Stabenow’s Farm Bill Proposals Getting Negative Grade from Rice & Peanut Growers

USDA says ground beef free of H5N1 | Livestock aid coming? | Dovish Powell and the FOMC

Jim Wiesemeyer

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May 02, 2024 09:18 AM

USDA says ground beef free of H5N1 | Livestock aid coming? | Dovish Powell and the FOMC

Today’s Digital Newspaper

MARKET FOCUS

Powell again turns dovish, but his words could come back to haunt him… again
Powell on stagflation: ‘I don’t see the stag, or the flation’
Highlights of FOMC meeting and Powell presser
OECD update: slightly more optimistic projection for global growth
Japanese yen rose against U.S. dollar on likely more intervention
U.S. unit labor costs rose by annualized 4.7%, surpassing market expectations
In March 2024, U.S. trade deficit remained nearly static at ten-month high
Exxon Mobil reaches agreement to secure reg approval for $60 billion acquisition
Maersk, a leading shipping company, revises full-year financial guidance upwards
Canada’s supply chains are on the brink of significant disruption
Ag markets today
Global rice market stable but weather risk remains
Ag trade update
NWS weather outlook
Pro Farmer First Thing Today items

RUSSIA & UKRAINE

Ukraine corn, wheat exports to fall sharply in 2024-25

POLICY

Stabenow farm bill unveiling more cover for Dems than effective safety net for farmers

CHINA

Subdued U.S. export sales activity to China.
Biden administration implements nearly 300 new sanctions on Chinese companies

LIVESTOCK, NUTRITION & FOOD INDUSTRY

USDA finds no bird flu in ground beef samples
Cargill Meat Solutions issues recall for approximately 16,243 pounds of ground beef
Emerging signs consumers may be starting to reduce spending

HEALTH UPDATE

Danish pharmaceutical firm Novo Nordisk raises financial forecast, but stock declines

OTHER ITEMS OF NOTE

Arizona Senate votes to repeal 160-year-old near-total abortion ban

MARKET FOCUS

— Equities today: Asian and European stock indexes were mixed overnight. U.S. Dow is currently up around 50 points. In Asia, Japan -0.1%. Hong Kong +2.5%. China -0.3%. India +0.2%. In Europe, at midday, London +0.4%. Paris -0.7%. Frankfurt +0.1%.

U.S. equities yesterday: Stocks finished mixed in the wake of the Fed’s decision to leave interest rates steady. The Dow rose 87.37 points, 0.23%, at 37,903.29. The Nasdaq fell 52.34 points, 0.33%, at 15,605.48. The S&P 500 declined 17.30 points, 0.34%, at 5,018.39. Of note: The S&P 500 surged when Jay Powell, the Fed chair, said during his news conference that an interest-rate increase was “unlikely” — only to plunge when he backed away from offering clear guidance on when cuts may be coming.

— Exxon Mobil reached an agreement to secure regulatory approval for its massive $60 billion acquisition, a significant development in the corporate landscape. To satisfy regulatory conditions set by the Federal Trade Commission (FTC), Exxon Mobil agreed not to appoint Scott Sheffield, the former CEO of Pioneer Natural Resources, as a director. This decision paves the way for the FTC to clear the transaction.

In related industry news, Shell experienced a positive shift in its stock value following the announcement of its quarterly earnings. The company reported $7.7 billion in adjusted quarterly earnings, surpassing the expectations of analysts. This performance highlights a robust financial period for Shell, contrasting with the strategic regulatory maneuvers by Exxon Mobil in their expansive deal.

— Ag markets today: Corn and soybean futures built on Wednesday’s gains during the overnight session while wheat futures rebounded. As of 7:30 a.m. ET, corn futures were trading 3 to 5 cents higher, soybeans were 9 to 11 cents higher, winter wheat markets were 7 to 10 cents higher and spring wheat was mostly 4 cents higher. Front-month crude oil futures were around 50 cents higher, and the U.S. dollar index was trading just below unchanged.

Cattle futures, wholesale beef prices struggling to gain footing. Cattle futures faced heavy selling pressure on Wednesday amid concerns with beef demand. Wholesale beef prices fell 83 cents for Choice and $1.88 for Select yesterday, though movement surged to 186 loads. The heavy movement tally signals strong underlying retailer demand, which should help alleviate some demand concerns, especially with USDA’s announcement that ground beef is free of the H5N1 virus.

Cash hog slide halts. The CME lean hog index is up 34 cents to $90.60 as of April 30, ending a four-day slide. After sharp losses on Wednesday, the premium in May lean hog futures narrowed to $2.425 while June hogs finished $9.825 above today’s cash quote.

— Agriculture markets yesterday:

Corn: July corn rose 3 3/4 cents to $4.43 1/4, notching a high range close.
Soy complex: July soybeans rose 7 1/4 cents at $11.70 1/4 and near the daily high. July soybean meal lost $2.90 at $349.00 and near the session high. July bean oil gained 25 points at 43.26 cents and nearer the session low.
Wheat: July SRW wheat fell 4 cents to $5.99 1/4, a near mid-range close. July HRW futures closed 10 1/4 cents lower at $6.25, nearer the session low, while July HRS futures fell 2 cents to $7.02 1/4.
Cotton: July cotton closed down 192 points at 76.51 cents and nearer the session low.
Cattle: Concerns about potential contamination of the U.S. beef supply seemed to spur fresh selling in the cattle and feeder markets. After opening strongly, nearby June live cattle futures ended Wednesday $1.125 lower at $173.855. May feeder futures plunged $3.15 to $241.425
Hogs: June lean hog futures skidded $2.05 to $100.425 and settled on session lows. Nearby May futures sank $1.125 to $93.025. Lean hog futures underwent heavy selling pressure throughout the session, closing at the lowest mark in a month.

— Quotes of note:

Fed Chair Powell does not see a risk of stagflation. The economy is growing at roughly 3% and the inflation rate is under 3% over the past year, he said, adding, “I don’t see the stag, or the flation.”
“This is by all accounts a dramatic move.” — Nick Nigro of Atlas Public Policy, on Tesla’s decision to slow the rollout of its electric-vehicle charging network.
“Everybody’s fighting for fewer consumers or consumers that are certainly visiting less frequently,” Ian Borden, McDonald’s CFO, told analysts on Tuesday.

— FOMC highlights:

The Fed as expected decided to keep the target range for the Fed funds rate steady at 5.25% to 5.5%.
Plans to slow down the balance sheet runoff starting in June have been confirmed, with adjustments in the monthly redemption caps for Treasuries and agency debts (in what could be viewed as an incremental loosening of monetary policy). The slowing of its balance sheet runoff was bigger than many had expected and may signal the Fed’s sensitivity to bond market angst and banking liquidity. The central bank said it would scale back the pace of QT starting on June 1, allowing only $25 billion in Treasury bonds to run off each month versus the current $60 billion. The balance sheet shrank to about $7.4 trillion last week, from nearly $9 trillion at its 2022 peak.

Inflation and Economic Observations:

The Fed acknowledged that inflation remains elevated and above expectations despite solid economic activity and strong job gains.
There has been no significant progress towards the Fed’s 2% inflation target recently.

Chairman Jerome Powell’s Insights:

Powell reiterated that rate reductions would not be considered until there is greater confidence that inflation is moving sustainably towards the 2% target.
He suggested that gaining this confidence might take longer than previously expected, and the next policy move is unlikely to be a rate hike — Treasury yields fell back from the year’s highs. Two-year Treasury yields recoiled from 5% — hovering just under 4.94% on Thursday — and 10-year yields slipped to 4.60%.
Powell emphasized that future decisions would depend on incoming data and outlined scenarios that could lead to rate cuts, particularly if there is greater assurance on inflation reduction or an unexpected weakening in the labor market.
Barron’s note this about Powell: “Investors shouldn’t get too comfortable assuming the only way is down — things can change pretty quickly, and they already have in recent months. Therefore, Powell’s assertion that ‘it’s unlikely that the next policy rate move will be a hike,’ must be taken with a degree of skepticism. After all, this is the same Jerome Powell who said in early April that the overall picture of falling inflation had not changed, only to effectively admit it had just two weeks later. It’s also the same Jerome Powell who in December opened the door to expectations for aggressive rate cuts potentially beginning as early as March. Now even a single cut in 2024 is up for debate. Not to mention his prolonged use of the word ‘transitory’ to describe inflation once upon a time.

Market and Rate Cut Speculation:

Despite discussions in March about potential rate cuts, Powell is not committing to a timeline, focusing instead on the need for more data to guide decisions.
Market expectations remain mixed, with CME Fed funds futures slightly favoring a rate cut in November. Of note: The futures market this morning was penciling in 0.35 percentage points’ worth of cuts this year to the Fed’s prime lending rate, compared with predictions in January that the central bank would lower by more than 1.5 percentage points.

Policy and Public Communication:

Powell’s communication has consistently highlighted that data will drive the Fed’s decisions regarding monetary policy.
Questions from reporters focused heavily on rate cuts, but Powell has maintained a balanced view, considering various potential economic paths.

Bottom line: The Federal Reserve remains cautious, with a primary focus on managing inflation sustainably while being prepared to adapt monetary policy based on evolving economic data.

— The OECD updated its economic outlook, indicating a slightly more optimistic projection for global growth. The organization now forecasts that the world economy will grow by 3.1% in 2024, up from a previous estimate of 2.9%, with expectations for further growth at 3.2% in 2025. This improvement is driven by better-than-expected economic performances in the U.S., China, and India.

Despite ongoing risks from conflicts in the Middle East and potential persistent inflation, the OECD suggests that the global economy is stabilizing and becoming more resilient. They note that inflation is cooling more rapidly than anticipated in many regions, although the U.S. is an exception, where inflation expectations have been adjusted slightly upwards.

The OECD’s view is that policymakers might soon be in a position to ease interest rates, particularly as inflation pressures begin to wane.

The OECD’s brighter economic forecast aligns with similar positive revisions by other institutions like the International Monetary Fund. Clare Lombardelli, the OECD’s Chief Economist, expressed cautious optimism about the global economic recovery, citing easing inflation and strong labor markets as key factors supporting growth.

However, the OECD also highlighted challenges such as divergent growth paths between the U.S. and Europe, potential spikes in energy prices due to conflicts, and long-term fiscal pressures from aging populations, climate change, and defense needs. They advocate for prudent monetary policies to manage inflation and a robust approach to fiscal management to support sustainable economic growth.

— In the first quarter of 2024, unit labor costs in the U.S. nonfarm business sector rose by an annualized 4.7%, significantly higher than the unchanged rate in the previous quarter and surpassing market expectations of a 3.3% increase. This rise in labor costs reflects a combination of a 5.0% increase in hourly compensation and a modest 0.3% gain in productivity. In the manufacturing sector specifically, unit labor costs increased by 3.2%, driven by a 3.4% rise in hourly compensation and a 0.2% improvement in productivity. Overall, unit labor costs in the business sector rose by 4.7%, with a year-over-year increase of 1.8% compared to the first quarter of 2023.

— In March 2024, the U.S. trade deficit remained nearly static at a ten-month high, totaling $69.4 billion, a slight shift from the upwardly revised $69.5 billion in February and just above the projected $69.1 billion. The minor change in the deficit was due to a $0.8 billion increase in the goods deficit, bringing it to $92.5 billion, and a $0.9 billion increase in the services surplus, which rose to $23.1 billion. On the trade activity front, exports decreased by 2% to $257.6 billion, influenced by reduced shipments of civilian aircraft, various petroleum products, soybeans, nonmonetary gold, and travel services. Concurrently, imports declined by 1.6% to $327 billion, driven by lower acquisitions of passenger cars, industrial supplies and materials, cell phones, other household goods, and transport services.

Market perspectives:

— Outside markets: The U.S. dollar index was nearly steady, with weakness in the euro, British pound and most other foreign currencies. The yield on the 10-year U.S. Treasury note was weaker, trading around 4.61%, with a mostly lower tone in global government bond yields. Crude oil futures were higher, with U.S. crude around $79.50 per barrel and Brent around $84.05 per barrel. Gold and silver futures were under pressure ahead of economic data, with gold around $2,305 per troy ounce and silver around $26.41 per troy ounce.

— Japanese yen rose against the U.S. dollar on likely more intervention from the Bank of Japan. Tokyo’s latest entry into the market was likely around ¥3.5 trillion ($22.5 billion), based on a comparison of Bank of Japan accounts and money broker forecasts. “With Japanese holidays and US jobs data coming up, it was a very good time for the authorities to tackle speculators,” Yuya Kikkawa, an economist at Meiji Yasuda Research Institute, told Bloomberg. “This will have a great impact on the market. I sense a strong determination by the authorities to defend the 160-yen-per-dollar line.”

— Maersk, a leading shipping company, revised its full-year financial guidance upwards, reflecting robust demand and logistical adjustments due to ongoing conflicts in the Red Sea. The company’s first quarter earnings exceeded expectations, reporting $1.50 billion, prompting an adjustment in its full-year earnings forecast to between $4 billion and $6 billion, up from an initial range of $1 billion to $6 billion.

The increase in guidance is partly due to the heightened Houthi activity in the Red Sea, which has disrupted traditional shipping routes and is expected to continue until at least the end of 2024. As a result, Maersk and other shipping lines have had to permanently alter their networks, leading to increased sailing times and operational costs. CEO Vincent Clerc noted that container volumes remain high compared to global GDP growth, suggesting a sustained demand for shipping services despite the geopolitical challenges.

Despite the positive overall financial performance, Maersk reported a loss in its ocean container shipping division for the quarter, largely due to the escalated costs from navigating the Red Sea turmoil. However, Clerc is optimistic about the future, indicating that the company plans to pass more of these increased costs onto customers, which could improve profitability in the upcoming quarters.

— Canada’s supply chains are on the brink of significant disruption as members of Teamsters Canada have authorized strike actions at the nation’s two major railroads, Canadian National Railway and Canadian Pacific Kansas City. The strikes, which could commence as early as May 22, involve over 9,000 workers and are expected to cause considerable interruptions across North American logistics networks. The potential walkouts would heavily affect both railroads’ substantial intermodal and commodity operations, according to the Wall Street Journal (link).

These rail disruptions are projected to have a broader and more severe impact than the previous year’s strike by dockworkers in British Columbia. Both Canadian National Railway and Canadian Pacific Kansas City operate an extensive network of about 20,000 miles of track throughout Canada, the U.S., and Mexico, underlining the potential for widespread logistical challenges.

Efforts are underway to mitigate the impact, with CPKC announcing that company and union representatives plan to meet this week, aided by federal labor conciliators. However, Pascal Chan from the Canadian Chamber of Commerce highlighted the critical issue, noting that the country lacks the capacity to replace the movement of goods by rail, indicating that the stakes are high for the Canadian economy and its supply chain stability.

— Global rice market stable but weather risk remains. Global rice supplies have stabilized, although the market remains vulnerable to risks from dry weather caused by El Niño, a senior executive at commodity merchant Louis Dreyfus Co (LDC) said. “It does seem like we went through a very tight situation. You had the export ban in India and Indonesia came to buy a very large volume of rice,” said Rubens Marques, LDC’s chief executive for South and Southeast Asia. “The combination of these two factors, I think, was too much for the market to handle, which ended up pushing prices up. It does seem like the supply and prices have stabilized. We cannot deny that climate change has had an impact and may still have an impact in terms of having this El Niño and having drier than expected weather,” he said.

— Ag trade update: Jordan tendered to buy up to 120,000 MT of optional origin milling wheat. Mauritius tendered to buy 4,000 MT of optional origin long grain white rice.

— NWS weather outlook: Severe Thunderstorms and Flash Flooding concerns over portions of the Central/Southern Plains and Mississippi Valley today... ...Cool and snowy in parts of the Northwest with above average and potentially record-breaking temperatures into the Ohio Valley and Mid-Atlantic on today.

Items in Pro Farmer’s First Thing Today include:

• Grains solidly higher overnight
• USDA: Ground beef free of H5N1, ‘safe’
• Yen surges on suspected intervention
• Eurozone factory activity slows in April

RUSSIA/UKRAINE

— Ukraine corn, wheat exports to fall sharply in 2024-25. Ukrainian exports of wheat and corn are likely to fall by nearly 25% in 2024-25 due to expected smaller production due to reduced plantings, the first deputy agriculture minister told Reuters. Taras Vysotskiy said wheat exports could fall to 14 MMT from 18 MMT in the current marketing year, while corn shipments may decline to the 20 MMT to 21 MMT range from 27 MMT this year. Barley exports are expected to hold steady at around 3 MMT. Vysotskiy said that so far crops are in good condition and the ministry “has yet to see any negative factors that would affect the harvest.”

POLICY UPDATE

— Big differences between House and Senate farm bill proposals. Committee leaders are planning meetings next week to discuss progress, but both proposals outline provisions that the other party has framed as non-starters. These are mainly in the food and nutrition and conservation sectors.

Senate Ag Committee Chair Debbie Stabenow (D-Mich.) on Wednesday introduced her version of the farm bill, aiming to give cover to House Democrats in advance of the planned the House Agriculture Committee markup on May 23.

The primary differences between the Senate and House bills focus on food and nutrition programs, with the House seeking to limit updates to the Thrifty Food Plan and redirect those funds to expand other areas like the farmer safety net.

The Senate bill, unlike the House version, does not place restrictions on the use of the Commodity Credit Corporation (CCC) authority, which the House wants to limit to achieve budget savings. Senate Majority Leader Chuck Schumer (D-N.Y.) has committed an additional $5 billion in funding for Stabenow’s proposal. House Ag Chair G.T. Thompson (R-Pa.) wants to fund his proposal in part by limiting future updates to the Thrifty Food Plan, which determines SNAP benefits and restricting the USDA’s secretary’s use of funds from the CCC.

Additionally, the House version integrates funding from the Inflation Reduction Act (IRA) for conservation programs without imposing usage restrictions, whereas the Senate maintains these “guardrails.”

Of note: Stabenow’s bill avoids a controversial choice between enhanced crop insurance and farmer safety net programs that was criticized by agricultural groups.

Stabenow’s bill, unlike the House, does not deal with concerns over California’s Proposition 12 or Question 3 in Massachusetts.

Stabenow did not provide cost estimates for her bill but suggested it would receive bipartisan support if brought to the Senate floor. Her proposal comprises about 100 legislative pieces contributed by senators.

While the House is moving forward with a scheduled markup, the Senate has yet to schedule action, indicating ongoing substantial differences that pose challenges for finalizing the bill this year.

Of note: Sen. John Boozman (R-Ark.), the top Republican on the Senate Ag Committee, said Stabenow’s move was “a welcome development” and that he is “optimistic that real progress on the farm bill can still occur this Congress.” However, he noted that the farm bill must make “meaningful investments in the risk management tools [farmers] rely on.” Boozman will certainly hear some negative comments from his rice producers about Stabenow’s plan. Why? Consider this:

Under current law, PLC pays from the Reference Price down to the higher of the marketing year average price (MYAP) or the Loan Rate. For example, for rice, the RP is $14/cwt and the Loan Rate is $7/cwt. So, the maximum possible PLC payment would be $7/cwt (or $14/cwt - $7/cwt).

Under Stabenow’s proposal, they limit PLC to 20% of the Effective Reference Price. So, for long-grain rice, the maximum payment rate would be $2.80/cwt (or $14/cwt x 20%). So, PLC would pay from $14/cwt down to $11.20/cwt (or $14/cwt - $2.80/cwt). If rice price falls below that, growers are on their own because PLC would have maxed out.

Had this been in place in the past: in 2018 the PLC rate would have been slashed from $3.2/cwt to $2.8/cwt, a 12.5% decrease. In 2016, the PLC rate would have been slashed from $4.39/cwt to $2.8/cwt…a 36.2% decrease.

One rice industry contact said: “They are essentially turning PLC into ARC. It triggers a little less often than ARC and has a slightly larger payment band. This isn’t a safety net. It’s absurd. It’s disingenuous.”

Peanuts could be even worse based on initial indications, where Stabenow’s approach would have led to lower peanut payments in four of the last 10 years.

Other industry reactions are mixed. Environmental groups applauded Stabenow’s proposal to preserve climate guardrails for conservation programs that were set by the Inflation Reduction Act. The National Cattlemen’s Beef Association praised Thompson’s plan and said the Senate Ag Democrats’ framework “reflects [a] lack of producer input… We are especially pleased by the Chairman’s focus on voluntary conservation programs that are increasingly popular with cattle producers, animal health provisions that protect the U.S. cattle herd, and investments in food security that support our broader national security,” said Ethan Lane, NCBA’s vice president of government affairs.

Bottom line: The House GOP farm bill proposals are far more farmer-friendly when it comes to production agriculture. Why?

Stabenow’s proposal has a 5% reference price increase for a few crops but then a 20% payment band is applied. That’s a rob Peter to pay Paul approach.
Stabenow’s plan limits any additional base to “underserved producers.”
The Senate plan squeezes down AGI under PLC/ARC, but NAP is exempted from AGI altogether
Wording suggests EWG’s actively engaged requirements overturning Vilsack regs.
If prices reach where loan rate increases land, there aren’t going to be many farmers focusing on conservation and climate.
Finally, will authorization of a disaster program put the latest disastrous ERP on auto pilot?

Upshot: There clearly are farm bill lines of demarcation. The House bill is farmer friendly; the Senate is not. We shall soon see if some Democrats want a farm bill or an issue.

CHINA UPDATE

— Subdued export sales activity to China. Weekly export sales data for the week ending April 25 showed tempered sales activity to China, with activity for 2023-24 including net sales of 3,950 metric tons of wheat, 6,500 metric tons of sorghum, net reductions of 1,013 metric tons of soybeans, and net sales of 14,958 running bales of upland cotton. Sales of 2,200 running bales of upland cotton for 2024-25 were also reported. For 2024, net sales of 1,591 metric tons of beef and 718 metric tons of pork were reported.

— The Biden administration implemented nearly 300 new sanctions, targeting over a dozen Chinese companies for their alleged role in supporting Russia’s military efforts in Ukraine. This move aims to disrupt Moscow’s ongoing invasion and highlights increasing U.S. pressure on Beijing over its purported backing of Russia. Both Treasury Secretary Janet Yellen and Secretary of State Antony Blinken recently visited China, where they warned Chinese officials about the consequences of continuing to support Russia’s war efforts. These sanctions represent a significant escalation in the U.S.’ efforts to hinder Russia’s military capabilities by targeting its international support network, specifically addressing the involvement of Chinese businesses in these activities.

LIVESTOCK, NUTRITION & FOOD INDUSTRY

— USDA finds no bird flu in ground beef samples. USDA’s Food Safety and Inspection Service (FSIS) tested ground beef samples from states with confirmed cases of highly pathogenic avian influenza (HPAI) in dairy herds. All the tests, which were carried out at the National Veterinary Services Laboratories (NVSL) using polymerase chain reaction (PCR) methods, returned negative for the H5N1 HPAI virus. This indicates that there is no presence of the virus in the ground beef from these areas.

Additionally, FSIS is extending these tests to muscle tissues from culled dairy cattle that were condemned due to systemic pathologies. The Agricultural Research Service (ARS) is also conducting a beef cooking study and will be using a virus surrogate in ground beef and cooking it at different temperatures to determine log-reduction of the virus. The results of these tests are yet to be published but are expected soon.

Of note: Challenges remain to testing at-risk people, including farmworkers who’ve had contact with infected cattle.

— Cargill Meat Solutions issued a recall for approximately 16,243 pounds of ground beef that might be contaminated with E.coli. This recall, announced by USDA’s Food Safety and Inspection Service (FSIS), affects raw ground beef items produced on April 26 and 27, which were distributed to Walmart stores nationwide. The recall was initiated after Cargill discovered that a product previously set aside due to safety concerns had been mistakenly used in the production of their ground beef. So far, there have been no confirmed reports of illnesses or adverse reactions from consuming these products.

— There are emerging signs that consumers may be starting to reduce their spending in response to persistent high prices and interest rates. This trend is becoming apparent in the fast-food industry, where several major chains have reported declines in same-store sales. Starbucks experienced an unexpected drop in this key performance metric during the most recent quarter. Similarly, both KFC and Pizza Hut observed declines in their same-store sales.

McDonald’s, noting the changing economic landscape and consumer behavior, has declared a shift to a “street-fighting mentality” to aggressively attract budget-conscious customers.

While some restaurant companies have attributed the decline in sales to factors like adverse weather conditions or challenging year-over-year comparisons, these reasons do not completely account for the observed weak performance. Analysts say this suggests a broader trend of tightened consumer spending which could have wider implications for the economy, particularly in sectors reliant on discretionary spending.

HEALTH UPDATE

— Danish pharmaceutical company Novo Nordisk raised its full-year financial forecast following a significant increase in sales, particularly of its weight-loss drug Wegovy, which saw its sales more than double in the first quarter of 2024. Wegovy’s sales reached 9.4 billion Danish kroner (approximately $1.18 billion), with the majority of this revenue coming from the U.S. market, where demand continues to outpace supply. In the same period, Novo Nordisk, now Europe’s most valuable company, reported a 22% increase in net sales overall, totaling 65.3 billion kroner, surpassing analyst expectations. Additionally, sales of Ozempic, a popular diabetes treatment that shares the same active ingredient as Wegovy, grew by 42% to 27.8 billion kroner.

The company revealed that Wegovy now garners over 130,000 weekly prescriptions. Due to the robust sales of its weight-loss treatments and the ongoing high demand, Novo Nordisk has updated its growth projections for 2024. Sales are now expected to increase by 19% to 27% in constant exchange rates, a slight uptick from the previously forecasted range of 18% to 26%.

Of note: Shares in the Danish drug maker were down today despite the company more than doubling sales of its blockbuster Wegovy treatment and raising revenue forecasts. Reasons: pressure on prices, amid growing competition from Eli Lilly’s Zepbound, supply constraints and scrutiny from lawmakers.

OTHER ITEMS OF NOTE

— Arizona Senate voted to repeal a 160-year-old near-total abortion ban, a significant decision particularly notable because the state Supreme Court had just revived this controversial law three weeks prior. The repeal is now awaiting signature from Governor Katie Hobbs, a Democrat, who has expressed her intention to sign it swiftly into law. This legislative action would solidify the 15-week abortion limit currently in place in Arizona.

Simultaneously, Vice President Kamala Harris highlighted the contrast in state policies during her visit to Florida, where a new law banning most abortions after six weeks of pregnancy has just been implemented. At a campaign event, Harris warned of the potential implications for women’s rights under a possible second Trump administration, emphasizing a future with “more bans, more suffering, less freedom.” This underscores the ongoing national debate and divergent approaches to abortion rights across states.

KEY LINKS

Policy Updates