U.S. GDP increased at 1.6% rate in first quarter, less than expected
Today’s Digital Newspaper |
MARKET FOCUS
- U.S. economy grew 1.6% first quarter of 2024, falling short of 2.5% growth anticipated
- Ford Motor surpasses earnings expectations for first quarter
- Rule on noncompete clauses challenged in court
- Competition Bureau of Canada raises alarms re: Bunge’s proposed takeover of Viterra
- Jamie Dimon skeptical inflation will come down smoothly
- Canadian retail sales see unexpected decline in February and stagnation in March
- South Korea’s GDP: 3.4% year-on-year increase in first quarter, above expectations.
- Economists expect PCE index to show 2.6% inflation
- Rockford, Ill., is America’s top real-estate market
- Yen falls to 34-year low against dollar market speculation is action would be taken in the 160 to 170 to the dollar area.
- BHP, largest mining firm globally, proposes $39 billion acquisition of Anglo American
- CPOPC seeks EU deforestation rule delay for smallholders
- Ag markets today
- Thailand rice exports surge
- Ag trade update
- NWS weather outlook
- Pro Farmer First Thing Today items
CONGRESS
- Rep. Donald Payne Jr. (D-N.J.) dead at 65
CHINA
- U.S. export sales to China continue for wheat, soybeans, cotton .
- Blinken raises concerns about fair treatment for U.S. companies in China
TRADE POLICY
- USTR maintains China on ‘priority watch list for IP protection issues
ENERGY & CLIMATE CHANGE
- Biden administration sets national objective to achieve carbon-neutral freight shipping
- Solar manufacturers ask U.S. gov’t to slap duties on $12.5 bil. of imported equipment
- Fossil fuel use banned in new U.S. gov’t buildings starting in 2030 under Biden rule
- Nebraska SAF credit
LIVESTOCK, NUTRITION & FOOD INDUSTRY
- Mandated testing for bird flu in dairy cows being transported between states
HEALTH UPDATE
- America’s fertility rate fell to 1.62 births per woman last year
- Senate panel investigating Novo Nordisk’s pricing
OTHER ITEMS OF NOTE
- Arizona House votes to repeal the state’s longstanding abortion ban from 1864
MARKET FOCUS |
— Equities today: Asian and European stock indexes were mixed overnight. Dow futures dropped around 500 points after the downbeat U.S. GDP report. In Asia, Japan -2.2%. Hong Kong +0.5%. China +0.3%. India +0.7%. In Europe, at midday, London +0.6%. Paris -0.9%. Frankfurt -0.7%.
U.S. equities yesterday: U.S. stock indices finished narrowly mixed after a session trading both sides of unchanged. The Dow fell 42.77 points, 0.11%, at 38,460.92. The Nasdaq gained 16.11 points, 0.10%, at 15,712.75. The S&P 500 edged up 1.08 points, 0.02%, at 5,071.75.
— Ford Motor surpassed earnings expectations for the first quarter, with robust sales in trucks and commercial vehicles compensating for its electric vehicle division’s losses. The company sustained its earnings outlook for 2024. Ford’s total revenue rose by about 3% from the previous year to $42.78 billion. Ford Blue, the division responsible for traditional vehicle lines, saw its earnings decrease by 66% to $905 million. In contrast, Ford Pro, which handles the commercial vehicle segment, boasted a 120% earnings increase to $3.01 billion compared to the same period last year. However, the Model e division, focused on electric vehicles, experienced a loss of $1.32 billion for the quarter.
— Rule on noncompete clauses challenged in court. Major business organizations and a national tax services firm have filed lawsuits against the Federal Trade Commission’s (FTC) new rule banning noncompete clauses, challenging the agency’s authority over such prohibitions. The U.S. Chamber of Commerce filed in East Texas, while Ryan LLC brought their case in Dallas. They are joined by other business entities, including the Business Roundtable. The FTC’s rule, issued Tuesday, forbids the enforcement of noncompete agreements except for senior executives, affecting roughly 20% of U.S. workers. Businesses argue noncompetes protect intellectual property and other assets. The FTC defends its authority, asserting that banning noncompetes is central to its mission to preserve economic freedom for Americans. This FTC action is part of the Biden administration’s broader initiative to intensify antitrust enforcement, aimed at bolstering workers’ interests.
— The Competition Bureau of Canada has raised alarms about Bunge Limited’s proposed takeover of Viterra Limited, citing the potential for reduced competition in the agriculture sector. Their analysis, submitted to the Minister of Transport, will inform Transport Canada’s review of the deal’s public interest implications. The Bureau is particularly concerned that the merger could lead to less competition in Western Canada’s grain purchasing and Eastern Canada’s canola oil sales. They also flagged a potential conflict of interest, as Bunge, already a minority shareholder in Viterra’s rival G3, might have access to sensitive G3 information. This thorough review included scrutinizing documents and data from the parties and G3, interviewing over 70 stakeholders, and consulting experts. The Bureau’s investigation follows the notification to the Minister of Transport by Viterra and Bunge on Aug. 15, 2023, about the acquisition plan. This prompted a public interest review starting Sept. 26, 2023, under the Canada Transportation Act. Transport Canada must complete its public interest assessment by June 2, 2024, with the final acquisition decision resting with the Governor in Council, upon the Transport Minister’s recommendation.
— Ag markets today: Soybeans pulled back from recent gains overnight, while corn and wheat traded on both sides of unchanged. As of 7:30 a.m. ET, corn futures were trading steady to fractionally higher, soybeans were mostly 6 cents lower, SRW wheat futures were 3 to 5 cents higher, HRW wheat was mostly a penny higher and HRS wheat was 2 to 5 cents higher. Front-month crude oil futures were modestly firmer, and the U.S. dollar index was nearly 300 points lower.
Cattle futures drop amid fear-based selling. Cattle futures faced heavy selling pressure on Wednesday amid news USDA plans to ramp up testing of dairy cattle for H5N1, even though there has been no impact to the beef herd. The psychological pressure offset initial light cash cattle trade that occurred at roughly steady prices with week-ago, suggesting the four-week slide in cash prices could be ending. Active followthrough in cattle futures, however, could weigh on cash cattle prices.
Hog traders optimistic on cash strength building into summer. The CME lean hog index is up another 19 cents to $91.64 as of April 23, marking a new high in the seasonal rally. May lean hog futures ended Wednesday $5.71 above today’s cash quote, which is close to the five-year average advance from now until May 16 when the contract is cash settled. Traders have bigger-than-normal premiums built into June and August lean hog futures, signaling they expect the rally to a summer high in the cash market to outperform the five-year average performance.
— Agriculture markets yesterday:
- Corn: May corn fell 5 1/4 cents to $4.37 3/4, closing near the session low.
- Soy complex: July soybeans fell 1/2 cent to $11.81 1/2 and nearer the session low. July soybean meal gained $3.10 to $349.20, near mid-range and hit a 10-week high. July bean oil closed down 61 points at 45.27 cents and nearer the session low.
- Wheat: May SRW rose 9 1/2 cents to $5.94 1/2, ending the session above the 100-day moving average, while May HRW rallied 15 1/2 cents to $6.24 1/4, marking the highest close since Jan. 30. May spring wheat futures closed 12 1/2 cents higher at $6.79.
- Cotton: July cotton futures fell 71 points to 81.01 cents and near the session low.
- Cattle: Cattle and feeder futures turned lower Wednesday, with expiring April live cattle futures falling $1.25 to $182.10, while most-active June futures tumbled $1.90 to $175.25. April feeder futures slid 65 cents to $243.10 and May feeders dropped $1.950 to $244.10.
- Hogs: June lean hog futures slipped 50 cents to $107.45 and settled near mid-range, while May futures sunk $1.225 to $97.35.
— Quotes of note:
- Jamie Dimon is skeptical that inflation will come down smoothly and doesn’t agree with the market’s bets on that happening. The JPMorgan CEO sat down for an exclusive interview with the WSJ (link) that covered the economic outlook, geopolitical risks and artificial intelligence. Dimon says the U.S. consumer is in good shape right now, but a huge fiscal deficit and geopolitical challenges make him cautious about the future. “I think the odds of a soft landing, the market kind of prices in 70%. I think it’s half of that,” he says.
- Canadian retail sales saw an unexpected decline in February and stagnation in March, leading to a lackluster first quarter. Capital Economics’ analyst Olivia Cross suggests these figures could prompt the Bank of Canada to reduce interest rates in their upcoming June meeting. Despite record warmth, retail sales dipped by 0.1% in February, with a slight offset from a 0.5% increase in motor vehicle and parts sales. Notably, sales drops in home furnishings, electronics, apparel, and sporting goods suggest a downturn in discretionary consumer spending.
- If you want a single number to capture America’s economic stature, here it is: This year, the U.S. will account for 26.3% of the global gross domestic product, the highest in almost two decades, writes Greg Ip of the Wall Street Journal (link).
— The U.S. economy grew at a slower pace of 1.6% on an annualized basis in the first quarter of 2024, down from 3.4% in the prior quarter and falling short of the 2.5% growth anticipated by analysts. This deceleration marks the second consecutive quarter of slowing growth. The modest expansion was fueled by rises in consumer spending, residential and nonresidential fixed investments, and state and local government expenditures, but these were partially countered by a decline in private inventory investment, alongside a rise in imports.
— South Korea’s GDP experienced a 3.4% year-on-year increase in the first quarter, surpassing expectations. This growth was partly fueled by a rise in private consumption, which grew by 0.8% on a quarterly basis, an improvement from the 0.2% growth in the previous quarter. Additionally, strong global demand for semiconductors, a sector where South Korea is a leading producer, contributed significantly to this growth, with exports climbing by 7.1% year-on-year.
— Economists expect PCE index to show 2.6% inflation; Fed’s decision eyed. The Federal Reserve’s preferred measure of inflation, the Personal Consumption Expenditures (PCE) price index will be updated Friday. Economists anticipate that the PCE index will show a 2.6% rise in prices over the 12 months ending in March, exceeding the Fed’s long-term target of 2% but still below the 3.5% increase reported by the Consumer Price Index (CPI) for the same period. A significant difference between the two indices is their treatment of shelter costs; these account for about a third of the CPI but only 15% of the PCE. The release of the PCE data is keenly watched as it may influence Federal Reserve rate decisions, affecting economic optimism and potentially impacting Treasury yields, which have recently increased.
— Rockford, Ill., is America’s top real-estate market, according to the WSJ/Realtor.com Housing Market Ranking, a turnaround for a city that was once the underwater-mortgage capital. Link for details.
Market perspectives:
— Outside markets: The U.S. dollar index was weaker as the euro, yen, and British pound were all firmer against the greenback. The yield on the 10-year U.S. Treasury note was higher, trading around 4.68%, with a higher tone in global government bond yields. Crude oil futures turned higher, with U.S. crude around $83.25 per barrel and Brent around $87.40 per barrel. Gold and silver were slightly firmer ahead of US economic updates, with gold around $2,338 per troy ounce and silver around $27.39 per troy ounce.
— Yen falls to 34-year low against the dollar. The yen hit fresh 34-year low versus the dollar and a 16-year low against the euro as investors expect the Bank of Japan won’t be hawkish enough following its monetary policy meeting that ends Friday to support the Japanese currency. Japanese officials have not yet had active discussions on what yen level would be entice intervention, Reuters reported, though market speculation is action would be taken in the 160 to 170 to the dollar area.
— BHP, the largest mining company globally, has proposed a $39 billion acquisition of its competitor, Anglo American. This move follows a significant decline in Anglo American’s annual profit, which dropped by 94% in 2023. BHP aims to enhance its copper production through this acquisition, capitalizing on Anglo American’s ownership of some of the world’s largest copper mines. The board of Anglo American is currently evaluating the offer.
— CPOPC seeks EU deforestation rule delay for smallholders. The Council of Palm Oil Producing Countries (CPOPC) is urging the European Union (EU) to postpone the enforcement of deforestation regulations for small businesses involved in supplying beef, palm oil, and other agricultural products to Europe. While the EU Deforestation Regulation (EUDR) will take effect on Dec. 30 for large and medium enterprises, small and micro businesses are given until June 30, 2025, to comply. CPOPC officials argue that smallholders need more time to meet certification requirements and improve practices. Failure to delay implementation could lead to supply chain disruptions, as mills may refuse to accept produce from uncertified smallholders, impacting producing countries like Indonesia, Malaysia, and Honduras. The EU is considering the request amid ongoing discussions, with potential shifts in its agricultural regulations to accommodate environmental concerns.
— Thailand rice exports surge. Thailand exported 3.06 MMT of rice from Jan. 1 to April 24, according to the commerce ministry, up 23.4% from last year and a record for the period. The value of exports surged 54%. Thailand says exports this year could exceed its target of 7.5 MMT.
— Ag trade update: Taiwan purchased 106,675 MT of U.S. milling wheat. Algeria purchased 30,000 MT each of optional origin corn and soymeal, and around 200,000 MT of durum wheat from unspecified origins.
— NWS weather outlook: Unsettled weather and severe thunderstorm chances will continue to expand across much of the central United States over the next several days... ...Increasing risk of flash flooding across parts of central and eastern Oklahoma Saturday night... ...Active fire weather pattern to emerge over the southern High Plains today.
NWS
Items in Pro Farmer’s First Thing Today include:
• Varied tone in grains this morning
• Warm winter would hinder Argentina’s leafhopper fight
• Colombia blocks some U.S. beef due to H5N1 in dairy cows
CONGRESS |
— Donald Payne Jr., a six-term Democratic congressman from New Jersey known for wearing bow ties, died at 65. He had been hospitalized in Newark and unconscious since April 6, when he sustained a heart attack resulting from complications of diabetes, according to his office. His death was announced by Gov. Phil Murphy. Payne had been running unopposed in the June 4 Democratic primary. It will be left to Governor Murphy to schedule a new date and a date for a special election to finish Payne’s unexpired term.
CHINA UPDATE |
— U.S. export sales to China continue for wheat, soybeans, cotton. USDA export sales data for the week ended April 18 included activity for 2023-24 of net sales of 72,247 metric tons of wheat, net reductions of 4,743 metric tons of corn, net sales of 8,019 metric tons of sorghum, 167,524 metric tons of soybeans, and 94,701 running bales of upland cotton. The first sales of cotton to China for 2024-25 were recorded at 22,000 running bales. For 2024, net sales of 4,621 metric tons of beef and 2,384 metric tons of pork were reported.
— Blinken raises concerns about fair treatment for U.S. companies in China. Secretary of State Antony Blinken called on China to provide a level playing field for American businesses as he began a visit with Chinese leaders. Blinken stressed U.S. firms need a level playing field in China and brought up “non-market economic practices” in the country during the meeting, according to a State Department spokesperson. Beijing pushed back against the criticisms, saying its practices are in line with international rules. It urged Washington to cooperate in developing steady U.S./China business ties. Blinken is set to hold talks with American business leaders in Shanghai before heading to Beijing for meetings on Friday, including a possible face-to-face with President Xi Jinping. Blinken will try to convince Chinese officials to halt defense trade with Russia, with the threat of U.S. sanctions on Beijing for its support of Moscow.
TRADE POLICY |
— U.S. Trade Representative (USTR) maintains China on its “priority watch list” for intellectual property (IP) protection issues as detailed in the latest Special 301 Report, coinciding with Secretary of State Antony Blinken’s visit to China. The report criticizes China for a slow pace of IP reforms and ongoing concerns like technology transfer, counterfeiting, and online piracy. Despite some improvements, significant issues remain regarding the fair implementation and enforcement of amended IP laws. The report highlights long-standing U.S. concerns over China’s IP practices, including forced technology transfers and unequal treatment of foreign rights holders. Additionally, China is noted as a major source of counterfeit goods and lacks transparency in its judicial proceedings, which affects IP rights enforcement. This ongoing scrutiny comes amid broader tensions in U.S./China trade relations, including recent U.S. tariffs and China’s countermeasures.
ENERGY & CLIMATE CHANGE |
— Biden administration sets national objective to achieve carbon-neutral freight shipping. To initiate this goal, they held a roundtable involving various stakeholders such as truck fleet managers, port directors, utility executives, and local government officials. This move is supported by federal funding aimed at electrifying ports and reducing emissions. Specifically, millions of dollars have been allocated to replace traditional gas and diesel trucks with low- and zero-emission vehicles at major ports across California, Texas, Georgia, New Jersey, and other locations. Additionally, to cut down on truck idling times and enhance port efficiency, the Federal Highway Administration has selected 16 projects across 11 states and Puerto Rico. These projects will share $148 million from a $400 million program established by the recent infrastructure law to minimize port pollution.
— Solar manufacturers asked the U.S. gov’t to slap duties on $12.5 billion of imported equipment from Southeast Asia, setting the stage for a trade probe. In petitions filed Wednesday, seven panel makers and polysilicon producers seek trade help to counteract what they say are unfair practices by overseas rivals. Their requests raise the prospect of tariffs as high as 271.5% later this year.
— Fossil fuel use will be banned in new U.S. gov’t buildings starting in 2030 under a Biden administration rule that the natural gas industry fought for more than a decade.
— Nebraska SAF credit. Gov. Jim Pillen signed legislation that includes a 75-cent-a-gallon Nebraska state tax credit to produce sustainable aviation fuel (SAF). Link for details.
LIVESTOCK, NUTRITION & FOOD INDUSTRY |
— Mandated testing for bird flu in dairy cows being transported between states was announced by the Biden administration following the detection of the virus in herds. USDA’s new order stipulates that cows must test negative for the influenza A viruses, which include bird flu, before transport, and herds with positive tests must report cattle movements to assist with disease tracing. Despite a highly contagious bird flu strain detected in the U.S. in 2022, officials maintain that the risk to the public remains low, with only one mild human infection reported thus far. Inactive viral fragments have been found in pasteurized milk, indicating wider virus spread among cattle than expected. USDA will reimburse for the testing of cows and aims to process thousands of tests daily, with a reporting time of one to three days. Public health experts have urged more rigorous testing and protective measures for dairy workers to prevent further spread and potential adaptation of the virus to humans.
Meanwhile, Colombia has acted to block fresh/frozen beef and beef products from cattle slaughtered on or after April 15 in Idaho, Kansas, Michigan, New Mexico, North Carolina, Ohio, South Dakota, and Texas. USDA’s Food Safety and Inspection Service (FSIS) said the restrictions are “temporary” and could result in shipments being held at port even if exporters have a valid import permit. Indications are that the Dominican Republic may also deploy some restrictions, but FSIS information does reflect any change as of yet.
USDA Secretary Tom Vilsack said on Wednesday that “based on the information we currently have available,” the U.S. milk supply is safe, and no live virus had been found in milk. The virus particles likely showed up in milk from asymptomatic cows that were found to be infected through testing, he said. More than 2,000 tests have been carried out on cattle in the last several weeks. More than 2,000 tests have been carried out on cattle in the last several weeks, Vilsack said, with USDA now expecting it will need about $500 million to address the situation in dairy, poultry, wild birds, and perhaps other species and a request to transfer money from the Commodity Credit Corporation (CCC) for the effort.
The National Milk Producers Federation (NMPF) welcomed USDA’s actions and emphasized that the milk supply remains safe thanks to pasteurization—which inactivates viruses like HPAI. “Since this virus was first discovered in cows, H5N1 in dairy cattle has been primarily an animal health concern,” said NMPF President and CEO Gregg Doud. “Today’s announcements and actions underscore that continued concern and focus on the well-being of animals and those who care for them.” Doud stressed that USDA and FDA research “has established what accumulated science indicated all along: The consumer milk supply is safe,” because of pasteurization. “Pasteurization renders the H5N1 virus, like other viruses, inactive, an important reminder to consumers of its value as a basic safeguard for human health. We appreciate that these agencies are sharing this message, which will help alleviate any concerns consumers may have,” he stated. “That said, the presence of this virus in dairy herds, as well as dairy farmers’ own commitment to animal and human health, makes USDA’s actions on testing and interstate travel appropriate,” Doud added. “Dairy farmers stand ready to take a proactive approach to ensuring that we better understand the spread of the virus, do what we can to limit that spread, and ensure the health of our animals and workers.”
Of note: The FDA hasn’t completed specific tests to confirm that pasteurization would make milk from infected cows safe, though the agency considers it “very likely” based on extensive testing for other pathogens.
Meanwhile, USDA is being criticized for its action to date on this topic. Link to a New York Times opinion item on this.
HEALTH UPDATE |
— America’s fertility rate fell to 1.62 births per woman last year. The number of births was the lowest since 1979. More women are postponing motherhood as they build a career; a drop in teenage pregnancies also contributed to the decline. A shrinking population will create problems for the government, which will have to increase healthcare spending and support for pensioners.
3.59 million: The number of children born in the U.S. in 2023, a 2% drop compared with 3.66 million in 2022 and the lowest number since 1979, according to provisional federal data.
— The Senate Health, Education, Labor, and Pensions Committee is investigating Novo Nordisk’s pricing of the weight-loss drug semaglutide in the United States. Sen. Bernie Sanders (I-Vt.), the committee’s chairman, has criticized the pharmaceutical company for charging excessively high prices for semaglutide, marketed as Ozempic and Wegovy for diabetes and obesity. Sanders contends that the steep pricing makes the drugs inaccessible to many Americans, despite them being sold at much lower prices in Canada and Europe. A March study highlighted that Ozempic could be manufactured for under $5 per month, yet is sold at a substantially higher cost.
OTHER ITEMS OF NOTE |
— Arizona House votes to repeal the state’s longstanding abortion ban from 1864, which could have enforced a near-total abortion ban with limited exceptions. This decision comes in the wake of previous unsuccessful efforts to discuss the repeal and a recent state Supreme Court decision to reinstate the ban. The move to overturn the ban leaves Arizona’s 15-week abortion restriction intact. The repeal’s fate now rests with the state Senate; if the Senate fails to pass the repeal, the 1864 law could be enacted by June 8, positioning Arizona among the states with the strictest abortion prohibitions. If the Senate approves the repeal, the 15-week abortion limit will remain the rule in Arizona.
KEY LINKS |
WASDE | Crop Production | USDA weekly reports | Crop Progress | Food prices | Farm income | Export Sales weekly | ERP dashboard | California phase-out of gas-powered vehicles | RFS | IRA: Biofuels | IRA: Ag | | Russia/Ukraine war, lessons learned | | SCOTUS on WOTUS | SCOTUS on Prop 12 pork | New farm bill primer | | Gov’t payments to farmers by program | Farmer working capital | USDA Ag Outlook Forum |