Putin Nixes Return to Black Sea Grain Deal; Offers Grain Donations with Free Shipping

Farm bill surprise initiatives | Powell: Fed is no longer forecasting U.S. recession

USDA daily export sale: 256,000 metric tons soybeans to unknown destinations during the 2023-24 marketing year.

New-crop soybean sales reflected in USDA weekly update. U.S. Weekly Export Sales activity for the week ended July 20 included confirmation of new-crop soybean sales to China that were partially announced via the daily export sales reporting system. Net sales for 2022-23 of 91,340 metric tons of sorghum, 43,316 metric tons of soybeans and 2,731 running bales of upland cotton were reported. For 2023-24, net sales of 1,050 metric tons of wheat, 53,000 metric tons of sorghum, 275,000 metric tons of soybeans, and 63,316 running bales of upland cotton. Net sales for 2023 of 2,824 metric tons of beef and 584 metric tons of pork were reported.

Considering heightened tensions following Russia’s withdrawal from the Black Sea grain pact, NATO is set to enhance surveillance in the Black Sea region, including maritime patrol aircraft deployment. Today’s dispatch includes several updates on the topic.

U.S. economy grew at an annual pace of 2.4% between April and June, reflecting continued strength despite higher prices. The second quarter gross domestic product figures mark a full year’s worth of economic expansion, according to new figures released Thursday by the Bureau of Economic Analysis, even as the Federal Reserve continues to hike interest rates to fight inflation.

President Biden plans today to announce new steps to address the extreme heat that has threatened millions of Americans, most recently in the Southwest. Meanwhile, the United Farm Workers and its allies are urging the Department of Labor to adopt a nationwide, permanent heat protection standard after two farmworkers were killed by extreme heat earlier this month. Details in Energy and Climate Change section.

More than 140 million Americans from coast-to-coast are under heat alerts today. Parts of the Northeast will see their highest temperatures this year while temperatures in the Midwest will be up to 20 degrees above normal. The extreme weather has also gripped the country’s southern tier from Southern California to Florida since June. And Phoenix, one of the hardest-hit cities in this summer’s scorching heat, is in its fourth week in a row of temperatures over 110 degrees, smashing a previous record of 18 straight days.

The Panama Canal Authority announced a reduction in the average daily number of ships allowed to navigate the canal, lowering the figure from 35-36 to 32 starting July 30. This move is an attempt to conserve water amid a prolonged period of drought. More in Markets section.

European Central Bank raises rates by 25 basis points, says inflation set to remain ‘too high for too long.’ Details in Markets section.

This dispatch has several new farm bill updates. See the Policy section for details.

China and some smaller importers have kept trade bans on U.S. poultry despite months without new cases of highly pathogenic avian influenza (HPAI). More in Trade Policy section.

New EV charging joint venture announced. The White House is applauding news that GM, Stellantis, Hyundai, Kia, Honda, Mercedes-Benz, and BMW plan to cooperate on deploying 30,000 fast chargers for electric vehicles across North America. Details below.

As Urals crude has been consistently trading at or above $60 for a period exceeding two weeks, the Biden administration may communicate privately with its Western allies, urging them to adhere to the price ceiling on Russian oil shipped exports. This approach will likely be a silent enforcement effort to avoid the potential disruption that overtly strict measures might cause in the energy markets. Adding to the concerns of the Western countries, Moscow is showing a growing tendency to rely on smaller traders for exporting crude to Asia. While this is not a violation of the sanctions, it might pose challenges in monitoring Russian oil transactions. See Russia section for more.

House GOP leadership faces uncertainty concerning the USDA/FDA appropriations measure. Details in Congress section.

Today marks the 70th anniversary of the cessation of the Korean War, the contentious conflict of the early Cold War years which saw the involvement of international forces. As part of the events, China, North Korea, and Russia are banding together to commemorate the anniversary, simultaneously displaying solidarity over the ongoing Ukrainian conflict. In the original Korean conflict, China played a critical role by dispatching roughly 250,000 soldiers to the Korean Peninsula, providing much-needed reinforcement to its ally, North Korea. This Chinese intervention significantly counterbalanced the collective military forces of South Korea, the United States, and various other nations under the U.N. Command. Recent reports have revealed that North Korea has been allegedly supplying Russia with a vast number of rockets for battlefield usage in Ukraine - an international issue that’s pressing along past its year and a half mark. Moreover, while China hasn’t directly supplied weapons, it exhibits unwavering support for Russia’s position regarding Ukraine, bolstering Moscow’s stance throughout this protracted conflict.

Equities today: The U.S. Dow opened around 85 points higher. In Asia, Japan +0.8%. Hong Kong +1.5%. China -0.2%. India -0.7%. In Europe, at midday, London +0.2%. Paris +1.4%. Frankfurt +0.9%.

U.S. equities yesterday: The Dow ended with gains after trading on both sides of unchanged leading up to the Fed meeting conclusion while the Nasdaq and S&P 500 finished in the red. The Dow gained 82.05 points, 0.23%, at 35,520.12. The Nasdaq was down 17.27 points, 0.12%, at 14,127.28. The S&P 500 eased 0.71 point, 0.02%, at 4,566.75.

Southwest Airlines stock tumbled ahead of the open Thursday as the low-cost carrier said it expected revenue per available seat mile to fall in the third quarter. The airline also warned of higher costs for the full year, driven by higher labor rates and wage accruals.

Agriculture markets yesterday:

• Corn: December corn fell 17 cents to $5.48 1/4, closing near the session low.
• Soy complex: November soybeans closed steady at $14.20 and nearer the session high. September soybean meal rose $8.30 at $444.60 and nearer the session high. Prices hit a more-than-three-month high again. September bean oil fell 151 points at 66.97 cents and nearer the session low. Prices hit a 13-month high Monday.
• Wheat: December SRW futures fell 38 1/2 cents and settled nearer the session low at $7.42 1/4. December HRW futures led the complex lower, falling 43 1/2 cents to $8.77 1/4. December spring wheat fell 34 1/2 to $9.07 1/2.
• Cotton: December cotton rose 86 points at 87.93 cents and near the session high. Prices hit an 11-month high.
• Cattle: August live cattle futures posted a 37.5-cent advance to $178.675 Wednesday, while tumbling grain markets boosted August feeder futures 97.5 cents to $244.20.
• Hogs: August lean hogs traded on both sides of unchanged before settling unchanged at $101.65, though deferred contracts fell.
  

Ag markets today: Corn, soybeans and wheat traded on both sides of unchanged overnight but have firmed early this morning. As of 7:30 a.m. ET, corn futures were trading fractionally to a penny higher, soybeans were mostly 3 to 4 cents higher, SRW wheat was a nickel higher, HRW wheat was 16 to 17 cents higher and HRS wheat was 14 to 16 cents higher. Front-month crude oil futures were around 75 cents higher, and the U.S. dollar index was about 200 points lower.

Market quotes of note:

• Elon Musk. “I learned a ton from watching Elon up close — the good, the bad and the ugly. His boldness, passion and storytelling are inspiring, but his lack of process and empathy is painful.” — Esther Crawford, Twitter’s former head of product and once a top lieutenant to Elon Musk, in a lengthy post about what it was like to work for the billionaire.
  

• The cost of Brent crude has climbed to a three-month high above $83 a barrel, and looks set to rally to the top of its range, says the global commodity research team at Bank of America, led by Francisco Blanch, who is reiterating his $90 a barrel Brent price target by early 2024. “The stars are finally aligning for a run in crude oil prices over the coming quarters. From a fundamental perspective, our supply and demand balance projections continue to suggest that oil markets will tighten very substantially over the coming 18 months, so we expect global oil stocks to decline substantially over this period as a result,” he says.

  
  

• Anheuser-Busch InBev laid off hundreds of workers at its U.S. offices after months of slumping sales at Bud Light. The world’s largest brewer, which also sells Stella Artois and Budweiser, on Wednesday said the cuts would affect less than 2% of its roughly 18,000 U.S. workforce. The layoffs won’t impact front-line workers such as brewery and warehouse staff, the company said. “While we never take these decisions lightly, we want to ensure that our organization continues to be set for future long-term success,” Anheuser-Busch Chief Executive Brendan Whitworth said in a written statement. “These corporate structure changes will enable our teams to focus on what we do best—brewing great beer for everyone.” The restructuring eliminated corporate and marketing roles at major U.S. offices, including St. Louis, New York and Los Angeles. Bud Light sales have tanked since April amid a commercial backlash over a promotion with transgender influencer Dylan Mulvaney. Earlier this summer, Mexican brand Modelo Especial dethroned Bud Light as the top-selling beer in the U.S.
  

The U.S. economy saw an annualized growth of 2.4% quarter over quarter (QoQ) in Q2 2023, surpassing its 2% growth in the previous quarter and exceeding the anticipated market forecast of 1.8%. This growth was largely driven by a sharp acceleration in nonresidential fixed investment, rising to 7.7% from 0.6% in Q1.

This acceleration was spearheaded by an upswing in capital equipment which experienced a significant rebound to 10.8%, compared to a -8.9% decrease in the previous quarter. Intellectual property products also increased to 3.9% from 3.1%. Another contributing factor to this growth was an increase in private inventories contributing 0.14 percentage points, significantly improving compared to their deduction of -2.14 percentage points in Q1.

However, consumer spending underwent a considerable deceleration, coming in at 1.6% compared to 4.2% in the previous quarter. Despite slowing down, it still exceeded market predictions due to manageable inflation and a tight labor market. Consumption of goods specifically suffered a sharp reduction, from 6% in Q1 to just 0.7% in Q2. On the other hand, spending on services remained strong albeit declining slightly, from 3.2% to 2.1%.

Government spending increased at a more modest rate of 2.6%, down from 5% in the previous quarter. Additionally, net trade had a negative impact on growth, subtracting 0.12 percentage points, caused by a 10.8% decrease in exports and a softer 7.8% decrease in imports. Residential investment continued its downward trend, dropping by -4.2% compared to -4% in the previous quarter.

ECB raises interest rates back to highest-ever level. The European Central Bank raised the rate on main refinancing operations to 4.25%, the highest level since October 2008, and the rate on the deposit facility to an over 22-year high of 3.75%. The decision came in line with expectations as the bank tries to bring the inflation rate to its 2% target. The ECB warned that consumer prices are still rising too fast and kept its options open for further increases.

The Fed as expected raised its federal funds rate by 25 basis points, increasing the rate to 5.25% to 5.5%, which is the highest mark in 22 years. The primary reason for this increase is the persistently high inflation, which the Fed characterizes as “elevated.” This increase is aimed at controlling and bringing down the inflation rate.

Future policy moves remain uncertain, with Fed Chairman Jerome Powell suggesting that both a rate rise or maintaining steady rates are possibilities for the upcoming September meeting. For 2024, rate decreases might be considered, but those decisions are still far off.

Powell further stated that the Federal Reserve’s goal is to continue achieving maximum employment with an inflation aim at 2% over the long run. Despite recent control efforts, inflation remains well above the Fed’s 2% target.

The Fed’s primary focus continues to be on inflation, seeking to bring inflation down from its current level. In the meantime, Fed officials no longer forecast a recession for later this year, showing a positive shift in their outlook on the economy.

Interestingly, Powell did not see Russia’s exit from the Black Sea Grain Initiative driving up food prices or significantly contributing to the U.S. inflation rate, though they will monitor the situation closely.

On future meetings, Powell affirmed that “meeting by meeting” analysis based on data will determine any policy changes. The decision for the September meeting will be guided by data that will emerge in the next few weeks, including job reports and Consumer Price Index reports.

While Powell made clear that the Fed was avoiding commentary on areas beyond its mandate, such as specific contract negotiations, he confirmed the commitment to keeping an eye on economic developments.

Overall, economic stability and reining in inflation continue to be the key focal points for the Federal Reserve. Future policy decisions will be based on a ‘data-dependent’ approach to manage the prevailing situation.

It’s too soon to say if the Fed is done raising rates. Powell acknowledged that “we’ve come a long way” in bringing down headline inflation from last summer’s peak of about 9%. But he added that it was still well above the central bank’s target.

Coming up: Two key Consumer Price Index reports and two jobs reports are set to be released between now and the Fed’s next rate-setting meeting in September. The central bank and investors will scrutinize those reports for any signs of inflation perking up.

Powell has laid out the importance of the upcoming data releases for Fed policy: “It is certainly possible that we would raise funds again at the September meeting if the data warranted,” he said. “And I would also say it’s possible that we would choose to hold steady at that meeting.”

Bottom line: The Wall Street Journal summed it up as follows: “The notion of more tightening looks fanciful, even if that is what the Fed would like us to think. We are almost certainly at what history will show to be the end of a rate hiking cycle.” The markets think the Fed will hold fire. The futures market this morning is showing just a 20% chance of a September rate increase, and it’s pricing in rate cuts for the first half of next year.

Market perspectives:

• Outside markets: The U.S. dollar index remained under pressure amid strength in the euro and British pound. The yield on the 10-year U.S. Treasury note was firmer, trading around 3.87%, with a mostly lower tone in global government bond yields. Crude is higher, with U.S. crude around $79.50 per barrel and Brent around $83.15 per barrel. Gold and silver futures were higher ahead of U.S. economic data, with gold around $1,977 per troy ounce and silver around $25.25 per troy ounce.

• Tour finds U.S. spring wheat yields down from last year but above average. Crop scouts on Day 2 of the Wheat Quality Council’s HRS tour found an average yield of 45.7 bu. per acre in north-central and northwest North Dakota, down from 47.7 bu. in those areas last year but above the five-year average of 38 bu. per acre. On Day 1, the tour’s average yield was 48.1 bu. per acre in southern and east-central North Dakota, down from 48.9 bu. last year but above the five-year average of 40.2 bu. per acre. Scouts will sample fields in northeastern North Dakota today.

• The Panama Canal Authority announced a reduction in the average daily number of ships allowed to navigate the canal, lowering the figure from 35-36 to 32 starting July 30. This move is an attempt to conserve water amid a prolonged period of drought, according to a Reuters report from earlier this week. This decision matters because ongoing drought conditions could force the Canal Authority to reduce the depth of the canal. As a result, ships would need to carry less cargo through the canal, thereby negatively impacting the efficiency and profitability of trading operations. Supply chains for goods frequently transported through the canal - including motor vehicles, petroleum, grains, and coal - are likely to be significantly slowed.

The restrictions would particularly affect trade between China, Japan, South Korea, and certain regions of the U.S., as the Panama Canal facilitates 46% of container movement from northeastern Asia to the U.S. East Coast. If drought conditions become severe, leading to major restrictions on ship passage and canal depth, cargo ships may need to undertake longer, costlier detours.

Background information reveals that in June, the Canal Authority considered reducing the canal’s depth by six inches (approximately 15 centimeters.) However, after a brief period of rain, the decision was made to maintain the current depth limit of 44 feet (around 13.41 meters.) Panama’s rainy season typically runs from May to January, and the canal depends on this period to preserve water levels. But this year’s lack of rain has made it necessary for the Canal Authority to implement water saving measures and plan for the long-term consequences of the drought.

• Ag trade: Taiwan purchased 108,000 MT of U.S. milling wheat. Algeria purchased an unspecified volume of Brazilian or Argentine corn from a tender for up to 120,000 MT. Bangladesh tendered to buy a nominal 50,000 MT of optional origin milling wheat.

• World ocean surface temperatures in June reached a historic high, with data collected over the past 174 years. In certain regions like near Miami, coastal Atlantic waters have recorded almost 90F (32C). This is seen as a potential catastrophe because the increased sea temperatures intensify extreme weather events which have proven lethal and caused enormous financial loss. There’s a vicious circle scenario here: the hotter the oceans get, the less heat they can ingest from the environment, which sets off a series of worsening climate effects. Notable among these are more potent storms and the demise of coral reefs.

• NWS weather outlook: Dangerous heat wave to begin in Northeast & Mid-Atlantic on Thursday and continue through weekend... ...Severe thunderstorms and flash flooding possible throughout portions of Northeast on Thursday... ...Record-breaking heat to continue across Southwest and Central U.S. through end of week.

Items in Pro Farmer’s First Thing Today include:

• Grains firming this morning
• Russia continues to attack Ukraine’s Odesa region
• Slow developing cash cattle market
• Cash hog index continues to climb

— Ukraine has initiated a significant move in its counteroffensive by conducting an armored assault on Russian fortifications in the south of the country. It is speculated that this assault might be a stratagem to sever Moscow’s terrestrial link to its bases in the occupied region of Crimea. This assault operation is taking place simultaneously with new missile strikes launched by Russia against infrastructure in Odessa, a region in Ukraine, resulting in one casualty and damage to a grain shipment.

Meanwhile, President Joe Biden has requested the federal government to provide the International Criminal Court in The Hague with evidence of alleged Russian war crimes committed in Ukraine.

The British Defense Ministry said Russia has altered its naval activities in the Black Sea following its withdrawal from an agreement allowing Ukrainian grain exports and could be preparing “to enforce a blockade of Ukraine.”

— Putin nixes return to Black Sea grain deal. Russian President Vladimir Putin stated at the Russia-Africa Economic and Humanitarian Forum that Russia will not rejoin a U.N.-brokered pact, known as the Black Sea grain deal, aimed at preventing famine in the developing world. The decision is a result of Russia’s ongoing conflict in Ukraine.

The Black Sea grain deal had facilitated the export of 32.9 million tons of agricultural products from Ukraine’s blockaded ports to the global market. Putin, accusing Western nations of being the primary beneficiaries of these exports while maintaining sanctions on Russia, insisted that Moscow would move towards “a fairer system of resource distribution.”

Putin said Russia would be prepared to provide 50,000 tons of grain each to Burkina Faso, Zimbabwe, Mali, Somalia, the Central African Republic, and Eritrea in the next three to four months, with promises of free shipping.

However, Russia has been accused of stealing Ukrainian grain during its invasion of the country’s southern region. With Russia’s exit from the deal, government forces have launched attacks against Ukrainian agricultural stores, supposedly resulting in the destruction of around 60,000 tons of grain.

The African Union pleaded earlier on Thursday for the reinstatement of the Black Sea grain deal, which ensured Ukrainian and Russian agricultural products could reach international markets despite the ongoing war affecting Black Sea shipping routes.

“The problem of grains and fertilizers concerns everyone,” Comoros President Azali Assoumani, who heads the 55-member African Union, told Russian state media. “We will talk about this in St. Petersburg, we will discuss it with Putin to see how we can restart this agreement.”

— Economist: The world should not let Vladimir Putin abandon the grain deal. An Economist article (link) discusses the current geopolitical crisis involving Russia and the international community, with a major focus on the repercussions of President Vladimir Putin’s decision to abdicate a crucial grain deal. Putin has justified his move by claiming the deal to be beneficial only for Western businesses, insinuating that Russia was unfairly shouldering the burden. However, the article notes, these allegations appear misleading as the claim that Russian exports of food and fertilizers are under sanctions is untrue.

The Black Sea Grain Pact not only facilitated Ukraine’s export of crop resources, reducing global food prices, but also ensured a safe passage for Ukraine’s crops and fertilizers. Putin’s withdrawal, likely motivated by a desire to destabilize Ukraine’s economy, has caused food prices to rise. His actions have now extended to attacking Ukraine’s alternative grain export routes as well.

This strategy debilitates Ukraine’s economy, the article observes, as a large portion of their export earnings come from food products. The resultant decrease in earnings for Ukrainian farmers may affect their ability to replant fields, threatening future harvests and deepening this economic crisis.

The article suggests a strong need for world leaders to refute Putin’s misinformation and rebuild the grain agreement. It recommends pressing this issue at the Russia-Africa Summit to urge Putin and Russia to reinstate the grain deal. African countries, in particular, might incentivize Russia as they bear the negative effect of increasing food prices and instability in the global food market. The article argues that these African leaders could voice their protest along with sending a grain ship to Ukraine under an African flag demonstrating solidarity.

Turkey could also play a vital role, given its significant influence over Putin. As the main beneficiary of Ukrainian wheat imports, Turkey could help alleviate its own inflation issues by selling some of their supplies and encourage Russia to re-enter the deal.

Ukraine’s Western allies could also intervene by indicating their willingness to resort to forceful measures if diplomacy fails, the article adds. Some suggested measures include arming Ukraine with long-range missiles, providing insurance for convoys, and even offering military escorts. If Turkey were to deny warships access to the Black Sea, NATO members could potentially provide air cover instead. The article suggests that Putin’s actions have highlighted a decrease in his strategic options rather than any upper hand he may believe he holds.

— U.S. mulls ‘soft enforcement’ as Russia oil prices top G7 cap. Due to Russian oil prices surpassing the $60-per-barrel cap set by the G7 countries in December on ocean-going exports of Russian crude, the Biden administration is planning to use “soft enforcement” methods to encourage compliance. Early indications suggest that the U.S. will not take a severe approach to the matter with tankers and tanker owners, opting instead for subtle methods such as letters and phone calls. The aim is to influence trading houses, tanker owners, insurers, and others, without sacrificing the delicacy of the balance sought to avoid further elevation of global oil prices by disrupting crude shipments. This approach has reportedly been in practice since the implementation of the price cap and will continue.

— Stabenow: Farm bill differences include politics of SNAP. Controversies around the Supplemental Nutrition Assistance Program (SNAP) are among the chief hindrances to passing the new farm bill, according to Senate Agriculture Committee Chair Debbie Stabenow. (D-Mich.). She is known for protecting public nutrition schemes, particularly this year when House Republicans are advocating for a 90-day limit on food stamps for a larger demographic.

Some current farm bill provisions expire on Sept. 30, however, the Congress is unlikely to implement a new farm bill before that date. Both the House and Senate Agriculture committees are not expected to vote on the legislation until September, despite ongoing behind-the-scenes work. House Agriculture Committee Chair G.T. Thompson (R-Pa.) is planning to draft the farm bill during the August congressional summer recess for a mid-September committee consideration.

Stabenow highlighted that the politics of nutrition often create obstacles for enacting the farm bill, as she discussed during an Axios conference on world hunger (link to video). She cited disagreements over farm subsidies and the challenge of informing lawmakers about the bill as other notable hurdles. She emphasized that although SNAP benefits modestly reduce hunger in America, the political debates surrounding it are challenging.

Earlier this year, House Republicans proposed extending the age limit for able-bodied adults without dependents (ABAWDs) who can receive SNAP benefits for up to 90 days, unless they are employed or enrolled in workfare or a job training program. This proposal, part of the debt limit bill, also suggested exemptions for specific demographics such as veterans, the homeless, and young adults aged up to 26, who have left foster care.

Stabenow has consistently rejected any reductions to SNAP in the farm bill, countering past attempts by conservative Republicans to cut SNAP funding and limit eligibility.

During the same Axios conference, Tjada D’Oyen McKenna, CEO of Mercy Corps, warned about the potential impact of the Black Sea Grain Initiative’s failure on global food supplies and prices, particularly affecting millions in the Middle East and Africa. She emphasized the role of the U.S. as the largest food-aid giver and the importance of the farm bill’s inclusion of the Food for Peace program, the leading U.S. international food initiative.

Barron Segar, president of World Food Program USA, highlighted the severity of global food insecurity, stating that around forty-three million people worldwide are on the brink of famine.

— Farm bill surprise push. Politico reports that House Agriculture Committee member Greg Casar (D-Texas) is introducing two new bills, co-led with Senate Agriculture member Peter Welch (D-Vt.), targeting large agricultural corporations that have significant influence on the farm bill reauthorization.

The Agricultural Worker Justice Act, one of the bills, seeks to use the federal government’s purchasing power to enforce fair wages and secure working conditions, aiming to prevent what they say are big corporations from exploiting American workers. The issue has been on the agenda for several months, with USDA Secretary Tom Vilsack having previously addressed Congress about the over consolidation in the meatpacking industry, citing it as a reason the federal government couldn’t sever ties with a food supplier found guilty of bribery in Brazil.

Further issues such as illegal child labor across the food industry have reinforced the demand for improved sourcing requirements. Casar argued that large food companies, especially those few meatpackers receiving significant taxpayer funds, should be obligated to source their food domestically and treat their employees with respect.

Casar’s second legislation, the Fairness for Small-Scale Farmers and Ranchers Act, is likely to meet resistance from larger companies in the food sector. It proposes a moratorium on mergers within big agribusiness, food and beverage manufacturing, and grocery retail, while prompting further reviews.

The legislation also lays out numerous steps to provide new resources to smaller farmers, promote competition in critical areas of the agriculture industry, like the cattle spot market, which is a contentious topic on Capitol Hill.

As for the goals for the farm bill, Casar and Welch aim to get “significant pieces” of both bills into the farm bill reauthorization, including a country of origin labeling for meat products, a move that has been advocated for by some lawmakers for years.

— Senate Ag member Cory Booker (D-N.J.) is introducing the Farmland for Farmers Act, which seeks to limit the rate of rising corporate agricultural land ownership in the U.S. The bill would in part restrict corporations, multilayered subsidiaries, pension funds and investment funds from new purchases or leases of agricultural land.

— Ethan Zindler will be Treasury Secretary Janet Yellen’s next climate adviser, according to the Washington Post. Zindler most recently served as head of Americas at BloombergNEF, where he managed a team of analysts on three continents tracking the transition to a low-carbon economy. He was instrumental in creating Climatescope, a tool that evaluates clean-energy investment conditions in nearly every nation. In his new role, Zindler will lead Treasury’s “climate hub” and help the department implement the clean-energy tax credits in President Biden’s signature climate law, the Inflation Reduction Act. On the international front, he will help negotiate climate finance deals known as Just Energy Transition Partnerships, building on existing deals with South Africa and Indonesia.

— Pentagon seeks supply of chip mineral after China curbs exports. In response to China reducing its mineral exports, the Pentagon is planning to award a first-time contract to secure supplies of gallium, a mineral crucial for semiconductors and military radar systems. This contract will go to U.S. or Canadian firms and is set to be issued by the end of the year.

The U.S. is also aiming to enhance its collaboration with Latin American nations to secure reliable supplies of critical minerals. This objective was communicated by State Department Undersecretary Jose Fernandez during a recent Senate Foreign Relations Committee hearing on Wednesday. The strategic move comes as part of the U.S. administration’s efforts to diversify its supply chains and build resilience against potential geopolitical shocks.

— Italy’s Prime Minister Giorgia Meloni plans to assure President Biden privately concerning Italy’s exit from China’s Belt and Road Initiative, a vast investment and infrastructure project, during her visit to the White House today, according to reports. Meloni’s intention is to foster stronger ties with Biden and update him with information about the intricate process of this separation. However, she will maintain discretion and not make this announcement publicly.

— Some bans on U.S. poultry exports remain in place. China and some smaller importers have kept trade bans on U.S. poultry despite months without new cases of highly pathogenic avian influenza (HPAI). China, South Africa and the Dominican Republic each maintain bans on poultry from 37 states that previously reported HPAI infections, USDA records show.

Mexico, the top overall market for American poultry meat, has largely lifted trade bans, though shipments from Colorado, Washington state and counties in a few other states remain blocked.

Export losses from the outbreak total $895 million, the USA Poultry and Egg Export Council said.

— White House applauds automakers’ EV charging network. The White House is commending the decision of seven global car manufacturers to collaborate on the installation of 30,000 fast chargers for electric vehicles across North America. Compatible with Tesla’s North American Charging Standard and the competing Combined Charging System, the first of these new stations will open in summer 2024. The companies backing this joint venture include GM, Stellantis, Hyundai, Kia, Honda, Mercedes-Benz, and BMW.

Transportation Secretary Pete Buttigieg, along with other officials, has praised this “major investment,” which will extend from major cities to rural communities. The initiative aligns with the administration’s support for standardization and funding for EV charging, a key aspect of the bipartisan infrastructure law enacted in 2021. According to Buttigieg, this initiative symbolizes a significant advancement towards an electric future, benefiting American consumers.

— President Biden is set to make a speech today addressing the harsh heat wave that has been impacting much of the country. Many Democrats and climate activists are urging him to leverage this occasion to advocate for more substantial action on climate change. Rep. Jared Huffman (D-Calif.) emphasized the need for a “bold Marshall Plan for the planet.”

However, Biden’s announcement will not be a climate-centered agenda as such. Instead, he plans to announce new investments in the National Oceanic and Atmospheric Administration’s weather forecasting and in initiatives to provide clean, reliable drinking water to communities across the Western U.S., regions that have been struggling with long-term drought and water supply issues. White House press secretary Karine Jean-Pierre shared these details with reporters.

This address arrives as Democrats are about to celebrate the anniversary of the climate law, the Inflation Reduction Act (IRA), which Biden enacted last August (see next item).

Meanwhile, Republicans aim to repeal over $9 billion in spending incorporated in the law amid a dispute over government funding.

Biden’s upcoming speech, while not a campaign speech per se, may offer early clues about how he intends to balance promoting his climate legislative achievements and arguing for more steps to be taken as the global warming continues.

— Schumer vows to top climate bill with 2024 wins. Senate Majority Leader Chuck Schumer (D-N.Y.) pledged to introduce a larger climate bill than the Inflation Reduction Act (IRA/Climate Bill), provided that the Democrats secure full control in Washington in the upcoming 2024 elections. He made this pledge during the one-year celebration of the said legislation.

Background. The IRA, passed in August of the previous year, allowed for approximately $370 billion in tax credits and other benefits for clean energy initiatives, which include electric vehicles, renewable energy, and hydrogen and nuclear power. However, according to analysts, the actual funding amount is higher than what the government estimates. Goldman Sachs, for instance, claims the figure is closer to $1.2 trillion.

Schumer claims the Democrats’ future climate bill will surpass even these figures should they gain additional seats in the Senate, regain control of the House, and retain the presidency.

— EWG suggests six farming practices to cut GHGs. If corn farmers in the Midwest adopted six practices — including crop rotations, cover crops, and selective planting of grasses and trees — on a large scale, they could reduce emissions of nitrous oxide, a potent greenhouse gas, by 4 million metric tonnes. Link for details.

— Think tank: WIC needs an additional $1 billion — or more. According to a report from the Center on Budget and Policy Priorities, the Women, Infants, and Children (WIC) program will need $7.2 to $7.3 billion for the fiscal year starting Oct. 1, 2023. This is due to increasing participant rates and food inflation. The required amount is significantly higher than what Congress is currently considering.

It is unclear when the House is expected to vote on its FY 2024 $198 billion USDA/FDA funding bill, with $6 billion allocated for WIC alongside a $500 million rescission. The Senate’s version of the bill proposes $6.3 billion for WIC — a figure also quoted by the White House.

The Center forecasts that the WIC’s average monthly participation will increase to 6.55 million people for 2023 and to between 6.76 million and 6.84 million for 2024. These numbers exceed the Agriculture Department’s earlier forecast of 6.5 million stated in the president’s budget. If WIC lacks funds, state agencies may have to deny aid to eligible people and reduce benefits for participants.

This growth in participation rates is believed to be a result of policies modernizing the program, reducing participation barriers, and improving the food packages offered by WIC. The rising food prices, which increase the costs of benefits, are also a contributing factor.

Background. WIC provides supplementary food packages and healthcare referrals to low-income pregnant, breastfeeding, and postpartum mothers, as well as infants and children up to age 5. According to USDA, the WIC program services nearly 40% of all infants in the nation.

— Doctors are fighting swine flu at fairs, the New York Times reports (link).

— Canadian cabinet moves. As part of a cabinet shakeup, Prime Minister Justin Trudeau named Lawrence MacAuley to be agriculture minister, a post he held from 2015 to 2019. Mary Ng will continue as minister of international trade. Link for details.

— The House Ag Committee is reviewing a cryptocurrency regulation bill (HR 4763), recently advanced by the Financial Services Committee. With the aim of creating a regulatory pathway for cryptocurrency involving the SEC and CFTC, the bill has been criticized by some Democrats who argue it could create loopholes and foster fraud. Despite this, House representative Brad Sherman (D-Calif.) believes it will pass the Agriculture Committee, with bipartisan support apparent in the House. The bill was backed by Republicans and approved by the Financial Services committee with a 35-15 vote, including support from Democratic representatives Jim Himes (Conn.) and Ritchie Torres (N.Y.) who argue that the current situation is insufficient.

Financial Services Chair Patrick McHenry (R-N.C.) supports the legislation, stating its potential to revolutionize the tech and financial sectors, if correctly implemented. This progress pleases cryptocurrency advocates who believe current regulations are vague and aim to curb the SEC’s increased activities against the industry, particularly after notable company collapses, including FTX.

The aspect of the bill guided by Rep. G.T. Thompson (R-Pa.) proposes an additional $120 million funding for the CFTC, which in turn would receive new powers to supervise the asset class under the proposed legislation.

— McConnell briefly leaves news conference after freezing up mid-sentence. Senate Republican Leader Mitch McConnell (R-Ky.) suddenly paused his remarks during his press conference on Wednesday, momentarily halting his speech and appearing to lose focus, according to the Associated Press. This interruption happened while he was discussing the annual defense bill, leading to a brief period where he seemed disoriented. Surprised by this unusual behavior, his Republican peers, who were standing behind him, assisted him and suggested he return to his office. Wyoming Senator John Barrasso, a trained orthopedic surgeon and the Senate’s third-ranking Republican, accompanied McConnell for support.

McConnell had been previously absent from Senate activities for nearly six weeks due to a fall that resulted in a concussion and a fractured rib. Since the incident, his speech delivery has appeared a bit more hesitant, raising concerns about his health among colleagues.

After briefly recuperating in his office, McConnell resumed his press conference, affirmatively responding to media questions and assuring everyone he was “fine.” His office did not comment about whether he received medical attention following the episode.

McConnell, 81, has had previous health problems, including a case of polio during his childhood, leading to some difficulty with climbing stairs. Additionally, McConnell sustained a shoulder fracture from another fall at his Kentucky home four years ago. Despite these challenges, he continues to maintain his leadership position and insists he can carry out his duties.

— House GOP leadership faces uncertainty concerning the USDA/FDA appropriations measure. With the August recess swiftly approaching, the House Rules Committee took a break on Wednesday without advancing the $25.3 billion Agriculture measure (HR 4368). Rules Chairman Tom Cole (R-Okla.) suggested that the delay is primarily due to debates over the extent of monetary cuts. The bill, which also intends to fund the Food and Drug Administration and the Commodity Futures Trading Commission, already features a 2% decrease from its corresponding budget in the current year. More conservative figures are advocating for even more significant fiscal reductions and additional contentious policy riders. However, these efforts are disputed by centrist Republicans who oppose the anti-abortion provisions in the base bill.

The measure has received a veto threat from the White House. As presently drafted by House Republicans, these bills will not become law, instead serving as a negotiation starting point with the Senate, which is controlled by Democrats, and the president. This possibility has led to concerns among some appropriators that additional cuts in the House bills might weaken their position during the negotiation process.

Meanwhile, the Senate Appropriations Committee has plans to review four spending bills today, pertaining to Defense, Interior-Environment, Labor-HHS-Education, and Homeland Security. Senate appropriators, under the Democratic majority, are creating these bills with increased spending limits, reflecting the recent debt limit agreement. This contrasts with House lawmakers who aim to align appropriations with fiscal year 2022 enacted levels.

— A united initiative to establish a digital overseer. Growing concerns over the increasing influence of tech behemoths like Alphabet, Amazon, Apple, Meta and Microsoft, which have gradually seized control over numerous facets of daily life, have prompted two influential senators to advocate for a new federal entity aimed at curbing the might of Big Tech.

Sens. Senators Elizabeth Warren (D-Mass.) and Lindsey Graham (R-S.C.) intend to launch the Digital Consumer Protection Commission Act. The act is envisaged to modulate the power of tech giants, without hampering their potential to innovate. However, there is strong resistance from these corporations against heightened scrutiny, raising questions about how such a new entity would integrate into an already regulator-filled Washington.

This suggested bill parallels prior legislative movements that instituted bodies to regulate burgeoning sectors, recalling how the Interstate Commerce Commission, the Federal Communications Commission and the Nuclear Regulatory Commission were established by Congress. Currently, the spotlight is on Internet platforms that possess nearly $10 trillion in market cap and whose services impact areas such as free speech, privacy, employment and beyond.

Warren told the New York Times’ DealBook that massive tech firms have for a significant period been abusing customer data, infringing on Americans’ privacy, posing national security threats and suppressing competition in the economy.

The newly proposed commission intends to concentrate on:

• Monopolistic market positions, enabling companies to unjustly advertise their products and stifle competition;
• Data privacy, a sector not presently governed by any overarching federal law, dealing with issues like targeted ads;
• Social impacts such as child abuse and exploitation, cyberbullying and endorsement of self-harm and eating disorders;
• And rapidly emerging technologies like artificial intelligence, which may result in discrimination, job attrition and several unforeseeable aftereffects.

Graham said the act represents “the initial step in a comprehensive journey to shield American consumers from the enormous clout currently held by these companies.”

The plan aims to orchestrate the wide range of existing endeavors to regulate tech, including parties like the FTC, the antitrust division of the Justice Department regarding competition, and state attorneys general among others. A staffer to Warren noted that the proposed agency would extend the authority of the FTC and the Justice Department, for instance, while applying a holistic approach to oversight.

— UFOs. In a recent House hearing, three retired military veterans spoke about unidentified anomalous phenomena, often referred to as UFOs. They expressed concern that these sightings pose a serious threat to national security and criticized the U.S. government for maintaining high levels of secrecy surrounding this issue. Among the witnesses was David Grusch, an ex-Air Force intelligence officer, who accused the government of concealing its investigations into these UFO sightings. Grusch claimed he reported this information to the intelligence community’s inspector general. Furthermore, he alleged that not only does the government possess these Unidentified Aerial Phenomena (UAPs), but also the remains of their “non-human” pilots. According to a representative from the Pentagon, of the 650 cases the government is presently tracking, approximately half are deemed of particular interest due to their anomalous characteristics.

— North Korean leader Kim Jong Un recently engaged in his first high-level discussions since the beginning of the Covid-19 pandemic, hosting a meeting with Sergey Shoigu, Russia’s Defense Minister. This event coincided with North Korea’s commemoration of the 70th anniversary of the cessation of combat in the Korean War. As a gesture during this significant meeting, Shoigu presented Kim with a letter autographed by Russia’s President Vladimir Putin. During his visit, Shoigu was taken on a guided tour of a weapons exhibit, which showcased nuclear-capable ballistic missiles and drones.

— Brazil President Luiz Inácio Lula da Silva has decided to pick an economist known for his unorthodox views to run Brazil’s statistics agency, raising concerns about the institution’s future. Marcio Pochmann, 61, a former head of the Institute of Applied Economics and Research (IPEA), is set to be the new leader of the Brazilian Institute of Geography and Statistics (IBGE), according to Social Communications Minister Paulo Pimenta. However, the exact date for his official appointment remains undetermined. Pochmann, known for his left-wing economic views, has also led a think tank established by the ruling Workers’ Party. Local media reports suggest that his potential appointment has caused unease, particularly with Planning Minister Simone Tebet, who supervises the IBGE, due to his considered extremist views. Three government officials, who wished to stay anonymous, voiced concerns about potential harm to the credibility of the IBGE due to Pochmann’s controversial tenure at the IPEA which led to the departure of several economists who disagreed with his approach.

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