U.S. Added More Jobs than Expected in June; Unemployment Rate Rises to 4.1%

(Farm Journal)

MARKET FOCUS

· U.S. added more jobs than expected in June; unemployment rate rises to 4.1%

· N.Y. Fed President John Williams: reaching inflation goal will take more time

· FOMC minutes: Fed officials signal patience on interest rates

· Samsung Electronics reports bumper profits

· Brent crude futures on Wednesday rose to highest level in over two months

· BMI analysts: oil demand to decline next year

· Saudi Arabia sees significant decline in overseas oil shipments in June

· German economists divided on EU’s tariffs on electric vehicles from China

· Widening U.S. trade deficit to subtract from GDP for second straight quarter

· Canada clears Glencore’s $6.9-billion acquisition of Teck’s metallurgical coal business

· Ag markets today

· AMIS market monitor

· U.S. ag exports drop to lowest level of FY 2024; record monthly trade deficit

· Brazil’s hot ag financing market set to stagnate due to farmer defaults: XP Inc.

· Ag trade update

· Beryl headed for south Texas

· NWS weather outlook

· Pro Farmer First Thing Today items

PRESIDENT JOE BIDEN

· Perspective on recent polling

· Biden faces significant pressure to perform well today interview, campaign rally

· Biden warns winner of 2024 election would control future of Supreme Court

· Big donors warn they would withhold funding if Biden did not cede his candidacy

· Trump and his top advisers expect Harris will replace Biden on Democratic ticket

· New Nevada poll showed Trump up by 10 points, but Dem Senate candidate up

OTHER POLITICS & ELECTIONS

· Britain’s Labour Party won a landslide election victory

· Lighthizer would like to be Treasury secretary under a new Trump administration

· Runoff elections in Iran to be held today

CONGRESS

· Congress back in session next week, but they are out again week of the 15th

· Survey: Thune likely successor to McConnell as Senate GOP leader

· Earmarks increase in House spending bills for FY 2025

ISRAEL/HAMAS CONFLICT

· Israel sending negotiators to Qatar to try to finalize cease-fire agreement

CHINA

· China warns prolonged heatwave may damage rice, cotton crops

· China allocates funds to support agricultural production, disaster relief

· EU announces provisional tariffs on electric vehicles (EVs) imported from China

· China to push ahead with an anti-dumping investigation into EU’s brandy exports

· Soybeans, cotton, beef and pork mark weekly U.S. export sales to China

· PBOC readies multibillion-yuan pool of bonds to sell

ENERGY & CLIMATE CHANGE

· Soy sector could overtake corn as preferred feedstock for U.S. biofuels

LIVESTOCK, NUTRITION & FOOD INDUSTRY

· Biden calls Vilsack to ask why beef prices are high

· World food prices steady in June

HEALTH UPDATE

· Colorado reports adult man tested positive for avian influenza

OTHER ITEMS OF NOTE

· Did UAW strike at Deere in 2021 have impact on moving some operations to Mexico?

· Jair Bolsonaro, former president of Brazil, indicted by federal police

— Equities today: Asian and European stock indexes were mixed to weaker overnight. U.S. stock indexes are pointed toward steady to firmer openings. The Nikkei Stock Average hit an all-time closing high on Thursday, on the back of a rally in Japanese tech stocks. In Asia, Japan -0.1%. Hong Kong -1.1%. China -0.3%. India -0.1%. In Europe, at midday, London +0.1%. Paris +0.3%. Frankfurt +0.8%. The U.S. Dow opened slightly higher but then went slightly lower.

U.S. equities Wednesday: The Blue Chip index ended weaker while the S&P 500 and Nasdaq both scored new record closes in a shortened trading session that took place with light trade volume. The Dow was down 23.85 points, 0.06%, at 39,308.00. The Nasdaq gained 159.54 points, 0.88%, at 18,188.30. The S&P 500 advanced 28.01 points, 0.51%, at 5,537.02.

— Samsung Electronics, the world’s biggest maker of memory chips, reported bumper profits of 10.4 trillion won ($7.5 billion) in the second quarter of 2024. The preliminary figure represents a 15-fold increase over the same period last year. Sales were boosted by the artificial-intelligence boom, which has increased demand for Samsung’s advanced memory chips.

— Brent crude futures on Wednesday rose $1.10, 1.3%, to $87.34 per barrel, the highest in over two months, supported by a significant drop in U.S. inventories reported last week and an optimistic U.S. fuel demand forecast. The U.S. Energy Information Administration (EIA) reported a 12.2-million-barrel decrease in crude stockpiles, well above expectations of a 680,000-barrel decline. Additionally, weaker U.S. economic data has increased expectations for a September interest rate cut, bolstering confidence in economic growth and energy consumption. WTI traded up $1.07 1.3% to close at $83.88.

— Agriculture markets today: Grain and livestock markets resume trading at 9:30 a.m. ET and will have regular closes.

Still awaiting active cash cattle trade. Packers’ inquiry into buying cattle picked up Wednesday, but bids remained well below feedlots’ asking prices. The limited cash trade that took place wasn’t enough for a true market test. After three weeks of strong trade, it’s possible this week’s activity will be light.

Cash hog index firms, pork slips. The CME lean hog index is up 14 cents for a second day in a row to $89.45 as of July 2. The pork cutout value dropped 69 cents on Wednesday to $93.63.

— Agriculture markets Wednesday:

· Corn: December corn futures traded on both sides of unchanged before settling 1 3/4 cents lower to $4.19 1/2.

· Soy complex: November soybeans rose 8 1/2 cents to $11.21 1/2, marking the highest close since June 24. August soymeal fell 20 cents to $350.10, closing near the session low. August soyoil surged 160 points to 48.64 cents, ending the session above the 200-day moving average for the first time since Sept. 27.

· Wheat: December SRW wheat futures fell 6 3/4 cents to $5.98. December HRW wheat futures lost 7 3/4 cents to $6.01. Both markets closed nearer their daily lows. December spring wheat futures closed 8 1/4 cents lower at $6.41.

· Cotton: December cotton fell 34 points to 72.36 cents, closing near the session low.

· Cattle: August live cattle futures rose 82 1/2 cents to $185.925 and nearer the daily high. August feeder cattle gained $2.275 to $263.375, nearer the session high and hit a five-week high.

· Hogs: Expiring July lean hog futures rose 52.5 cents to $89.75, while most-active August edged up 5 cents to $89.825.

— Quotes of note:

· Federal Reserve Bank of New York President John Williams stated that although inflation has recently decreased toward the Fed’s 2% target, reaching the goal will take more time. Currently, inflation is around 2.5%, reflecting significant progress, but sustained 2% inflation is still a way off. Williams reiterated the Fed’s commitment to achieving this target during an event at the Reserve Bank of India in Mumbai. Williams emphasized the importance of maintaining “well-anchored” inflation expectations and discussed the challenges of measuring key economic indicators like the long-run neutral interest rate, or r-star. He disputed claims that the neutral rate has increased since the pandemic, noting estimates that place it near pre-Covid-19 levels in both the U.S. and Eurozone. In June, officials raised their longer-term rate estimates to 2.8% from 2.6% in March.

· According to BMI analysts, oil demand is expected to decline next year due to a supply surplus driven by non-OPEC countries. Output from these countries, excluding the U.S., is projected to increase by an average of 858,000 barrels per day this year and 940,000 barrels per day next year, marking the highest two-year growth period since 2005. This growth is fueled by long-term conventional projects that are generally unaffected by short-term oil price fluctuations. These projects are expected to come online over the next 18 months regardless of market conditions. BMI forecasts Brent crude prices to drop to $82 per barrel next year and is considering a further downward revision.

· German economists are divided on the European Union’s planned tariffs on electric vehicles from China, as reported by the Ifo Institute. In a poll conducted by the institute, one-third of economists supported the tariffs, another third opposed them, 11% favored lower tariffs, and 6% wanted higher tariffs. Niklas Potrafke, head of Ifo’s Center for Public Finance, noted the complexity of dealing with China, highlighting the need to balance geopolitical risks, responses to China’s economic and export strategies, and the maintenance of free trade.

— The U.S. economy added 206,000 jobs in June 2024, slightly below the revised 218,000 jobs added in May but above the forecast of 190,000. Job gains were seen in government, health care, social assistance, and construction sectors. May’s job data was significantly revised down from an initial 272,000.

The unemployment unexpectedly climbed to 4.1%, providing a conflicting sign for Federal Reserve officials weighing their next move on monetary policy.

Wage growth: Average hourly earnings rose by 0.3% in June, down from 0.4% in May, indicating a slight easing in wage pressures. Twelve-month wage growth of 3.9% matched forecasts.

The labor participation rate was 62.6%, up from 62.5% in May.

Bottom line: The June 2024 jobs report indicates a resilient but gradually slowing labor market, with job gains exceeding forecasts but an unexpected rise in unemployment. The Federal Reserve will likely take a cautious approach, closely monitoring upcoming economic data before making any significant changes to interest rates. After the jobs report, S&P 500 futures were little changed despite the positive implications for the Federal Reserve rate-cut outlook. Treasury yields fell slightly to about 4.3%.

— FOMC minutes: Fed officials signal patience on interest rates. Minutes from the June 11-12 Federal Open Market Committee (FOMC) meeting, released on July 3, indicated that officials believe they have more time to assess the economy before lowering interest rates. Despite progress toward the Fed’s 2% inflation goal, officials agreed more evidence is needed. Recent comments from officials echo this sentiment. This suggests that potential rate reductions are likely to be considered later in the year, rather than at the upcoming July 30-31 meeting.

— A widening of the U.S. trade deficit is expected to subtract from gross domestic product for a second straight quarter. A drop in shipments of goods to overseas customers to the lowest since November was led by a decline in the value of industrial supplies, aircraft and automobiles. Limited economic growth in overseas markets and a strong U.S. dollar are restraining demand for US goods and services.

Meanwhile, the U.S. appetite for imported merchandise may continue to cool amid restrained consumer spending and a recent pickup in retail inventories. Imports of goods fell 0.4% in May, the trade report showed.

On an inflation-adjusted basis, the merchandise trade deficit widened to $94.5 billion in May, the largest in more than a year. Details:

• Total services exports increased to a record $92.1 billion during the month. Imports of services were also the highest in data.

• Travel exports — or spending by visitors to the U.S. — climbed to $18.1 billion, a fresh record.

• Travel imports — a measure of Americans traveling abroad — rose for the first time in three months.

The U.S. merchandise-trade deficit with China grew to $23.9 billion. The value of goods imported from China rose.

The goods shortfall with Mexico also widened to the largest in three months.

— U.S. agricultural exports have dropped to their lowest level of fiscal year (FY) 2024, resulting in a record monthly trade deficit. In May, exports fell to $13.74 billion, a 4.5% decline from April, while imports slightly decreased by 1.5% to $18.01 billion. This created a trade deficit of $4.27 billion, the largest monthly deficit on record. For the third consecutive month, imports have exceeded $18 billion.

So far in FY 2024, agricultural exports total $122.57 billion against imports of $137.63 billion, resulting in a cumulative deficit of $15.06 billion, nearing the record trade gap of $16.7 billion for all of FY 2023. With four months remaining in FY 2024, the USDA forecasts exports of $170.5 billion and imports of $202.5 billion. To meet these forecasts, monthly exports need to average $11.98 billion, and imports need to average $16.22 billion.

In the last four months of FY 2023, exports averaged $12.55 billion, and imports averaged $15.79 billion. If these averages are repeated, FY 2024 exports would reach $172.8 billion, surpassing the USDA’s forecast by $2.3 billion, while imports would hit $202.5 billion, matching the forecast. This scenario would yield a trade deficit of $29.7 billion, slightly below the forecasted $32 billion but still the largest trade deficit for the sector and the fourth in the past six fiscal years. This marks a significant shift for a sector that has traditionally contributed positively to the U.S. trade balance.

Market perspectives:

— Outside markets: The U.S. dollar index was lower ahead of the Employment report, with the euro and British pound stronger against the greenback. The yield on the 10-year U.S. Treasury was weaker, trading around 4.34%, with a negative tone in global government bond yields. Crude oil futures were mixed, with U.S. crude trading higher at around $83.95 per barrel and Brent trading lower at around $87.35 per barrel. Gold and silver futures were up ahead of U.S. jobs data, with gold around $2,373 per troy ounce and silver around $30.90 per troy ounce.

— Canada approved Glencore’s $6.9-billion acquisition of Teck’s metallurgical coal business, while the latter announced a $2 billion share buyback and pledged to boost copper output.

— Saudi Arabia, the world’s largest crude oil exporter, experienced a significant decline in overseas shipments in June, reaching a 10-month low, according to Bloomberg (link). Exports were estimated at around 168 million barrels, or 5.6 million barrels per day, which is only 250,000 barrels per day above the lowest level since the Covid-19 pandemic began. This decline is particularly pronounced in exports to two major customers: China and India. Shipments to China dropped to about 1.27 million barrels per day, the lowest since mid-2020. Exports to India also fell to their lowest since mid-2021, with a consistent downward trend since early 2022. A key reason for this slump is increased competition from Russia, another member of the OPEC+ alliance, which has been affecting Saudi Arabia’s market share in these regions.

(Bloomberg)

— Brazil’s hot agriculture financing market set to stagnate due to farmer defaults, says XP Inc. For the past three years, agriculture financing has been one of Brazil’s hottest investment trends. However, the market for Fiagros — investment funds focused on agricultural receivables like interest, dividends, and land-lease payments — is expected to stagnate this year. This shift is due to a wave of farmer defaults, which has caused uncertainty in the market, according to a top executive at XP Inc., Brazil’s largest brokerage firm. Link for details.

— Ag trade update: Japan purchased 129,660 MT of milling wheat, including 59,670 MT U.S., 34,600 MT Canadian and 35,390 MT Australian. Tunisia purchased 100,000 MT of soft milling wheat and 50,000 MT of durum — all optional origin.

— Beryl headed for south Texas. The National Weather Service (NWS) is expecting Hurricane Beryl to regain strength as it moves into the Gulf and sets its sights on south Texas (it has been downgraded to a Category 2 storm). “Beryl is forecast to weaken into a tropical storm as it traverses the Yucatan Peninsula on Friday before emerging into the southwestern Gulf of Mexico on Saturday,” the NWS said. “Beryl has an opportunity to re-intensify over the Gulf and turn more northwest toward the southern tip of Texas” by Saturday evening.

— NWS weather outlook: Heat is expected to intensify and spread farther up the West Coast this weekend... ...Oppressive heat and humidity will shift east into the Mid-Atlantic and Southeast today and Saturday... ...Excessive Rainfall possible over portions of the coastal Mid-Atlantic down through the Carolinas on Saturday... ...Beryl is forecast to re-intensify over the southwestern Gulf of Mexico on Saturday and threaten southern Texas.

(NWS)

Items in Pro Farmer’s First Thing Today include:

• No overnight grain trade
• Favorable weather for Corn Belt
• French wheat conditions decline

— Perspective on recent polling. At the national level, President Biden has lost a point or two since last week’s debate. In the electoral swing states, however, the numbers have shifted more decisively. Democratic-leaning states, such as New Hampshire and Minnesota, are potentially in play. Polls taken after Thursday night’s debate voters expressing heightened concern about the president’s mental and cognitive health. Harris, Whitmer, Newsom, Buttigieg, Pritzker and Klobuchar all poll behind Trump in hypothetical matchups, according to a CNN/SSRS poll, but they all also fare better than Biden, who trails the former president by six points. VP Kamala Harris performs best of the six, polling two points behind Trump.

According to a New York Times/Siena College poll released on July 3, Trump solidified his lead: he is up by six points among likely voters.

— President Biden faces significant pressure to perform well today during a campaign rally in Madison, Wisconsin, a crucial battleground state. The rally will be held in one of the state’s most strongly Democratic areas, highlighting its importance in his campaign strategy. He will travel to another battleground state, Pennsylvania, on Sunday. The president’s supporters have urged him to eschew teleprompters at campaign stops. Additionally, Biden will participate in a one-on-one interview with ABC’s George Stephanopoulos, which will be broadcast as a prime-time special. The president will convene foreign leaders in Washington next week for the annual North Atlantic Treaty Organization summit, which will include a Biden solo news conference scheduled Wednesday, exposing him to direct questioning by reporters. The outcomes of those events are crucial as they aim to bolster his campaign in a state that is essential for winning the upcoming election.

— Biden warned Thursday that the winner of the 2024 election would control the future of the Supreme Court. On Independence Day, Biden hosted active-duty military members for a barbecue and fireworks at the White House. Biden spoke with Israeli Prime Minister Benjamin Netanyahu about efforts to finalize a cease-fire deal in Gaza. During a meeting with Democratic governors on Wednesday, Biden received feedback on his need to be more public and unscripted. Tim Walz of Minnesota, Wes Moore of Maryland and Kathy Hochul of New York told reporters at the White House after the meeting that they had Biden’s “back” and the president was “fit for office.” Several more, including Gavin Newsom of California and Michigan’s Gretchen Whitmer posted statements of support to social media site X. Some governors expressed concerns about his re-election chances, especially in states like New Mexico and Maine. The last Republican to carry New Mexico was George W. Bush in 2004. Maine awards electoral votes by statewide totals and congressional districts and has been a reliable state for Democrats in presidential elections, but Trump carried the state’s rural second congressional district in 2016 and 2020, winning one electoral vote in both elections.

As for medical concerns, there are differing reports. The White House reported that Biden had no new medical exams since February but was recovering well from a cold following the debate. However, Politico reports Biden told the governors he had a medical checkup after the debate and was fine.

Of note: Biden told the gathering of nearly two dozen Democratic governors at the White House that he needs to get more sleep and work fewer hours — and even avoid events held after 8 p.m. — despite indications he can only handle the rigors of the job between 10 a.m. and 4 p.m. Biden’s acknowledgment was reported by the New York Times, citing two people who took part in the high-stakes meeting and others who were briefed on the comment.

— Several big donors warned that they would withhold funding to the party if Biden did not cede his candidacy. Reed Hastings, the co-founder of Netflix and one of the biggest Democratic donors, called for Biden to make way for “a vigorous Democratic leader to beat Trump and keep us safe and prosperous.” Other wealthy donors also believe Biden should step aside, but they have not said as much publicly, to avoid helping Trump. Donors are the lifeblood of any campaign. Abigail Disney, the granddaughter of Walt Disney Company co-founder Roy O. Disney, has funded the party for years but told CNBC that she’s stopping her contributions because “the stakes are far too high.” Meanwhile, Gideon Stein, the president of the Moriah Fund, also said he’s pausing planned donations of $3.5 million unless Biden steps aside.

Of note: Republicans are running commercials pairing clips of their opponents attesting to Biden’s mental acuity with clips of his debate meltdown.

— Trump and his top advisers expect Harris will replace Biden on the Democratic ticket. Trump was recorded secretly at his Bedminster, New Jersey golf course telling people he thought Biden would “quit.” In the video, which went viral late on Wednesday, he added: “That means we are going to have Kamala . . . she is so bad. She is so pathetic. She is just so [expletive deleted] bad.”

Harris’ supporters — known as the KHive — are flooding social media with signals that they’re prepared to back her if Biden drops out. She would be in the best place to inherit Biden’s campaign funds under Democratic fund-raising rules (link for more). During the 2020 Democratic primary, Harris positioned herself to the left of Joe Biden on several issues. She supported the Green New Deal, a legislative package sponsored by Rep. Alexandria Ocasio-Cortez (D-N.Y.), while Biden opted for market-based climate solutions in the Inflation Reduction Act. Harris also aligned more with the progressive wing on immigration and voted against the U.S.-Mexico-Canada Trade Agreement.

— A new Nevada poll showed Trump up by 10 points in the Silver State, yet Democratic Sen. Jacky Rosen with an eight-point lead over Republican challenger Sam Brown. Link.

— Lighthizer would like to be Treasury secretary under a new Trump administration. Robert Lighthizer, former U.S. Trade Representative under President Donald Trump, is a key figure in Trump’s 2024 campaign and is being considered for the role of Treasury Secretary should Trump win another term. Lighthizer’s tenure as Trade Representative was marked by a significant shift in U.S. trade policy towards a more protectionist and nationalist approach, which included imposing tariffs on steel, aluminum, and a substantial portion of Chinese exports, as well as renegotiating the North American Free Trade Agreement (NAFTA) into the U.S.-Mexico-Canada Agreement (USMCA).

Lighthizer’s potential appointment as Treasury Secretary would likely continue his mission of transforming U.S. international economic policy. He has been a proponent of reducing the U.S. trade deficit, which he views as a transfer of wealth to competitors like China. This perspective contrasts with the conventional economic view that trade deficits are largely a result of national savings rates and are not easily influenced by trade policy alone.

The potential devaluation of the U.S. dollar is one of the more controversial strategies being discussed by Lighthizer and Trump’s economic advisers is This move aims to make U.S. exports cheaper and reduce the trade deficit but carries significant risks, including potential inflation, retaliation from other countries, and threats to the dollar’s status as the world’s reserve currency. Lighthizer’s advocacy for such measures indicates a willingness to employ aggressive economic policies to achieve his goals.

Lighthizer’s career has been characterized by his skepticism of free trade and his efforts to protect American industries from foreign competition. His approach has often put him at odds with mainstream economic and business communities but has garnered support from those who believe in a more protectionist trade policy.

Bottom line: His tenure would likely be marked by significant shifts in U.S. economic policy, with far-reaching implications for both domestic and international markets.

— The recent general election in the United Kingdom results in historic landslide victory for the Labour Party, led by Sir Keir Starmer. This outcome marks a significant shift in the British political landscape, ending 14 years of Conservative governance.

Election Results and Immediate Consequences

• Labour party victory: Labour has secured over 400 seats in the 650-seat House of Commons, with the final tally expected to be around 410 seats. This is one of the largest parliamentary majorities in recent British history.

• Conservative Party defeat: The Conservative Party, led by Rishi Sunak, suffered a catastrophic defeat, winning only 116 to 131 seats, their lowest in history. Sunak has tendered his resignation as Prime Minister to King Charles III and announced he will step down as Conservative Party leader once a successor is chosen.

• Other parties: The Liberal Democrats have achieved their highest-ever number of seats, securing around 61 seats, while the populist Reform UK party, led by Nigel Farage, won 13 seats.

Keir Starmer’s Promises and Plans

Keir Starmer has pledged an “age of national renewal” for the UK, focusing on several key areas:

• Economic stability: Starmer aims to deliver economic stability through tough spending rules, growth-oriented policies, and measures to keep taxes, inflation, and mortgage rates low.

• NHS improvement: Labour plans to cut NHS waiting times by introducing 40,000 more evening and weekend appointments each week, funded by cracking down on tax avoidance and non-domiciled tax statuses.

• Energy policy: A significant part of Starmer’s agenda is the establishment of Great British Energy, a publicly owned clean power company aimed at reducing energy bills and boosting energy security. This initiative will be funded by a windfall tax on oil and gas companies.

• Job creation and education: Labour intends to create jobs, particularly in green industries, and recruit 6,500 new teachers in key subjects, funded by ending tax breaks for private schools.

• Public safety: The party plans to launch a new Border Security Command to tackle criminal gangs and strengthen borders, and crack down on antisocial behavior with more neighborhood police and tougher penalties for offenders.

Broader Implications

• Political landscape: This election signifies a dramatic shift towards the center-left in British politics, reflecting public dissatisfaction with the Conservative Party’s handling of economic issues, internal conflicts, and governance over the past decade.

• International relations: Starmer’s admiration for U.S. President Biden suggests a potential strengthening of U.S./U.K. relations, contrasting with the more strained relations under previous administrations.

Bottom line: The Labour Party’s landslide victory under Keir Starmer promises significant changes in the UK’s political and economic landscape, with a focus on stability, public services, and green energy. This election marks a pivotal moment in British politics, with the electorate decisively opting for a new direction after years of Conservative rule.

— Runoff elections in Iran to be held today to replace former President Ebrahim Raisi, who died in a May helicopter crash; reformist Dr. Masoud Pezeshkian faces hard-liner Saeed Jalili.

— Congress is back in session next week, but they are out again the week of the 15th. The Senate has just three more in-session weeks before the August recess. Next week, the floor will see an abortion messaging vote and some nominations. Several senators will be attending the annual NATO summit taking place in downtown D.C.

— Survey: Thune likely successor to McConnell as Senate GOP leader. Nearly three-quarters of senior GOP and Democratic Hill staffers believe Senate Minority Whip John Thune (R-S.D.) is the most likely candidate to succeed Mitch McConnell (R-Ky.) as the GOP leader in the Senate, according to a recent survey by Punchbowl News. Republican senators are expected to select their new leader in a secret vote in late November. If Thune wins, he would replace McConnell, who has held the post since 2007 and is the longest-serving Senate party leader in U.S. history. Thune had briefly filled in for McConnell last summer when the Kentucky senator was absent due to health issues.

Thune’s relationship with former President Donald Trump has been rocky. He condemned Trump for the Jan. 6 Capitol attack and initially endorsed Sen. Tim Scott (R-S.C.) for president. However, Thune endorsed Trump in February once it became clear Trump would be the GOP nominee.

Respondents in the survey ranked Sen. John Cornyn of Texas and Sen. Rick Scott of Florida as the second and third most likely candidates to succeed McConnell. Both Cornyn and Scott support term limits for the Senate GOP leader, a stance McConnell opposes.

The Canvass Capitol Hill survey was conducted from June 3-21 in partnership with the independent public affairs firm LSG.

— Earmarks increase in House spending bills for Fiscal Year 2025. The Republican majority continues to dominate “community project funding” in appropriations bills for the new fiscal year. Rep. James R. Comer (R-Ky.) has become the top earmarker with $241.3 million, largely due to a $218 million Army Corps of Engineers project for the Kentucky Lock expansion. Link to full lists of all the House appropriations earmarks and requests.

The total earmarks in the House bills have risen to just over $8 billion, a 9% increase from last year, spread across 4,830 individual projects. This year’s earmarks reflect a slight increase in the number of projects compared to fiscal year (FY) 2024.

There are still 67 GOP lawmakers who do not request any community project funding, though two notable newcomers this year are Reps. Thomas Massie (R-Ky.,) and Warren Davidson (R-Ohio). Rep. Vince Fong (R-Calif.) also joined the earmarking process after a special election win.

Although House Democrats dominate the number of individual projects, they received only 37% of the total earmarked funds, around $3 billion. The rest went to the GOP majority.

By departments:

• The Transportation-HUD bill remains the largest source of earmarks but saw a slight decrease.
• The Commerce-Justice-Science and Interior-Environment bills saw significant increases in earmark totals.
• The Military Construction-VA and Agriculture bills also saw substantial rises in earmarked funds. The Agriculture bill is up about 29%, to $626 million.

(CQ Roll Call )

(CQ Roll Call )

— David Barnea, the head of Israel’s Mossad, will travel to Qatar today (July 5) to finalize a cease-fire deal with Hamas, indicating the possibility of a truce in the ongoing Israel/Hamas conflict. Barnea is expected to meet with Qatar’s Prime Minister Sheikh Mohammed bin Abdulrahman Al Thani. This move follows a new proposal from Hamas that might lead to the release of hostages held in Gaza and a pause in the war, which has lasted nearly nine months. The development marks the most promising sign in weeks after extensive indirect negotiations. Prime Minister Benjamin Netanyahu’s cabinet discussed Hamas’ offer, and Netanyahu had a call with President Joe Biden, who proposed a three-part peace plan in May.

— China warns prolonged heatwave may damage rice, cotton crops. China’s weather bureau warned a prolonged heatwave forecast in the country’s eastern, central and southern regions may hurt production of rice and cotton. The China Meteorological Administration (CMA) said it expected temperatures in most areas across the country to be relatively high over the next few months, signaling a second consecutive summer of extreme heat. Summer temperatures in regions including Zhejiang, Jiangxi, Hunan, Fujian, Guangdong, Guangxi, Gansu and Ningxia are expected to be 1 to 2 degrees Celsius (1.8 to 3.6 degrees Fahrenheit) above normal, CMA said.

— China allocates funds to support agricultural production, disaster relief. Beijing allocated 546 million yuan ($76.57 million) to support agricultural production and disaster relief in parts of the country, the finance ministry announced. Some 447 million yuan will be spent on flood relief in the agricultural sector in regions such as Heilongjiang, Anhui, Fujian, Hunan and Guangdong, with funds used for crop replanting, the repair of damaged facilities and floodwater drainage. A total of 99 million yuan will go to Inner Mongolia and various other regions to support drought relief in agricultural production, particularly to protect seedlings, maintain soil moisture and facilitate the purchase and transport of forage and feed.

— EU announces provisional tariffs on electric vehicles (EVs) imported from China. This move is expected to heighten trade tensions with China. The EU confirmed the tariffs following an anti-subsidy investigation, targeting three major Chinese manufacturers. State-owned MG maker SAIC Motor Corp. will face a 37.6% tariff in addition to the existing 10% rate, while Geely and BYD Co. will face additional tariffs of 19.9% and 17.4%, respectively.

Chinese EV manufacturers that cooperated with the investigation but weren’t specifically sampled will face a weighted average duty of 20.8%, while non-cooperating firms will face a 37.6% increase. This move also affects Western automakers such as Renault, BMW, and Tesla, with Tesla currently dominating EU-bound EV shipments from China.

The provisional tariffs take effect today, with definitive duties expected by November unless an alternative solution is reached or blocked by a qualified majority of EU member states. The EU concluded that China’s subsidies for its EV industry harm the EU’s carmakers. The EU and China are currently engaged in talks to resolve the issue, with the EU emphasizing the need to address the market distortion caused by these subsidies.

Official comments. Valdis Dombrovskis, an executive vice president of the European Commission, noted that while a mutually beneficial solution is being sought, the tariffs might still be enforced if the market distortion isn’t resolved. The EU’s decision comes after the US imposed a 100% duty on Chinese EVs, and Canada is considering similar measures. China has threatened retaliation and has already launched probes into imports from the EU.

— China said it will push ahead with an anti-dumping investigation into the EU’s brandy exports amid a worsening trade spat. As noted in the previous item, the EU on Thursday slapped provisional tariffs on Chinese electric vehicles, which benefit from state subsidies. Chinese state media suggested China could also launch probes into imports of European dairy and some cars.

— Soybeans, cotton, beef and pork mark weekly U.S. export sales to China. USDA weekly Export Sales for the week ended June 27 continued to show U.S. export sales of soybeans, upland cotton, pork and beef to China. Activity for the week ended June 27 included net sales of 625 metric tons of corn, net reductions of 763 metric tons of sorghum, net sales of 66,500 metric tons of soybeans, and 63,622 running bales of upland cotton. The only sales activity for 2024-25 were net sales of 30,800 running bales of upland cotton. Activity for 2024 included net sales of 4,047 metric tons of beef and 9,451 metric tons of pork.

— PBOC readies multibillion-yuan pool of bonds to sell. The People’s Bank of China (PBOC) said it has hundreds of billions of yuan worth of medium- and long-term bonds at its disposal to borrow, after signing agreements with several major financial institutions. The central bank said it would borrow the bonds on an open-ended unsecured basis and sell them depending on market conditions. China’s sovereign bonds have surged this year on the back of the country’s gloomy economic outlook and expectations for interest rate cuts. However, PBOC has been pushing back against the rally, warning investors of the potential for losses should the market reverse. The central bank sees excessively low yields as endangering financial stability and weighing on the yuan.

— Soy sector could overtake corn as the preferred feedstock for U.S. biofuels, aided by new IRA incentives for sustainable aviation fuels (SAF), BloombergNEF writes. But producing SAF from soybean oil requires significantly more land than corn ethanol. Estimates suggest that 35-50 million acres of soybeans would be needed to produce 3 billion gallons of SAF, compared to 8-11 million acres of corn. Future policies and regulations, particularly regarding the 45Z tax credit set to roll out in 2025, will play a crucial role.

— UN Food and Agricultural Organization (FAO) Food Price Index remained steady at 120.6 in June, unchanged from a revised figure for May. This stability followed three consecutive monthly increases, with the index previously falling to a three-year low of 117.4 in February. Despite the steady reading, the index is still 2.1% lower than in June 2023 and 24.8% below its peak of 160.3 in March 2022.

Key changes in commodity prices included:

• Cereal grains: Global export prices for all major cereals decreased by 3%, primarily due to seasonal pressure from ongoing harvests in the northern hemisphere and larger crop expectations in Argentina and Brazil.

• Vegetable oils: Prices increased by 3.1%, driven by higher prices for palm, soy, and sunflower oils, while rapeseed oil prices remained nearly unchanged. The increase in palm oil prices was attributed to renewed demand and increased competition.

• Sugar and dairy products: Prices for these commodities also saw increases, helping to offset the declines in cereal grain prices.

— On Wednesday, July 3, public health officials in Colorado reported that an adult man had tested positive for avian influenza (bird flu) after exhibiting mild symptoms, including conjunctivitis (pink eye). The individual, a dairy farm worker, had direct contact with cattle infected with the H5N1 virus, which is responsible for the current outbreak among dairy herds in the United States.

This case marks the fourth human infection with avian flu in the U.S. since the virus began spreading among dairy cattle earlier this year. The previous cases involved dairy workers in Texas and Michigan, who also experienced mild symptoms such as eye infections and respiratory issues. All affected individuals have recovered following antiviral treatment.

The Centers for Disease Control and Prevention (CDC) and other health authorities have emphasized that the risk of bird flu transmission to the general public remains low. The virus has not shown the capability for human-to-human transmission, and infections have been limited to individuals with direct exposure to infected animals. The outbreak has affected dairy herds in 12 states, with over 130 farms reporting infected cattle.

Health officials continue to monitor and test individuals who have been in contact with infected animals, and they recommend that those working with livestock take appropriate precautions, including the use of personal protective equipment (PPE). The U.S. government is also increasing the production of avian influenza vaccines as a preventive measure.

— Did the UAW strike at Deere in 2021 have any impact on moving some operations to Mexico? Some U.S. farmers remember when USDA Secretary Tom Vilsack visited striking union members outside a Deere & Co, telling workers he supports them, and the country needs them. While the United Auto Workers (UAW) strike at Deere & Co. in 2021 had significant impacts on the company, there is no direct evidence that the strike itself was the primary reason for Deere’s decision to move some operations to Mexico.

The UAW strike, which lasted five weeks, involved around 10,000 workers and was the first strike against Deere in 35 years. The strike led to a new contract that included significant wage increases and bonuses for the workers. Despite the strike, Deere reported record profits for the fiscal year, indicating that the company managed to maintain its financial performance during and after the strike.

Decision to move certain operations to Mexico. Deere recently announced that it would be moving the manufacturing of certain equipment, such as skid steer loaders and compact track loaders, from its Dubuque, Iowa facility to a new plant in Ramos, Mexico. This decision was attributed to several factors, including:

• Rising operational costs: Deere cited increasing manufacturing costs as a reason for relocating production to Mexico, where labor and other operational costs are lower.

• Market demand: The company also mentioned a decline in market demand for products manufactured at the affected facilities, necessitating organizational changes to align with future goals.

• Strategic realignment: Deere’s move is part of a broader strategy to optimize its global manufacturing footprint and improve operational efficiencies.

Bottom line: It is undeniable that the UAW contracts did increase the costs for Deere (and other equipment makers), such as increased labor costs due to the new contract, there is no direct evidence linking the strike to the decision to move operations to Mexico. The relocation appears to be part of a strategic effort to manage rising costs and declining demand rather than a direct consequence of the strike.

— Jair Bolsonaro, the former president of Brazil, has been indicted by federal police. He faces accusations of money laundering and other crimes linked to diamonds he received from Saudi Arabia during his presidency. Both Bolsonaro and his lawyers deny the allegations. The indictment has not yet been submitted to Brazil’s Supreme Court.

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