Trump Gave Two Speeches: Unifying at Beginning but Then Same Trump as Before

News/Markets/Policy Updates: July 19, 2024

MARKET FOCUS

• IT tech outage, fix deployed
• Pressure on Houthi shipping and finance
• Gold prices sharply lower
• Ag markets today
• Grain market outlook from grain trader and analyst Richard Crow
• Smaller placements expected in Cattle on Feed Report
• Ag trade update
• NWS outlook
• Pro Farmer First Thing Today items

GOP NATIONAL CONVENTION

• Highlights of Trump’s long acceptance speech

CONGRESS

• Bipartisan House bill aims to simplify tax filings and payments

CHINA

• China facing soybean glut

ENERGY & CLIMATE CHANGE

• 53 new Conservation Innovation Grants (CIG) projects, amounting to $90 million

LIVESTOCK, NUTRITION & FOOD INDUSTRY

• Colombia bans beef imports from Oklahoma

OTHER ITEMS OF NOTE

• Cotton AWP moves higher
• EPA farm advisory meetings scheduled for Aug. 5-6 in Lancaster, Pa
• Doubts about Kentucky’s standing to challenge EPA’s shelved 2023 WOTUS rule

— Equities today: Asian and European stock indexes were mostly lower. U.S. stock indexes are pointed toward mixed openings. In Asia, Japan -0.2%. Hong Kong -2%. China +0.2%. India -0.9%. In Europe, at midday, London -0.6%. Paris -0.7%. Frankfurt -0.8%.

U.S. equities yesterday: All three major indices finished with losses on Thursday. The Dow dropped 533.06 points, 1.29%, at 40,665.02. The Nasdaq fell 125.70 points, 0.70%, at 17,871.22. The S&P 500 declined 43.68 points, 0.78%, at 5,544.59.

— A major IT outage affected banks, media companies, emergency services, and airlines worldwide, causing significant disruptions, including grounded flights. The outage was traced to an update from the cybersecurity software company CrowdStrike, which impacted millions of Microsoft Windows device users globally. CrowdStrike CEO George Kurtz confirmed that the issue had been identified and resolved, emphasizing that it was not a security incident or cyberattack. The incident points to how reliant the global economy is on a handful of major tech companies to run vital infrastructure.

— Ag markets today: Corn, soybeans and wheat posted mild gains during the overnight session. As of 7:30 a.m. ET, corn futures were trading around a penny higher, soybeans were 2 to 6 cents higher and wheat futures were 4 to 7 cents higher. The U.S. dollar index was around 130 points higher, and front-month crude oil futures were about 30 cents lower.

Cash cattle weaken. The plunge in cattle futures Thursday caused feedlots to sell cash cattle in the northern dressed market around $2.00 below last week after trade in the Southern Plains at steady prices earlier in the week. Barring an upturn today, the average cash price will decline again this week.

Cash hog index rises again. The CME lean hog index is up 47 cents to $89.27 as of July 17, extending the recent upturn to four consecutive days. August lean hog futures finished Thursday at a $2.105 premium to today’s cash quote. The pork cutout value firmed 93 cents to $100.25, while movement improved to 303.2 loads.

— Agriculture markets yesterday:

• Corn: December corn fell 6 3/4 cents to $3.91 1/4, nearer the session low.

• Soy complex: November soybean futures firmed 2 cents to $10.43 and settled nearer session high. August meal futures slid $1.9 to $337.2 and settled nearer the intraday low. August bean oil futures firmed 24 points to 46.45 cents.

• Wheat: December SRW wheat fell 3 1/2 cents to $5.60 and nearer the session low. December HRW wheat rose 1 1/2 cents to $5.79 and near mid-range. December spring wheat futures rose 8 3/4 to $6.20 1/4.

• Cotton: December cotton futures dropped 14 points to 71.93 cents and settled near mid-range.

• Cattle: August live cattle fell $2.025 to $182.25. August feeder cattle closed down $2.325 at $256.225. Both markets closed nearer their session lows.

• Hogs: Hog futures traded mixed Thursday, with nearby August dipping 27.5 cents to $91.375. October futures posted modest gains.

— Quotes of note:

• Pressure on Houthi shipping and finance. “Treasury will continue to disrupt the actors who are critical to this network’s operations, as well as the Houthis’ ability to further destabilize the region and threaten international commerce.” — Under Secretary of the Treasury for Terrorism and Financial Intelligence Brian Nelson, after the U.S. Treasury Department imposed sanctions intended to maintain pressure on Houthi shipping and finance.

• “Downside risks are mounting given a slower glide path on rate cuts and delays to investment due to heightened uncertainty surrounding the outcome of the election. Policy uncertainty acts as a tax on the economy.” —Diane Swonk, chief economist at KPMG.

Market perspectives:

— Outside markets: The U.S. dollar index was firmer, with the euro and British pound slightly weaker against the U.S. currency. The yield on the 10-year U.S. Treasury note was flat, trading around 4.21%, with a steady-to-firmer tone in global government bond yields. Crude oil futures were weaker, with U.S. crude around $82.55 per barrel and Brent around $84.95 per barrel. Gold and silver futures were seeing significant pressure ahead of US market action, with gold around $2,410 per troy ounce and silver around $29.24 per troy ounce.

— Gold prices are sharply lower on heavy profit-taking pressure by the shorter-term futures traders after prices hit a record high earlier this week. Some analysts blame the sell off, in part, on concerns about a weakening economy in China in the coming months, which could decrease demand for raw commodities, including the metals.

— Grain market outlook from grain trader and analyst Richard Crow: “With U.S. crops moving to the final 60 days of the production cycle, the crops have to be watched. The market is trading yields never seen. The forecast has promising moisture over the next 15 days by ridge-riding storms. The temps are below average but return to above normal next week. The Northern Plains is an area where dryness could develop. The South remains with moisture chances over the next week. The Western Corn Belt has moisture forecasted this weekend. The wheat market is getting talk of quality issues with some crops, mainly in France.”

— Smaller placements expected in Cattle on Feed Report. Analysts expect USDA’s Cattle on Feed Report this afternoon to show the large feedlot (1,000-plus head) inventory up 1.1% from year-ago at 11.327 million head, snapping a two-month string of year-on-year declines. After a 4.3% jump in placements during May, this month’s report is expected to show a 2.8% decline in the number of cattle moved into feedlots during June. Marketings are expected to decline 8.3% from June 2023.

— Ag trade update: Egypt purchased 20,000 MT of sunflower oil.

— NWS outlook: A break in the heat is expected for much of the eastern two-thirds of the country but triple-digit heat will continue in the West through this weekend... ...Scattered thunderstorms will be confined across the South and Southeast as monsoonal thunderstorms linger across the Four Corners region... ...Strong to severe thunderstorms possible today over the north-central Plains.

(NWS)

Items in Pro Farmer’s First Thing Today include:

• Grains firmer overnight
• French wheat ratings plunge to 8-year low, harvest lags
• ECB survey: Eurozone inflation will reach target by 2025

— Donald Trump delivered his 92-minute speech at the 2024 Republican National Convention in Milwaukee, formally accepting the party’s nomination for president. Here are some highlights:

• Call for unity at beginning of speech: Trump opened his speech with a call to heal the discord and division in American society, promising to be “president for all of America, not half of America, because there is no victory in winning for half of America.” He emphasized the interconnectedness of Americans and their shared fate and future. “The discord and division in our society must be healed — we must heal it quickly,” Trump said on the Republican convention’s final night. “As Americans, we are bound together by a single fate and a shared destiny. We rise together — or we fall apart.” Several analysts said the speech was less unifying than expected.

• Recounting of assassination attempt: Trump provided a vivid and detailed account of the recent assassination attempt against him, telling the crowd that “you’ll never hear it from me a second time, because it’s actually too painful to tell.” He seemed touched by the devotion of his supporters, describing the shooting as almost a spiritual experience — even “providential.” “Bullets were flying over us, yet I felt serene,” he said. “I stand before you in this arena only by the grace of almighty God.” On stage was the uniform of the retired fire chief, Corey Comperatore, who was killed at the Pennsylvania rally. The most powerful moment came when Trump said, “I’m not supposed to be here tonight.” The crowd began chanting, “Yes you are!” Trump responded, “Thank you, but I’m not.”

• Criticism of Biden administration: The former president scrutinized the current administration’s policies and performance. He mentioned President Biden by name only once.

• Portrayal as a “living martyr": The Republican National Convention celebrated Trump not just as a party leader but as someone who survived a significant threat, presenting him as an “American folk hero” and “strong commander in chief”.

• Defense against democracy concerns: Trump addressed critiques about his impact on democracy by claiming, “I am the one saving democracy”.

• Discussion of legal issues: He revisited accusations that his criminal conviction and other prosecutions were due to the weaponization of the justice system.

• Broad policy promises: While short on details, Trump made sweeping promises to end inflation, secure the border, reduce energy prices, and cut taxes.

• Illegal Immigration crisis: Trump called it “the greatest invasion in history” and compared undocumented migrants to Hannibal Lecter. He pledged the border would be closed “on day one.” He promised to launch the “largest deportation operation in the history of our country.”

“We want people to come into our country, but they have to come in legally,” he said.

• Energy: Trump claimed Biden had wasted trillions of dollars on the “Green New Scam,” which he said contributed to inflation. The U.S. ag sector worries that this could include biofuel tax incentives. Trump again noted he would “drill, baby, drill,” promising to roll back Biden administration efforts to combat climate change, including getting rid of EV mandates. “I’m all for electric. They have their application. But if somebody wants to buy a gas-powered car or a hybrid, they’re going to be able to do it. And we’re going to make that change on Day One,” Trump said.

Trump claimed the Biden administration had dismantled his energy policies and then reinstated them, suggesting this inconsistency harmed American energy production. Trump characterized the Inflation Reduction Act as detrimental to American energy independence and accused the Biden administration of weaponizing government against traditional energy sectors. Trump highlighted rising energy costs under Biden, claiming that his policies would lower energy prices significantly. He stated his intention to reduce electricity prices to less than half of their current levels within a year if re-elected. Trump reiterated his stance on leaving the Paris Agreement, framing it as a move to prioritize U.S. energy interests over global climate commitments.

• China: Trump emphasized the need to confront China, framing it as a significant economic competitor. He criticized the Biden administration for not being tough enough on China, suggesting that their policies have weakened America’s position. He reiterated accusations against China regarding unfair trade practices, indicating that his administration would take a stronger stance to protect American jobs and industries from Chinese competition. Trump slammed the leader of United Auto Workers for jobs being sent abroad to countries like China, saying he should be “ashamed” and “fired.”

• Trade policy/tariffs: He promised to protect U.S. workers from unfair trade, saying he would slap stiff tariffs onto foreign autos specifically. He pledged to bring more auto manufacturing to the United States, threatening to impose tariffs of 100% to 200% on foreign-made autos. Saying “they will be unsellable in the United States.”

“We have long been taken advantage of by other countries,” Trump said, adding “oftentimes these other countries are considered so-called allies. We lose jobs, we lose revenue, and they gain everything, and wipe out our businesses, wipe out our people. I stopped it for four years, I stopped it.”

Trump said his “best” trade deal was an agreement with China, a reference to the China Phase One deal that led to increased purchases of U.S. farm commodities. “But I don’t even talk about it because of covid. I don’t even mention it, frankly, because of what happened with the China virus,” Trump said.

He mentioned the U.S.-Mexico-Canada trade agreement that replaced the North American Free Trade Agreement, which Trump called the “worst trade deal ever made.”

• Taxes: Trump said his tax 2017 cuts were instrumental in fostering economic growth, stating that they contributed to the best economy in U.S. history prior to the Covid-19 pandemic. He criticized the Biden administration, claiming that it plans to raise taxes significantly, stating, “This is the only administration that said we’re going to raise your taxes by four times what you’re paying now.” (Biden’s proposed tax increases would affect primarily the wealthiest taxpayers, not the general population.) Trump said his tax cuts benefited the middle class. He hinted at his intention to implement further tax cuts if re-elected, suggesting that he would continue to prioritize tax relief as part of his economic agenda.

• Shift in tone: Compared to his 2016 convention speech, Trump’s address showed a departure from the “I alone can fix it” rhetoric, attempting to present a less partisan version of himself.

• Bottom line: The speech was especially effective at the beginning and less so as it went on as it became undifferentiated from a normal Trump stump speech. Writes Amy Walter of The Cook Political Report: “While the first part of Trump’s speech was a compelling account of the harrowing attempt on his life Saturday and a thoughtful homage to the Pennsylvania firefighter who was killed at that rally, the rest of his 90-minute address reverted to the kind of polarizing and divisive rhetoric that marked his tenure as president. In between his scripted remarks, he called out ‘crazy Nancy Pelosi’ and accused Democrats of using ‘Covid to cheat in the [2020] election.’ He provided no real specifics on the policies he would implement in a second term, but was eager to remind his audience of the successes during his previous time in office. Rather than trying to grow his appeal to a wider audience, Trump fell back to the rhetoric that he knows fires up his already committed base of voters. For Democrats, this was a welcomed reprieve from the steady stream of bad news that has defined the last three weeks of the campaign. Moreover, it confirmed the theory of the case they’d been making for months, namely that Trump’s temperament, undisciplined style and lack of a coherent, future-forward message made him an inherently weak challenger.”

(AP)

— Bipartisan House bill aims to simplify tax filings and payments. Key provisions:

Simplified S Corporation election:
• Corporations can elect S status by checking a box on the first Form 1120-S filed, instead of filing Form 2553 within 2½ months of existence.

Revised due dates for estimated income tax payments: • Proposed changes align payment due dates with the end of each quarter: April 15, July 15, October 15, and January 15, instead of the current schedule (April, June, September, and January).

Timeliness of online payments and filings:
• Online payments and filings will be considered timely if submitted by the due date, even if the IRS processes them the next day.

Support and prospects:
• Support: The bill is backed by tax professionals and the IRS’s National Taxpayer Advocate.
• Legislation timeline: These measures are not expected to be enacted this year, but they are worth monitoring.

Bottom line: These changes have professional support but are not anticipated to pass this year.

— China facing soybean glut. China is facing an oversupply of soybeans as record purchases boost stockpiles at a time when soymeal demand remains subdued, Reuters reports. Importers have ramped up soybean deliveries, fearing a return to a trade war with the U.S., despite poor crush margins and weak demand from the livestock sector. At the same time, Chinese consumer demand for pork has waned. The soybean surplus threatens to curb China’s appetite for imports in the September to December period, the peak U.S. shipping period.

— USDA announced 53 new Conservation Innovation Grants (CIG) projects, amounting to $90 million, aimed at advancing natural resource conservation on private lands to combat climate change. A significant focus is on innovative methods to reduce livestock emissions, particularly enteric methane. The funding is divided into $69.7 million for on-farm trials and over $20.2 million for CIG classic projects.

The classic projects aim to enhance current technologies, including virtual fences for livestock, beef emissions tracing systems, and tools for fertilizer and phosphorus management. The on-farm trials, which receive larger grants, target broader issues such as methane emissions management, feed rations, grasslands beef, water conservation, irrigation, and energy conservation.

— Study: Cleaner jets needed by 2035 to reach net-zero goal. The aviation industry is running out of time to introduce cleaner planes needed to eliminate net carbon emissions from air travel by 2050, according to a study released Thursday. New models that emit net zero carbon dioxide throughout decades of use will need to be flying by the mid-2030s for aviation to reach its mid-century goal, the International Council on Clean Transportation (ICCT) said in the report. The climate-change research group called on plane makers to accelerate plans to develop zero-emissions planes, especially those powered by hydrogen. Its study highlighted the decades-long lifecycles of commercial aircraft, a factor that contributes to making aviation one of the hardest industries to decarbonize. By the time they’re retired, passenger planes already in service as of 2023 are expected to release about half of the carbon dioxide emissions available within the framework of the mid-century net-zero goal, according to ICCT. New aircraft will use up the rest by 2032 to 2037, depending on how quickly the industry adopts sustainable aviation fuel blends and other fuel-efficient technologies.

— Colombia has banned beef imports from Oklahoma following the confirmation of highly pathogenic avian influenza (HPAI) in two dairy herds in the state on July 11. This addition raises the total number of U.S. states from which Colombia has halted beef imports to 13. The Animal and Plant Health Inspection Service (APHIS) reports that 164 herds across these 13 states have been confirmed with HPAI in livestock.

— Cotton AWP moves higher. The Adjusted World Price (AWP) for cotton moved up to 56.42 cents per pound, effective today (July 19), after falling to 56.08 cents per pound the prior week. This still marked the seventh straight week the AWP has been below 60 cents per pound. Meanwhile, USDA announced Special Import Quota #14 will be established July 25 for the import of 42,137 bales of upland cotton, applying to supplies purchased not later than Oct. 22 and entered into the U.S. not later than Jan. 20.

— EPA farm advisory meetings scheduled for Aug. 5-6 in Lancaster, Pa. EPA will hold the next meeting of the Farm, Ranch, and Rural Communities Advisory Committee (FRRCC) on Aug. 5-6 at the Lancaster Marriott in Lancaster, Pennsylvania. This meeting will be conducted in a hybrid format. Additionally, the FRRCC Animal Agriculture and Water Quality Subcommittee will meet on August 8-9 at the same location, also in a hybrid setting. This subcommittee is responsible for providing information to the EPA on improving the implementation of the Clean Water Act (CWA) National Pollutant Discharge Elimination System (NPDES) permitting program for Concentrated Animal Feeding Operations (CAFOs).

— Appellate panel has major doubts about Kentucky’s bid to win standing to challenge EPA’s shelved 2023 WOTUS rule. This suggests the judges are skeptical of Kentucky’s legal arguments in the case. Previously, on April 20, 2023, the Sixth Circuit Court of Appeals had stayed enforcement of the 2023 WOTUS rule in Kentucky. This effectively blocked the rule from being implemented in the state.

Some background on the case:

• In February 2023, the Kentucky Chamber of Commerce and other industry groups sued the EPA and Army Corps of Engineers in federal court, arguing that the 2023 WOTUS rule was unlawful.
• On March 31, 2023, the Eastern District of Kentucky initially denied Kentucky’s motion for a preliminary injunction against the rule.
• Kentucky then filed an emergency appeal to the Sixth Circuit.

The current skepticism from the appellate panel suggests Kentucky may face challenges in maintaining its case against the now-shelved 2023 WOTUS rule. The judges appear to be questioning whether Kentucky has proper legal standing to continue challenging a rule that is no longer in effect.

This case is part of broader ongoing litigation and controversy surrounding the definition of “waters of the United States” under the Clean Water Act. Multiple states and industry groups have challenged various iterations of the WOTUS rule in recent years.

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