Russia Attacks Ukrainian Grain Terminal on Border with Romania

Industry coalition weighs in on forthcoming final WOTUS rule | IMF updated forecasts

Florida Gov. Ron DeSantis was involved in a car crash Tuesday morning while traveling to a campaign event in Chattanooga, Tennessee, his campaign said — but the GOP presidential contender and his staff were uninjured.

U.S. wheat futures traded on the Chicago Board of Trade are under focus after seeing their daily maximum surge on Monday. This comes as Russia has expanded its air campaign against Ukrainian ports and grain infrastructure along the Danube River, which came after Russia withdrew from the Black Sea Grain Initiative. The conflict reportedly resulted in the destruction of three warehouses in the port of Reni by Russian drones. These drones continue their almost daily pounding of Ukraine’s food export ports. For Ukraine, this means that it will likely have to export more of its grain by land, which is slower and more expensive.

The rising tension in this region is affecting more than just wheat futures, as corn and soybeans have also seen an uptick. This trend has been further supported by predictions for a hot weather period in the U.S. crop belt that could impact domestic yields.

On top of this, the European Union’s monitoring service has made a downward revision to its crop yield forecasts for the current year’s harvest, hinting at potential food insecurity issues due to a combination of conflict and adverse weather conditions.

A Memphis trading house has started a petition drive calling on USDA to release the monthly Crop Production and WASDE reports at 9 a.m. ET, when U.S. futures markets are closed so everyone has time to digest the data. More in Markets section.

Argentina appears to be implementing unusual new fiscal measures as it negotiates a significant $44 billion deal with the International Monetary Fund (IMF). As part of these measures, the country has set up weaker exchange rates specifically for exports. For instance, corn exporters will be able to transact at a rate of 340 pesos per dollar, which represents a roughly 27% decrease from the current rate of 268 pesos per dollar. Surprisingly, soybeans, one of Argentina’s leading exports, have not been included. More in Markets section.

Global growth is projected to fall from an estimated 3.5% in 2022 to 3.0% in both 2023 and 2024. While the forecast for 2023 is modestly higher than predicted in the April 2023 World Economic Outlook (WEO from the IMF), it remains weak by historical standards. The rise in central bank policy rates to fight inflation continues to weigh on economic activity. Global headline inflation is expected to fall from 8.7% in 2022 to 6.8% in 2023 and 5.2% in 2024. Underlying (core) inflation is projected to decline more gradually, and forecasts for inflation in 2024 have been revised upward. Link for details.

U.S. drivers may soon end up paying more at the pump after Exxon shut a gasoline unit at its Baton Rouge facility — one of the largest U.S. refineries — for unexpected repairs.

Uncertainty over the path of inflation later this summer makes it hard to predict the Federal Reserve’s next steps following a likely quarter-percentage point increase in interest rates this week. More in Markets section.

Almost three-fourths of economists now put odds of a U.S. recession at 50% or less, a sharp turnaround from April. The results of a recent survey by the National Association for Business Economics (NABE) indicate an optimistic outlook for the US economy, with 71% of respondents stating that the possibility of a U.S. recession in the coming year is 50% or less.

China removes Qin Gang as foreign minister after month-long absence. Qin Gang, who has not been seen in public since June, has been removed as the country’s foreign minister, state broadcaster CCTV news reports.

Shares in Hong Kong and mainland China jumped, after a key political meeting yielded promises of support for the country’s economy. Mainland China’s CSI 300 closed up almost 3% in its best performance so far this year. China’s Politburo promised some economic stimulus after acknowledging insufficient demand in the economy in a statement after its meeting. It also pledged a shift in macroeconomic policy in the second half of the year. While the stimulus is welcome, it is not the major support needed to provide a significant boost to the economy, which has been slow to bounce back after the Covid-19 pandemic.

The Biden administration is discussing lifting sanctions on a Chinese police forensics institute suspected of participating in human-rights abuses, people familiar with the matter said, in a bid to secure Beijing’s renewed cooperation in fighting the fentanyl crisis, the Wall Street Journal reports.

Agents with the Internal Revenue Service will no longer make surprise visits to households and businesses in attempts to recoup lost tax revenue.

The Federal Deposit Insurance Corp. sent a warning to U.S. banks not to take liberties with their deposit numbers. A Wall Street Journal analysis of the banks’ filings with the FDIC shows that Bank of America and Huntington National Bank had among the biggest revisions to their uninsured-deposit numbers. More in Markets section.

House Republicans are “wasting time with partisan bills,” the White House said in a three-page list of objections to the USDA/FDA funding bill on Monday, including cuts to clean energy programs. The GOP-controlled House may vote on the bill later this week.

Several WOTUS updates are in the Policy section.

EPA said on Monday it would develop a multi-chemical, multi-species approach to meeting its obligations to protect threatened and endangered species from harmful chemicals. Details in Policy section.

The Biden administration is contemplating a broader focus on household appliances and items to boost their energy efficiency. More in Energy section.

USDA forwarded its final rule on ‘Transparency in Poultry Grower Contracting and Tournaments’ to the Office of Management and Budget (OMB) for evaluation. Details in Livestock section.

A look at how Mexico views corn imports is in the Trade Policy section.

Farmland purchase restrictions. The Senate is set to vote on an amendment to the National Defense Authorization Act that would restrict foreign investors from certain countries — specifically those belonging to China, Russia, Iran, or North Korea — from purchasing land in the United States.

This week presents significant challenges for House Republicans as they strive to secure conservative backing for essential spending bills. These bills include the Military Construction-VA funding bill (HR 4366) and the Agriculture-FDA measure (HR 4368), both set to be considered by the House Rules Committee today and tomorrow respectively.

Bayer announced it is lowering its earnings forecast due to a sustained decrease in demand for glyphosate, a commonly used herbicide. Details below.

Equities today: Asian and European stock markets were mixed in quieter overnight trading. U.S. Dow is currently down around 10 points. The Nasdaq is up around 75 points. Chinese stocks rose, led by gains in technology and property, after the Politburo pledged to boost employment and support to the real-estate sector (see China section for more). In Asia, Japan -0.1%. Hong Kong +4.3%. China +2.1%. India flat. In Europe, at midday, London +0.1%. Paris +0.2%. Frankfurt flat.

U.S. equities yesterday: The Dow gained 183.55, 0.52%, at 35,411.24, its 11th consecutive day of gains, and the longest winning streak since February 2017. The S&P 500 rallied 18.30 points, 0.40%, at 4,554.64. The S&P 500 has advanced 19% this year even as analysts expect 2023 corporate earnings to barely inch up. The Nasdaq rose 26.06 points, 0.19%, at 14,058.87.

The Federal Deposit Insurance Corp. (FDIC) issued a statement indicating that some banks aren’t accurately reporting their uninsured deposits, an issue revealed after multiple banks revised their deposit figures to decrease the uninsured portion. A Wall Street Journal investigation disclosed that 47 banks had recently reduced their levels of uninsured deposits.

The alterations, which lowered uninsured deposits by $198 billion, ensued following the collapse of Silicon Valley Bank in March, where an astonishing 88% of deposits were uninsured. The FDIC mentioned in their correspondence that banks had inaccurately guaranteed certain deposits and neglected to include intercompany deposit balances from subsidiaries.

In response to this incident and the resulting $15.8 billion cost to insure uninsured deposits at Silicon Valley Bank and at Signature Bank, the FDIC intends to levy a special assessment on banks possessing over $5 billion in assets. The assessment will be calculated based on each bank’s uninsured deposits as of December 31.

Agriculture markets yesterday:

• Corn: December corn surged 32 cents to $5.68 1/4, marking the highest close since June 26.
• Soy complex: November soybeans rallied 22 3/4 cents to $14.24 1/2, the highest level since December. August soymeal rallied $4.50 before settling at $447.30. August soyoil rallied 259 points to the highest level since December on the continuation chart, settling at 71.99 cents.
• Wheat: December SRW wheat surged 59 3/4 to $7.77 1/2 and closed at a five-month high close. December HRW wheat gained 58 1/2 cents to $9.25 1/4 and hit an eight-month high. Both markets closed near their daily highs and near limit-up. September spring wheat futures rallied 49 cents to $9.36.
• Cotton: December cotton rose 68 points to 85.16 cents, the highest close since March 1.
• Cattle: August live cattle fell $1.275 to $178.75. August feeder cattle closed down $2.675 at $243.25. Prices closed nearer the session lows.
• Hogs: August lean hogs fell 57.5 cents to $100.10 as profit-taking overcame the continued cash market strength.
  

Ag markets today: After explosive trade yesterday, corn, soybeans and wheat traded lower overnight. As of 7:30 a.m. ET, corn futures were trading 10-11 cents lower, soybeans were 12-15 cents lower, SRW wheat was 10 cents lower, HRW and HRS wheat were 2-5 cents lower. Front month crude oil futures are posting mild gains while the U.S. dollar index continues to show strength.

Market quotes of note:

• General Motors on Tuesday boosted its 2023 outlook for a second time, as it reported strong second quarter results. But the guidance came with a caveat. “This is the second time we’ve raised guidance this year and it assumes that we successfully negotiate new labor agreements without a work stoppage,” CEO Mary Barra said in a letter to shareholders, referring to the recently started negotiations between the United Auto Workers union and Detroit automakers.
  
• China: “The absence of any major announcements or policy specifics does suggest a lack of urgency or that policymakers are struggling to come up with suitable measures to shore up growth,” Julian Evans-Pritchard, head of China economics at Capital Economics, wrote in a note. “Either way, it’s not particularly reassuring for the near-term outlook.”
  
• IRS ends surprise visits. Agents with the Internal Revenue Service (IRS) will no longer make surprise visits to households and businesses in attempts to recoup lost tax revenue. The decadeslong practice, which enabled officers to show up at residences and places of business with a median tax debt of $110,000, came under fire in recent years, with IRS agents encountering increasing amounts of threats and hostility. “We have the tools we need to successfully collect revenue without adding stress with unannounced visits,” said IRS Commissioner Danny Werfel, who’s overseeing a broader reorganization of the agency.
  

Almost three-fourths of economists now put odds of a U.S. recession at 50% or less, a sharp turnaround from April. The results of a recent survey by the National Association for Business Economics (NABE) indicate an optimistic outlook for the US economy, with 71% of respondents stating that the possibility of a U.S. recession in the coming year is 50% or less. This marks a significant departure from the April survey, where anticipations of economic downturn were evenly divided.

Moreover, about one quarter of participants in the July poll now believe that the odds of a recession within the next 12 months are 25% or less. There are a few factors contributing to this shift, including an enduringly strong labor market and a recent decline in important consumer price metrics. While several economists have been consistently adjusting their predictions about the start of a prospective recession, this survey suggests that many might be re-evaluating the unavoidable occurrence of a downturn.

The survey reveals improved profit margins within various companies and an increasing number of firms passing on recent cost rises to consumers. The inflation-related results are somewhat variable. Although a majority reported that wages stayed the same at their companies in Q2, 49% saw price increases during the same period, reflecting an upward trend from 40% in the April survey. A larger section of participants also anticipates price hikes in the upcoming three months.

The survey was conducted from June 30 to July 12, collecting responses from 52 NABE members across different industries.

Market participants are expecting the Federal Reserve to hike interest rates by another quarter of a percentage point following its Wednesday meeting, although economists are divided regarding the central bank’s subsequent actions. Some economists express concern that the recent signs of decreasing inflation may only be temporary, while others see definite indicators of a slowing economy.

According to the CME FedWatch tool, the futures markets place the likelihood of the Fed maintaining the same interest rates in September (after an anticipated rise this week to a range of 5.25% to 5.50%) at over 80%. The probability of another rate hike in November gradually increases, with the market projecting a 32% chance of another quarter-point hike at the November meeting. Conversely, there’s a slightly lower probability that another rate increment won’t occur until December.

The Federal Reserve has previously stated that its decisions will be driven by economic data. The first GDP reading for the second quarter, which is scheduled for release on Thursday, is projected to show a slightly decreased economic growth of 1.5%, in comparison to a 2% growth rate in the first quarter.

For June, the Fed’s preferred inflation measure, the personal consumption expenditure index, is expected to be announced on Friday. Analysts, according to FactSet, peg it to rise 0.2% for June and 3% year over year.

Looking ahead, Federal Reserve officials stated in June that they may need to implement two additional quarter-point rate hikes as they strive to manage inflation. Interestingly, this marked an increase from their March projections, which didn’t stipulate any additional hikes. They also predicted a moderate decrease in inflation levels.

The Ifo Business Climate indicator for Germany plummeted to 87.3 in July, marking an eight-month low from last November and coming in beneath the market forecast of 88.0. This indicates a potential delay in the anticipated recovery of the German economy, which is the largest in Europe. Key contributing factors seem to be lasting inflationary issues and increasing costs of borrowing.

Britain is set to incur the “highest debt-interest costs in the developed world” due to rising inflation, according to Fitch, a credit rating agency. It estimates the Treasury will spend £110bn ($141 billion) on debt interest in 2023 — or 10.4% of total government revenue.

Perspective: In Britain inflation-linked debt constitutes nearly 25% of the government’s total, whereas it is below 10% in most developed countries.

South Korea’s economy grew by 0.6% between April and June, a faster quarterly rate than expected. But exports declined by 1.8% amid a downturn in the chip sector, an important industry for Asia’s fourth-largest economy. The Bank of Korea has kept interest rates unchanged for six months as it battles inflation.

Market perspectives:

• Outside markets: The U.S. dollar index was firmer. with the euro and several foreign rival currencies weaker against the greenback. The yield on the 10-year U.S. Treasury note was higher, trading around 3.89%, with a higher tone in global government bond yields. Crude oil futures were weaker, with U.S. crude around $78.65 per barrel and Brent around $82.35 per barrel. Gold and silver futures were trading slightly higher, with gold around $1,963 per troy ounce and silver around $24.80 per troy ounce.

• Crude oil hovers near three-month high. West Texas Intermediate (WTI) crude futures increased towards $79 per barrel on Tuesday, which is close to a three-month high. This rise is being supported by the potential for tighter global supplies and increased demand from China. The OPEC+ countries have contributed to this situation through their output cuts and are prepared to put further measures into place if necessary. On the consumer side, China has promised to increase its policy support for its slowing economy, focusing on enhancing domestic demand and aiding its struggling property market (see related item in China section). However, there’s some uncertainty in the market, as key interest rate decisions are forthcoming from the U.S. Federal Reserve and the European Central Bank. The general market consensus expects both banks to increase rates this month, but belief in further monetary tightening throughout the year has been reduced due to easing inflationary pressures.

• U.S. drivers may soon end up paying more at the pump after Exxon shut a gasoline unit at its Baton Rouge facility — one of the largest U.S. refineries — for unexpected repairs. A gasoline-producing fluid catalytic cracker (FCC) at Exxon Mobil Corp’s 522,500 barrel-per-day (bpd) Baton Rouge, Louisiana refinery may shut for up to four weeks for repairs, said people familiar with plant operations on Monday. The 110,000-bpd FCC was shut on Thursday and preparations for the repair work were completed on Sunday, sources told Reuters.

• Argentina appears to be implementing unusual new fiscal measures as it negotiates a significant $44 billion deal with the International Monetary Fund (IMF). As part of these measures, the country has set up weaker exchange rates specifically for exports. For instance, corn exporters will be able to transact at a rate of 340 pesos per dollar, which represents a roughly 27% decrease from the current rate of 268 pesos per dollar.

Surprisingly, soybeans, one of Argentina’s leading exports, have not been included in this new scheme. Additionally, the country has introduced distinct taxation measures for the import of certain goods and services, utilizing separate exchange rates for each.

The major objective behind these steps seems to be to manage impending IMF debt payments, which are due to the tune of around $3.4 billion in the coming months of July and August. Argentina appears hopeful that these changes may help alter economic goals set with the IMF and expedite some of the planned disbursements.

The country is struggling with crippling inflation rates over 100% annually, and these measures, though unconventional, are aimed to stave off a broader currency devaluation that would exacerbate the inflation problem. It’s quite a complex economic situation; Argentina is juggling multiple issues in a bid to stabilize its economy.

• A Memphis trading house has started a petition drive calling on USDA to release the monthly Crop Production and WASDE reports at 9 a.m. ET, when U.S. futures markets are closed so everyone has time to digest the data. Link for details.

Says one grain industry analyst: “When they went to this timing, it was so that we would not have traders outside of the U.S. able to trade this market news before U.S. traders and the market was open. They also wanted to put it out mid-day, so the market would settle in before the end of the session. The real issue is USDA poor Internet connections. Some people get the reports right away, and some must wait for minutes to get in. It is truly a lottery, and that is what is exceedingly unfair to all market participants. The last time reports came out, I had other people’s write-ups before I was able to access the report. That is ridiculous. Changing the timing would still have those problems that they tried to fix when they last changed report timing.”

• Ag trade: Algerian state agency ONAB has issued an international tender to purchase up to 120,000 metric tons of animal feed corn to be sourced from Argentina or Brazil. Iranian state-owned animal feed importer SLAL has issued international tenders to purchase about 120,000 metric tons of animal feed corn and 120,000 metric tons of soymeal.

• NWS weather outlook: Excessive Rainfall leading to flash flooding possible over Northeast/Mid-Atlantic Coast today... ...Severe thunderstorms possible across Northern/Central Plains and Northeast/Mid-Atlantic Coast today then shifting into the Midwest on Wednesday... ...Above average temperatures spread across Northern/Central Plains and Upper/Middle Mississippi Valley over the next couple of days... ...Air Quality Alerts remain in effect across the Midwest and Upper Great Lakes due to Canadian wildfire smoke; Critical Fire Risk across Northern/Central Great Basin on Wednesday.

Items in Pro Farmer’s First Thing Today include:

• Grains face corrective selling overnight
• Cordonnier lowers corn yield
• Corn, soybean and spring wheat CCI ratings fall
• Cold Storage Report also out this afternoon
• Pork prices remain strong
• Cash cattle prices jump

— The recent military offensives by Russia against a port on the Danube River, as part of its increasingly aggressive strategy to hinder a vital Ukrainian wheat export route, has led to a sharp surge in global wheat prices — now at a five-month peak. The targeted port, Reni, is just across the river from NATO member Romania, and its destruction, particularly a grain hanger, follows Russia’s termination of an agreement that allowed Ukraine to ferry its crops through the Black Sea. Soon after ending this deal, Russian forces attacked ports in Odesa, intensifying their operations.

Today’s meeting in Brussels, Belgium, will see agriculture ministers from the European Union deliberate on strategies to facilitate Ukrainian grain exports amid the current crisis.

Simultaneously, Russia has been strengthening its ties with African ally Mali by supplying wheat to the nation. This reveals a strategic effort by Russia to maintain and expand its influence across different parts of the world even as it intensifies its hostile actions towards Ukraine.

— The Kremlin is maintaining its stance that Russia can’t re-enter the Black Sea Grain Initiative unless the agreements meant to support Russian grain and fertilizer exports are established. According to spokesperson Dmitry Peskov, a letter from U.N. Secretary General Antonio Guterres addressed to Russian President Vladmir Putin is not sufficient to persuade Russia to rejoin the grain agreement. Peskov emphasized that Guterres’ letter outlined an action plan and made promises to eventually implement the Russia-focused part of the agreement but argued that this part of the agreement has never been executed. On the other hand, Guterres is urging Russia to permit the safe passage of Ukrainian grain exports once again from Black Sea ports.

Furthermore, Peskov revealed that Russia plans to discuss grain and fertilizer exports with African nations at a Russia-Africa summit set to happen on Thursday and Friday.

— Ukraine’s stalled counteroffensive is causing political discomfort for President Biden. Western officials are concerned that the slow progress of Kyiv’s operations might dampen hopes for conclusive negotiations ending the conflict within this year. The possibility of an on-going stalemate may question the efficacy of Biden’s strategy of investing billions in military aid to empower Ukraine’s bargaining position against Russia. This situation might also strain the West’s ability to continue contributing weaponry, which is in under supply, and provide ammunition to those against the U.S.'s involvement in the conflict.

— EPA said on Monday it would develop a multi-chemical, multi-species approach to meeting its obligations to protect threatened and endangered species from harmful chemicals. The draft Herbicide Strategy is expected to largely support farmers, who are some of the key users of herbicides. EPA looks set to introduce early mitigations to help reduce the potential impact of chemicals on different species while maintaining their accessibility for agricultural purposes. This proactive approach is designed to lessen potential harms even before a fully formed decision is reached about certain herbicides’ potential dangers.

The proposed flexibility for growers allows them to choose mitigations that suit their situations best, which could improve implementation and compliance. This draft is indeed a significant proposal not only to meet legal obligations under the Endangered Species Act but also for environmental conservation.

The public is invited to provide their insights, which can play an instrumental role in shaping the final guidelines.

— WOTUS update. In a recent letter (link/pdf) dated July 24, voiced by the Waters Advocacy Coalition, demands are made for the final Biden administration to exclude ditches from the definition of federal waters, include wetlands only when they can’t be distinguished from navigable waters, and erase the independent interstate waters and wetlands category. The Coalition represents numerous sectors including energy, forestry, real estate, and transportation. Their affiliations range from the American Gas Association to the National Association of Home Builders and Chamber of Commerce. Both the Environmental Protection Agency (EPA) and the Army Corps of Engineers were communicated this request.

Timeline. EPA and the Corps have announced their intention to release a final rule consistent with the Supreme Court’s Sackett v. EPA ruling from May 25 by Sept. 1. In the mentioned ruling, it constricted the scope of waters included in the Waters of the United States (WOTUS) definition, marking a setback for the Biden administration.

The Coalition’s letter petitioned the agencies to not merely strike the “significant nexus” language or the definition of “adjacent waters” in the final rule. The Coalition believes such an approach would neither be a defendable response to the Supreme Court decision in Sackett v. EPA nor would it be a suitable course for this particular rulemaking process.

— WOTUS meetings. The Office of Management and Budget (OMB) is currently preparing for numerous meetings to discuss planned amendments to the Waters of the U.S. (WOTUS) rule, proposed by the Environmental Protection Agency (EPA). So far, eight meetings have been arranged to review the final rule.

The schedule includes sessions commencing on July 27 with the Waters Advocacy Coalition and the American Road and Transportation Builders Association. Additional meetings are planned for July 31 with RISE (Responsible Industry for a Sound Environment) and the National Mining Association.

In the following week, Aug. 1 is earmarked for consultations with the Edison Electric Institute, National Association of Homebuilders, and the National Stone and Gravel Association. The series of meetings will conclude on Aug. 4 with the American Farm Bureau Federation.

EPA has committed to finalizing and releasing their definitive rule by Sept. 1, 2023. These meetings are a critical part of this process, allowing stakeholders to provide their feedback and concerns.

— EPA Phase 2 payouts continue to rise. Payments under Phase 2 of the Emergency Relief Program (ERP) increased to $3.031 million as of July 23 issued to 1,732 recipients. The increase moved total ERP payments to $7.44 billion. There were also small changes in Coronavirus Food Assistance Program 2 (CFAP 2 payments via increases in original CFAP 2 payments to $14.51 billion ($14.50 billion prior) and top-up payments to $4.93 billion ($4.92 billion prior). That, however, did not change total CFAP 2 payments which still rounded to $19.43 billion.

— The offshore Chinese yuan strengthened beyond 7.15 per dollar, reaching its highest level in over a month. This comes in direct response to China’s commitment to enhance policy support for its slowing economy, notably through promoting domestic demand and aiding the struggling property market. This decision occurred a week after data showed a second quarter slowing down of China’s economic progress, attributed to diminished domestic and global demand. Additionally, the yuan found further support following reports that China’s large state-owned banks were exchanging dollars for yuan in the offshore spot market, to avert significant yuan depreciation. The People’s Bank of China also relaxed a regulation on cross-border financing, enabling companies to borrow more from offshore sources. This move effectively discourages firms from purchasing dollars and selling the yuan in the onshore spot market.

— China appointed Wang Yi as its new foreign minister, succeeding Qin Gang, as reported by local state media on Tuesday. Qin had been missing from public appearances for about a month, leading to speculation about his well-being. Although he was a noteworthy figure as one of China’s youngest foreign ministers, he had to leave his post due to undisclosed health concerns. Before assuming the role of foreign minister in December, Qin Gang had served as an envoy to the United States.

— The Biden administration is contemplating removing sanctions on a Chinese police forensics institute, despite allegations of the institute’s involvement in human rights violations, the Wall Street Journal reports. This consideration is part of an attempt to re-engage China in the fight against the ongoing fentanyl crisis. During a meeting in Beijing last month, U.S. Secretary of State Antony Blinken proposed the establishment of a new working group with China to jumpstart stalled negotiations about combatting fentanyl. However, Chinese officials stipulated that these sanctions must first be lifted before any joint counternarcotics efforts can resume.

Curbing the pervasive entry of fentanyl into the U.S., a matter of high priority for the Biden administration, has turned into a significant public health issue as the opioid epidemic continues to claim lives across the country. A key challenge lies in China’s crucial role in this issue, as Chinese firms manufacture precursor chemicals that Mexican cartels use to produce fentanyl before smuggling it into the U.S.

The U.S. is now seeking ways to navigate this issue and secure China’s cooperation, with the position of the sanctioned police institute standing as a considerable obstacle.

— Australia’s economy suffered limited damage from punitive trade actions by China, government research found, as Canberra and Beijing try to negotiate an end to tariffs on Australian barley and wine exports.

— Mexico and U.S. corn trade. In December 2020, Mexican President Andrés Manuel López Obrador signed a decree to phase out the use of glyphosate, a common herbicide, and all genetically modified (GM) corn by January 31, 2024, citing negative impacts on human health. Mexico is the second-largest importer of U.S. corn, much of which is genetically modified. The U.S. began serious pushback in late 2021, which eventually led to Mexico modifying the decree in February 2023, eliminating the ban on GM corn for livestock feed while maintaining the ban on imports for human consumption.

The issue: Mexico’s move to ban GM corn is a manifestation of its efforts to protect numerous native corn varieties against the global ag industry’s push towards genetically modified organisms (GMOs), says an article Ambrook Research (link). Many activists are celebrating this decision, despite acknowledging the significant pressure coming from trade partners like the U.S. and Canada.

The article notes that in Mexico, corn is much more than a food crop — it’s a key part of the country’s heritage, culture, and traditions. It has even been listed on UNESCO’s Intangible Heritage of Humanity list. The Mexican government argues glyphosate and GM corn are dangerous to human health, and seeks to introduce alternative, culturally appropriate farming practices and herbicides.

There is also a broader issue at stake in this debate, the article continues: conflicting views of corn’s role and value across different cultures. While U.S. mainly uses corn for livestock feed and industrial use, corn plays a much more central role in Mexican diets and cultures. Mexico is home to approximately 60 native corn varieties and these varieties are thought to be at risk of contamination or substitution by GM crops, posing a potential threat to Mexico’s cultural heritage and biodiversity alike. However, amid constant pressure from trade partners and the ag sector, fully implementing the ban on GM corn could be a long-term process. Mexico is currently unable to replace all its U.S. GM corn imports by itself.

Despite these challenges, Mexican advocates remain committed to defending their cultural traditions, health, and ancestral ways of life by protecting the biodiversity of domesticated corn. Recently, measures have been taken such as the introduction of a 50% tariff on white corn imports and the modification of regulatory standards to ensure tortilla makers only use non-GM white corn.

— The Biden administration is contemplating a broader focus on household appliances and items to boost their energy efficiency. The proposed regulation targets residential water heaters, mandating manufacturers to adopt advanced technologies to enhance efficiency. This would entail electric water heaters integrating heat pumps, while gas-fired water heaters would need to utilize condensing technology.

This initiative falls under a series of eco-friendly measures introduced by the Department of Energy. Recent actions include the implementation of heightened efficiency standards for centralized air conditioning units, proposed restrictions on the water and energy usage of washing machines and dishwashers, as well as phasing out incandescent lightbulbs in favor of more energy-efficient LEDs. These measures aim to reduce energy consumption and the associated environmental impact.

— USDA forwarded its final rule on ‘Transparency in Poultry Grower Contracting and Tournaments’ to the Office of Management and Budget (OMB) for evaluation. This submission marks the completion of amendments the USDA has been undertaking since it pulled back a draft rule on the ranking systems for poultry competitions in November 2021. The proposed legislation had been reviewed in two OMB gatherings. As of the morning of July 25, there are no scheduled meetings at the OMB concerning the rule, but it is anticipated that there will be discussions in the future regarding the final plan.

— Farmland purchase restrictions. The Senate is set to vote on an amendment to the National Defense Authorization Act that would restrict foreign investors from certain countries — specifically those belonging to China, Russia, Iran, or North Korea — from purchasing land in the United States. Sens. Mike Rounds (R-S.D.) and Jon Tester (D-Mont.) originally proposed this bill in February, aiming to broaden the authority of the Committee on Foreign Investment in the U.S. (CFIUS), thereby allowing it to prevent land purchases by individuals associated with foreign adversaries. The proposed amendment excludes U.S. citizens and lawful permanent residents from such restrictions.

— House sets up floor votes on spending bills; Biden threatens vetoes. This week presents significant challenges for House Republicans as they strive to secure conservative backing for essential spending bills. These bills include the Military Construction-VA funding bill (HR 4366) and the Agriculture-FDA measure (HR 4368), both set to be considered by the House Rules Committee today and tomorrow respectively. The Republicans’ goal is to pass both bills before the commencement of their August recess at the end of this week. However, their efforts face potential obstacles from conservatives seeking further expenditure reductions, and the White House, who has threatened to veto both measures.

Democratic support for either bill is currently lacking, leaving Republicans in need of near-unanimous approval from their 222-member caucus to secure the necessary 218 votes. The convergence around these pieces of legislation seems unlikely, especially considering the assortment of amendments that arch conservatives are proposing. These aim for further reductions in agencies’ budgets and incorporate contentious policy riders, such as Rep. Marjorie Taylor Greene’s (R-Ga.) proposals to cease funding for Covid-19 vaccine development and bar any funds to Ukraine.

Adding to these challenges, Rep. Andy Harris (R-Md.), a House Freedom Caucus member and author of the Agriculture-FDA spending bill, disclosed that GOP leaders are still trying to guarantee majority support for this week’s spending bills.

The White House strictly criticized both spending bills and Republicans’ broader decision to propose bills significantly below funding levels outlined in the bipartisan debt-limit agreement. The Office of Management and Budget argues that Republicans are wasting time with partisan bills that dangerously cut domestic spending.

Meanwhile, the Senate is set to release and markup their last four spending bills concerning Defense, Homeland Security, Interior-Environment, and Labor-HHS-Education this Thursday, with floor votes deferred to September.

— The Justice Department has filed a lawsuit against Texas and Gov. Greg Abbott after he refused to remove the floating barriers or a razor wire fence he installed to deter immigration across the Rio Grande and ignored a DOJ-imposed deadline. Abbott accused President Joe Biden of violating his “constitutional obligation to defend the States against invasion.”

— Bayer announced it is lowering its earnings forecast due to a sustained decrease in demand for glyphosate, a commonly used herbicide. This situation has led Bayer to deduct 2.5 billion euros ($2.8 billion) from the value of its glyphosate assets, as per an unexpected statement released on Monday. The new earnings expectation is between 11.3 billion and 11.8 billion euros after adjusting for currency factors, a downgrade from the previously anticipated 12.5 billion euros.

Furthermore, Bayer predicts a goodwill impairment of approximately 2.5 billion euros, which they attribute to the current trajectory of the glyphosate market. The company had previously indicated that its results would likely be on the lower end of their target. This expectation was due to rising costs and a drop in glyphosate prices.

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