Robust U.S. Corn Export Sales as Buyers Perceive Price Value

News/Markets/Policy Updates: Oct. 24, 2024

— Equities today: Asian and European stock indexes were mixed overnight. U.S. Dow opened around 100 points lower. In Asia, Japan +0.1%. Hong Kong -1.3%. China -0.7%. India flat. In Europe, at midday, London +0.5%. Paris +0.7%. Frankfurt +0.6%.

U.S. equities yesterday: All three major indices finished with losses after failing to trade in positive territory at all during the session. The Dow lost 409.94 points, 0.96%, at 42,514.95. The Nasdaq fell 296.47 points, 1.60%, at 18,276.65 (biggest daily drop in more than 6 weeks). The S&P 500 declined 53.78 points, 0.92%, at 5,797.42.

— One-fifth of McDonald’s restaurants have temporarily stopped selling Quarter Pounders due to an E. Coli outbreak that has sickened at least 49 people and killed one. The outbreak has been reported in several states, including Colorado, Nebraska, Iowa, Kansas, Montana, Oregon, Utah, Wisconsin, and Wyoming. The company’s stock price on Wednesday fell by its largest daily percent decrease in more than two years. McDonald’s has temporarily stopped selling Quarter Pounders at about 20% of its U.S. locations as a precautionary measure. This affects approximately 2,700 restaurants out of 13,484 nationwide. The company has removed specific onions and beef patties from its menu in affected areas while continuing to work closely with health authorities to ensure customer safety.

USDA said it is continuing to verify the safety of ground beef used by McDonald’s, indicating a state partner has collected samples from the chain’s ground beef patties for testing. However, USDA echoed the indications from the U.S. Centers for Disease Control and Prevention (CDC) and FDA that slivered onions on the tainted burgers are suspected as the likely source of illnesses. Most of the illnesses have been reported in Colorado and Nebraska. “We fully expect to see more cases,” said CDC spokesman Tom Skinner. “McDonald’s has moved rather quickly to take action to, hopefully, prevent as many cases as possible.”

— Tesla posts strong earnings as cybertruck turns profitable. Tesla reported strong quarterly earnings, driven by a rebound in demand and the unexpected success of its Cybertruck, which reached profitability for the first time. Despite its rocky debut, the Cybertruck secured the third-highest EV sales in the U.S. last quarter and holds nearly half of the market share for electric pickups. Tesla also reassured investors by confirming that new, affordable models are on track for production next year, addressing concerns about competition from faster, lower-cost rivals. Tesla’s shares jumped by more than 12% after reporting strong third-quarter results.

— Boeing workers, represented by the International Association of Machinists and Aerospace Workers (IAM), have rejected a new contract proposal, prolonging a strike that began on Sept. 13. This decision was made by 64% of the union members, who voted against the proposed agreement. The strike has significantly impacted Boeing’s operations, halting production at key facilities and contributing to substantial financial losses for the company.

The rejected contract proposed a 35% cumulative salary increase over four years. This was an improvement from an earlier offer of a 25% raise but still fell short of the 40% increase initially demanded by the union.

The proposal included a $7,000 ratification bonus and enhanced contributions to employee 401(k) retirement plans. However, it did not reinstate the defined benefit pension plan that was frozen a decade ago, which remains a significant point of contention for many union members.

The contract maintained an incentive bonus program that Boeing had previously sought to eliminate.

Impacts: The ongoing strike has caused Boeing to incur massive financial losses, with the company reporting a $6 billion loss in the third quarter of 2024. This financial strain is compounded by existing challenges related to quality control and production issues. The strike has also led to furloughs and layoffs affecting thousands of workers. Boeing’s new CEO, Kelly Ortberg, has emphasized resolving the strike as a crucial step in stabilizing the company and restoring trust among its customers. Despite these efforts, negotiations between Boeing and the union remain tense, with both sides expressing a willingness to return to the bargaining table.

— Oil prices dropped on Wednesday due to higher-than-expected U.S. crude inventory builds, despite ongoing concerns about the Middle East conflict keeping prices elevated earlier in the week. Brent crude futures fell by $1.08, 1.42%, settling at $74.96 per barrel, while U.S. West Texas Intermediate crude futures dropped by $1.32, 1.83%, to $70.77 per barrel.

— Ag markets today: Corn and soybeans built on Wednesday’s corrective gains overnight, while the wheat market traded on both sides of unchanged. As of 7:30 a.m. ET, corn futures were trading 2 cents higher, soybeans were 6 to 8 cents higher and wheat futures were 2 cents lower to 2 cents higher. The U.S. dollar index was more than 225 points lower, and front-month crude oil futures were around 65 cents higher.

Slow developing cash cattle negotiations. After six straight weeks of higher prices, packers have been slow to establish cash cattle bids while feedlots are confidently pricing cattle higher. Given strong packer margins, cash prices are eventually expected to trade steady/firmer barring a major decline in futures, though active trade may not occur until after Friday afternoon’s Cattle on Feed Report.

Contra-seasonal climb in hogs, pork continues. December lean hog futures posted a high of $80.225 and closed at $80.175 on Wednesday, just below the contract high of $80.65 from June 2023 right after the contract moved onto the board. The contra-seasonal gains in futures are being fueled by strength in the cash and product markets. The CME lean hog index firmed another 32 cents to $84.66 as of Oct. 22, the four straight daily gain. The pork cutout firmed 95 cents to $98.22, fueled by strong gains in picnics and bellies.

— Agriculture markets yesterday:
• Corn: December corn rose 2 1/2 cents to $4.19, marking a two-week high close above the 100-day moving average.
• Soy complex: January soybeans rose 4 1/2 cents to $10.05, nearer the session high. December soybean meal closed down $2.70 at $315.00 and near the daily low. December soybean oil fell 30 points to 43.39 cents and nearer the session low.
• Wheat: December SRW wheat rose 2 1/2 cents to $5.78 1/2, while December HRW futures fell a penny to $5.85 1/2, each ending nearer the session high. December spring wheat fell 1 3/4 cents to $6.14 3/4.
• Cotton: December cotton rose 43 points to 72.51 cents and nearer the daily high.
• Cattle: Feeder market losses seemed to drag fed cattle futures lower Wednesday. Expiring October live cattle futures dropped 42.5 cents to $187.625, while most-active December slid 25 cents to $187.875. November feeder futures tumbled $1.70 to $247.225, while the expiring October contrast slid 85 cents to $248.575.
• Hogs: Futures continued marching higher Wednesday, with December futures surging $1.05 to $80.175.

— Quotes of note:

• “Every company’s legal and compliance functions should sit up and take note: national security risks are not only here—they’re accelerating. And they’re being supercharged by emerging technologies like artificial intelligence.” — U.S. Justice Department Principal Associate Deputy Attorney General Marshall Miller said in a speech Wednesday in New York.

• Bank of Canada predicts export boom, fueled by oil capacity expansion. The Bank of Canada (BOC) projects exports will drive economic growth in 2025 and 2026, aided by increased oil export capacity. The Trans Mountain expansion, completed this year, raises crude capacity from 300,000 to 890,000 barrels per day, enabling greater overseas exports via Pacific Coast terminals. Export growth picked up moderately in Q3, with natural resource businesses expecting the trend to continue. The BOC forecasts exports will contribute 1.5 percentage points to GDP growth in 2025, compared to 0.4 points this year, and 1 point in 2026.

— Russia proposes new global payment system to counter US dollar dominance but gets tepid reaction. At the BRICS summit in the Russian city of Kazan, Russian President Vladimir Putin introduced a new international payments framework aimed at reducing reliance on the U.S. dollar, which he accused of being used as a “weapon” by Western powers. Putin argued that sanctions imposed on Russia since its invasion of Ukraine have “undermine[d] the trust in this currency and diminish[ed] its powers.”

The proposed system, known as “BRICS Bridge,” utilizes blockchain, tokens, and digital currencies as an alternative to the SWIFT system. This initiative reflects a broader interest among non-Western countries to avoid potential exclusion from global financial systems dominated by the U. S. Chen Qi from Tsinghua University noted in the Financial Times (link) that “non-western emerging countries like China, Russia, India or other countries, even Saudi Arabia, have the same kind of concerns about possibly one day being ousted by the United States from the Swift system.”

Despite the ambitious proposal, practical implementation remains uncertain. Alexandra Prokopenko from the Carnegie Russia Eurasia Center highlighted that while summit attendees appeared supportive, there is little evidence that these initiatives will be realized soon. “They are nodding, they are politely listening to Russia. But there is no sign yet that this initiative is going viral and will be implemented in real life,” she told the Financial Times.

The U.S. has warned that cooperating with Russia’s financial system could result in losing access to the dollar, complicating efforts to establish a sanctions-proof network. This has led banks in countries like Turkey and China to reduce dealings with Russian entities. Despite these challenges, Russia has significantly increased its use of non-Western currencies for cross-border trade, signaling a shift towards alternative financial systems.

— The latest Federal Reserve Beige Book provides an overview of current economic conditions across the United States. Highlights:
• Economic activity: The report indicates that economic activity has been largely flat across most regions since early September. This suggests a slowing in economic growth despite some positive indicators in employment, consumer prices, and retail sales.
• Employment: Employment levels saw a slight increase, with more than half of the Federal Reserve districts reporting slight or modest growth. The report notes a limited number of layoffs and low worker turnover across various regions.
• Regional variations: The Beige Book compiles qualitative data from the 12 Federal Reserve Districts, highlighting regional economic conditions and prospects. This information is gathered through reports from bank directors, interviews, and online questionnaires with businesses and community organizations.

Key points regarding agriculture:
• Farm income and crop prices: Prospects for farm income have declined due to falling corn and soybean prices. Despite favorable crop conditions in most areas, some regions experienced a shortage of precipitation. Farmers are holding higher-than-usual levels of crops in storage due to low prices.
• Harvest expectations: Fall harvests are expected to approach previous record levels, indicating strong production despite the challenges with prices.
• Livestock and other agricultural products: Livestock operations have benefited from lower feed costs. Cattle prices have eased but remain high compared to historical levels.
• Dairy and egg prices have increased, while hog prices have decreased slightly.
• Financial stresses: There is an expectation of increasing financial stress on less-productive farms due to the combination of low crop prices and high interest rates.
• The St. Louis Fed pointed out that low crop prices have helped livestock producers but have “failed to offset other price increases.” Inflation has continued to moderate, the report noted, with “prices of some food products, such as eggs and dairy, were reported to have increased more sharply,” while “many districts noted increasing price sensitivity among consumers.” The short-lived port strike on the East and Gulf Coasts had little lasting impact although some pickup in activity was noted ahead of the work stoppage. The Chicago Fed noted impacts for agriculture from rail issues Mexico and low water on the Mississippi River.

Bottom line: The report overall should still support another reduction in the Fed funds rate of 25 basis points at the Nov. 6-7 which is currently the overwhelming market expectation.

— Why E-Verify remains underused despite its potential. In an article (link) for the Los Angeles Times, Don Lee explores the surprisingly low adoption rate of E-Verify, a federal program designed to help employers verify the work authorization status of prospective employees. Despite its potential to significantly curb unauthorized employment, only about 16% of California’s employers use E-Verify, compared to a national average of 27%.

E-Verify is praised for its reliability, with over 98% of checks confirming work authorization almost instantly. However, its voluntary nature means that many businesses opt out, partly because they rely on undocumented workers to fill labor shortages. As Don Cameron, general manager at Terranova Ranch, notes, “I think you would see a general overall collapse in California agriculture and food prices going through the roof if we didn’t have them do the work.”

The reluctance to adopt E-Verify is also tied to broader economic and demographic trends. Julia Gelatt from the Migration Policy Institute points out that “it’s not in our macroeconomic interest to prevent unauthorized immigrants from working, because the U.S. population is aging.”

This sentiment reflects a widespread acknowledgment that undocumented workers are integral to many industries, particularly those offering low-wage jobs that are less attractive to U.S. citizens. Efforts to make E-Verify mandatory have repeatedly stalled due to political and economic concerns. As Lee highlights, “Neither party has been able to get comprehensive immigration reform,” leaving businesses and the economy reliant on undocumented labor.

Market perspectives:

— Outside markets: The U.S. dollar index was lower, with the euro and British pound gaining ground against the greenback. The yield on the 10-year U.S. Treasury note fell, trading around 4.20%, with a mostly negative tone in global government bond yields. Crude oil futures are higher, with US crude around $72.20 per barrel and Brent around $76.40 per barrel. Gold and silver futures were higher, with gold around $2,750 per troy ounce and silver around $34.43 per troy ounce.

— Surging gold prices reflect growing global fears and central bank demand. Gold has surged 38% in the past year, hitting a record of over $2,700 per troy ounce, driven by inflation, geopolitical instability, and rising investor anxiety, the Economist reports (link). Central banks, wary of sanctions and seeking security, have increased their gold reserves, with countries like China, India, Turkey, and Poland making significant purchases. Demand has also surged in Asia, where economic uncertainties are prompting consumers to invest in physical gold. Ultra-rich investors and family offices are hedging against economic turmoil, while gold ETF demand is expected to rise if U.S. interest rates decline. As fears spread, gold remains a key refuge, bolstered by its unique liquidity and resilience across markets.

(World Gold Council, Economist)

(IMF, Economist )

— USDA on Nov. 7 to release preliminary commodity tables for 2034 agricultural projections. The release will be at 3 pm. ET. These tables will provide 10-year projections for major U.S. crops and livestock products. A comprehensive report, including detailed discussions on commodity supply, use projections, farm income, and global commodity trade, will follow in February 2025.

Known as the “USDA Baseline,” these projections assume that current laws governing federal spending and revenues remain unchanged throughout the projection period. They do not attempt to forecast global policy changes, political developments, unusual weather events, or other external factors that might influence market outcomes. Instead, they represent USDA’s evaluation of market evolution under existing conditions and normal weather patterns. The projections are intended as a neutral benchmark to assess the impact of proposed legislation or external developments on agricultural markets.

The projections are based on the World Agricultural Supply and Demand Estimates (WASDE) report (link) from Oct. 11, 2024, and macroeconomic forecasts developed in August 2024.

The data will be available simultaneously in MS Excel format on the Office of the Chief Economist’s (OCE) website (link) and will also be uploaded to the Economic Research Service’s (ERS) Baseline database at USDA ERS — Agricultural Baseline Database (link).

— Mexico’s food and agriculture plan: A return to the 1980s. Mexico’s President Claudia Sheinbaum announced a new agriculture plan aimed at reviving the country’s food production and distribution systems to resemble those of the 1980s. The Associated Press reports (link) this initiative focuses on staples such as tortillas, beans, instant coffee, and hot chocolate, which were commonly purchased from government stores offering basic goods.

President Sheinbaum emphasized the importance of “food sovereignty,” with a primary goal of increasing domestic bean and corn production. “It is about producing what we eat,” she stated, highlighting her interest in promoting beans as a healthier alternative to processed snacks.

Agriculture Secretary Julio Berdegué outlined plans to guarantee prices for corn farmers to stabilize tortilla prices, which have surged in recent years. The government aims to increase bean production by 30% over six years to reduce imports and plans to establish research centers for higher-yielding bean seeds.

The plan also includes support for coffee production, focusing on instant coffee, which is reportedly used by 84% of Mexican households. Additionally, it seeks to bolster cocoa production for powdered baking and hot chocolate rather than fine chocolate bars.

These policies diverge from current market trends, where modern grocery shopping and fresh ground coffee consumption have become prevalent. Bean consumption has significantly declined, with Mexicans now consuming less than half the amount they did in 1980. Amanda Gálvez of Mexico’s National Autonomous University noted that beans are often undervalued despite being a good protein source.

Tortilla consumption has also decreased, with many consumers opting for bread and other bakery products. The policy challenges include shifting consumer habits and addressing market trends favoring high-value chocolate varieties over cheaper alternatives.

Mexico’s chocolate production has suffered due to plant diseases and insufficient investment, dropping from nearly 50,000 tons in 2003 to about 28,000 tons in 2022. Although instant coffee remains a staple in many households, consumer spending trends favor other coffee types.

Sheinbaum’s policies reflect a continuation of her predecessor Andrés Manuel López Obrador’s focus on self-sufficiency in oil, energy, and foodstuffs. The AP item notes that her recent announcement of a “junk food” ban in schools further underscores her commitment to altering consumer behavior, despite past challenges in achieving such changes.

— USDA daily export sales:
• 227,600 MT corn to Japan, 2024-2025 marketing year.
• 165,000 MT corn to unknown destinations, 2024-2025 marketing year.
• 198,000 MT soybeans to unknown destinations, 2024-2025 marketing year.

— Ag trade update: Indonesia canceled its tender to buy 240,000 MT of rice.

— NWS outlook: Pleasant weather continues across most of the country through the end of the week... ...Well above-average temperatures continue over the Central and Southern U.S.

(NWS)

Items in Pro Farmer’s First Thing Today include:

• Grains mostly firmer overnight
• Attaché forecasts smaller Aussie wheat crop
• Eurozone business activity remains subdued

— Group of 7 finalizes a $50 billion loan to Ukraine. Member nations agreed to give financing backed by frozen Russian central bank assets, essentially trying to force Moscow to pay for the damages of its invasion. The move gives Kyiv a financial lifeline without putting G7 nations’ taxpayers on the hook.

— Economic assistance for the 2024 crop year: New proposals emerge. As the U.S. ag sector faces mounting challenges, there is increasing pressure to finalize a new farm bill before the 2025 crop year. This urgency is compounded by the need to address economic losses in 2024, exacerbated by the limited support provided under the current farm bill extension. Additionally, Hurricanes Helene and Milton have intensified calls for natural disaster assistance for both the 2023 and 2024 crop years.

Despite ongoing behind-the-scenes efforts on the farm bill, “economic assistance for 2024 losses is starting to take shape,” according to Dr. Joe Outlaw and Dr. Bart Fischer from Southern Ag Today (link). The agricultural community is particularly concerned about the significant decline in commodity prices over the past two years, coupled with persistently high production costs. This scenario has led to what is described as “the largest 2-year decline in crop cash receipts in history.”

In response, as previously reported by Pro Farmer, Rep. Trent Kelly (R-Miss.) has introduced the Farmer Assistance and Revenue Mitigation Act of 2024 (The FARM Act). This legislation aims to provide emergency assistance to producers of eligible commodities whose expected revenue in 2024 falls below the projected per-acre cost of production. Eligible crops include barley, corn, cotton, dry peas, grain sorghum, lentils, large chickpeas, oats, peanuts, rice, small chickpeas, soybeans, other oilseeds, and wheat.

FARM Act Payment = (Projected Cost – Projected Returns) x Eligible Acres x 60% where:

Projected Cost is the per-acre cost published by USDA’s Economic Research Service for corn, soybeans, wheat, cotton, rice, sorghum, oats, and barley and otherwise as determined by the Secretary in a similar manner.

Projected Returns for corn, soybeans, wheat, cotton, rice, sorghum, oats, and barley are determined by multiplying the projected 2024 marketing year average price published in the WASDE by the 10-year national average yield for the eligible commodity and otherwise as determined by the Secretary.

Eligible Acres consist of 100% of the acres planted to an eligible commodity plus 50% of the acres prevented from being planted to an eligible commodity in crop year 2024, as reported to FSA by the producer.

Payment limitations are set based on income derived from farming activities. Those earning less than 75% of their income from farming face a cap of $175,000 in assistance, while those earning more face a cap of $350,000.

While these proposals are still forming, “the levels of support being discussed would provide a meaningful amount of assistance to help offset losses in 2024,” Dr. Outlaw and Dr. Fischer emphasize. However, they caution that these estimates are subject to change as Congress may adjust payment factors or pursue alternative directions.

(Southern Ag Today )

— USDA announced an investment of $1.5 billion in its Regional Conservation Partnership Program (RCPP) as part of the Inflation Reduction Act. This funding is aimed at advancing conservation efforts across the U.S. by supporting 92 partner-driven projects. These projects are designed to help farmers, ranchers, and forest landowners implement and expand voluntary conservation strategies that enhance natural resources and address climate challenges.

Background. The RCPP is a collaborative program that leverages public-private partnerships to tackle natural resource challenges on agricultural land. The additional funding from the Inflation Reduction Act allows for an increased focus on climate action and conservation. This act provides a total of $19.5 billion over five years to support USDA’s conservation programs, with $4.95 billion specifically allocated for the RCPP.

The projects funded under this initiative aim to address various conservation priorities, including:
• Climate-smart agriculture: Implementing practices that reduce greenhouse gas emissions and increase carbon storage.
• Water conservation: Particularly in the Western U.S., where drought pressures are significant.
• Wildlife habitat conservation: Promoting terrestrial wildlife habitat connectivity and restoration.
• Innovative technologies: For example, reducing methane emissions in livestock through new technologies.

Of note: USDA Secretary Tom Vilsack USDA is pushing out IRA funds for ag programs as GOP leaders and Donald Trump have promised to roll back any unspent dollars allocated through the IRA/Climate Act.

— Soybeans again top U.S. export sales to China in most recent week. U.S. export sales activity for the week ended Oct. 17 included net sales for 2024-25 of 10,000 metric tons of corn, 17,000 metric tons of sorghum, 1,289,191 metric tons of soybeans, and 27,497 running bales of upland cotton. Net sales activity for 2024 included 4,630 metric tons of beef and 8,804 metric tons of pork.

— Xi urges BRICS to lead urgent reform of global financial system. At the BRICS summit in the Russian city of Kazan, Chinese President Xi Jinping urged the bloc to spearhead reforms in the global financial architecture, ensuring it better reflects the modern economic landscape. Xi emphasized deepening financial cooperation, expanding the New Development Bank, and advancing green development. This summit is the first since BRICS expanded, adding five new members, and Xi hinted at further expansion.

Of note: Xi did not immediately respond to calls from Moscow to develop a BRICS payment settlement system, which has become a priority for Russia following its exclusion from the main international payment messaging network Swift following the start of the war in Ukraine in 2022.

Background. BRICS — named after the founding members Brazil, Russia, India and China plus South Africa – expanded to cover more than 40% of the world’s population after Egypt, Ethiopia, Iran, Saudi Arabia and the United Arab Emirates joined earlier this year. The bloc also represents more than a quarter of global GDP – offering China a potential path to challenge the current Western-dominated international order.

In separate meetings, Xi met Indian Prime Minister Narendra Modi to ease border tensions and discussed economic cooperation with Russian President Vladimir Putin. Xi also highlighted the need for “true multilateralism,” green energy initiatives, and peaceful solutions to conflicts, including Gaza and Ukraine. The three-day summit has drawn nearly two dozen world leaders to address pressing global and regional issues.

— The U.S. and IMF disagree about China. The IMF doesn’t share U.S. view that China’s massive trade surpluses are hurting the world, and that tension is likely to grow. Link to WSJ article for details.

— USTR warns Brazil of Belt and Road risks amid China’s growing influence. At the Bloomberg B20 event in São Paulo, U.S. Trade Representative Katherine Tai urged Brazil to weigh the risks of joining China’s Belt and Road Initiative (BRI). Tai encouraged Brazil to assess the economic impact through a risk management perspective, emphasizing the importance of economic resilience. This comes as Brazil considers joining the initiative to counter protectionist policies from the U.S. and EU. China’s growing influence in Latin America, highlighted by upcoming state visits from President Xi Jinping, has heightened U.S. concerns.

China’s influence in Latin America is growing, with President Xi Jinping planning state visits to the region, including Brazil. These developments have heightened concerns in the U.S. about China’s expanding footprint in Latin America. Joining the BRI could provide Brazil with access to significant financing and infrastructure projects, which are appealing prospects for the country’s development goals.

Of note: Tai also discussed trade priorities with Mexico and plans to review the U.S.-Mexico-Canada Agreement (USMCA), noting China’s expanding presence in Mexico’s manufacturing sector. Asked about that review on Wednesday, Tai did not go into specifics of what the process will look like, saying that “the whole point of having that review is for us to use it.”

— EU debates expanding tariffs on Russian agricultural goods and fertilizers. The European Union is considering raising tariffs on more Russian agricultural products, fish, and fertilizers to limit Moscow’s revenues, Bloomberg reports (link). Some member states advocate for sweeping levies, building on grain tariffs introduced earlier this year, while others urge caution to avoid disrupting European imports and food prices. Trade measures, which don’t require unanimous approval, are under review, with potential new fertilizer tariffs welcomed by Europe’s crop nutrient industry. However, legal and political challenges make the timing uncertain.

Separately, the EU is also working on a new sanctions package but may delay broad actions until Poland takes over the presidency from Hungary in 2024.

— Sen. Rand Paul: Trump’s tariffs won’t bring us peace and prosperity. In an op-ed in the Wall Street Journal (link), Sen. Rand Paul (R-Ky.) argues against the protectionist tariffs proposed by Donald Trump, asserting that they contradict the long-standing conservative principle of free trade, which Ronald Reagan famously supported for promoting both economic progress and world peace. Paul highlights that these tariffs, intended to protect American workers, often backfire by raising prices for consumers and limiting choices. For instance, tariffs on Chinese electronics could increase U.S. technology prices by up to 21%, with American consumers bearing these costs due to China’s significant share in U.S. imports.

Paul explains the basic economic impact of tariffs: they inflate foreign goods’ prices, allowing domestic producers to raise their prices as well. This disproportionately affects low- and middle-income families, as evidenced by a study showing that Trump’s first-term tariffs increased household costs by $831 annually.

He emphasizes that free trade fosters prosperity by opening markets and spurring innovation, contrary to the belief that imports harm the economy. In fact, trade supports millions of American jobs and has historically boosted household purchasing power. Paul cites Frédéric Bastiat’s observation that “If goods don’t cross borders, soldiers will,” to underscore how trade promotes peace through mutual dependencies.

Paul warns against retreating into protectionism, which risks economic and military conflict. He invokes Dwight Eisenhower’s caution against building trade walls, highlighting the historical lesson from the Smoot-Hawley tariff’s role in exacerbating the Great Depression. Ultimately, Paul advocates for embracing free trade to ensure peace and security.

— U.S. Commerce Dept. finalizes shrimp trade investigations. The U.S. Department of Commerce (DOC) concluded its final determinations in the antidumping duty (AD) and countervailing duty (CVD) investigations concerning frozen warmwater shrimp imports from Ecuador, Indonesia, India, and Vietnam. These investigations aim to address concerns regarding unfair trade practices impacting U.S. shrimp producers.

• Ecuador and Indonesia: The DOC determined that certain exporters from Ecuador and Indonesia were involved in dumping practices. Ecuadorian companies such as Sociedad Nacional de Galápagos C.A. received a dumping rate of 0.00%, while Industrial Pesquera Santa Priscila S.A. was assigned a de minimis rate of 0.48%. In Indonesia, PT Bahari Makmur Sejati also received a 0.00% dumping rate, but PT First Marine Seafoods faced a higher rate of 3.90%.

• Subsidy rates: The DOC also assessed subsidy rates for these countries. For Ecuador, subsidy rates ranged from 3.57% to 4.41% depending on the exporter. Indian companies like Devi Sea Foods Limited were assigned a subsidy rate of 5.87%, while Indonesian companies received de minimis rates below 2%. Notably, Vietnam’s Thong Thuan Company Limited faced a significantly high subsidy rate of 221.82%, attributed to adverse inferences drawn by the DOC.

• Economic impact: In 2022, the U.S. imported shrimp valued at $1.44 billion from Ecuador, $2.74 billion from India, $1.4 billion from Indonesia, and $645 million from Vietnam, collectively accounting for approximately 80% of U.S. shrimp consumption. These imports are crucial for the U.S. market but have raised concerns about unfair pricing and subsidies affecting domestic producers.

Next steps: The International Trade Commission (ITC) is expected to issue its final determination by Dec. 5. If the ITC concurs with the DOC’s findings, final orders will be issued on Dec 12. These measures are intended to level the playing field for U.S. shrimp producers against subsidized and dumped imports.

— USGS: Arkansas sits on a treasure trove of lithium. The U.S. Geological Survey (USGS) estimates that Arkansas holds lithium reserves of 5 million to 19 million tons, enough to meet global electric vehicle battery demand nine times over by 2030. ExxonMobil has secured drilling rights on 120,000 acres in the Smackover Formation and plans to begin production in 2027 using direct lithium extraction, but the commercial viability of the reserves remains uncertain. Link for details.

— U.S. invests $196 million to upgrade aging gas pipelines. The Department of Transportation’s Pipeline and Hazardous Materials Safety Administration will grant $196 million to support 60 projects designed to upgrade and replace deteriorating natural gas pipelines in 20 states. “Aging, leak-prone natural gas pipes can be dangerous, drive up energy costs for families, and harm the environment, which is why the Biden-Harris Administration is supporting funds to replace aging pipelines,” said Transportation Secretary Pete Buttigieg. Link for details via Reuters.

— Neste ends renewable hydrogen investment amid challenging biofuel market. Finland-based Neste announced its decision to halt investment in renewable hydrogen production at its Porvoo refinery, coinciding with the release of its third-quarter earnings report. The company reported adjusted earnings before interest, tax, depreciation, and amortization (EBITDA) of 293 million euros ($316 million), marking a significant 66% decline from previous figures. This financial downturn is attributed to several factors, including a difficult biofuel market characterized by falling renewable diesel prices, weak global demand, increased supply, and high input costs.

Neste’s decision to withdraw from the 120 MW electrolyzer project for renewable hydrogen production reflects broader uncertainties in the global economy and energy markets. CEO Heikki Malinen highlighted ongoing geopolitical and trade policy tensions as contributors to this uncertainty. Additionally, the lack of clarity surrounding the U.S. clean fuel production credit, expected to be implemented on Jan. 1, adds another layer of unpredictability affecting Neste’s strategic decisions.

The uncertainty surrounding the U.S. clean fuel production credit, particularly the 45Z incentive, significantly impacts Neste’s strategic planning and investment decisions. The 45Z credit is designed to incentivize the production of fuels with lower greenhouse gas emissions, but the lack of finalized guidance on how to qualify for this credit creates uncertainty for companies like Neste. This uncertainty affects their ability to plan and negotiate contracts for feedstocks and fuel offtake, which are critical for their operations and financial stability. The delay in issuing guidance for the 45Z credit poses a risk to Neste’s growth in the U.S. market, as it complicates long-term planning and investment in new technologies and infrastructure required to meet the credit’s criteria. This is particularly challenging in a market already facing volatility due to geopolitical tensions and fluctuating demand. Furthermore, the transition from existing credits to the new 45Z credit is expected to shift benefits from blenders to producers, which adds another layer of complexity for Neste as it navigates these changes.

Bottom line: The move underscores the challenges faced by companies in the renewable energy sector as they navigate volatile market conditions and regulatory uncertainties.

— European Parliament moves to fast-track deforestation rule delay. The European Parliament has voted to fast-track consideration of a proposal to delay the EU’s deforestation rules by one year. The expedited process bypasses committee-level review, allowing a direct vote on the measure at the Nov. 14 plenary session. While the implementation will be delayed, the provisions of the rules remain unchanged.

— Brazil’s role in climate change leadership and investment opportunities. Brazil is increasingly recognized as a leader in climate change initiatives, leveraging its abundant natural resources to attract investment amidst global geopolitical instability. This was a central theme at the Bloomberg New Economy at B20 conference in São Paulo, where influential figures like Bill Gates and leaders from agriculture and technology sectors discussed Brazil’s potential and challenges.

Brazil’s energy grid is over 90% powered by renewable sources, positioning it as a global leader in sustainable energy. This foundation provides opportunities for producing green steel, hydrogen, and powering data centers essential for technological advancements.

The country’s renewable energy market is booming, with significant investments expected in solar and wind energy. Bloomberg’s New Energy Finance forecasts $300 billion in infrastructure investment over the next 17 years. However, Brazil must improve its global narrative to attract foreign investors, as highlighted by Karina Saade from MEP Family Office. She emphasized the need for Brazil to communicate its story with international stakeholders in mind.

There is a strong emphasis on reducing the costs of energy transition for consumers and increasing private sector involvement. This collaboration is crucial for attracting more capital to fund climate solutions.

Political instability poses a significant challenge to securing investment for environmental protection, particularly in the Amazon. Bill Gates noted that political swings make it difficult to implement consistent policies necessary for protecting the rainforest.

— FDA approves continued use of animal feed ingredients after MOU with AAFCO expires. FDA issued final guidance (link) allowing the continued use of animal feed ingredients that were previously approved under a now-defunct Memorandum of Understanding (MOU) with the Association of American Feed Control Officials (AAFCO). This MOU, in place since 2007, facilitated the collaboration between the FDA and AAFCO in reviewing and defining animal feed ingredients. However, the MOU expired on Oct. 1 and will not be renewed (link).

Key points of the new guidance
• Continuation of ingredient use: The FDA has stated that it does not plan to initiate enforcement actions against the use of ingredients that were defined and listed in the 2024 AAFCO Official Publication (OP), even if they are not approved as food additives or generally recognized as safe (GRAS). This means that manufacturers can continue using these ingredients as long as they adhere to the intended use, specifications, and limitations outlined in the AAFCO OP.
• New consultation process: With the expiration of the MOU, the FDA has introduced a new Animal Food Ingredient Consultation (AFIC) process. This interim process allows firms to engage with the FDA regarding new ingredient reviews that would have previously gone through AAFCO. The AFIC aims to provide a pathway for firms to consult with the FDA about new ingredients and involves public input on safety concerns.
• Public and industry input: The FDA is actively seeking comments from industry stakeholders on its pre-market animal food review processes, including the Food Additive Petition (FAP) and GRAS programs. These comments will help determine if changes are needed to improve these pathways.

Of note: Despite the end of the MOU, the FDA plans to continue working with AAFCO and state regulators to ensure animal food safety. The agency will still participate in AAFCO committees and meetings.

— Highly pathogenic avian flu re-emerges in British Columbia poultry flocks. After an eight-month period without any new cases, highly pathogenic avian influenza (HPAI) has re-emerged in Canadian commercial poultry flocks. The virus was confirmed on Oct. 21 at three farms located in British Columbia’s Fraser Valley, specifically in the Abbotsford and Chilliwack areas.

The Canadian Food Inspection Agency (CFIA) has not disclosed the specific types of poultry affected or the number of birds involved in these outbreaks. However, reports indicate that the affected farms include turkey, broiler, and egg operations.

This resurgence marks the first instance of HPAI in British Columbia’s poultry sector for 2024, with the last case in the province recorded on Dec. 25, 2023. Prior to these recent detections, Canada had lifted all HPAI-related primary control zones and movement restrictions earlier this month after meeting specific conditions on previously infected premises.

The CFIA continues to emphasize the importance of maintaining strict biosecurity measures, especially as the fall migration of wild birds is ongoing, which could contribute to the spread of the virus.

— Brazil to fight deforestation with new cattle-tracking system. Brazil is pressing ahead with plans to track its cattle herds as the world’s largest beef producer contends with international pressure to prevent deforestation caused by commodity production. The Brazilian government is working with the private sector to launch a data platform that will allow meat packers to fully trace their supplies starting in 2027, Agriculture Minister Carlos Fávaro said in an interview at the Bloomberg B20 event in Sao Paulo. That will allow Brazilian beef to be completely traceable by 2032, he said. While companies including JBS SA, Marfrig SA and Minerva SA say they have advanced in monitoring direct suppliers, a government-backed program would allow a more robust tracing of indirect suppliers as well.

— Investigation reportedly uncovers animal cruelty at PQA Plus-certified farms. A recent investigation by Mercy For Animals has revealed instances of animal cruelty at farms certified under the Pork Quality Assurance Plus (PQA Plus) program. The investigation documented severe mistreatment of pigs, including animals suffering from prolapses being kicked, piglets castrated without pain relief, and sows confined in gestation crates. These practices starkly contradict the humane standards that the PQA Plus program is supposed to uphold.

Mercy For Animals released a white paper (link) detailing additional alleged violations, raising concerns about the effectiveness of the PQA Plus certification in ensuring humane treatment of pigs. Paula Tejeda-Moncrief, director of investigations for Mercy For Animals in the U.S., criticized the program, stating that marketing labels often fail to reflect the reality of animal treatment on farms.

In response to the allegations, Jason Menke, a spokesperson for the National Pork Board, stated that they are reviewing the white paper. He emphasized that about 85% of U.S. pigs are raised on PQA Plus site-assessed farms and reassured consumers about the welfare standards in place. Menke also mentioned that the PQA Plus program is continuously updated, with a new version set to be released next year.

The PQA Plus program was established to improve food safety and animal welfare in pork production. It involves training and certification for farmers and on-farm assessments conducted by certified advisors.

— Courts to hear challenges on Biden rule allowing H-2A farmworkers to unionize. In November, federal judges in Kentucky and Mississippi are set to hear motions regarding a Biden administration rule that allows foreign farmworkers on H-2A visas to form legally protected unions. This rule, introduced by the U.S. Department of Labor, aims to prevent employers from retaliating against these workers for engaging in union organizing and other concerted activities. The rule is part of broader efforts to enhance protections for H-2A workers, who often face exploitation, including poor living conditions and wage theft.

Timelines. U.S. District Judge Denny Reeves in Kentucky will hear a motion Nov. 4 for a nationwide preliminary injunction filed by seven farmers and five groups, including the Worker and Farm Labor Association in Washington. U.S. District Judge Halil Suleyman Ozerden on Oct. 22 set a hearing for Nov. 18 in Gulfport, Miss., on a motion filed by the American Farm Bureau, U.S. Chamber of Commerce, Mississippi and others. could be issued before the end of the year.

The rule has faced significant legal challenges. In August 2024, a federal judge in Georgia blocked the enforcement of this rule in 17 Republican-led states. The judge ruled that the Department of Labor exceeded its authority because Congress had explicitly excluded farmworkers from such protections under the National Labor Relations Act (NLRA). The judge’s decision was based on the argument that the rule grants rights that Congress did not authorize, thus overstepping the department’s regulatory powers.

The states challenging the rule argue that it imposes undue burdens on employers and infringes on property rights while exceeding the Department of Labor’s authority. They claim that the rule is a “giveaway to Big Labor” and argue that it could interfere with farm operations by imposing new requirements on employers.

The upcoming hearings in Kentucky and Mississippi will address motions for a nationwide hold on this rule, reflecting ongoing legal battles over its implementation and broader debates about labor rights for temporary foreign workers in the agricultural sector.

Agricultural businesses in the United States rely on H-2A workers primarily due to labor shortages and the seasonal nature of agricultural work.

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