Still Waiting on First Ukrainian Grain Shipment Since Paper Agreement

Xi warns Biden not to ‘play with fire’ ahead of Pelosi’s potential Taiwan trip

USDA daily export sale: 132,000 metric tons of soybeans for delivery to unknown destinations during the 2022-2023 marketing year.

Remember when some reports said some Ukrainian grain would be shipped as soon as this Wednesday. That timeline was not met for several reasons, including insurance issues and crews for the ships. Oleksiy Goncharenko, a Ukrainian MP representing Odesa, said: “It’s clear that Putin wants to disrupt this deal. And when he wants to disrupt something, we should do everything we can to make it work.”

Ukrainian forces say restrictions on the use of Western weapons are limiting their ability to respond to Russian attacks. Targeting is limited to Russian positions in occupied areas of Ukraine, but not over the border in the area around Belgorod, said Yevhen Tonitsa, battery commander for the 40th Separate Artillery Brigade in southeastern Kharkiv. “If we had permission, we would have seen results a long time ago,” he said. More in Russia/Ukraine section.

President Joe Biden and Chinese leader Xi Jinping began arrangements for their first face-to-face meeting since Biden was inaugurated. The long talk between the two superpower leaders on Thursday came after the House sent a bill to boost U.S. competitiveness with China to Biden, and as the world focuses on Taiwan, the self-ruled island which China claims as its own. House Speaker Nancy Pelosi (D-Calif.) has indicated she may visit Taiwan during a swing through Asia that begins this week, which could enflame relations between the U.S. and China. Earlier this week, the New York Times reported that U.S. officials are growing more concerned that China may move against Taiwan in the next 18 months.

Top Democrats moved to lock down support for a climate, healthcare and tax package and pass it by next week after secret talks between Sens. Joe Manchin and Chuck Schumer suddenly revived much of the party’s economic agenda. Many Democrats are hopeful they can secure an agreement before the midterm elections. In addition to tax and healthcare provisions, the package would be the costliest and most ambitious effort ever by the U.S. to address climate change — powered in part by benefits for fossil fuels and the broader energy industry. The deal would also preserve — and in some cases expand — tax credits for electric-vehicle purchases. We have details in the Energy and Climate Change section.

Mortgage rates fell after rising for two weeks; the average rate on a 30-year fixed-rate mortgage dropped to 5.3%.

The eurozone economy grew faster than expected, but so did inflation. Positive GDP growth for the region, a day after the U.S. reported that economic growth slumped for the second quarter in a row, relieved some worries about growing stagflation. Still, inflation in the eurozone hit 8.9% in July versus a year ago, a fresh record.

Members of Congress are asking the Dept. of Justice for an update on its investigation into the Big Four packers. It’s been two years since the DOJ sent civil investigative demands to the companies.

The Senate by 93-1 passed the Waterways Resources Development Act (WRDA) of 2022, which includes important provisions for modernizing the U.S. waterways infrastructure. The measure amends the cost-share for inland waterway projects to 75% general Treasury funds and 25% from the Inland Waterways Trust Fund. “This permanent cost-share change would expedite the modernization of U.S. inland waterways and bolster the ability of NGFA members to fulfill their role in the agricultural value chain to serve American farmers and domestic and global customers,” NGFA President and CEO Mike Seyfert said. House and Senate lawmakers must conference and pass WRDA 2022 before it can be signed into law.

Are the Dems’ Senate prospects really improving enough to keep control of the Senate? We have several perspectives on that section in the Politics section.

Election Day 2022 is 102 days away. Election Day 2024 is 830 days away.

Equities today: In Asia, Japan -0.1%. Hong Kong -2.3%. China -0.9%. India +1.3%. In Europe, at midday, London +0.5%. Paris +1.2%. Frankfurt +1%. The U.S. Dow in early trading is vacillating between slight gains and meager losses. The Nasdaq is up 80 points. This follows a positive earnings report from Apple, which said it hasn’t seen “any sign of demand weakness” for iPhones, although it has been discounting in China. Nor is it suffering from softness in subscription fees like other tech companies. Amazon was stronger with a 7.2% rise in quarterly revenue. There are still more earnings to digest, too: Exxon Mobil, Chevron and Procter & Gamble reported before the bell today. ExxonMobil Corp. and Chevron Corp. posted record profits in the second quarter of the year amid high commodity prices boosted by the war in Ukraine. ExxonMobil posted earnings of $17.9 billion, compared to $4.7 billion in the same period last year, while Chevron reported earnings of $11.62 billion, up from $3.08 billion last year.

U.S. equities yesterday: The Dow gained 332.04 points,1.03%, at 32,529.63. The Nasdaq gained 130.17 points, 1.08%, at 12,162.59. The S&P 500 rose 48.82 points, 1.21%, at 4,072.43. The S&P 500 on course to close out its best month since 2020.

Agriculture markets yesterday:

• Corn: December corn gained 16 cents to $6.19, the contract’s highest closing price since July 11.
• Soy complex: November soybeans jumped 30 1/2 cents to $14.40 1/2, the contract’s highest close since June 30. August soymeal rose 80 cents to $489.70 and August soyoil surged 466 points to 65.84 cents, a four-week high.
• Wheat: September SRW wheat rallied 26 3/4 cents to $8.17, the highest close since July 20. September HRW wheat gained 28 cents to $8.89 3/4, a 2 1/2-week closing high. September spring wheat rose 18 cents to $9.28.
• Cotton: December cotton rose 114 points to 96.21 cents per pound, the contract’s highest closing price since 97.48 cents on July 1
• Cattle: October live cattle fell 50 cents to $141.825. September feeders fell $1.65 to $180.20.
• Hogs: August lean hogs rose 52.5 cents to $119.125, the highest close since April 19. Deferred contracts ended lower, with October hogs down 12.5 cents at $96.325. The CME lean hog index rose 25 cents to $119.73 (as of July 26), a 13-month high.
  

Ag markets today: Soybean futures sharply extended this week’s price surge overnight amid forecasts calling for hot and dry conditions in early August. Corn and wheat also posted strong gains. As of 7:30 a.m. ET, soybean futures were trading mostly 22 cents higher, corn was 9 to 10 cents higher, winter wheat futures were 21 to 24 cents higher and spring wheat was around 16 cents higher. Front-month U.S. crude oil futures were around $2.50 higher and the U.S. dollar index was down more than 400 points.

Technical viewpoints from Jim Wyckoff:

On tap today:

• U.S. employment-cost index for the second quarter is expected to increase 1.1% from the prior quarter. Follow our coverage here. (8:30 a.m. ET)
• U.S. consumer spending for June is expected to increase 0.9% and personal income is forecast to climb 0.5% from the prior month. Follow our coverage here. (8:30 a.m. ET)
• U.S. personal-consumption expenditures price index excluding food and energy for June is expected to increase 0.5% from one month earlier and 4.7% from one year earlier. (8:30 a.m. ET) UPDATE: Inflation hit the highest annual rate in 40 years in June, according to the metric favored by officials at the Federal Reserve. Headline inflation rose half a percentage point to 6.8% in the personal consumption expenditures price index, the Bureau of Economic Analysis reported, the biggest 12-month move since the 6.9% increase in January 1982. The index rose 1% from May, tying its biggest monthly gain since February 1981. Core PCE was 4.8%, up from 4.7% in June. On a monthly basis, core was up 0.6%, its biggest monthly gain since April 2021.
• Chicago purchasing managers index is expected to fall to 55 in July from 56 one month earlier. (9:45 a.m. ET)
• University of Michigan’s consumer sentiment index is expected to hold at 51.1 in July, unchanged from a preliminary reading. (10 a.m. ET)
• Baker Hughes rig count is out at 1 p.m. ET.
• CFTC Commitments of Traders report, 4 p.m. ET.

Eurozone economy grows, Germany stagnates. Economic growth in the eurozone accelerated during the three months through June even as Russia’s invasion of Ukraine sent energy and food costs surging and shattered household and business confidence. The world’s third-largest economy was buoyed by the lifting of most pandemic restrictions during the first half of the year, which helped it grow at a faster-than-expected clip despite higher energy costs and continued blockages in supply chains. The European Union’s statistics agency Friday said the combined gross domestic product of the eurozone’s members was 0.7% higher in the three months through June than in the first quarter, and 4% higher than a year earlier. But cuts to supplies of natural gas threaten to push it into contraction over coming months.

Separate figures released by Eurostat on Friday showed the annual rate of inflation rose to a fresh record of 8.9% in July, from 8.6% in June.

Fertilizer fracas in Canada. Canadian Prime Minister Justin Trudeau’s push to accelerate the fight against climate change is sparking a showdown with the nation’s farmers, who say it’s threatening food supplies and their profits. One estimate signals accumulated losses of C$10.4 billion ($8.08 billion) by 2030 due to reduced output. The government is proposing to cut emissions from fertilizer 30% by 2030 as part of a plan to get to net zero in the next three decades. But growers are saying that to achieve that, they may have to shrink grain output significantly at a time when the world is scrambling for more supplies.

Production losses could be significant, according to an analysis commissioned by Fertilizer Canada. Canada could lose over 160 million metric tons of canola, corn and spring wheat between 2023 and 2030 due to the plan, according to the report. That’s nearly double Canada’s expected grain production this season.

Market perspectives:

• Outside markets: The U.S. dollar index is flat. The yield on the 10-year U.S. Treasury note was firmer, trading around 2.69%. U.S. crude was around $98.75 per barrel and Brent around $104.15 per barrel. Gold and silver futures were higher ahead of economic data, with gold around $1,758 per troy ounce and silver around $19.94 per troy ounce.

• The U.S. dollar’s strength is hurting emerging-markets currencies and pressuring central banks across the globe to increase rates—even at the cost of a recession. Link for more via the Wall Street Journal.

• Gasoline futures have lost about 19% from their June 9 high, ending Thursday at $3.646 per gallon. Diesel futures have dropped 28% from their peak in April. The decline in retail gasoline prices, which have fallen for 43 straight days, is accelerating. Citigroup said in a research note today that it expected growth in the supply of oil to outpace weaker demand. Still, geopolitical factors and the weather could change the trajectory of prices, particularly if the U.S. has an active hurricane season that disrupts refining capacity. “Just a few of these risks materializing could work up a continued perfect storm of high volatility,” Citigroup said.

• The Baltic Dry Index for bulk shipping rates, at 1,945 on Thursday, is down about 1,400 points since May 23 to the lowest level in five months.

• Dockworkers at the Port of Felixstowe, the U.K.’s largest port, voted to strike next month after they were offered a below-inflation pay increase.

• Ag trade: South Korea purchased 40,000 MT of Canadian milling wheat. The Philippines passed on tender to buy 100,000 MT each of feed wheat and feed barley.

• NWS weather: Additional rounds of excessive rainfall across parts of the Ohio/Tennessee Valleys are expected to trigger areas of flash flooding today... ...Daily rounds of heavy downpours could cause flash flooding from Arizona to the Mid-South region over the next few days... ...Excessive heat continues in the Pacific Northwest; hot and humid across the Deep South; cool air over the Central Plains expected to shift eastward.

Items in Pro Farmer’s First Thing Today include:

• Soybeans continue to surge
• Ukraine awaits all-clear signal on grain shipments (details in Russia/Ukraine section)
• Sharp drop in Russian wheat export tax
• Rains aid some of Argentina’s wheat crop
• Armyworms spreading northward in China
• China soybean auctions continue
• Wholesale beef trade softens
• Strong cash hog rally continues

— Summary: Russian forces on Thursday launched massive missile strikes on Ukraine’s Kyiv and Chernihiv regions, areas that haven’t been targeted in weeks, while Ukrainian officials announced an operation to liberate an occupied region in the country’s south.

• Ukraine’s grain. U.N. aid chief Martin Griffiths said on Thursday that grain shipments from Ukraine could resume as soon as today but that details of the exact coordinates of shipping routes were still being finalized. Some commercial roadblocks have also emerged following the Ukraine/Russia deal, including insurance for the vessels and finding sailors to crew them.

  Ukraine is ready to start shipping grain from two Black Sea ports but no date has been set for the first shipment, Ukrainian Infrastructure Minister Oleksandr Kubrakov said. Ukrainian President Volodymyr Zelenskyy said his country is awaiting a signal from the United Nations and Turkey to start exports. Zelenskyy today visited the Black Sea port of Chornomorsk. “The first vessel, the first ship is being loaded since the beginning of the war. This is a Turkish vessel,” Zelenskyy said. “We sent all the signals to our partners – the UN and Turkey, and our military guarantees the security situation. The infrastructure minister is in direct contact with the Turkish side and the UN. We are waiting for a signal from them that we can start.”

— Sen. Sinema reviewing Manchin/Schumer reconciliation deal. Sen. Kyrsten Sinema (D-Ariz.) is a potential obstacle to her party’s efforts to pass a landmark tax, climate and health-care package next month, in part due to long-standing opposition to closing the carried-interest loophole. The tax perk allows private equity and hedge-fund managers to pay lower capital-gains tax rates, which top out at 23.8%, rather than the 37% income-tax rate on a portion of their earnings. Manchin told reporters he wants to assure Sinema that tax rates have not been raised. He said he’s “not prepared to lose” closing the carried interest loophole which he has talked about ending for years. The provision would raise $14 billion over 10 years.

Sinema is “reviewing the text and will need to review what comes out of the parliamentarian process,” her spokesperson, Hannah Hurley, said Thursday, referring to the top Senate rules official’s decision on whether the language of the package comports with strict budget rules.

Reconciliation timeline. Senate Democrats sent their 725-page Inflation Reduction Act to Parliamentarian Elizabeth MacDonough for a review that isn’t expected to be completed until at least next week. A more limited ruling on the prescription drugs piece of the bill could come as early as Thursday since that part has been under review for weeks.

Meanwhile, A Wall Street Journal editorial labeled the Dems’ reconciliation measure the “Business Investment Reduction and Distortion Act since that will be the result of its $433 billion in climate and healthcare spending, and $615 billion in new taxes and drug price-control “savings.”

— Pelosi’s potential Taiwan visit focus of Biden/Xi call. A congressional trip to Taiwan led by House Speaker Nancy Pelosi (D-San Francisco) became the focus of President Biden’s call with Chinese leader Xi Jinping on Thursday. The nearly 2½-hour call included a “direct and honest discussion” about Taiwan in which Biden emphasized that the two countries have managed differences over the democratically self-governing island for the last 40 years, and vowed that the U.S. would continue to maintain the status quo under Washington’s “one-China” policy, according to a White House official who briefed reporters on condition of anonymity. China had harsher words regarding Taiwan, reiterating Beijing’s opposition to the island’s independence and echoing Biden’s promise to keep an open line of communication on the issue. “Those who play with fire will perish by it,” a Chinese readout of the call said. “It is hoped that the U.S. will be clear-eyed about this.”

Republicans respond. “If she doesn’t go now, she’s handed China ... a victory of sorts,” Senate Minority Leader Mitch McConnell (R-Ky.) said Tuesday. House Minority Leader Kevin McCarthy (R-Calif.) echoed that sentiment and said he would lead a congressional delegation if he became speaker next year.

— Chinese officials indicate the country will miss this year’s growth target. Chinese leaders all but acknowledged that the country would miss its annual growth target this year and said local governments will ultimately be responsible for fixing the property woes in their own markets. China’s restraint reflects a shift from previous downturns, when Beijing unleashed aggressive stimulus to prop up growth.

— Chief ag trade negotiator nominee pressed on Biden trade policy. Members of the Senate Finance Committee Thursday challenged Doug McKalip, the Biden administration’s nominee to be chief agricultural negotiator at the Office of the U.S. Trade Representative (USTR), over the Biden administration’s lack of pursuing new free trade agreements (FTAs), especially ones without market access or measures to address tariffs. They also pressed him on specific ag trade issues including Mandatory Country of Origin Labeling (MCOOL) that was repealed for pork and beef after the U.S. lost a case at the WTO. McKalip said his priority, if confirmed, is to arrive at a policy that can withstand a future challenge and be “more permanent” for consumers.

McKalip told panel members he would work hard on issues under the U.S.-Mexico-Canada Agreement (USMCA) such as Canadian dairy and biotechnology with Mexico. McKalip is expected to be confirmed. The U.S. filed its second USMCA challenge to Canadian dairy import quotas in May. “This is something we will not let rest,” said McKalip. The Biden administration won its first dispute over Canadian import rules — the first trade complaint filed under the so-called new NAFTA — and said Canada’s revision of those rules is insufficient.

Lingering lumber trade issues. A lengthy trade dispute between the U.S. and Canada is expected to keep tariffs on softwood lumber in place, adding to soaring inflation costs.

“I also look forward to ensuring farmers and ranchers are front and center as USTR looks to strengthen our trade relationships, execute new initiatives, and address challenges like China,” said McKalip, a USDA trade adviser since March 2021.

Great Britain and Southeast Asia offer the leading opportunities to expand food and ag trade, said McKalip. The Indo-Pacific Economic Framework, launched in late May, was not the traditional forum for negotiating a free trade agreement (FTA), he said, but trade should be a prominent element in it. “I promise I will fight for full market access in these agreements.”

— Big push for EVs in reconciliation measure. The Biden administration is using regulation to essentially mandate that auto makers churn out electric vehicles. If the reconciliation measure becomes law, taxpayers will subsidize that cost, on top of the $7,500 EV tax credits. The bill removes the 200,000 manufacturer cap for the $7,500 EV tax credit, which GM, Tesla and Toyota have hit and Ford soon will.

— Energy/climate provisions in Dem’s reconciliation package. Senate Democrats announced Wednesday they agreed on a plan that includes a record $370 billion in spending to fight climate change. If approved, the deal would cut greenhouse gas emissions by about 40% by the end of the decade, according to analysts. That helps put the U.S. on track to meet President Joe Biden’s goal of cutting emissions by as much as 52% from 2005 levels by the end of the decade.

The spending package includes several tax credits for clean energy sources to the first-ever fee on methane emissions and $3 billion for the U.S. Postal Service to buy emission-free mail trucks. (Source of items below: Bloomberg)

Tax credits. The bulk of the climate spending would be on a host of tax credits seen as key to helping the clean energy industry:

• 10-year incentives for wind and solar, hydrogen, rooftop solar, standalone energy storage, and other power sources.
• A production tax credit for nuclear power generators that could serve as a lifeline for struggling plants and a boon for utilities such as Southern Co. and Constellation Energy Corp.
• Also extended in the deal is a $1-a-gallon tax credit for biodiesel and renewable diesel through 2024, plus other alternative fuel and biofuel credits, and a new $1.25/gallon credit for sustainable aviation fuel (SAF), which could help lower airlines’ soaring energy costs. Sustainable aviation fuels, which can be made from renewable biomass and waste, have a lower carbon footprint than jet fuel and are intended to reduce airplane emissions. The White House estimates 4.5 million gallons of the fuel are now produced domestically each year — less than 1% of the goal that must be hit in less than a decade.
• Subsidies of as much as $85 per metric ton for carbon capture, an amount seen potentially extending the life of coal plants with billions of dollars in tax credits, were also included in the legislation. The increase from the current level of $50 was backed by a coalition that included utility DTE Energy Co. and coal-mining giant Peabody Energy Corp.

Electric and hydrogen vehicles. The deal extends a popular consumer tax credit for electric vehicles in a big win for manufacturers such as General Motors Co., Tesla Inc. and Toyota Motor Co. And in a twist, it gives hydrogen fuel-cell vehicles access to the tax credits.

• Automakers will continue to offer $7,500 in tax credits for the purchase of new “clean cars,” a category that includes electric and hydrogen vehicles.
• Caveats: vehicles will need to be built with minerals extracted or processed in a country the U.S. has a free trade agreement with, and have a battery that includes a large percentage of components that were manufactured or assembled in North America.
• The deal also includes a cap on suggested retail prices of eligible vehicles: $55,000 for new cars and $80,000 for pickups and SUVs. Credits would be capped to an income level of $150,000 for a single filing taxpayer and $300,000 for joint filers for new vehicles, and at $75,000 and $150,000 for used cars.
• For the first time, buyers would be eligible to receive $4,000 for used clean cars.
• The bill also creates a 30% tax credit for commercial electric vehicles.
• It includes $3 billion for the U.S. Postal Service plus $1 billion for clean heavy-duty vehicles like school buses, transit buses and garbage trucks. The legislation also makes up to $20 billion available in loans to build new clean vehicle manufacturing facilities.

Oil and gas. The bill requires the sale of drilling rights in the Gulf of Mexico and Alaska. It also makes new renewable power projects on federal land and water contingent on future sales.

• The Interior Department would only be able to issue new wind and solar rights over the next decade if it recently held oil and gas lease sales. The requirements would constrain the administration’s ability to pare fossil fuel developments on federal land, despite pleas from climate activists to halt drilling and rapidly pivot to green energy.
• Includes a new Methane Emissions Reduction Program, under which oil and gas companies could tap into $850 million in grants, loans and other incentives over the next five years to monitor, trap and report emissions of the potent greenhouse gas from wells and other equipment.
• Companies would face a new fee for excess methane emissions starting at $900 a metric ton in 2024 and rising to $1,500 per metric ton in 2026.

Clean energy manufacturing. The bill includes a $60 billion production tax credit directly to companies involved in clean energy manufacturing, according to an analysis of the legislation by Height Securities, LLC.

• About half of the credits are for solar, wind, batteries and critical minerals processing, the group said in a research note Thursday. There’s also around $10 billion to build clean technology manufacturing facilities, Height said.
• Companies poised to benefit include First Solar Inc., the biggest US panel maker, as well as TPI Composites Inc., a maker of wind-turbine blades.

Green bank. The measure would create a green bank:

• The lender would be funded with $27 billion, to invest in zero-emission technology. That model has already been used in several states, and supporters say the federal version, dubbed the Greenhouse Gas Reduction Fund, could potentially leverage hundreds of billions more in private funding to catalyze critical emission-fighting technology.

Permitting reform. The spending package included the promise of separate legislation —expected to move this fall — that would accomplish a bipartisan goal to speed up environmental permitting.

• Sen. Manchin said he had secured commitments from Biden as well as congressional leaders to move forward with “a suite of common-sense permitting reforms this fall that will ensure all energy infrastructure, from transmission to pipelines and export facilities, can be efficiently and responsibly built to deliver energy safely around the country and to our allies.”

— Sen. Kevin Cramer (R-N.D.) said he expects Republicans to balk at proposed permitting reforms, which were instrumental in getting Sen. Joe Manchin (D-W.Va.) on board with Democrats’ $369 billion climate package. But Republicans such as Sens. Bill Cassidy of Louisiana and Dan Sullivan of Alaska suggested they would be open to backing a permitting reform deal, which could help streamline fossil fuel and renewable projects, according to E&E News.

— Dems urge update on alleged market manipulation by big packers. Six House Democrats sent a letter (link) to the DOJ calling on the agency to update Congress on “allegations of market manipulation” by the Big Four packers: Tyson, JBS, Cargill, and National Beef. These four control more than 80% of the market for processed beef.

— Summary:

• Global Covid-19 cases at 574,856,143 with 6,395,528 deaths.
• U.S. case count is at 91,120,369 with 1,029,270 deaths.
• Johns Hopkins University Coronavirus Resource Center says there have been 603,693,871 doses administered, 223,245,563 have been fully vaccinated, or 67.75% of the U.S. population.

— Sen. Dick Durbin (D-Ill.) tested positive for Covid-19, and Dems haven’t had all 50 members voting since the beginning of July.

— The Biden administration plans to offer updated booster shots in September. With reformulated shots from Pfizer and Moderna on the horizon, the FDA has decided that Americans under 50 should wait to receive second boosters.

— Republican hopes of retaking the Senate in November are fading, in some measure due to former president Donald Trump’s support for weak candidates. Talks with GOP proponents fear some of their candidates are underperforming in key Senate races they must win...most important, Democrat-held seats in Arizona and Georgia, but also swing states. Democratic candidates have amassed a big campaign war chest vs their opponents, notably in Arizona where incumbent Mark Kelly is outpolling his likely GOP opponent, Blake Masters. Kelly has $25 million cash on hand. In Georgia, Raphael Warnock has a major funding-raising advantage over Republican Herschel Walker who has not been an effective campaigner. In Pennsylvania, Lt. Gov. John Fetterman (D) and television personality Mehmet Oz (R) show Fetterman at a funding advantage. Democrats are also faring better than expected in GOP states of Missouri and in Ohio, largely because of flawed Republican candidates.

But an election analyst emailed: “There sure are flawed candidates but I still see Rs as narrow favorites given Biden at 39% approval.”

— Have Dems’ Nov. 8 election prospects actually improved? Amy Walter of the Cook Political Report today offers a reality check on that topic. She writes: “Over the last couple of weeks, there’s been a shift in opinion among many political professionals about Democrats’ chances in the midterm campaign. They point in particular to improvement for Democrats in the generic ballot poll question (which party would you like to see control Congress?), as well as recent Senate polls which show incumbent Democrats significantly outpacing Biden’s job approval ratings in their respective states.”

So why the disconnect between Biden’s weak approval ratings and stronger showings for Democratic House and Senate candidates. Walter says it is a few factors: a post-Dobbs energizing of the Democratic base, weak and/or flawed GOP senate candidates, and the January 6th hearings. “In other words, the media focus has increasingly been centered on issues that are harmful for the GOP. “

But Walter notes there is nothing new about a late summer “reassessment” of midterm assumptions. “In fact, like clockwork, the out-party right about now starts to fret that their advantage is slipping, while the in-party sees green shoots springing from a barren landscape. Or, as Washington Examiner’s David Drucker wrote on Twitter recently: ‘Midterm cycles since ’06 have certain rhythm: 1) Maybe POTUS’ party’ll avoid losses. 2) Things look good for out party. 3) Things look REALLY good for out party. 4) Hold on, maybe POTUS’ party won’t lose as many seats as thought. 5) Could POTUS’ party avoid wipeout? 6) WIPEOUT.’”

— A new political party in the U.S. The Forward Party, a new political party aimed at providing a middle ground for voters fed up with Democrats and Republicans, was announced yesterday by party co-chairs Andrew Yang and Christine Todd Whitman, alongside former Republican Rep. David Jolly. Yang, a former Democratic candidate for president, and Whitman, the former Republican Governor of New Jersey, hope to win over the millions of voters who now identify as Independent. The Forward Party doesn’t have any stated policy goals yet.

— Weekend work schedule for Senate. Senate Majority Leader Chuck Schumer (N.Y.) told fellow Democrats at a caucus meeting Thursday to prepare to work through next weekend, according to Sen. Tim Kaine (D-Va.). That would cancel at least the first few days of the August recess as Democrats push to pass a tax, climate, and health care bill through the budget reconciliation process before leaving town until September.

— The House passed, 243 to 187, a bill that will boost U.S. semiconductor manufacturing capacity and provide billions more in funding for scientific research. The $280 billion Chips and Science Act now heads to President Biden’s desk for his signature (24 House Republicans voted for the measure). The bill includes $52 billion in grants and incentives for domestic semiconductor manufacturing, sending it to Biden for his signature.

— House, Senate go to conference on WRDA. The Senate on Thursday passed a bipartisan 2022 Water Resources Development Act (WRDA) bill (HR 7776) with a substitute amendment, teeing up a conference committee to iron out differences. Senators voted 93-1 for the 2022 Water Resources Development Act, which would direct dozens of new feasibility studies by the Army Corps of Engineers and authorize or modify projects for construction.

— U.S./Japan ties. U.S. Secretary of State Antony Blinken hosts his Japanese counterpart Yoshimasa Hayashi for a bilateral meeting today as well as talks under the auspices of the Japan/U.S. Economic Policy Consultative Committee. Blinken will continue his Asia focus into next week when he travels to Cambodia for a meeting of ASEAN foreign ministers.

— North Korea threat. North Korean leader Kim Jong Un said the country’s nuclear missiles stand “fully ready” for a military conflict with the U.S. and threatened to annihilate South Korea’s military should it attempt a pre-emptive strike.

— Cotton AWP edges higher. The Adjusted World Price (AWP) for cotton moved up to 104.48 cents per pound, effective today (July 29), up from 103.96 cents per pound the prior week. The AWP had declined the six previous weeks until the current rise. USDA also announced that Special Import Quota #15 would be established Aug. 4 to allow the import of 55,798 bales of upland cotton, applying to supplies purchased not later than Nov. 1 and entered into the U.S. not later than Jan. 30.