U.S. Producer Prices Exceed Expectations

News/markets/policy updates: July 12, 2024

(Farm Journal)

MARKET FOCUS

· Producer price index heats up more than expected

· Odds rise for September Fed rate cut

· Market putting 95% odds on Sept. 17-18 rate cut

· A Barron’s headline today reads, “Fed rate cuts look imminent”

· Analyst: May take six to eight months to reach Federal Reserve’s 2% inflation target

· Powell’s comments on labor markets have made jobs data more significant

· Economists surveyed by WSJ: inflation would be worse under Trump than Biden

· Volatile yen

· Farm equipment sales slump continues

· John Deere announced another 345 layoffs

· Smithfield Foods Inc. picks advisers to work on initial public offering in U.S.

· Bunge’s $8 billion acquisition of Viterra faces approval delays

· German media giant Axel Springer reportedly considering breakup

· Panama Canal expected to return to more normal traffic levels later this summer

· Peak population

· Ag markets today

· Selloff in Brazil’s currency over past month shielding farmers

· July USDA crop reports out at noon ET

· Argentina, known for high beef consumption, shifting towards cheaper chicken

· Coffee exports from Vietnam likely to stay tight through year-end

· Ag trade update

· 70% chance tLa Niña develops between August and October

· NWS weather outlook

· Pro Farmer First Thing Today items

CONGRESS

· Bipartisan farm, food funding bill advances to Senate floor

RUSSIA & UKRAINE

· Zelenskyy urges NATO to lift limits on long-range weapons at summit

POLICY

· Farm bill fracas reaches the Washington Post

PERSONNEL

· Biden’s nominee for FDIC chair, Christy Goldsmith Romero, receives praise

CHINA

· ASA responds re: concerns over USDA approval of Chinese firm’s GE soybeans

· China makes no changes to ag balance sheets

· China’s soybean imports jump in June

· China’s meat imports slump in June

· China’s trade surplus surged to $99.05 billion in June

· Europe may disinvest in China

· China’s heavy reliance on coal undermines advancements in wind and solar energy

· Cooking oil produced by major Chinese state-run food for, removed from lonline stores

· China facing increased pressure to produce more food at home

· China will break tradition for monthly presser to answer questions on economic data

TRADE POLICY

· Coalition of business groups urges White House to revise trade agenda

· Vilsack maintains optimistic outlook on trade

ENERGY & CLIMATE CHANGE

· Biden announces $1.7 billion plan to boost EV production

LIVESTOCK, NUTRITION & FOOD INDUSTRY

· USDA awards $110 million to expand independent meat processing

POLITICS & ELECTIONS

· Nate Cohn: Polls may shape Biden’s future. Are they up to the job?

· Cook Political Report moves open Michigan Senate race from Lean Dem to Toss Up

OTHER ITEMS OF NOTE

· Cotton AWP moves lower

— Equities today: Asian and European stock indexes were mixed overnight. U.S. Dow opened around 80 points higher. In Asia, Japan -2.5%. Hong Kong +2.6%. China flat. India +0.8%. In Europe, at midday, London +0.4%. Paris +0.7%. Frankfurt +0.4%.

U.S. equities yesterday: The Dow rose 32.39 points, 0.08%, at 39.753.75. The S&P 500 lost 49.37 points, -0.88%, at 5,584.54. The Nasdaq plunged 364.04 points, -1.95%, at 18,283.41.

— John Deere announced another 345 layoffs at its Waterloo, Iowa facilities, effective Sept. 20, 2024. The company also laid off seven employees at John Deere Coffeyville Works in Coffeyville, Kan., effective Aug. 9. This brings the total number of layoffs announced by John Deere in 2024 to just over 1,500 employees (numbers vary), as the company has been making cuts throughout the year due to reduced demand and shifting production strategies. These layoffs are part of John Deere’s response to a significant decline in revenue and profits, driven by lower demand for tractors and other agricultural equipment. The company has also been moving some of its manufacturing operations to Mexico to optimize costs and improve operational efficiencies.

— Farm equipment sales slump continues. Sales of farm tractors were down 11.5% and sales of combines were down 17.3% in the first half of 2024, compared to the same period in 2023, said an industry group (link).

— Smithfield Foods Inc. has picked advisers including Bank of America Corp. and Goldman Sachs Group Inc. to work on an initial public offering in the U.S., intending to raise at least $1 billion.

— Bunge’s $8 billion acquisition of Viterra faces approval delays. Bunge Global SA’s $8 billion acquisition of Glencore-backed Viterra is encountering delays as Canada, China, and the European Union have yet to approve the deal. Initially set for completion by mid-2024, the transaction is now unlikely to close before the end of the year due to antitrust concerns in various countries, Bloomberg reports (link). Canada and the EU have raised antitrust issues, potentially extending the review process. China has not yet issued an opinion, though similar past deals required concessions to satisfy Chinese regulators. Bunge remains publicly committed to the mid-2024 target, despite internal doubts. The acquisition would create a $25 billion agricultural giant, enhancing Bunge’s position among top traders like Cargill and ADM.

— German media giant Axel Springer is reportedly considering a breakup, discussing with private equity firm KKR, one of its largest investors, to divide into two entities. One business would own publications like Politico, Business Insider, and the German newspaper Bild, while the other would manage its classifieds business. This move, reported by the Financial Times (link), would significantly reshape Axel Springer’s role as a global investor in news media.

— Front-month U.S. crude futures on Thursday recorded their steepest premium to the next-month contract since April. WTI traded up $0.52 or 0.6% to close at $82.62. Brent traded up $0.32 or 0.4% to close at $85.40.

— Ag markets today: Corn, soybeans and wheat pulled back from Thursday’s corrective gains during overnight trade. As of 7:30 a.m. ET, corn futures were trading 2 to 3 cents lower, soybeans were 1 to 3 cents lower, SRW wheat was 6 to 7 cents lower, HRW wheat was 9 to 12 cents lower and HRS wheat was 8 to 9 cents lower. The U.S. dollar index was around 130 points lower, and front-month crude oil futures were about 70 cents higher this morning.

Wholesale beef prices drop again. Choice boxed beef prices fell $2.40 on Thursday while Select declined 56 cents. Wholesale beef prices are declining seasonally, which is typical following the Fourth of July, though movement stayed strong at 142 loads yesterday, indicating still-active retailer buying.

Pork cutout firms again. After a sharp decline on Tuesday, the pork cutout firmed the past two days with a $1.81 advance yesterday as all cuts except loins strengthened. Movement improved to 329.1 loads. High wholesale beef prices may finally be triggering more retailer interest in pork.

— Agriculture markets yesterday:

· Corn: July corn rose 3 1/2 cents to $4.10 3/4, marking a near mid-range close.

· Soy complex: November soybean futures firmed 3/4 cent to $10.67 3/4, settling near mid-range. August meal futures rallied $3.2 to $342.4, closing nearer session highs. August bean oil futures climbed 78 points to 47.12 cents.

· Wheat: December SRW wheat rose 10 cents to $5.95 and near mid-range. December HRW wheat gained 18 cents to $6.01 3/4 and nearer the session high. September spring wheat futures rallied 7 3/4 cents to $6.18 3/4.

· Cotton: December cotton futures fell 6 points to 70.87 cents though closed near session lows.

· Cattle: August live cattle closed steady at $182.25 and near mid-range. August feeder cattle rose $1.80 at $256.15 and near the daily high.

· Hogs: Expiring July hog futures edged up 10 cents to $88.55 Thursday, while most-active August recovered a major portion of Wednesday’s breakdown. It jumped $2.00 to $86.675.

— Quotes of note:

· U.S. inflation is cooling, but it may take six to eight months to reach the Federal Reserve’s 2% target, leading to a slower decline in interest rates than markets expect, according to Skyler Weinand of Regan Capital. June’s core annual CPI decreased slightly to 3.3% from 3.4%, suggesting a potential for an initial rate cut in September and possibly another in December, if inflation trends favorably. However, Weinand cautions that inflation could rise again, and investors might be underestimating the risk of near-term Fed rate hikes. He also notes that increasing government spending could hinder rapid interest-rate reductions.

· Fed Chair Powell’s recent comments on labor markets have made jobs data more significant for investors predicting when interest rate cuts might begin. According to Kevin Flanagan of WisdomTree, the Fed’s focus isn’t solely on inflation anymore. Despite cooling inflation, jobless claims indicate a relatively healthy labor market with no signs of weakening. This balanced view suggests that the first rate cut could happen in September, with Flanagan expecting a total of two cuts this year.

· No more Chevron deference. “Congress has gotten used to writing very generalized language and then deferring to regulators to flesh it out. We shouldn’t do that anymore.” — Republican Sen. Cynthia Lummis, on the Supreme Court’s decision overruling a decades-old precedent that deferred to regulators to interpret vague laws.

— Factory gate prices in the U.S. rose by 0.2% month-over-month in June 2024, exceeding forecasts of a 0.1% increase and following a flat reading in May. Service prices increased by 0.6%, driven by a 1.9% rise in margins for final demand trade services, while goods prices fell by 0.5%, primarily due to a 5.8% drop in gasoline prices. Year-on-year, producer inflation climbed to 2.6%, the highest since March 2023, up from an upwardly revised 2.4% in May.

The unexpected rise in the PPI has led to speculation about the Federal Reserve’s monetary policy, particularly regarding the timing of potential interest rate cuts. Higher-than-anticipated wholesale prices could influence the Fed’s decisions as it balances the need to control inflation with supporting economic growth.

— Economists surveyed by WSJ indicated that inflation would be worse under Trump than Biden. A survey by the Wall Street Journal (link) found that 56% of forecasters expect higher inflation with Trump, while only 16% believe the opposite. Economists attribute these views to Trump’s policy preferences, particularly on trade and immigration. Trump has proposed high tariffs on imports and a large-scale deportation of unauthorized immigrants, which could reduce labor supply. In contrast, Biden has taken steps to allow unauthorized immigrants to stay in the U.S. and reduce illegal crossings.

Economists also note that presidential influence on the economy is limited by the business cycle, external shocks, and Federal Reserve policies. Both Trump and Biden have policies that could impact inflation and interest rates, but Trump’s trade policies and potential challenges to Fed independence are seen as more likely to increase inflation. Moreover, larger budget deficits are expected under Trump due to his tax cut plans, which could further pressure inflation and interest rates.

Despite these concerns, some economists believe the differences in inflation between the two administrations may not be stark, as both parties show limited interest in deficit reduction.

Market perspectives:

— Outside markets: The U.S. dollar index was weaker, with the euro and British pound higher against the greenback. The yield on the 10-year U.S. Treasury note was little changed, trading around 4.22%, with a mixed tone in global government bond yields. Crude oil futures were higher, with U.S. crude around $83.45 per barrel and Brent around $86.05 per barrel. Gold and silver futures were down, with gold around $2,408 per troy ounce and silver around $31.00 per troy ounce.

— Volatile yen. The Japanese yen fluctuated around 159 per dollar on Friday, remaining volatile after a sharp rebound the previous day, which was likely due to suspected intervention by Japanese authorities following lower-than-expected U.S. inflation data. On Thursday, the yen surged by 2.6% to 157.42 per dollar, with local media attributing the rise to official buying efforts to support the currency after it hit 38-year lows. Reports also indicated that the Bank of Japan (BOJ) conducted rate checks with banks on the euro-yen cross, raising concerns of further intervention. Top currency diplomat Masato Kanda did not confirm whether the government was involved in the yen’s rally. Investors are now looking ahead to the BOJ’s policy meeting in late July, where announcements on bond purchase tapering and potential interest rate hikes are anticipated.

— Selloff in Brazil’s currency over the past month is shielding farmers in the world’s top soybean exporter from this year’s price plunge, giving them an edge over U.S. rivals. The real has lost 11% against the dollar this year — spurred by worries about the nation’s budget gap. That in turn brings about that much more revenue for soybeans than in 2023. Link for details via Bloomberg.

— July USDA crop reports out at noon ET. USDA’s updated balance sheets will reflect adjustments to old-crop demand forecasts based on June 1 stocks. There will be major changes on the new-crop balance sheets to reflect planted acreage figures. The first all-wheat crop estimate will include the initial survey-based forecasts for other spring wheat and durum. Analysts expect 2023-24 ending stocks of 2.049 billion bu. for corn (2.022 billion bu. in June), 355 million bu. for soybeans (350 million bu. in June) and 702 million bu. for wheat (688 million bu. in June). For 2024-25 ending stocks, analysts expect: 2.312 billion bu. for corn (2.102 billion bu. in June), 449 million bu. for soybeans (455 million bu. in June) and 788 million bu. for wheat (758 million bu. in June). Analysts expect the all-wheat production estimate to be 1.909 billion bu. (1.875 billion bu. projected in June).

— Coffee exports from Vietnam — the world’s biggest robusta grower — are likely to stay tight through year-end, putting more pressure on prices that have jumped by almost two-thirds in 2024.

— Panama Canal is expected to return to more normal traffic levels later this summer, as increased rainfall is helping to alleviate the severe drought conditions that had forced restrictions on ship passages. The Panama Canal Authority (APC) announced it will increase the number of daily booking slots for vessels to 35 in August, up from the previous limit of 24 crossings per day imposed in November 2023. This increase includes 10 Neopanamax crossings (larger locks) and 25 Panamax crossings (smaller locks). Higher rainfall at Gatún Lake, the principal water source for the canal’s operations, has allowed for the easing of restrictions. Water levels are expected to continue improving during the rainy season, which typically lasts from May to December. The drought-induced limitations had significantly affected global trade routes, with some ships forced to take longer alternative routes. The restrictions led to higher global shipping rates and disruptions in supply chains. The APC expects more rainfall during the current rainy season due to an anticipated La Niña event this summer. This could potentially result in a return to normal operations by late summer or early fall. A recent court ruling has opened the possibility for constructing a new $1.6 billion reservoir to supplement the canal’s water supply. However, this project could take up to six years to complete and requires approval from local communities. Despite the improvements, water levels in Gatún Lake are still lower than historical averages for this time of year.

— Argentina, known for its high beef consumption, is shifting towards cheaper chicken as households seek to maximize their shrinking paychecks. According to a report by the Rosario Board of Trade, beef demand is expected to drop below 45 kilograms (99 pounds) per person this year, the lowest level since records began in 1914. This would mark the first time that Argentina’s beef consumption is nearly equal to its demand for chicken, reflecting a global trend towards increased chicken consumption.

— Ag trade update: South Korea purchased 65,000 MT of optional origin feed wheat, excluding Russia and Ukraine, but passed on a tender to buy up to 140,000 MT of corn from South America or South Africa.

— There’s a 70% chance that La Niña develops between August and October, and a nearly 8 in 10 chance that La Niña is in place this winter, National Oceanic and Atmospheric Administration scientists wrote in a forecast issuing their La Niña watch. In the United States, it can deliver drought conditions in some places and heavy snow in others; elsewhere, its most dangerous effects can include drought in East Africa and floods in Indonesia. “It’s going to be interesting to see how this La Niña intersects with the generally very warm global oceans,” said Nathan Lenssen, a climate scientist at the University of Colorado. “We’re in really uncharted territory, globally.”

— NWS weather outlook: There is a Slight Risk of severe thunderstorms over parts of the Northern Plains into Upper Mississippi Valley on Saturday... ...There is a Slight Risk of excessive rainfall over parts of the Mid-Atlantic into the Northeast on Friday and a Slight Risk over Southern New England on Saturday... ...Dangerous and record-breaking heat will continue for much of the West through Saturday, while sizzling temperatures will also begin to build across the Central Plains and Southeast.

(NWS)

Items in Pro Farmer’s First Thing Today include:

• Grains weaker overnight
• French wheat ratings drop, harvest lags
• China’s money and credit data add to concerns of weak demand

— Bipartisan farm, food funding bill advances to Senate floor. A $27 billion fiscal year (FY) 2025 food and farm spending bill has received unanimous approval (27-0) from Senate appropriators, moving it to the full chamber for a vote (link). The bill proposes an $821 million increase in funding for USDA, Food and Drug Administration (FDA), and other agencies compared to FY 2024. The House bill that advanced out of committee Wednesday would provide $25.9 billion. Highlights of the Senate measure:

Increased funding:

• USDA and FDA: Significant budget increases, with FDA getting nearly $6.9 billion.
• SNAP: The Supplemental Nutrition Assistance Program, formerly known as food stamps, was funded at $123.2 billion, an increase of $845.3 million from FY 2024. The committee report addresses the skimming of SNAP benefits, a practice that occurs when a device is installed into sales terminals to capture card data and PIN entries. According to the FBI, the skimming of Electronic Benefits Transfer cards has been a “key target” for theft since 2021 because the cards don’t have an embedded chip. EBT cards are used to distribute SNAP benefits and the theft often occurs between the first and tenth of the month. The FY 2023 consolidated appropriations law allowed state agencies to replace stolen SNAP benefits using federal funds, but that authority is set to expire Sept. 30. The report directs USDA to report on the “process toward making skimming victims whole” within 30 days of the bill’s enactment.
• USDA research: $1.87 billion, up by $29 million from the previous year.
• WIC: The Senate bill would increase funding for the Women, Infants and Children (WIC ) program to $7.7 billion, a boost of $667 million from fiscal 2024. The program provides approximately 7 million women and children with cash benefits to buy fruits and vegetables.
• The Food for Peace program also would see a boost in funding for its international aid. The legislation would provide $1.7 billion for the program, a $101 million increase from FY 2024. The bill contrasts with the House bill, which would provide $1 billion in funding, or $619 million less than in FY 2024.
• The McGovern-Dole Food for Education program would see an increase of $10 million from FY 2024, for a total of $250 million, according to the Democratic summary.
• Housing rental assistance: Increased by $83 million to a total of $1.7 billion.
• FDA: The bill would provide $6.9 billion in funding for FDA, which includes $3.5 billion in discretionary funding, a $22 million increase from FY 2024. It also includes an increase of $15 million for food safety at the FDA, a boost that comes as the agency is reorganizing its food oversight division into a unified Human Foods Program.

Senate vs. House appropriations:

• The Senate moved the bill forward quickly with only a manager’s amendment, while the House spent several hours on amendments and debates, proposing a $25.9 billion budget.

Bipartisan cooperation:

• Sen. Martin Heinrich (D-N.M.) highlighted the bipartisan effort, emphasizing the bill’s focus on working families.
• Senate Appropriations Chair Patty Murray (D-Wash.) and ranking member Susan Collins (R-Maine) negotiated emergency funding, with $13.5 billion for nondefense and nearly $21 billion for defense.

Top-line allocations:

• Panel members agreed on top-line allocations for all 12 annual funding bills, though details on emergency funds were not fully disclosed.

— Zelenskyy urges NATO to lift limits on long-range weapons at summit. During the NATO summit, Ukrainian President Volodymyr Zelenskyy urged the alliance to permit Ukraine to use long-range weapons without restrictions. He emphasized that lifting all limitations is essential for victory. Currently, President Joe Biden allows Ukraine to strike only just inside Russia’s borders with American-supplied systems. Jens Stoltenberg, NATO’s outgoing secretary-general, has also called on allies to abandon these prohibitions.

— Farm bill fracas reaches the Washington Post. The newspaper, in an article (link) titled, Expand SNAP or Hike Crop Prices? Congress in Farm Bill Standoff,” says lawmakers are debating whether to boost price floors for food commodities or enhance food aid for needy families in the latest $1.5 trillion farm bill. Republicans propose spending $50 billion over the next decade to raise price floors for crops like corn and wheat, but this would cut a 2018 law allowing presidents to increase Supplemental Nutrition Assistance Program (SNAP) benefits. Democrats oppose this trade-off, advocating for independent consideration of SNAP and commodity prices. The disagreement threatens the farm bill’s passage before the current bill expires on Sept. 30, potentially leading to market upheaval.

— President Biden’s nominee for FDIC chair, Christy Goldsmith Romero, received praise from both Democrats and some Republicans on the Senate Banking Committee during a recent hearing. Romero, a lawyer known for investigating fraud related to the 2008 bank bailout, appears to be in a strong position to win confirmation.

— Chairman raises concerns over USDA approval of Chinese biotech firm’s genetically engineered soybeans; ASA responds. Chairman John Moolenaar (R-Mich.) of the House Select Committee on the Chinese Communist Party has raised significant concerns about USDA’s approval of Qi Biodesign, a Chinese agricultural biotech company, to produce genetically engineered soybeans for consumption in the United States. This approval has sparked controversy and USDA Secretary Tom Vilsack has been asked to review the regulatory status approval. Link to our Special Report on this top published Thursday.

ASA responds. Josh Gackle, president of the American Soybean Association (ASA) and soybean farmer from North Dakota, said of the Select Committee on the Chinese Communist Party’s oversight effort on USDA’s review of biotechnology products from Chinese developers, “While we share the committee’s concern in wanting to ensure our regulatory system is not playing favorites — especially for developers from countries that have politicized their flawed regulatory systems — we have urged lawmakers to respond carefully and thoughtfully. U.S. farmers have fought for years to ensure our biotechnology regulatory system is efficient, risk-based, and science-based. It is not a political system. Some of the questions posed by the committee hint that the U.S. might consider politicizing its own regulations in response to China politicizing its rules, but it makes no sense to break our system simply because China’s is broken. We should guarantee fairness in our U.S. regulations and continue to push China to honor its commitments.”

— China makes no changes to balance sheets. China’s ag ministry kept its estimates unchanged for corn, soybean and cotton production and imports for 2024-25. China’s wheat production increased 2.7% this year to 138.22 MMT as planted area inched up 0.1% and yields rose 2.6%.

— China’s soybean imports jump in June. China imported 11.11 MMT of soybeans during June, up 890,000 MT (8.7%) from May and 840,000 MT (8.2%) more than last year. Through the first half of 2024, China imported 48.48 MMT of soybeans, down 2.2% from the same period last year. Soybean arrivals in China are expected to be record-large between 12 MMT and 13 MMT this month.

— China’s meat imports slump in June. China imported 515,000 MT of meat during June, down 42,000 MT (7.5%) from May and 150,000 MT (22.6%) from year-ago. Through the first half of this year, China imported 3.3 MMT of meat, down 13.4% from the same period last year.

— China’s trade surplus surged to $99.05 billion in June, up from $69.80 billion in June 2023, and exceeding market expectations of $85 billion. June’s trade surplus is the highest since at least 1994, according to figures from local data provider Wind dating back to August 1994. The increase was driven by a significant rise in exports and a decline in imports. Exports grew by 8.6% year-over-year, the fastest pace in 15 months, surpassing forecasts of an 8% gain. Conversely, imports fell by 2.3%, missing the forecasted 2.8% growth, and following a 1.8% rise in May.

The trade surplus with the U.S. also widened to $31.78 billion in June from $30.81 billion in the previous month.

For the first half of 2024, China recorded a surplus of $435 billion, with exports increasing by 3.6% to $1.71 trillion and imports rising by 2.0% to $1.27 trillion. The trade surplus with the U.S. stood at $159.9 billion for January to June 2024.

Of note: The government is throwing cash at manufacturing firms, propelling exports. At the same time weak domestic demand has depressed imports. The figures will spook China’s trading partners, who complain that the subsidies have allowed it to flood their markets with goods, including electric cars, at cut-throat prices.

— China’s heavy reliance on coal undermines its advancements in wind and solar energy, according to a report by Global Energy Monitor. Although China leads the world in wind and solar energy capacity, with twice as much under construction as the rest of the world combined, its dependence on coal power to address the variability of renewable energy generation is a significant drawback. The report indicates that 30% of the proposed power capacity from large wind and solar projects between 2021 and 2025 will come from coal.

— Cooking oil produced by a major Chinese state-run food company has been removed from leading online stores after concerns over contamination have revived consumer fears over food safety in a country scarred by past scandals. “Jinding” brand cooking oil — produced by conglomerate China Grain Reserves Corp., — was withdrawn from platforms including Taobao and JD.com.

— China is facing increased pressure to produce more food at home, as grain imports soar to record levels and trade tensions mount. That’s spurring top officials to zero in on an essential component of that task: land. Link for details via Bloomberg.

— China will break its tradition for holding a monthly press conference to answer questions on economic data, as President Xi Jinping convenes Communist Party officials for a policy meeting in Beijing.

— Coalition of business groups urges White House to revise trade agenda amid rising barriers. A coalition of nearly 50 business groups from various sectors has requested a meeting with White House officials to discuss creating a more impactful trade agenda. In a letter to top aides Jake Sullivan and Lael Brainard, the U.S. Chamber of Commerce and others expressed support for the Biden Administration’s trade policy goals but raised concerns about rising trade barriers threatening American livelihoods. The business community is frustrated by the administration’s lack of new market-opening agreements, the continuation of Trump-era tariffs, and reversals on digital trade positions.

The coalition, which includes representatives from agriculture, automotive, aerospace, technology, and other industries, stressed the urgency of building a more effective policy for external engagement to support the domestic economic agenda. The letter highlighted the need to leverage U.S. strengths and promote rules-based trade frameworks to ensure economic success.

— USDA Secretary Tom Vilsack maintained an optimistic outlook on trade despite a growing agricultural trade deficit. According to USDA’s latest forecast, U.S. agricultural exports are expected to reach $170.5 billion in 2024, down from $178.7 billion in 2023, while imports will rise to $202.5 billion, resulting in a $32 billion deficit, the largest in a decade. Vilsack attributed the weaker export outlook to the relatively strong U.S. economy compared to global peers and reduced purchases from China, now the second-largest customer instead of the first. He suggested that U.S. rhetoric about China might be contributing to the decline in Chinese purchases, as China redirects its buying to other competitors. To mitigate these challenges, Vilsack highlighted USDA investments in export promotion and an aggressive trade mission schedule to diversify U.S. agricultural export markets.

— Biden announces $1.7 billion plan to boost EV production. This plan, managed by the Department of Energy (DOE), aims to convert 11 existing auto manufacturing plants across eight states to produce electric vehicles and their components. The initiative is designed to revitalize facilities that have either closed or are at risk of closing without government support.

The initiative is expected to safeguard 15,000 existing jobs and create 3,000 new positions, primarily union jobs, which aligns with Biden’s commitment to support American workers and manufacturing communities. The grants will help modernize traditional auto manufacturing facilities, enabling them to produce up to 1 million electric vehicles annually. This move is crucial for maintaining the competitiveness of U.S. automakers against international rivals, particularly those in countries with heavy subsidies for their auto industries.

— USDA awards $110 million to expand independent meat processing. USDA Secretary Tom Vilsack announced nearly $100 million in new grants to enhance local and regional meat and poultry processing capacity. This funding, part of two initiatives, includes over $83 million for 24 projects in 15 states under the Meat and Poultry Processing Expansion Program (MPPEP) and $26.9 million through the Local Meat Capacity (Local MCap) grant program for 33 projects in 23 states. These efforts align with the Biden administration’s goals for fairer, more competitive, and resilient markets. Responding to concerns from House Ag Chair GT Thompson (R-Pa.) about new EPA regulations, Vilsack noted that USDA has collaborated with EPA to minimize any impact on processing capacity, suggesting that concerns about the regulations are exaggerated.

— Nate Cohn: Polls may shape Biden’s future. Are they up to the job? President Biden’s re-election campaign is in jeopardy due to his poor debate performance and concerning poll numbers. For the past 10 months, Donald Trump has maintained a nearly uninterrupted lead in the polls, shaping Democratic calculations in Washington. Polls now hold significant weight in political decision-making, though they are inherently imprecise, writes Nate Cohn in the New York Times (link). He says Biden’s chances increasingly hinge on the possibility that the polls are incorrect. Historically, polls have been both right and wrong, making it difficult to predict their accuracy in this election cycle. Early and final polls have varied in precision, and while recent trends show early polls becoming more accurate, uncertainties remain.

Trump’s lead has grown since the debate, with polls showing him ahead by about three points nationally and by larger margins in key battleground states. Private polls, which influence political actors, align with public poll trends, indicating no significant difference. Polling accuracy varies, but recent years have shown early polls to be as accurate as those taken immediately before the election.

Cohn notes that polling errors in 2020 were attributed to nonresponse bias, where Trump supporters were less likely to respond to surveys. There are signs that current polls might be on safer ground, with balanced response rates between Democrats and Republicans. However, he adds, Trump’s lead depends on turnout from less engaged voters, which could significantly impact the election outcome. Additionally, undecided voters and those who dislike both candidates could introduce further volatility, making the final outcome uncertain until election night.

— Cook Political Report moved the open Michigan Senate race from Lean Democrat to Toss Up. The Aug. 5 primary is fast approaching, and swing-seat Rep. Elissa Slotkin is expected to easily become the Democratic nominee. There’s a contested GOP primary, but Trump has endorsed former Rep. Mike Rogers. Senate editor Jessica Taylor writes: “Democratic sources tell us their polls have shown Slotkin consistently leading, but narrowly, and that the contest is closer than others in the Lean Democrat column. There’s no denying that Slotkin, a former CIA analyst who flipped a Lansing-based House seat blue in 2018, is a strong candidate for Democrats. She just reported raising nearly $6.5 million in the second fundraising quarter and heads into the fall with $9.5 million in the bank. But it’s Slotkin’s first time running statewide, and she doesn’t have the same built-in advantages veteran incumbents do. Rogers has been out of the political game for more than a decade after retiring in 2014 and has never run in the Trump era of the GOP. His fundraising in the first quarter was poor, raising just $1 million, and while it’s expected to be better in the second quarter, unlike several other Senate battleground nominees, Rogers isn’t wealthy and self-funding his race.

— Cotton AWP moves lower. The Adjusted World Price (AWP) for cotton fell to 56.08 cents per pound, effective Friday (July 12), down from 57.80 cents the prior week. Meanwhile, USDA announced Special Import Quota #13 would be established July 18 for 42,137 bales of upland cotton, applying to supplies purchased no later than Oct. 15 and entered into the U.S. not later than Jan. 13, 2025.

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