing (23%), and climate change investment (20%).
• Recession predictions: Respondents have varied opinions on when the next recession might occur. A significant portion (30%) either doesn’t know or has no opinion, up from 17% in February 2024. Twenty-five percent believe a recession will occur in 2025, while another 25% think it will happen in 2027 or later.
Market perspectives:
— Outside markets: The U.S. dollar index was weaker, with the euro and British pound both firmer against the U.S. currency. The yield on the 10-year U.S. Treasury note was weaker, trading around 3.87%, with a mostly weaker tone in global government bond yields. Crude oil futures were lower, with U.S. crude around $75.05 per barrel and Brent around $79 per barrel. Gold and silver were firmer, with gold around $2,541 per troy ounce (see next item) and silver around $29.01 per troy ounce.
— The gold market has experienced a significant rally, with prices climbing above $2,500 per ounce due to a combination of factors:
• Chinese gold import quotas: China’s central bank has issued new gold import quotas to Chinese banks, which has sparked speculation of increased gold buying. This move is seen as a response to the country’s economic concerns, including a slowdown in growth and deflation, leading Chinese investors to seek safe-haven assets like gold.
• Interest rate expectations: There is growing anticipation of interest rate cuts by central banks, particularly the Federal Reserve. This expectation has been fueled by weaker economic data and dovish comments from Fed officials, which have increased the appeal of gold as a hedge against currency devaluation and economic instability.
• Geopolitical tensions: Ongoing geopolitical uncertainties, including tensions between China and the United States, conflicts in Europe and the Middle East, and the upcoming U.S. presidential election, have further driven demand for gold as a protective asset.
— Canadian rail strike threatens economic impact. Canada’s freight rail network is on the brink of a significant disruption as Canadian National Railway (CN) and Canadian Pacific Kansas City (CPKC) have issued lockout notices to the Teamsters union, which represents nearly 10,000 workers. This unprecedented simultaneous labor action could halt the transportation of essential goods like food grains, potash, coal, and timber, potentially causing billions of dollars in economic damage across North America. The lockout is set to begin early Thursday unless an agreement is reached.
CN has requested binding arbitration from the federal government to resolve its dispute with the Teamsters, but the government has so far declined to intervene, emphasizing negotiation. The Teamsters have issued a 72-hour strike notice to CPKC, indicating a readiness to strike if no agreement is reached. The primary issues include safety provisions and a proposed relocation policy by CN, which the union argues would disrupt workers’ lives.
Both CN and CPKC have started to wind down operations, ceasing shipments of hazardous materials and refrigerated items. This move is intended to prepare for a possible work stoppage, which could disrupt supply chains, particularly affecting shipments of vehicles, chemicals, and agricultural products. The railways handle about 40,000 freight carloads daily, valued at approximately $1 billion.
Business groups have called on Prime Minister Justin Trudeau to intervene to prevent a national work stoppage, citing potential harm to the economy and increased prices for essential goods. However, the federal government has shown little interest in intervening directly, preferring the parties to negotiate independently.
Upshot: This labor dispute, if unresolved, could have far-reaching consequences not only for Canada but also for the broader North American economy, given the critical role of rail transport in moving goods across borders.
— USDA daily export sales:
• 332,000 MT soybeans received in the reporting period for China during the 2024-2025 marketing year.
• 110,000 MT soybeans to unknown destinations during 2024-2025 marketing year.
— Pro Farmer Crop Tour begins today. Scouts will be sampling corn and soybean fields across the seven Crop Tour states over the next four days. Follow along with updates on our website and by searching #pftour24 on X (formerly Twitter). Scouts on the eastern leg of the tour are making their way today from Dublin, Ohio to Noblesville, Indiana. Those on the western leg are scouting fields between Sioux Falls, South Dakota, and Grand Island, Nebraska. Pro Farmer will release the Tour results for Ohio and South Dakota and stream the nightly results on its internet site tonight. The Pro Farmer corn and soybean crop estimates will be released Friday at 2:30 p.m. ET.
— NWS outlook: There is a Slight Risk of excessive rainfall over parts of New England on Monday... ...There is a Slight Risk of severe thunderstorms over parts of the Central High Plains on Monday... ...There are Excessive Heat Warnings over parts of the Southern Plains and Heat Advisories over parts of the Southern Plains and Lower Mississippi Valley.
Items in Pro Farmer’s First Thing Today include:
• Corn and soy higher overnight, wheat lower
• Precipitation falls across Corn Belt
• Japan machinery orders rebound more than expected
| ISRAEL/HAMAS CONFLICT |
— Secretary of State Antony Blinken’s visit to Israel underscores the intense diplomatic efforts underway to resolve the ongoing Israel-Hamas conflict. His statement emphasizes that it might be the last viable opportunity to secure the release of hostages and achieve a cease-fire, which could pave the way for longer-term peace and security in the region. The cautious optimism expressed by Israeli Prime Minister Benjamin Netanyahu’s office suggests that there is some progress, although the situation remains delicate. Hamas’s accusation that Israel is stalling negotiations implies deep mistrust between the parties, which complicates the efforts to reach an agreement.
The potential threat from Iran further escalates the stakes, as Israel must consider both the immediate conflict with Hamas and the broader regional dynamics, particularly the risk of an Iranian attack. This adds significant pressure on all parties to find a compromise, as the consequences of failure could be severe.
Bottom line: The outcome remains uncertain.
| RUSSIA/UKRAINE |
— Ukraine’s air force announced the destruction of a second bridge in Russia’s Kursk region, which borders Ukraine. This strategic attack aims to disrupt supply lines to Russian forces attempting to fend off Ukrainian fighters who crossed into Russian territory on Aug. 6. Ukrainian President Volodymyr Zelenskyy has stated that Ukrainian troops are not only holding their positions in enemy territory but are also strengthening and expanding them. This development underscores Ukraine’s efforts to intensify pressure on Russian forces by targeting critical infrastructure and maintaining an offensive posture beyond its borders.
— Ukrainian 2024-25 grain exports have reached 5.79 million metric tons (MMT) as of August 19, significantly higher than the 3.61 MMT recorded at the same point in the 2023-24 marketing year. The current year’s totals include 2.8 MMT of wheat, 2.1 MMT of corn, and 907,000 metric tons of barley. According to Agriculture Ministry data, grain exports in August are now at 2.09 MMT, up from 1.33 MMT at this time in August 2023.
| POLICY UPDATE |
— There is a push to extend the 2024 Spring crop insurance payment deadline due to depressed grain prices. The bill, historically due on Nov. 30, has been due on Sept. 30 for the past 8 to 10 years, with billing occurring on Aug. 15. Despite when the bill is sent, recipients have 30 days to pay. In previous years, deadlines were deferred due to weather issues and Covid-19. However, this year, the Risk Management Agency (RMA) decided not to defer the payment deadline, citing a record crop. Some farmers, particularly in Ohio, are requesting a deferral due to late planting and depressed markets, but others argue it is too late to implement the change after the Aug. 15 billing date. Stakeholders note that without an extension, many producers may struggle, as they won’t have new cash sales until after Sept. 30.
— USDA is seeking public feedback on the implementation of the Sustainability Targets in Agriculture to Incentivize Natural Solutions Act of 2021 (SUSTAINS Act). This legislation, which was incorporated into the fiscal year (FY) 2023 appropriations package, allows USDA to accept private contributions to fund farm conservation programs, such as the Agricultural Conservation Easement Program (ACEP) and the Regional Conservation Partnership Program (RCPP). USDA is interested in understanding the criteria for accepting these private contributions and how the funds should be utilized to support conservation projects that address carbon sequestration, wildlife habitat improvement, and water protection, among other priorities.
USDA published a Request for Information (RFI) in the Aug. 16 Federal Register (link), to gather input from stakeholders. This feedback will inform future rulemaking and help maximize the benefits of the SUSTAINS Act by promoting equity and assisting all producers. The department emphasizes the importance of agriculture in conserving natural resources and is keen to hear from those directly involved in the implementation of the legislation.
The deadline for public comments on the implementation of the SUSTAINS Act is Sept. 16, 2024.
The SUSTAINS Act was a significant legislative initiative by House Ag Committee Chair GT Thompson (R-Pa.) and aims to expand the reach of conservation programs by leveraging private investments. USDA’s efforts are part of a broader strategy to support climate-smart agricultural practices and enhance the resilience of the U.S. food system.
| CHINA UPDATE |
— China and the U.S. reached an agreement to cooperate on financial stability matters. This agreement was made during a meeting of the U.S./China Financial Working Group in Shanghai. The People’s Bank of China (PBOC) reported that the discussions were “professional, pragmatic, candid, and constructive,” covering topics such as capital markets, cross-border payments, and the monetary policies of both nations. The agreement includes appointing contact people to handle any future ‘financial stress events’ and exchanging lists of financial stability contacts.
— Chinese stock exchanges have recently stopped releasing real-time data on foreign fund flows, a move that deprives investors of a crucial sentiment gauge. This change, effective from Monday, comes at a time when international traders have been net sellers of Chinese stocks for several months. The Shanghai and Shenzhen exchanges will now only publish certain figures after markets close, such as total turnover and the number of cross-border Hong Kong Stock Connect trades, along with monthly and annual summaries.
Prior to this decision, investors could access real-time data on overseas investors’ trades through Stock Connect, which provided insights into the daily quota balance of the scheme. Now, investors will have to rely on the Chinese central bank’s quarterly reports on financial assets held by overseas entities, which do not provide detailed information on foreign flows.
This reduction in transparency has further eroded foreign investors’ confidence in the Chinese market. The year-to-date tally for foreign investment in China’s $8.3 trillion stock market has reportedly turned negative, and the country is expected to see its first annual outflow since 2016. The decision to stop disclosing intraday foreign flows data and real-time estimates of mutual fund products’ net value had already been made in the past, contributing to the current sentiment.
— American businesses are bracing for continued challenges in U.S./China trade relations, regardless of the outcome of the upcoming election. Donald Trump has vowed to impose tariffs as high as 60% on Chinese goods, while Vice President Kamala Harris, if elected, is expected to maintain the Biden administration’s strategy of working with allies to counter China in key sectors like artificial intelligence, electric vehicles, and solar energy.
Due to the uncertainty, companies are delaying investments and expansions until they have more clarity, the New York Times writes (link). Some are even stockpiling goods to prepare for potential new restrictions. For instance, during June and July — when retailers typically build up inventory for the holiday season—ocean shipments from China to the U.S. increased by more than 4% compared to the previous year, according to supply chain technology firm Project44.
Meanwhile, China has sent mixed signals to Western companies. While they have used major events, such as the World Economic Forum in Dalian, to show openness to foreign business, the American Chamber of Commerce in China warns that policy inconsistencies, such as raids on consulting firms and changes to counterespionage laws, are making it increasingly difficult for companies to operate there.
Despite discussions of “decoupling,” the reality is that Chinese goods are still finding their way into the U.S., often by being shipped or assembled in other countries like Mexico and Vietnam to bypass American restrictions. In sectors like steel and copper, replacing China’s role as a key buyer and supplier would be costly for American firms.
Bottom line: While China remains the world’s largest manufacturing economy and the U.S. the largest consumer economy, Chinese supply chains are likely to continue meeting U.S. demand, albeit through more complex routes.
— Collisions tear holes in U.S. ally’s ships as tensions flare in South China Sea. Three collisions between coast guard ships belonging to China and the Philippines mark an escalation that threatens to spiral into a conflict that could draw in the U.S. Link to more via the Wall Street Journal.
Of note: Incident comes despite temporary détente last month over disputed territory.
— Final verdict in EU anti-subsidy probe of Chinese-made EVs expected by end of month. China trade chamber made the prediction on the investigation, which last month found Chinese makers benefited from ‘unfair subsidization,’ imposing provisional punitive duties.
— Russian pork producers target EU’s share of China’s pork market. The trade adds to the growing economic ties between Russia and China in the face of increasing sanctions against both countries by the West. Link to more via Reuters.
| TRADE POLICY |
— Malaysia launches controversial ‘orangutan diplomacy’ to boost palm oil image amid criticism. Malaysia has launched a controversial “orangutan diplomacy” program aimed at improving the image of its palm oil industry by allowing countries that import palm oil to “adopt” orangutans. This initiative, announced by Malaysia’s Plantation and Commodities Minister Johari Abdul Ghani, is intended to demonstrate Malaysia’s commitment to biodiversity conservation. The plan has drawn parallels to China’s “panda diplomacy” and is seen as a response to the European Union’s ban on imports of commodities linked to deforestation, which includes palm oil.
The program has faced significant criticism from conservationists and environmental organizations. Critics argue that the initiative is hypocritical, as it involves gifting orangutans while the palm oil industry is a major driver of deforestation, which threatens the orangutans’ natural habitat. Conservationists suggest that a more effective approach would be to focus on improving forest management and promoting sustainable palm oil production.
Initially, the plan involved sending orangutans abroad as diplomatic gifts, but it has since been revised. The updated version allows companies importing palm oil to adopt orangutans without relocating them from their natural habitats. Funds from this adoption scheme are intended to support conservation efforts and monitor the safety and condition of the orangutans in Malaysia.
| ENERGY & CLIMATE CHANGE |
— Zeekr unveils ultrafast EV charging tech, addressing long charging times and boosting market potential. Chinese EV maker Zeekr unveiled ultrafast charging technology that can charge a vehicle from 10% to 80% in less than 11 minutes, using an 800-volt architecture. This advancement addresses one of the key concerns for potential electric vehicle buyers: long charging times. The new technology, demonstrated with Zeekr’s 007 sedan, is expected to benefit the broader EV market, including competitors like Tesla. Despite the positive development, Zeekr’s stock has struggled, down 25% since its May IPO, reflecting broader challenges in the EV market due to slowing demand and increased competition. Improved technology like this could help reignite growth in the sector. Link to details via Barron’s.
— USDA announced (link) on Aug. 16 that it is providing $90.3 million in funding through the Higher Blends Infrastructure Incentive Program (HBIIP). This funding, sourced from the Inflation Reduction Act (IRA), is designated for 89 projects across 26 states. The main goal is to enhance the infrastructure necessary to support the sale and distribution of higher ethanol blend fuels, such as E15 (15% ethanol, 85% gasoline) and E85, as well as biodiesel blends.
The funding will be used to install and upgrade fuel pumps, dispensers, and storage tanks, which are essential for distributing higher blends of ethanol and biodiesel. This includes the installation of blender pumps that allow consumers to choose the level of ethanol in their fuel.
The HBIIP (link) is designed to significantly increase the sales and use of higher blends of ethanol and biodiesel by sharing the costs associated with building and retrofitting biofuel-related infrastructure. Grants cover up to 75% or $5 million of total project costs.
Timeline: USDA will accept applications for HBIIP funding until Sept. 30, 2024.
Link to a list of HBIIP and REAP projects.
| LIVESTOCK, NUTRITION & FOOD INDUSTRY |
— Perdue Foods LLC issued a voluntary recall of approximately 167,171 pounds of frozen, ready-to-eat chicken products due to potential metal contamination. This recall was initiated after consumer complaints revealed the presence of metal wire in the products. The affected items include:
• Perdue Simply Smart Organic Gluten Free Breaded Chicken Breast Nuggets
• Perdue Breaded Chicken Breast Tenders
• Butcher Box Organic Free Fully Frozen-Cooked Breast Chicken Nuggets
These products were produced on March 23, 2024, and have a “best if used by” date of March 23, 2025. They were distributed nationwide to retail locations and sold online. The recall was coordinated with USDA’s Food Safety and Inspection Service (FSIS), and the affected packages bear the establishment number “P-33944" on the packaging.
Perdue’s Senior Vice President of Food Safety, Jeff Shaw, stated that the recall was a precautionary measure after identifying a thin strand of metal wire inadvertently introduced during manufacturing. There have been no reports of illness or injury related to the consumption of these products. Consumers are advised to discard the products or return them to the place of purchase. For further information, consumers can contact Perdue at 866-866-3703.
— Recent discussions have emerged regarding accusations of price gouging in the food industry, with various stakeholders offering differing perspectives on the issue.
• Food industry’s stance: Representatives from the food industry, including the National Grocers Association and FMI, The Food Industry Association, have rejected accusations of price gouging. They argue that high input costs are the primary reason for increased grocery prices, not deceptive practices. Greg Ferrara, president and CEO of the National Grocers Association, emphasized that independent grocers are also affected by inflationary pressures and called for a focus on reducing credit card fees and regulations instead of implementing a price gouging ban. Leslie Sarasin, President and CEO of FMI, stated that the food industry has zero tolerance for price gouging and highlighted that grocery stores operate on tight profit margins.
• Political proposals: Vice President Kamala Harris has proposed a federal ban on price gouging in the food industry, arguing that it would prevent businesses from exploiting crises to charge excessive prices. However, some economists and critics argue that such a ban could lead to unintended consequences, such as discouraging new market entrants and potentially maintaining the status quo. The proposal is part of a broader agenda aimed at reducing costs for consumers, including food, housing, and medicine.
• Economic and political context: Under the Biden/Harris administration, food prices increased significantly, contributing to public dissatisfaction with the economy. While inflation is reportedly moderating, grocery prices remain a concern for many voters. Some economists suggest that addressing barriers to market entry and focusing on anti-competitive behaviors might be more effective than implementing price gouging bans.
— USDA is defending its response to the avian influenza outbreak amid calls from lawmakers for increased action. Reps. Randy Feenstra (R-Iowa) and Jim Costa (D-Calif.) have urged USDA to create a strategic initiative focused on researching biosecurity measures, developing vaccines, and improving methods for culling infected birds. USDA has emphasized that its current measures, in collaboration with other federal agencies, have maintained the safety of the food supply.
USDA is also exploring the development of vaccines for poultry, acknowledging that while vaccines are important, implementing a vaccination strategy domestically poses challenges and could have significant trade implications. A vaccine for cattle is considered promising but is still in the early stages of development. Meanwhile, health experts are encouraging producers to adopt voluntary biosecurity measures to mitigate the spread of the virus.
Of note: The current outbreak of Highly Pathogenic Avian Influenza (HPAI) has resulted in the deaths of over 100 million domestic and commercial birds and has affected dozens of dairy herds since 2022. As fall approaches, federal officials anticipate a rise in bird flu cases due to wild bird migrations but do not expect an increased risk to dairy cattle.
| HEALTH UPDATE |
— Recent cases of mpox, previously known as monkeypox, are emerging globally, with the virus now spreading to Sweden, Pakistan, and the Philippines. This surge in cases prompted the World Health Organization (WHO) to declare a global public health emergency last week, a move aimed at accelerating vaccine access and distribution. WHO Director-General Dr. Tedros Adhanom Ghebreyesus emphasized the need for a coordinated international response to “stop these outbreaks and save lives.”
Mpox is a potentially fatal virus characterized by fever, body aches, and pus-filled lesions. The virus has been categorized into two types: the severe clade I group (formerly known as the Congo Basin strain) and the clade II variant (previously known as the West African strain). The clade II variant was responsible for an outbreak in 2022 that led to approximately 100,000 cases worldwide. Recently, clade I has begun spreading internationally after an outbreak in the Democratic Republic of the Congo, which has resulted in over 1,100 deaths since January.
| KEY LINKS |
WASDE | Crop Production | USDA weekly reports | Crop Progress | Food prices | Farm income | Export Sales weekly | ERP dashboard | California phase-out of gas-powered vehicles | RFS | IRA: Biofuels | IRA: Ag | | Russia/Ukraine war, lessons learned | | SCOTUS on WOTUS | SCOTUS on Prop 12 pork | New farm bill primer | | Gov’t payments to farmers by program | Farmer working capital | USDA Ag Outlook Forum |