United Egg Producers: Current Bird Flu Outbreak is ‘Greatest Threat’ to Domestic Egg Industry

EPA and John Deere | OPEC+ | Elections in India, Mexico | No U.S. rate cuts in 2024?

MARKET FOCUS

• Barron’s article says Federal Reserve unlikely to lower interest rates in 2024
• Why Tom Essaye is getting more concerned about an economic slowdown
• Economic Commentary by Dr. Vince Malanga, President of LaSalle Economics
• Copper prices remain high amid AI demand and China recovery
• European natgas futures surged over 10%, reaching six-month high
• Supply chains facing disruptions & increased costs due to ships diverted from Red Sea
• Ag markets today
• Indonesia will extend its rice donation program through the end of 2024
• Egypt proposes Russian grain hub
• Ag trade update
• NWS weather outlook
• Pro Farmer First Thing Today items

BALTIMORE BRIDGE COLLAPSE

• Maryland officials aiming for completion of new bridge by Oct. 15, 2028

CONGRESS

• Lawmakers will depart on Wednesday
• Congress’ schedule in abbreviated week

ISRAEL/HAMAS CONFLICT

• Far-right Israeli ministers threaten coalition collapse over Biden’s Gaza peace plan
  

RUSSIA & UKRAINE

• Russia may declare nationwide emergency due to frost impacts by end of this week
  

POLICY

• House Ag Dems filed dissenting views on the farm bill approved on May 24

PERSONNEL

• Rep. Sheila Jackson Lee announces she has been diagnosed with pancreatic cancer
  

CHINA

• Xinjiang cotton found in 19% of products despite U.S. ban, report finds
• China manufacturing growth at near 2-year high
• China’s vague food security law aims for ‘absolute self-sufficiency’
  

TRADE POLICY

• Despite restrictions, strong demand for U.S. beef in Colombia
  

ENERGY & CLIMATE CHANGE

• OPEC+ extends cuts, plans gradual rollback starting in October
  

LIVESTOCK, NUTRITION & FOOD INDUSTRY

• Egg group: Current bird flu outbreak is ‘greatest threat’ to domestic egg industry
• USDA Secretary Tom Vilsack will announce new measures to boost competition in the U.S. agricultural industry
• Beyond Meat facing significant challenge
• Is gain-of-function responsible for the bird flu jump to cows and humans?
  

HEALTH UPDATE

• Doctors report first patient to receive a genetically modified pig liver is alive and well
  

POLITICS & ELECTIONS

• Indian stocks and currency climb on projected Modi win
• Republicans plan swift tax bill push ahead of elections
• 2024 presidential election will feature major shift in electorate compared to 2020
  

OTHER ITEMS OF NOTE

• Ex-Trump official testifies Sen. Menendez pressured him over halal meat monopoly

— Equities today: U.S. stock futures are ticking higher, following the lead of broad gains across European equity markets and a jump in Asia. In Asia, Japan +1.1%. Hong Kong +1.8%. China -0.3%. India +3.4%. In Europe, at midday, London +0.1%. Paris +0.4%. Frankfurt +0.9%.

U.S. equities Friday and for the week and month: The Dow and S&P 500 both finished with gains on Friday while the Nasdaq lost ground. But all three registered losses for the week even as they put up strong gains for May. On Friday, the Dow was up 574.84 points, 1.51%, at 38,686.32. The Nasdaq eased 2.06 points, 0.01%, at 16,735.02. The S&P 500 rose 42.03 points, 0.80%, at 5,277.51.

For the week, the S&P slipped -0.5%, the Nasdaq fell -1.1%, and the Dow lost -1.0%.

But major indices recorded sharp gains in May, with the Dow crossing the 40,000 mark for the first time. For the month, the Dow rose 2.3%, the Nasdaq was up 6.9% and the S&P 500 gained 4.8%.

— Saudi Arabia’s sale of shares in oil giant Aramco drew more demand than the stock on offer within hours of kicking off on Sunday, a deal that could raise up to $13.1 billion in a major test of international appetite for the kingdom’s assets.

— Ag markets today: Wheat futures recouped some of last week’s losses during the overnight session, while corn and soybeans extended their recent declines. As of 7:30 a.m. ET, corn futures were trading mostly a penny lower, soybeans were 8 to 10 cents lower and wheat futures were 5 to 8 cents higher. The U.S. dollar index was modestly lower, while front-month crude oil futures are trading just above unchanged.

Seasonal slide in cash cattle. Traders will have to wait until later this morning to get the average cash cattle price from last week, though it will be down from the all-time high two weeks ago. With fresh contract supplies available and negative packer cutting margins, cash prices are expected to decline again this week. Seasonally, cash prices typically slide through summer.

Cash hog fundamentals strengthen. The CME lean hog index is up 49 cents to $91.49 as of May 30, the second straight day of gains following a seven-day drop. June lean hog futures finished last Friday $2.86 above today’s cash quote. The pork cutout value firmed $1.30 on Friday, despite losses in bellies and loins, fueled by a $6.07 jump in hams.

— Agriculture markets Friday and for the week:

• Corn: July corn futures settled 2 1/2 cents lower to $4.46 1/4, the lowest close since April 19 and down 18 1/2 cents on the week.
• Soy complex: July soybeans fell 4 3/4 cents to $12.05 and plunged 43 cents on the week. July soymeal rose $1.10 to $364.70 but gave up $21.80 week-over-week. July soyoil closed 20 points lower at 45.52 cents but gained 57 points on the week.
• Wheat: July SRW wheat futures fell 2 1/2 cents at $6.78 1/2 and nearer the session low. For the week, July SRW lost 18 3/4 cents. July HRW wheat futures closed down 3/4 cent at $7.08 3/4, nearer the daily low and on the week down 12 1/2 cents. Spring wheat futures fell 2 1/4 cents to $7.39 3/4 and lost 13 cents on the week.
• Cotton: July cotton plummeted 161 points to 76.15 cents and lost 437 points on the week.
• Cattle: August live cattle futures fell $1.325 to $178.45, near the session low and hit a two-week low. For the week, August live cattle dropped $2.675. August feeder cattle futures lost $2.675 at $256.40, nearer the session low, hit a two-week low and on the week were down $3.825.
• Hogs: Hog futures firmed to end the week. Nearby June hog futures rose 37.5 cents to $94.35, while most-active July gained 17.5 cents to $97.125. The latter close represents a weekly decline of 12.5 cents.
  

— Quotes of note:

• Fedspeak. The blackout period for June 2024 is from June 1 to June 13. During this time, Federal Reserve staff and Federal Open Market Committee (FOMC) participants are restricted from speaking publicly or granting interviews. (Note: On Friday, Fed Governor Lisa Cook delivers commencement speech at the Girls Global Academy first graduation. It’s safe to assume she will not comment on Fed policy.)

• Why Sevens Report’s Tom Essaye is getting more concerned about an economic slowdown.

  “My biggest concern for this market remains that we get an unexpected economic slowdown be-cause that’s one of the few events that can legitimately cause a material correction in stocks (meaning 20% or more) and my concern about that slowdown be-came stronger last week.

  “However, that increase in my concern wasn’t because of last week’s economic data. The Q1 GDP revision implied slower growth, but the details of the GDP report were still solid. Additionally, weekly jobless claims appear to be entering an uptrend (the first in years, perhaps) but they’re still extremely low in an absolute sense.

  “Instead, my elevated concern came from corporate commentary. While Q1 earnings were “fine,” they were mostly fine because U.S. companies are extremely adept at controlling costs and maintaining margins. They were not fine because of solid aggregate demand and over the past few weeks, we’ve seen numerous companies from multiple industries post disappointing results on a com-bination of underwhelming gross sales and the inability to maintain margins.

  “Put plainly, the number of companies citing reduced demand, or a more discerning customer is growing quickly and it’s stretching across industries. This behavior is being called “retrenching” in the financial media and it’s another signal that the economy is seeing slowing growth. Examples of companies reporting this type of behavior include (but are not limited to): WDAY, CRM, AAL, KSS, WBA, LULU, HUM and others.

  “Twice in my career I have seen investors cheer a slow-down and both times the Fed was not able to cut rates at the right time to prevent the slowing from becoming a broader economic contraction. That doesn’t mean they can’t do it this time, but catching a falling knife doesn’t work in real life, it doesn’t work in stock trading, and I’ve never seen it work in monetary policy. So, while I hope it does, I do want to push back more firmly on this ‘bad is good’ idea.

  “Looking forward, bad data may stay good for markets for a piece longer and I’m not one to argue against price action. And this doesn’t mean the S&P 500 can’t run to 5,700 (or higher) if we see a sharp drop in yields and investors roll their earnings estimates at 2025 (which are $270/share).

  “But I want to distinctly and clearly point out that the evidence of slowing growth is growing on the macroeconomic and microeconomic fronts and that’s increasing my medium-term fear that investors are complacent to economic slowdown risks. If I’m right about that, the second half of the year could be much more volatile than the first half.

  “Our job will be to watch macroeconomic data and micro-economic results to tell us if (and when) the slowdown appears imminent, because at that point it will be time to get defensive (and we will have time to do so). For now, bad is still good so it makes no sense to materially de-risk, but we will continue to gradually move to reduce volatility in portfolios (while still maintaining long exposure) so that if we’re wrong, our investments rise with the tide — and if we’re right, we’re insulated from the coming volatility.”
  

— Fed watch: A Barron’s article (link) says the Federal Reserve is unlikely to lower interest rates in 2024 due to persistent inflation, a strong economy, and a resilient labor market. Despite earlier expectations for rate cuts, these conditions suggest that the current federal-funds rate target of 5.25% to 5.50% will remain unchanged. Inflation has decreased from its peak but remains above the Fed’s 2% annual target. Chairman Jerome Powell and other Fed officials emphasize the need for sustained lower inflation before considering rate cuts.

While the economy continues to show resilience, with GDP growth and low unemployment, the Fed remains cautious to avoid repeating past mistakes of easing too soon, the item reasons. Some economists believe rate cuts may still happen if the labor market weakens, but such a scenario is not imminent. The Fed’s upcoming meetings are not expected to result in rate changes unless significant new data emerge.

Fiscal policies and structural economic factors, including fixed low-rate mortgages and corporate refinancing, are contributing to the economy’s stability despite higher rates. The combination of these elements, the article concludes, means the Fed is likely to maintain a steady rate policy through the end of 2024, with potential implications for market volatility and investor expectations.

— Economic Commentary by Dr. Vince Malanga, President of LaSalle Economics:

Economic indicators and potential trends:

April’s economic indicators predominantly pointed towards weakness. It remains uncertain whether this trend is temporary or the beginning of a more prolonged downturn. If the trend persists, we can expect a decrease in inflation expectations and potential easing of monetary policy. Key indicators being closely monitored include ISM measures, labor conditions, and small business attitudes.

Current observations:

ISM and Labor Conditions: Preliminary data suggests weakness. While the S&P PMIs for May were strong, they do not correlate well with ISM data, which aligns more closely with regional PMIs that showed a decline compared to April.

Labor Market: The Conference Board reported marginal improvement in labor conditions for May, weaker than in March. There is a significant chance the unemployment rate for May could rise to 4%, accompanied by moderating job growth.

Political implications:

A 4% unemployment rate, historically desirable, is now seen as politically sensitive due to the approaching election. The trend of the rate, currently upward, is more critical than the absolute level. A 4% rate would likely provoke strong political reactions.

Federal Reserve’s position:

Any criticism will target the Federal Reserve’s monetary policy, whether it’s seen as too restrictive or not restrictive enough to combat persistent inflation. The PCE deflator, the Fed’s preferred inflation measure, increased by 0.3% in April, bringing the annual rate to 2.7%, with the core rate at 2.8%.

Challenges in achieving inflation targets:

Achieving a 2% inflation target soon may require actual price reductions, which is challenging given the current calendar data. For example, the CPI and PCE deflator data from May to July 2023 showed minimal increases, making it tough to reduce the yearly rate to 2% without significant price weakness.

FOMC’s potential actions:

Despite public statements, it appears the FOMC is eager to lower its benchmark rate due to concerns about market reactions to fiscal policies and declining commercial real estate values impacting bank balance sheets. The FOMC has already indirectly eased by slowing balance sheet reduction. Markets responded positively to this move, and a reduction in the benchmark rate might be similarly welcomed if justified by economic fundamentals.

Future focus:

Following any rate cuts, attention will likely shift to the differing economic policies of presidential candidates, highlighting significant contrasts.

Market perspectives:

— Outside markets: The key outside markets today see the U.S. dollar index slightly up. Nymex crude oil prices are near steady and trading around $76.75 a barrel. The benchmark 10-year U.S. Treasury note yield is presently 4.49%.

— Copper prices remain high amid AI demand and China recovery. Copper prices have reached an all-time high, driven by expectations of strong AI demand and China’s economic recovery, despite high production by Chinese refineries and weaker-than-expected demand from China, the world’s largest copper consumer. The benchmark three-month forward contract for copper rose to $11,104.5 per tonne on May 20, 2024, on the London Metal Exchange (LME). Prices are expected to remain elevated as traders and investors anticipate increased demand from data centers, renewable energy projects, and AI development.

Global demand for copper is projected to rise significantly, with clean energy and electric vehicle initiatives boosting consumption.

Challenges persist in meeting supply demands, with mining production targets and new projects facing delays. The LME’s ban on newly smelted Russian copper and protests halting operations at mines like Cobre Panama contribute to supply constraints.

— European natural gas futures surged over 10% to above €38 per megawatt-hour, reaching a six-month high. This spike is due to an unplanned outage at Norway’s Nyhamna processing plant, reducing Norwegian gas shipments to Europe by 14 million cubic meters per day. Additionally, hot weather in Asia has increased LNG demand, prompting Northeast Asian buyers to secure summer supplies and raising concerns about tighter global supplies. Despite these issues, Europe’s gas supply remains relatively secure, with storage facilities 70.17% full.

— Supply chains are facing disruptions and increased costs due to ships being diverted from the Red Sea, resulting in delays and higher freight rates, according to Bloomberg (link). This situation has been exacerbated by attacks from Yemen on commercial ships using the Suez Canal, leading to vessels rerouting around Africa’s Cape of Good Hope. This rerouting has caused congestion in major Asian ports such as Shanghai-Ningbo and Singapore, creating imbalances in container availability and extended delivery times to the US and Europe.

The increased transit times, calculated by Sea-Intelligence, show a nearly 40% rise to the Mediterranean from Asia and 15% to northern Europe. This has led to significant congestion at ports like Jebel Ali in the UAE, and Singapore, where vessel arrivals have surged, causing delays of two to three days for some ships.

The ripple effect of these delays has forced supply chain managers to place orders earlier, contributing to a decrease in on-time arrivals of container ships to around 52%. Delivery times from China to Europe and the U.S. East Coast are particularly slow due to the avoidance of the Suez Canal route.

Strong U.S. demand, especially through the Port of Los Angeles, has further strained the supply chain, with import volumes rising steadily. This imbalance is occurring ahead of the peak shipping season, which starts in July and lasts through September, as retailers prepare for back-to-school and year-end holiday sales.

The combination of geopolitical risks, tariff threats, and early peak season preparations is driving up spot shipping rates. This increase is also affecting air cargo, with rates from the Persian Gulf and South Asia to Europe rising by almost 80% in May compared to the previous year. Experts predict that the interconnected global supply chain may take several months to stabilize, contingent on improvements in the Red Sea situation.

— Indonesia will extend its rice donation program through the end of 2024, providing 10 kilograms of rice monthly to over 20 million low-income families. Initially set to end in June, the program will now distribute rice in August, October, and December, according to NFA head Arief Prasetyo Adi. He emphasized the importance of the program due to rising global food prices, despite a recent easing in domestic rice prices.

— Egypt proposes Russian grain hub. An Egyptian company has sent the Russian government a feasibility study for the construction of grain hub in Egypt that could store and process Russian grains, Egyptian trade minister Ahmed Samir told Russian news agency RIA. Samir said the hub could be built in the ports at Said, Damietta or Sokhna.

— Ag trade update: South Korea purchased 60,000 MT of optional origin feed wheat. Algeria tendered to buy a nominal 50,000 MT of optional origin soft milling wheat.

— NWS weather outlook: Excessive Rainfall and Severe Weather threaten portions of the Mississippi Valley and Southern Plains today... ...Increasing Excessive Heat Risk potential over parts of the West and southern Texas through mid-week.

Items in Pro Farmer’s First Thing Today include:

• Wheat firmer, corn and beans weaker to start the week
• Another active week of weather across central U.S.
• Sharp monthly declines expected for soy crush, corn ethanol use
• Bigger planted area to boost Aussie wheat crop

— Maryland officials aiming for completion of new bridge by Oct. 15, 2028. Maryland officials are seeking private industry proposals to design and build a replacement for the fallen Key Bridge, aiming for completion by Oct. 15, 2028. This comes after a cargo ship collision destroyed the bridge, causing significant traffic and economic disruptions. The request emphasizes a visually appealing design with minimal piers in the Patapsco River.

Maryland Transportation Secretary Paul J. Wiedefeld highlighted the urgency of the project, saying, “We are committed to getting this bridge rebuilt as quickly, safely and efficiently as we can.” Proposals must include a “Vessel Collision Protection Design Manager” with extensive experience to ensure robust bridge protection.

The estimated cost for the new bridge ranges from $1.7 billion to $1.9 billion, with potential federal funding pending. Governor Wes Moore stressed the importance of federal support for the project. The final design and structure of the bridge will depend on the selected contractors’ proposals.

Efforts are also underway to fully reopen the federal shipping channel by early June, crucial for local and national trade. The Coast Guard is overseeing the removal of wreckage from the riverbed to clear the channel.

— Congress is back, but will be out again soon. Congress returns from Memorial Day recess, with both the House and Senate voting tonight. President Joe Biden will visit France this week for the 80th anniversary of the D-Day invasion and a state visit to Paris (Biden and First Lady Jill Biden will host the White House Congressional Picnic on Tuesday. After the picnic, Biden will travel to Paris). Many lawmakers will also travel to Normandy, leading to a short legislative week, with both chambers adjourning by Wednesday.

The congressional calendar leaves little time to work through contentious and complex legislation. One or both chambers are in session for just under half of the 22 weeks before the Nov. 5 elections. Both chambers are out in August for their traditional recess and all of October in the run-up to the election. Two weeks of July are reserved for Republicans’ national convention and the July 4 holiday. The Democrats hold their convention in August.

“A lot of the heavy lifting and the more complicated, contentious issues probably end up getting punted,” said Senate Minority Whip John Thune (R-S.D.), “only because we’re in a political season and it gets really hard to legislate when both sides are going to their respective corners and getting ready to duke it out in the campaigns.”

What about a new farm bill? Senate Democrats worry the closer they get to the election, the less willing Republicans will be to reach a deal on such major legislation as the five-year reauthorization of agriculture and nutrition programs. “We’re running out of time, but it’s still doable,” said Senate Ag Chairwoman Debbie Stabenow (D-Mich.). “This is just a question of, do folks want to really get it done or not?” The House Agriculture Committee advanced its GOP-led version of the food and farm legislation (HR 8467) last month. While it has no chance in the Senate, where Democratic leadership opposes the nutrition spending levels, House Republicans still may push for a floor vote on the farm bill before the election to force tough political votes for some rural Democrats in competitive races.

Congress’ schedule this week includes:

Monday:

• Dr. Anthony Fauci will testify before the House Oversight and Accountability subcommittee on Covid-19.
• The House Rules Committee meets at 4 p.m. ET on the MilCon-VA bill and sanctions on the International Criminal Court.

Tuesday:

• House Appropriations Committee subcommittees will mark up the FY 2025 Homeland Security and State-Foreign Ops bills.
• Senate Appropriations hearings with Treasury Secretary Janet Yellen and FBI Director Christopher Wray.
• House Judiciary hearing with Attorney General Merrick Garland. (House Speaker Mike Johnson (R-La.) is weighing whether to schedule a vote on holding Garland in contempt of Congress amid uncertainty that the resolution has enough GOP support to pass.)
• Senate Foreign Relations closed briefing on China with U.S. Ambassador Nicholas Burns.

Wednesday:

• House Appropriations subcommittee markup on the FY 2025 Defense spending bill.
• House Oversight hearing with EPA Administrator Michael Regan.
• The Right to Contraception Act will hit the Senate floor this week, with a “show” vote slated for Wednesday. Majority Leader Chuck Schumer (D-N.Y.) announced this on Sunday as he previewed Democrats’ focus on abortion and related issues throughout June.

— Far-right Israeli ministers threaten coalition collapse over Biden’s Gaza peace plan. Two far-right Israeli ministers have threatened to resign and collapse Prime Minister Benjamin Netanyahu’s coalition if he accepts President Biden’s peace proposal. Biden’s proposal, revealed on Friday, outlines a three-phase plan to end the Gaza conflict, involving the release of hostages and a “full and complete ceasefire.” He stated that Hamas has been weakened to a point where it can’t launch attacks like the one on Oct. 7, which triggered the current war. However, the two ministers strongly oppose an immediate ceasefire, and Netanyahu has indicated he is also not ready, casting doubt on the feasibility of Biden’s proposal.

— Russia may declare a nationwide emergency due to frost impacts by the end of this week, according to Agriculture Minister Oksana Lut, as reported by Interfax. Cold temperatures have already caused significant crop damage, leading to local emergencies in several areas.

— House Ag Committee Democrats on Friday filed their dissenting views (link/pdf) on the farm bill approved on May 24. They expressed “genuine concern over the trajectory of the majority’s partisan farm bill,” warning that “it is unlikely that the farm bill can pass on the House floor” or even be considered by the full House before the current extension expires on Sept. 30, 2024.

Their concerns focus on changes to nutrition programs, the removal of guardrails on climate-smart agriculture programs, and restrictions on the Agriculture Secretary’s authority under the Commodity Credit Corporation Charter Act. The letter was signed by the four Democrats who voted for the bill — Reps. Sanford Bishop, Yadira Caraveo, Eric Sorensen, and Don Davis — along with other committee members.

The Democrats emphasized, “We all agree there is the opportunity to reach broader bipartisan consensus. A good place to start would be to stop ignoring our positions on fundamental issues and dismissing any opposition as ‘playing politics’ and ‘disingenuous.’”

They concluded, “Failure to do so will lead only to delay, dysfunction, and consequently disappointment for America’s farmers. House Agriculture Democrats stand willing to work with the majority to craft a genuinely bipartisan farm bill that respects each other’s core values, helps feed America, and supports our farmers in doing so.”

— Veteran Texas Democratic Rep. Sheila Jackson Lee announced that she has been diagnosed with pancreatic cancer. The 74-year-old Jackson Lee — who ran unsuccessfully for mayor of Houston last year — was first elected in 1994. Jackson Lee was treated successfully for breast cancer in the past.

— Xinjiang cotton found in 19% of products despite U.S. ban, report finds. A report by Applied DNA Sciences and provided to Fashion Dive (link) revealed that cotton from the Xinjiang region of China was found in 19% of 822 cotton-containing products sampled between February 2023 and March 2024. Notably, 57% of the Xinjiang-positive samples claimed to be of U.S.-only origin, although products from Xinjiang are banned in the U.S. due to forced labor concerns. The report highlighted that these origin claims can impact a product’s eligibility for tariff reductions. The report also found that 66% of Xinjiang-positive samples were blended with cotton from other regions, while 34% were solely from Xinjiang. Among the blended samples, 42% contained cotton from Brazil, and 40% contained cotton from the U.S.

— China manufacturing growth at near 2-year high. The Caixin China General Manufacturing PMI increased to 51.7 in May 2024, up from 51.4 in April, exceeding the estimated 51.5. This marks the seventh consecutive month of expansion in factory activity and the fastest growth since June 2022, driven by the highest output increase in 23 months amid rising new orders. However, new export orders grew at a slower rate compared to April’s 41-month high, reflecting a sluggish global economy.

Employment in the manufacturing sector declined for the ninth straight month, though at a reduced pace. Backlogs of work increased for the third consecutive month, reaching the highest rate since September 2021 due to rising new work inflows. Purchasing activity surged to its fastest rate in three years.

Input cost inflation accelerated to its highest level since last October, driven by increased costs for metals, plastics, and energy. Consequently, output costs rose as firms passed on their higher costs to clients. Despite these challenges, business sentiment improved, fueled by expectations of stronger domestic and global demand.

— China’s vague food security law aims for ‘absolute self-sufficiency’. China’s first food security law aimed at achieving “absolute self-sufficiency” in staple grains went into effect on Saturday, reinforcing efforts by Beijing to lower its reliance on overseas purchases. The law provides a legal framework for existing guidance by the Communist Party for local governments and the agricultural industry to raise food production, although it did not give details on how it will be implemented. It includes protection of farmland from being converted to other uses, protecting germplasm resources and preventing waste. The law holds central and provincial governments accountable for incorporating food security into their economic and development plans, ensuring that food supply remains a top priority. It also stipulates the formation of a national grain emergency plan and a food security monitoring system. The law also said China will “strengthen international food security cooperation and allow international grain trade to play its role,” without providing specific details. Trivium China said, “It doesn’t change the realities on the ground for local officials who were already under significant pressure to deliver on food security. The food security law enshrines existing practices in law but isn’t set to change anything. Food security was already among the top national priorities and can’t go any higher.”

— Despite restrictions, strong demand for U.S. beef in Colombia. Colombia is the only trading partner to impose restrictions on imports of U.S. beef as a result of highly pathogenic avian influenza (HPAI) being detected in some lactating dairy cows. Homero Recio ), U.S. Meat Export Federation (USMEF) Latin America representative, explains that Colombia currently will not accept beef from any of the nine states impacted by HPAI. However, Recio reports that the U.S. industry is doing its best to overcome this trade barrier and meet the needs of Colombian customers by sourcing beef from eligible states. He adds that despite Colombia’s restrictions, the business climate for U.S. red meat remains favorable, with strong demand from the retail and foodservice sectors.

— OPEC+ extends cuts, plans gradual rollback starting in October. OPEC+ decided to extend its oil production cuts, a move aimed at bolstering a fragile market. The deal likely signals oil prices will remain elevated through the U.S. presidential election.

This extension involves maintaining voluntary cuts from key members such as Saudi Arabia and Russia well into next year. However, starting in October, these supply reductions will begin to be rolled back, earlier than some had anticipated.

According to the new agreement, eight nations involved in these additional curbs will have added about 750,000 barrels a day to the market by January. The agreement extends roughly 2 million barrels a day of cuts that were crucial in maintaining crude prices above $80 a barrel this year. These cuts will continue in the third quarter and be gradually phased out over the next 12 months.

The voluntary cuts besides an earlier group-wide agreement caps crude output at about 39 million barrels a day, which was set to expire at the end of this year but is now extended to the end of 2025.

The agreement also temporarily resolves debates over nations’ oil capacities by postponing an external review of members’ capabilities to November 2026. The UAE secured a 300,000 barrel-a-day increase in its production target for next year, aligning its proportional cut with other members. Saudi Arabia’s Prince Abdulaziz emphasized that the adjustment was about fairness, not favoring the UAE.

— Current avian influenza outbreak is ‘greatest threat’ to the domestic egg industry following virus detections in massive flocks, according to United Egg Producers President and CEO Chad Gregory. “On-farm biosecurity is at its most stringent levels, and despite these robust precautionary measures, the egg industry has lost flocks to [bird flu] in recent weeks,” Gregory told Politico in a statement. “This is a sad and difficult time for affected farmers, who must act swiftly to prevent the spread of the disease and go through an extensive recovery process.” A massive flock of over 4.2 million egg-laying chickens in Iowa was detected to have bird flu last week.

— USDA Secretary Tom Vilsack will announce new measures to boost competition in the U.S. agricultural industry. The expected actions include proposed rules on Poultry Grower Payment Systems and Capital Improvement Systems, recently reviewed by the Office of Management and Budget (OMB). Another proposed rule on Unfair Practices and Undue Preferences under the Packers and Stockyards Act is still under OMB review but may also be unveiled today. This follows a pattern of immediate announcements by the USDA and the Biden administration after OMB reviews.

— Beyond Meat, which experienced a meteoric rise when it went public in 2019, is now facing significant challenges as sales decline and concerns about the healthfulness and cost of plant-based meats grow, according to an article (link) in the Los Angeles Times. Despite initial success and widespread adoption, industry sales have fallen, with Beyond Meat’s net revenue dropping by over 25% to $343 million in 2023 and continuing to decline into 2024.

Beyond Meat founder and CEO Ethan Brown acknowledged the difficulties, stating, “The trough has been a difficult place to be the last couple of years.” To combat these challenges, the company has introduced a new burger formulation with reduced saturated fat and sodium, aiming to improve both taste and nutritional profile. This new product has received endorsements from the American Diabetes Association and Good Housekeeping, which will feature on its labeling.

John Baumgartner, an analyst at Mizuho Securities, noted, “I give credit where it’s due. I think they’ve made some clear improvements in the ingredients and nutritional profile, so there’s clear progress there.” Despite these advancements, Beyond Meat faces stiff competition from Impossible Foods and skepticism from consumers about the health benefits of plant-based meats.

Sales of plant-based meats and seafood fell 12% in 2023, and Beyond Meat’s stock has plummeted over 90% from its peak in 2019. The company’s financial struggles have led to concerns about its cash position, prompting discussions about raising funds through debt or equity.

Critics, including nutritionists and industry-funded campaigns, have highlighted the highly processed nature of plant-based meats. James Bowers, executive director of the Center for Consumer Freedom, stated, “Consumers have seen past the marketing spin and realized that these products are just ultraprocessed goop that costs more and isn’t healthier than real meat.”

In response, Brown emphasized the importance of changing the perception of plant-based meats, saying, “Once that narrative became complicated for people because of misinformation or whatever, it became harder to grow the business. We have addressed that thoroughly in this product.” Despite the challenges, Beyond Meat remains committed to improving its products and maintaining its presence in the market.

The company is hopeful that its new burger, which includes healthier ingredients like avocado oil and a mix of peas, red lentils, faba beans, and brown rice, will help turn its fortunes around. However, it has also raised the price of its new burgers to $6.99 for an eight-ounce pack, a move Baumgartner questioned given the previous price cuts during inflationary periods.

Bottom line: Beyond Meat’s efforts to regain its market position come amid a broader industry downturn and growing competition, both domestically and internationally. The company continues to innovate and adapt, betting that improved products and strategic adjustments will help it reclaim its sizzle in the plant-based meat market.

— Is gain-of-function responsible for the bird flu jump to cows and humans? That headline should grab your attention. Here is a link to an Epoch Times opinion dispatch about the topic written by Yuhong Dong, M.D., Ph.D. and Xiaoxu Sean Lin, M.D., Ph.D.

— Doctors report first patient to receive a genetically modified pig liver is alive and well two weeks post-surgery; marks the fifth person worldwide to undergo a pig organ transplant. Link for details.

— Claudia Sheinbaum has become Mexico’s first female president following a decisive victory, riding the wave of outgoing President Andrés Manuel López Obrador (AMLO)'s popularity. Representing the ruling Morena party, Sheinbaum won by at least 30 percentage points, and her party is expected to secure a two-thirds majority in congress, granting significant legislative power. As the former mayor of Mexico City, Sheinbaum inherits a country grappling with severe challenges, including rampant criminal violence and a substantial fiscal deficit left by AMLO. Her task is complicated by the need to balance loyalty to AMLO, who enjoys a 60% approval rating, with addressing these pressing issues. Her policies may be influenced by the outcome of the next U.S. presidential election, particularly if Donald Trump returns to office.

— Exit polls predict a significant victory for Prime Minister Narendra Modi’s Bharatiya Janata Party (BJP) and its allies in the National Democratic Alliance (NDA). The exit polls suggest that the NDA could secure between 353 to 401 seats in the 543-seat Lok Sabha, indicating a potential two-thirds majority. Despite these predictions, the opposition remains hopeful and has questioned the accuracy of the exit polls. The final outcome will be confirmed once the official vote count is completed. India’s shares rose to a record, while the rupee and sovereign bonds also gained.

— Republicans plan swift tax bill push ahead of elections. Top Republicans are preparing to quickly enact a tax package if they gain control of Congress and the White House in November. With many new GOP members in the House since the 2017 tax law, Republicans are educating lawmakers on the budget reconciliation process, which allows tax and spending changes to pass with simple majorities, bypassing the need for 60 Senate votes. This process, used by both parties for significant legislation, is being readied for potential GOP control, with tax legislation high on the agenda for 2025. House Majority Leader Steve Scalise (R-La.) and committee chairs are compiling priority wish lists to fit within reconciliation rules.

Of note: A GOP-led reconciliation measure could also include a new farm bill if one is not enacted earlier.

— The 2024 presidential election will feature a significant shift in the electorate compared to 2020, according to a Bloomberg report. Over 31 million new eligible voters have been added since the last election due to migration, aging into voting age, and naturalization, nearly one million more than after the 2016 election. This turnover is most pronounced in battleground states, where up to 15% of the voting-age population has changed due to deaths, departures, and new eligible voters.

Migration is the primary driver of this churn, with younger and more diverse populations moving between states. For example, Florida saw an influx of naturalized citizens equal to 2% of its 2020 voting population. Changes in demographics, such as an increase in college-educated white voters and non-white populations, are also reshaping the electorate in key states.

Despite these changes favoring Democrats, the latest Bloomberg News/Morning Consult poll shows a tight race, with Trump leading in most battleground states.

Bottom line: The net effect of these demographic shifts will be crucial in determining the outcome, especially in swing states like Nevada and Arizona, where newly registered voters outnumber the 2020 margin of victory.

— Ex-Trump official testifies Sen. Menendez pressured him over halal meat monopoly. Ted McKinney, who served as the undersecretary for trade and foreign agricultural affairs during the Trump administration, testified that Sen. Robert Menendez (D-N.J.) called him in 2019 and instructed him to “quit interfering with my constituent.” This call was related to a controversy involving a New Jersey-based startup, Almarasco, which had been granted a monopoly by Egypt to certify halal meat exports from the United States. The startup was run by Wael Hana, a friend of Menendez’s wife, Nadine Menendez.

According to news accounts, McKinney described the call as terse and direct, with Menendez dismissing concerns about the potential negative impacts of the monopoly, such as increased prices and market share issues. Despite McKinney’s attempts to explain these consequences, Menendez cut him off, insisting that these were not the issues at hand. This testimony was part of the bribery trial against Menendez, where he and his co-defendants are accused of accepting bribes in exchange for political favors.

USDA officials, including McKinney, responded to Menendez’s intervention with concern and resistance. Despite Menendez’s pressure, USDA officials continued to scrutinize the situation. McKinney’s testimony highlighted the tension between the USDA’s regulatory responsibilities and the political pressure exerted by Menendez.

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