U.S. Consumer Prices Above Expectations; Core Inflation Eases Slightly; Food Prices Flat

Questions escalate why USDA is so much higher than others on size of Brazil soybean crop

•

March 12, 2024 09:13 AM

Questions escalate why USDA is so much higher than others on size of Brazil soybean crop

Pro Farmer members: Please fill out our acreage survey. You should have received our annual spring acreage survey via e-mail. Please fill out the survey with your current planting intentions for this year. We’ll cover results and our acreage forecasts ahead of USDA’s March 28 Prospective Plantings Report. Click here to fill out the survey if you haven’t already responded. Please complete the survey only once.

Today’s Digital Newspaper

MARKET FOCUS

U.S. inflation edges up in February 2024, core inflation eases, food prices flat
Jamie Dimon: Don’t take prospect of recession in U.S. ‘off the table’
Oracle’s stock surges
FAA conducts six-week audit of Boeing
ADM says global crush margins will decline, comments on DOJ investigation
BOJ governor: Japanese economy in state of recovery
Record U.S. oil output in 2023
Possibility of walkout at East Coast and Gulf Coast ports looms
Ag markets today
India’s wheat stocks fall to 7-year
China has never canceled this many shipments of U.S. wheat
Ag trade update
NWS weather outlook
Pro Farmer First Thing Today items

FY 2025 BUDGET PROPOSALS

Biden proposes $7.3 trillion budget for FY 2025
Several hearings on tap regarding FY 2025 budget proposals
Highlights of Biden’s FY 2025 budget proposals
Biden budget proposals include comments about new farm bill

ISRAEL/HAMAS CONFLICT

Ship carrying nearly 200 tonnes of food departed from Cyprus bound for Gaza

RUSSIA & UKRAINE

Ukrainian drones strike Russian regions, causing fires at key sites
Ukraine’s grain, oilseed production could fall nearly 8%

POLICY

Emergency Relief Program (ERP) update shows minimal changes in payouts

PERSONNEL

HUD Secretary Marcia Fudge to depart Biden Cabinet amid housing challenges

CHINA

China criticizes India for inaugurating tunnel near shared border
House Republicans to vote on TikTok ban bill; White House signals support

LIVESTOCK, NUTRITION & FOOD INDUSTRY

Rule for use of ‘Product of USA’ & ‘Made in USA’ labels for meat/poultry/ egg products
Tyson Foods announces closure of pork plant in Perry, Iowa
Federal judge hands victory to large franchisers in the labor arena

POLITICS & ELECTIONS

Voters in Ga., Hawaii, Mississippi, and Washington participate in primary elections

OTHER ITEMS OF NOTE

Tenth Circuit upholds GMO corn lawsuit settlement, rejects fee dispute appeals

MARKET FOCUS

— Equities today: Asian and European stock markets were mixed in overnight trading. U.S. Dow opened around 95 points higher. U.S. stocks rose after the release of monthly inflation data and the implications for the Federal Reserve’s interest-rate policy. In Asia, Japan -0.1%. Hong Kong +3.1%. China -0.4%. India +0.2%. In Europe, at midday, London +1.1%. Paris +0.1%. Frankfurt +0.4%.

U.S. equities yesterday: The Dow was up 46.97 points, 0.12%, at 38,769.66. The Nasdaq lost 65,.84 points, 0.41%, at 16,019.27. The S&P 500 eased 5.75 points, 0.11%, at 5,117.94.

— Oracle’s stock surged approximately 13% in premarket trading following the software giant’s announcement of an earnings beat on Monday. The company reported adjusted earnings per share of $1.41, surpassing the expected earnings of $1.38 per share. Revenue reached $13.28 billion, slightly below the estimated $13.3 billion. Oracle’s cloud services and license support segment, its largest business, slightly exceeded expectations and experienced a 12% revenue increase compared to the same quarter last year. CEO Safra Catz affirmed Oracle’s commitment to achieving its previous sales target of $65 billion by fiscal year 2026.

— Federal Aviation Administration (FAA) conducted a six-week audit of Boeing and a major supplier following an incident involving an Alaska Airlines 737 Max 9 flight where a door panel blew off in January. The audit revealed “dozens of problems” at Boeing and its supplier. Boeing passed 56 tests but failed 33 product audits, according to the New York Times. The audit also scrutinized Spirit AeroSystems, which manufactures fuselages for Boeing 737 Max planes. Seven of Spirit’s audits received failing grades, while only six passed.

— ADM says global crush margins will decline. ADM reported lower-than-expected fourth-quarter earnings on Tuesday, after an investigation into accounting practices at the company’s nutrition unit delayed the release of its financial results for nearly two months. As part of its quarterly earnings report, ADM said it expects global soybean crush margins will decline this year, likely falling into a range of $35 per MT to $60 per MT.

ADM revealed a profit of $6.43 per share for 2023. This announcement follows a previous reduction in profit forecasts in January, along with the withdrawal of forward-looking guidance for the nutrition segment of the company. ADM overstated historical profits at its fast-growing nutrition business by up to 10%, it said on Tuesday, setting out for the first time the details of an accounting probe that led to its chief financial officer being put on leave.

Additionally, ADM confirmed that some of its employees have been subpoenaed by the Department of Justice (DOJ) as part of an investigation into accounting practices within its nutrition unit. The company stated that it is cooperating with the DOJ’s inquiries.

The company’s shares rose more than 3% in pre-market trading, but remain about 17% lower than before the accounting investigation was announced.

— Ag markets today: Soybeans extended Monday’s declines overnight, while corn and wheat pulled back from yesterday’s gains. As of 7:30 a.m. ET, corn futures were trading 2 to 3 cents lower, soybeans were 1 to 2 cents lower, SRW wheat futures were around a nickel lower, while HRW and HRS futures were mostly 7 cents lower. Front-month crude oil futures were modestly firmer, while the U.S. dollar index was trading just below unchanged this morning.

Cash cattle strengthen. Cash cattle averaged $185.12 last week, up $1.82 from the previous week and the highest price since the week ended Oct. 20 of last year. Packers purchased a strong 76,000 head in the negotiated market last week, including 24,000 head “with time.” But cash sources are expecting prices to be steady/firmer again this week. While cutting margins remain in the red, firming wholesale beef prices have lessened packers’ per-head losses. Choice beef jumped $1.84 on Monday, while Select firmed $1.45.

Cash hog index declines. The CME lean hog index is down 7 cents to $81.41 as of March 8, the first daily decline since Feb. 8 and only the fifth drop since the seasonal low was posted at the beginning of the year. April lean hog futures finished Monday at a $1.865 premium to today’s cash quote.

— Agriculture markets yesterday:

Corn: May corn rose 2 cents to $4.41 3/4, notching the highest close in nearly a month.
Soy complex: May soybean futures fell 4 3/4 cents to $11.79 1/4, settling nearer session lows. May meal futures dropped $4.20 to $337.20, near session lows. May bean oil futures rose 47 points to 46.64 cents.
Wheat: May SRW wheat closed up 9 1/2 cents at $5.47 1/4 and nearer the session high. Prices hit another contract low early on. May HRW wheat closed up 10 cents at $5.98 3/4, nearer the session high and hit a three-week high. May spring wheat futures rallied 7 1/4 cents to $6.70.
Cotton: May cotton fell 22 points to 95.06 cents, with a close below the 20-day moving average for the first time since Jan. 2.
Cattle: April live cattle closed steady at $187.60. May feeder cattle fell $1.375 to $255.375. Prices closed near mid-ranges.
Hogs: April lean hogs fell $1.10 to settle at $83.275, the lowest close in nearly a month.

— Quotes of note:

A change worth noting. The top U.S. military official in South Korea said his thinking has changed on deterring North Korea’s nuclear weapons. In the past, efforts were dedicated to halting Pyongyang’s development of nuclear capabilities. Now the focus is on preventing Kim Jong Un from using the weapons.
Jamie Dimon said he wouldn’t take the prospect of a recession in the U.S. “off the table,” but that the Fed should wait before it cuts rates.
“If you make a million dollars in this country, you are done paying your Social Security taxes sometime in February....Is that fair? We don’t think so.” — Shalanda Young, director of the Office of Management and Budget.
Un-American. “The current geopolitical environment is defined by power distributed to more countries operating contrary to America’s interests...These developments are generating increased tail risks.” — Evan G. Greenberg, Chairman and Chief Executive Officer of Chubb Group.

— U.S. inflation edges up in February 2024, core inflation eases. In February 2024, the annual inflation rate in the U.S. slightly increased to 3.2%, up from 3.1% in January, which surpassed the anticipated 3.1% forecast. Similarly, the monthly inflation rate rose from 0.3% to 0.4%, in line with expectations. This increase was mainly driven by higher prices for shelter and gasoline, which accounted for more than 60% of the overall monthly rise in prices.

However, core inflation, which excludes volatile items like food and energy, eased slightly to 3.8% from 3.9%. This was still above the predicted rate of 3.7%, indicating that while overall inflation moderated slightly, the underlying inflationary pressures remained elevated. While it was the lowest annualized core inflation reading since May 2021, though the metric still remains well above the 2% level the Federal Reserve has long targeted.

Prices for food away from home rose just 0.1%, following January’s 0.5% increase. Food services prices aren’t part of the core CPI, but they are part of the core PCE price index.

Prices of used cars and trucks, which fell 3.4% in January, rose 0.5% in February. Likewise, apparel prices went from -0.7% to +0.6%.

Transportation services prices rose 1.4% on the month, as airline fares jumped 3.6%. Cable TV and streaming services prices rose 0.6%. Day care and preschool prices rose 0.8%.

Market impact: After the CPI inflation data, markets were pricing in just 13% odds of a Fed rate cut on May 1, down from 20% ahead of the report. However, odds of a rate cut by the June 12 meeting stood at 70%, up from 68% before the CPI data release. For all of 2024, markets now see the Fed’s key rate ending the year at 4.48%, down from 4.49% ahead of the CPI. Current odds imply that four quarter-point rate cuts are roughly as likely as three cuts from the current 5.25% to 5.5% range of the Fed’s key rate.

— Governor of the Bank of Japan, Ueda Kazuo, expressed that the Japanese economy is in a state of recovery despite facing certain challenges. While he acknowledged weaknesses in household spending data, he highlighted steady growth in business investment. Traders perceived Ueda’s remarks as slightly less optimistic than anticipated, causing a slight decline in the value of the yen.

Market perspectives:

— Outside markets: The U.S. dollar index was weaker, with the euro and yen both edging higher against the greenback. The yield on the 10-year U.S. Treasury note was weaker, trading around 4.09%, with a mostly lower tone in global gov’t bond yields. Crude oil futures were firmer, having shifted between losses and gains. U.S. crude was trading around $78 per barrel while Brent was around $82.30 per barrel. Gold and silver futures were under pressure ahead of US inflation data, with gold around $2,177 per troy ounce and silver around $24.63 per troy ounce.

— Record U.S. oil output in 2023. The U.S. produced an average of 12.9 million barrels per day (bpd) of crude oil in 2023, well above the prior record in 2019, according to the U.S. Energy Information Administration (EIA). This marked the sixth straight year that the U.S. has led global oil production, and EIA pointed out that no other country currently has the capacity to exceed the new record.

— U.S. importers are facing a new wave of uncertainty as the possibility of a walkout at East Coast and Gulf Coast ports looms, even before formal contract negotiations with dockworkers begin. The International Longshoremen’s Association (ILA) aims to capitalize on the significant wage gains achieved by other transportation unions, such as the 32% increase secured at West Coast ports last year. The union has instructed local chapters to resolve their work-related issues by May 17, with coast-wide negotiations slated to commence afterward. ILA chief Harold Daggett has warned of a dockworkers’ strike if a new agreement cannot be reached before the current contract expires on Sept. 30. In response to the potential disruption, ocean carriers anticipate retailers to either accelerate the import of goods or increase shipments from Asia to the West Coast to mitigate the impact of any potential labor actions.

— India’s wheat stocks fall to 7-year low. India’s wheat inventories held in government warehouses dropped to the lowest since 2017, after two straight years of low crops prompted the state to sell record volumes to boost domestic supplies and lower local prices. Wheat reserves in state stores totaled 9.7 MMT at the start of this month, down from 11.7 MMT in March 2023, the state-run Food Corporation of India said. Despite the tight supply, New Delhi has resisted calls to encourage imports by cutting or removing the current 40% tax, or by directly buying from top suppliers such as Russia.

— China has never canceled this many shipments of U.S. wheat. China yesterday canceled another batch of U.S. wheat export shipments, adding to an already record number of cancellations that have weighed on Chicago futures. Link to Bloomberg article on the topic.

— Ag trade update: Iran passed on a tender to buy 180,000 MT of corn, 120,000 MT of soymeal and 120,000 MT of feed barley. Japan is seeking 114,305 MT of milling wheat in its weekly tender.

— NWS weather outlook: One more day of unsettled weather across the Pacific Northwest and northern California before the precipitation gradually tapers off on Wednesday... ...Mountain snows spreading into the northern and central Rockies on Wednesday before heavy snow develops over central Colorado Wednesday night... ...Fire danger across the southern High Plains will be followed by chance of severe thunderstorms across the north-central Plains later on Wednesday as rain may change over to wet snow in the nearby High Plains... ...Anomalously warm temperatures to expand eastward from the Upper Midwest into the Ohio Valley, Mid-Atlantic and Northeast through Wednesday.

Items in Pro Farmer’s First Thing Today include:

• Grains lower overnight
• Cordonnier leaves South American crop estimates unchanged

FY 2025 BUDGET PROPOSALS

— President Joe Biden proposed a $7.3 trillion budget for FY 2025. The plan proposes lower costs for childcare and housing, among other things, funded by higher taxes on corporations and the rich. Biden’s will not pass the House of Representatives, which is controlled by Republicans, but should be seen as Biden administration spending and tax proposals especially ahead of Nov. 5 elections.

— Several hearings on tap regarding FY 2025 budget proposals.

Senate Finance Committee hearing on using the tax code to boost U.S. manufacturing.
Senate Budget Committee hearing. where Office of Management and Budget Director Shalanda Young will testify on the president’s budget.
Joint Economic Committee hearing on the U.S. fiscal situation.

— Highlights of Biden’s FY 2025 budget proposals:

$7.3 trillion budget is $300 billion higher than the current budget’s roughly $6.9 trillion.
$895.2 billion in discretionary funds directed towards national defense. Of that, the Pentagon’s portion comes out to $849.8 billion — while up 2%, it’s a number that defense leaders say amounts to an effective cut from its FY24 request due to inflation. While high in dollar terms, at 3%, current U.S. defense spending as a share of GDP remains relatively low, especially compared to the 1950s and 60s, when it was closer to 9-10% of GDP, or during the Reagan era (6%), the Ford and Carter presidencies (~4.5%), and the Iraq and Afghanistan wars (~4%).
Raises taxes by a net $4.9 trillion over a decade, or more than 7% above what the U.S. would collect without any policy changes.
Aims at increasing taxes on wealthy individuals and corporations.
Includes new tax measures, such as raising the corporate alternative minimum tax rate to 21% and rolling back tax breaks for private jet travel. Additionally, it resurrects Biden’s earlier suggestions to increase the corporate tax rate to 28% (from 21%) and introduce a 25% minimum tax for the wealthiest households.
Households worth at least $100 million would pay at least a 25% income tax rate.
The top personal-income tax rate goes to 39.6%, from 37%, for those making more than $400,000.
Capital gains for those earning at least $1 million would be taxed at a base rate of 39.6%, up from 20%.
Imposes a capital gains tax on transfers, either during life or at death. There would be a $5 million exemption ($10 million for couples with portability). Also, farmers could elect to defer the tax until it is no longer farmed in the family, etc. but interest would be due, but payable over 15 years.
Includes housing-related tax credits and an expansion of the child tax credit to assist low- and middle-income families.
Section 2032A would be bumped up to $14 million and indexed to inflation. Tax expert Paul Neiffer says this would allow farmers to value their land at its rental value instead of current fair market value. Current law allows for about a maximum $1.3 million deduction. This would increase it to $14 million.
All farm income over would be subject to either the Net Investment Income Tax or SE taxation if adjusted gross income exceeds $400/500,000. There is a phase-in of the tax.
International tax proposals: Floats several new international tax proposals, including an expansion of the stock-buyback tax and tweaks to foreign tax credit reporting.
USDA: Requests $29.2 billion for USDA, a $2 billion (8%) increase, that includes $6 billion in climate related funding, a $733 million increase from last year, and $7.7 billion for the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC), around a $700 million increase. USDA’s budget request included a $733 million increase in climate-related funding over fiscal 2023 spending and $387 million more to the USDA Forest Service to help address recruitment and retention challenges — including for the wildland firefighting workforce — critical risk mitigation work and other priorities. Biden proposed $112 million for USDA’s ReConnect program to expand rural access to high-speed internet service. Some $15 billion was proposed over the next decade so that participation in the Community Eligibility Provision, which allows schools in low-income areas to serve lunch for free to all pupils, could grow to reach 9 million students. Also proposed were $1 billion in loan guarantees to install renewable energy equipment on farms and small businesses; $6.5 billion for rural electric loans for clean energy, energy storage, and transmission projects; and $6 billion for climate resilience and other conservation practices. Of note: The White House supports permanent authorization of a cover crop incentive that is offered through federal crop insurance program. It provides a premium support of $5 an acre to farmers who plant cover crops.
EPA’s fiscal 2025 budget calls for hiring 2,023 additional full-time employees to help rebuild the agency to carry out its mission. That would boost the EPA workforce to 17,145 full-time employees, according to the proposal.
Biden is asking Congress for $8 billion toward the climate corps — the funding would be provided over a decade, to be put toward hiring 50,000 new workers annually by 2031 hire and train young workers to prevent wildfires, defend communities from floods, and install solar systems.
Calls for a 2% civilian pay boost, along with a 4.5% military pay raise. The difference between the figures quickly drew a rebuke from Hoyer (D-Md.), the ranking member of the House Appropriations Financial Services Subcommittee, who said he’d push for an even raise across the board.

— Biden budget proposals include comments about a new farm bill. The administration says it wants to work on issues surrounding new and beginning farmers; shoring up agricultural research; enhancing investments in climate-smart agriculture and forestry; and supporting competition by increasing transparency and support for independent meat processors, among other priorities. It also says the administration “supports improvements to crop insurance, proactively managing risk from natural hazards, including the permanent authorization of the cover crop incentive program.”

USDA Secretary Tom Vilsack said Monday that too much of the farm bill discussion is about how much one commodity or another is getting. “The future of the farm bill can be broad, looking for ways in which every farming operation has a shot,” Vilsack said.

ISRAEL/HAMAS CONFLICT

— A ship carrying nearly 200 tonnes of food departed from Cyprus bound for Gaza, marking the first effort to establish a sea route for delivering essential aid to the besieged enclave. This initiative aims to address the urgent humanitarian needs in Gaza. In response to attacks by Hizballah, an Iran-backed militant group, Israel launched additional airstrikes against targets in Lebanon. The Israel Defense Forces stated that these actions were retaliatory measures against Hizballah’s attacks.

RUSSIA/UKRAINE

— Ukrainian drones strike Russian regions, causing fires at key sites. The recent escalation between Ukraine and Russia saw a significant development as Ukrainian drones struck several regions across Russia, marking one of the most extensive attacks attributed to Kyiv in recent times. Over two dozen drones were reported over central Russia, with the defense ministry claiming to have intercepted most of them. However, the strikes caused major fires at two major energy infrastructure sites, including one of Russia’s largest oil refineries.

The attacks caused significant damage to Russian fuel facilities, with fires reported at an oil reservoir in the Oryol region and an oil refinery owned by Lukoil in the Kstov industrial zone. However, officials stated that the fires had been extinguished by Tuesday morning.

Russian officials also reported damage to electricity lines and power outages in residential areas due to drone attacks. Social media channels, particularly on Telegram, shared images of the aftermath of the attacks, including damage to buildings and drone parts on the ground.

Besides the drone strikes, armed militia units backed by Kyiv, including the Russian Volunteer Corps and Free Russia Legion, made incursions into the Belgorod and Kursk regions of Russia from Ukraine. These groups have previously engaged in skirmishes with the Russian army across the border. Russian authorities claimed to have repelled the attack, stating that armed groups attempted to break through from Ukraine’s Kharkiv region into the Belgorod region at multiple locations.

— Ukraine’s grain, oilseed production could fall nearly 8%. Ukraine’s 2024 combined grain and oilseeds production is likely to shrink to 76.1 MMT from 82.6 MMT last year, Ukrainian grain traders’ union UGA said. It said production could include 26.3 MMT of corn, 20 MMT of wheat and 13.7 MMT of sunflower seeds. With smaller production, UGA said Ukraine’s exportable grain and oilseed surplus for 2024-25 could decrease to 43.7 MMT from 53.2 MMT in the current marketing year, including 20.5 MMT of corn, 13 MMT of wheat, 4 MMT of soybeans and 3.6 MMT of rapeseed.

POLICY UPDATE

— Latest update on the Emergency Relief Program (ERP) shows minimal changes in payouts. In the most recent week, the only noticeable change occurred in Phase 2 of the program, where payments increased slightly to $883.29 million as of Feb. 10, compared to $883.18 million the previous week. Overall, total ERP payments remained virtually the same at $8.63 billion, with Phase 1 payments also showing little variation at $7.75 billion.

PERSONNEL

— HUD Secretary Marcia Fudge to depart Biden Cabinet amid housing challenges. Housing and Urban Development (HUD) Secretary Marcia Fudge, a key figure in navigating the housing sector through the challenges of the pandemic, plans to leave the Biden administration, marking the second Cabinet departure during President Joe Biden’s tenure. During her time in office, Fudge focused on addressing housing affordability and supply issues, proposing significant investments in affordable housing and taking steps to combat racial discrimination in housing practices.

However, her tenure was also marked by a notable increase in housing costs, driven by Federal Reserve rate hikes aimed at controlling inflation, making mortgages historically expensive. Shelter prices rose by 6% from the previous year, according to data from the Bureau of Labor Statistics.

In response to the housing affordability challenge, President Biden proposed a two-year tax credit for new homebuyers in his budget released earlier this week.

Deputy Secretary Adrianne Todman will serve as acting secretary following Fudge’s departure, which is set for March 22.

Fudge’s departure follows that of Marty Walsh, Biden’s former Labor secretary, who left to lead the National Hockey League Players’ Association last year.

CHINA UPDATE

— China criticized India for inaugurating a tunnel near their shared border. Last week, Indian Prime Minister Narendra Modi opened the tunnel in a disputed area of the northeastern state of Arunachal Pradesh, which China claims as its own. India stated that the tunnel would serve military purposes. However, China objected, stating that India lacks the authority to construct infrastructure in what it refers to as the “southern region of Tibet.”

— House Republicans to vote on TikTok ban bill; White House signals support. House Republicans are set to vote on a bill on Wednesday that proposes banning TikTok in the U.S. unless it severs ties with its Chinese parent company, ByteDance. Concerns have been raised by some lawmakers about the video-sharing app’s potential national security threat, as they fear the Chinese government could compel ByteDance to share data from American TikTok users. The White House has indicated President Biden’s readiness to sign the bill, while former President Trump has shown some reservations about it. House Energy and Commerce Chair Cathy McMorris Rodgers (R-Wash.) expressed confidence in the bill’s passage and played down Trump’s opposition, citing his prior support for cracking down on the app before reversing his stance. If approved, the bill would give TikTok approximately five months to disassociate from ByteDance, failing which the app would be barred from U.S. app stores.

Expect China to respond. “It’s highly unlikely that Chinese leaders would permit ByteDance to divest from TikTok,” Gabriel Wildau, a China risk analyst at Teneo, told the New York Times’ DealBook. “And the leadership has plenty of legal tools available to block a sale, so the bill under discussion is effectively a ban.”

LIVESTOCK, NUTRITION & FOOD INDUSTRY

— USDA finalizes rules regarding the use of “Product of USA” and “Made in USA” labels for meat, poultry, and egg products. This rule clarifies conditions for making voluntary origin claims and adjusts the use of flags to designate origin. The requirements will take effect on Jan. 1, 2026.

The phrase proposed by USDA for the voluntary label remains as animals being “born, raised, processed, and slaughtered” in the U.S. If it’s a multi-ingredient product, all ingredients except spices and flavorings must be of domestic origin. This decision was based on survey results, although the survey only covered pork and beef products.

Foreign trade associations and countries, including Canada and Mexico, raised concerns about the rule’s impact on market integration and compliance with trade obligations. The Canadian Cattle Association has said it will be closely watching for any signs of discrimination against Canadian cattle, as Canada could potentially refer to the earlier World Trade Organization ruling on U.S. country-of-origin labeling (COOL). However, USDA argues that the rule is voluntary and doesn’t establish mandatory country of origin labeling requirements.

The rule also addresses other claims regarding U.S. origin, such as products sliced or packaged in the U.S. or in a given state. It does not cover animal feed requirements. USDA insists that the program is voluntary, and claims that it will become “de facto commercially mandatory” are speculative.

There were concerns about the rule’s impact on trade and compliance with WTO obligations, but USDA maintains that it is consistent with trade obligations and is voluntary. Verification activities will be performed by FSIS at establishments to ensure compliance with labeling requirements.

The rule will apply to cell-cultured meat under FSIS jurisdiction, with certain conditions. Non-compliant products will be documented, and corrective actions will be required before they can enter commerce.

Despite the finalized rule, questions remain about the adequacy of the survey used by USDA and concerns raised by foreign countries regarding trade obligations. Legal and other challenges may arise as the rule takes effect.

— Tyson Foods announced the closure of its pork plant in Perry, Iowa, resulting in the loss of 1,276 jobs, with the plant scheduled to shut down on June 28. The plant, which processed approximately 9,000 hogs per day, cited a need to optimize operational efficiency to better serve customers as the reason for the closure. The United Food and Commercial Workers union represents a significant portion of the workers affected and intends to seek compensation for them. The plant has been in operation for around 60 years, and city officials are uncertain whether Tyson will consider selling the plant to another company. Tyson said it still employs 9,000 people in Iowa, and it has pork facilities in Waterloo, Storm Lake and Columbus Junction.

Iowa Gov. Kim Reynolds said Monday in a statement that “Tyson employees, the Perry community, and Iowa pork producers will have the full support of the state in the months leading up to the plant closure and after.”

The Iowa Economic Development Authority and Iowa Workforce Development are “already engaged,” Reynolds said. “We stand ready to assist impacted employees with finding new jobs in the area as soon as possible,” with about 60,000 job openings posted on IowaWorks.gov.

— A federal judge, presiding in the Eastern District of Texas, has handed a significant victory to large franchisers in the labor arena. The ruling pertains to a rule established by the National Labor Relations Board (NLRB) that would hold companies like McDonald’s responsible for the working conditions of employees at franchise locations. The judge deemed this rule overly expansive. While the NLRB has the option to appeal the decision, its stance on the matter remains unclear.

POLITICS & ELECTIONS

— Today, voters in Georgia, Hawaii, Mississippi, and Washington will participate in primary elections. President Joe Biden and former President Donald Trump are expected to secure their party’s nominations after dominating their respective Republican and Democratic primaries on Super Tuesday last week. Following these primaries, it is widely anticipated that Trump will gather the necessary 1,215 delegates to secure the Republican nomination, while Biden will reach the required 1,968 delegates to secure the Democratic nomination. This outcome will officially set the stage for a rematch between the two rivals in November’s election. This rematch between a current and former president marks the first such occurrence since 1892.

OTHER ITEMS OF NOTE

— Tenth Circuit upholds GMO corn lawsuit settlement, rejects fee dispute appeals. The U.S. Court of Appeals for the Tenth Circuit upheld a settlement agreement related to attorneys’ fees in a lawsuit concerning genetically modified (GMO) corn. The lawsuit, involving Syngenta AG, centered on the release of GMO seeds in China before regulatory approval, which led to U.S. corn producers being excluded from the Chinese market. Numerous lawsuits were consolidated in multidistrict litigation before the U.S. District Court for the District of Kansas, resulting in a $1.51 billion settlement.

Following the settlement, $503 million in attorneys’ fees were allocated, with four pools established. Three pools corresponded to common benefit work for each state involved, while the fourth was for attorneys representing individual clients. The allocation plan faced challenges from several firms, leading to a series of appeals.

In one of these appeals, Watts Guerra LLP reached an agreement to end litigation over their fees. Under this agreement, Watts Guerra would receive $7 million from the common benefit pools, funded by a reduction in other firms’ awards. However, firms with pending appeals and those challenging the settlement agreement were not required to contribute to this fund.

The Tenth Circuit determined that objecting firms lacked standing to challenge the settlement agreement because their fees would not be affected by the agreement with Watts Guerra. Judge Jerome A. Holmes emphasized that rescinding Watts Guerra’s fees wouldn’t impact the objecting firms’ fees, thus they hadn’t suffered an injury granting them standing.

The court also rejected the argument that objecting firms suffered a procedural injury, stating that without a concrete prejudice, procedural injury alone was insufficient for standing. Moreover, since the Tenth Circuit had affirmed the allocation orders, many arguments against them were deemed “stale.”

The ruling deferred decisions on appeals related to the portion of funds for attorneys representing individual clients. Judges Robert E. Bacharach and Carolyn B. McHugh joined in the opinion. Watts Guerra was represented by MoloLamken LLP. The case is Shields Law Group LLC v. Stueve Siegel Hanson LLP, 10th Cir., No. 21-03021, decided on March 11, 2024.

KEY LINKS

Policy Updates