Vaden Getting Good Reviews as Trump’s Pick for USDA Deputy Secretary

News/Markets/Policy Updates: Dec. 23, 2024

— Equities today: Asian and European stock indexes were mixed to firmer overnight. U.S. Dow opened around 100 points lower. In Asia, Japan +1.2%. Hong Kong +0.8%. China -0.5%. India +0.6%. In Europe, at midday, London +0.2%. Paris flat. Frankfurt -0.3%.

U.S. equities Friday and for the week: Gains in U.S. stock indices Friday after inflation data failed to keep them from registering losses for the week. The Dow lost 2.25%, the Nasdaq fell 1.78%, and the S&P 500 declined 1.99%. On Friday, the Dow gained 498.02 points, 1.18%, at 42,840.26. The Nasdaq was up 199.83 points, 1.03%, at 19,572.60. The S&P 500 rose 63.77 points, 1.09%, at 5,930.85.

— Starbucks workers strike expands across nine states. The Starbucks Workers United strike, which began last week, now spans nine states, including Missouri, New Jersey, and New York as of Sunday. Baristas in Colorado, Ohio, and Pennsylvania joined the strike Saturday, following earlier walkouts in Chicago, Los Angeles, and Seattle, Starbucks’ headquarters. The union predicts the strike could extend to “hundreds of stores” by Christmas Eve, though this represents a fraction of Starbucks’ over 10,000 company-operated locations.

— Nissan and Honda explore merger to create auto giant. Nissan and Honda entered formal discussions on a potential merger, aiming to finalize talks within six months. If successful, the deal would establish the world’s third-largest automaker, boosting their capacity to compete with rising Chinese car manufacturers. Mitsubishi, a smaller Japanese automaker already allied with Nissan, will also join the negotiations. The combined entity would rank behind only Toyota and Volkswagen in global sales. “This is a pivotal moment,” said Nissan CEO Makoto Uchida, emphasizing the potential to deliver unique automotive experiences unattainable by either company alone. Industry experts, including Morgan Stanley’s Adam Jonas, suggest the move could trigger further consolidation within the auto sector.

— The best way to preserve the U.S. steel industry — and thwart China’s efforts to dominate — is to approve the sale of United States Steel Corp. to Japan’s Nippon Steel Corp., US Steel Chief Executive Officer David Burritt writes in the New York Times (link).

— Oil prices remained steady on Friday, with Brent crude inching up 6 cents (0.08%) to $72.94 per barrel and WTI gaining 8 cents (0.12%) to $69.46. Despite these minor gains, both benchmarks ended the week down around 2.5%. Cooling U.S. inflation bolstered expectations for rate cuts, weakening the dollar and improving oil demand prospects. However, concerns over China’s waning demand persisted, with Sinopec forecasting a peak in China’s oil imports by 2025 and overall consumption by 2027. OPEC+ faced ongoing challenges, revising its 2024 demand growth outlook downward for the fifth straight month. J.P. Morgan anticipates a surplus of 1.2 million barrels per day by 2025, driven by rising non-OPEC+ supply and stable OPEC output. Additionally, geopolitical tensions continued as the EU and Britain imposed tighter sanctions on Russian oil, exploring stricter price caps to counter circumvention via the shadow fleet.

— Ag markets today: Wheat futures led gains in the grain markets during the overnight session. As of 7:30 a.m. ET, corn futures were trading a penny higher, soybeans were 1 to 2 cents higher and wheat futures were 4 to 6 cents higher. The U.S. dollar index was nearly 600 points higher, and front-month crude oil futures were modestly weaker.

Wholesale beef prices fell $4.84 for Choice to $315.85 and firmed $1.80 for Select to $285.91 on Friday. The $315.00 and $285.00 levels for Choice and Select beef, respectively, appear to be the comfort zone for packers and retailers, as values haven’t been able to sustain moves away from those levels.

The CME lean hog index is up another 14 cents to $84.35 as of Dec. 19, marking gains in five of the last seven days. After strong gains Friday, February hogs finished $1.58 above today’s cash quote, signaling traders are gaining more confidence a seasonal low has been posted in the cash market.

— Agriculture markets Friday and the week:
• Corn: March corn futures surged 5 1/2 cents higher to $4.46 1/4 today, marking a weekly gain of 4 1/4 cents.
• Soy complex: January soybeans rose 11 1/2 cents to $9.74 1/2 but lost 13 3/4 cents on the week. March soymeal rallied $10.40 to $294.50 and marked a $9.10 weekly gain. January soyoil slid 53 points to 39.48 cents and plunged 313 points on the week.
• Wheat: March SRW wheat futures closed unchanged at $5.33, nearer the daily high but hit a fresh contract low early on. For the week, March SRW lost 19 1/4 cents. March HRW wheat gained1 1/2 cents to $5.44 3/4 and near mid-range. On the week, March HRW fell 12 1/4 cents. March spring wheat futures rose 3 1/2 cents to $5.90 1/4 but closed down 8 1/4 cents on the week.
• Cotton: March cotton rose 15 points to 68.06 cents but was down 121 points on the week.
• Cattle: February live cattle rose $1.85 to $188.40, near the daily high but prices on the week were down $3.625. January feeder cattle futures gained $1.125 to $255.60, nearer the daily high and for the week lost $2.05.
• Hogs: Futures finished the week on a strong note, with the nearby February contract leading the way higher. It jumped $2.30 to end the week at $85.925. That represented a weekly rise of 32.5 cents.

— UK economy stalls in Q3 2024. Revised figures from the Office for National Statistics show Britain’s economy saw no growth in Q3 2024, contrary to an earlier estimate of 0.1% expansion. A decline in production offset gains in construction, intensifying pressure on the Labour government. Chancellor Rachel Reeves acknowledged the “huge” challenge ahead.

— A million taxpayers will soon receive up to $1,400 from the IRS, who said it’s distributing about $2.4 billion to taxpayers who failed to claim a Recovery Rebate Credit on their 2021 tax returns. People who missed one of the Covid stimulus payments or had received less than the full amount were able to claim the credit. But the IRS on Friday said it discovered many eligible taxpayers hadn’t done so. Link for details.

— U.S. population growth reaches fastest pace since 2001; Net international migration fuels a 1.0% increase as population surpasses 340 million. The U.S. population grew by nearly 1.0% between 2023 and 2024, surpassing 340 million, according to the U.S. Census Bureau’s Vintage 2024 population estimates (link). This marks the fastest annual growth rate since 2001 and a sharp recovery from the record low of 0.2% growth in 2021, driven primarily by a rise in net international migration.

Key drivers of growth

• Net international migration:
  
  • A net increase of 2.8 million people accounted for 84% of the nation’s 3.3 million population increase.
  • Migration gains have accelerated in recent years: 1.7 million in 2022, 2.3 million in 2023, and now 2.8 million in 2024.
  • Births outpaced deaths by 519,000, a rise from the historic low of 146,000 in 2021 but still below previous decades.
• Natural increase: Births outpaced deaths by 519,000, a rise from the historic low of 146,000 in 2021 but still below previous decades.

Regional highlights

South:

• Fastest-growing region with a 1.4% increase (1.8 million people), driven by international migration (1.1 million), domestic migration (411,004), and natural increase (218,567).
• Texas and Florida saw the largest numeric growth, with the District of Columbia growing the fastest at 2.2%.
• Gained 688,000 residents (0.9% increase), with growth offsetting a domestic migration loss of 170,000 through international migration (667,794) and natural increase (187,986).
• Added 435,000 residents (0.76% increase), fueled by international migration (567,420).
• Grew by 410,000 residents (0.6% increase), supported by international migration (406,737) and a smaller natural increase (52,741).
  

West:

• Gained 688,000 residents (0.9% increase), with growth offsetting a domestic migration loss of 170,000 through international migration (667,794) and natural increase (187,986).
• Added 435,000 residents (0.76% increase), fueled by international migration (567,420).
• Grew by 410,000 residents (0.6% increase), supported by international migration (406,737) and a smaller natural increase (52,741).
  
• Northeast: Added 435,000 residents (0.76% increase), fueled by international migration (567,420).
• Midwest: Grew by 410,000 residents (0.6% increase), supported by international migration (406,737) and a smaller natural increase (52,741).

State-level trends

• Texas led the nation with a numeric increase of 562,941, bringing its population to 31.3 million.
• Florida grew by 2.0%, surpassing 23 million residents, and North Carolina exceeded 11 million residents.
• Only Vermont, Mississippi, and West Virginia saw slight population declines due to natural decrease or negative domestic migration.

Of note: The Census Bureau enhanced its migration estimation methodology to improve accuracy. Future updates will include regional demographic components of change through July 2024.

Market perspectives:

— Outside markets: The U.S. dollar index was firmer, with the euro and British pound both weaker against the U.S. currency. The yield on the 10-year U.S. Treasury note was higher, trading around 4.55%, with a mostly higher tone in global government bond yields. Crude oil futures moved lower, with U.S. crude around $69.15 per barrel and Brent around $72.60 per barrel. Gold and silver were mixed, with gold lower around $2,631 per troy ounce and silver firmer around $30.18 per troy ounce.

— Holiday relief: Gas prices drop to lowest since 2020. Drivers across the nation are benefiting from lower gasoline prices this holiday season. According to GasBuddy, a crowdsourced app for pump prices, the national average is expected to be $3.01 per gallon on Christmas Day. This marks a decrease from $3.10 last year and the 2021 record high of $3.26. These are the lowest holiday gas prices since the pandemic-era lows in 2020.

— Neutral Cattle on Feed Report. USDA estimated there were 11.982 million head of cattle in large feedlots (1,000-plus head) as of Dec. 1, down 34,000 head (0.3%) from year-ago. Placements declined 3.7%, while marketings dropped 1.5% from November 2023. This data is fully neutral and should have virtually no market impact.

— Hog herd expected to be inch up from year-ago. Analysts expect USDA’s Hogs & Pigs Report this afternoon to show the U.S. hog herd up 0.1% from year-ago at 75.536 million head. The breeding herd inventory is anticipated to be about equal to last year, while market hog numbers are seen up 0.1%. After fourth-quarter slaughter ran under levels implied by the September H&P Report, some downward revisions are expected to past data.

— Indonesia’s B40 biodiesel program to reshape global palm oil market. Indonesia’s upcoming implementation of the B40 biodiesel program, raising palm oil content in biodiesel from 35% to 40% starting Jan. 1, 2025, is poised to drive up palm oil prices and reshape global market dynamics.

The B40 policy is expected to support palm oil prices in 2025 by increasing domestic demand and tightening global supplies. Experts predict crude palm oil (CPO) futures could exceed 5,000 ringgit per tonne ($1,130) in early 2025, with potential for a 10-15% price rally in early 2024 if the plan proceeds as scheduled.

Biodiesel allocation: Projected at 15.62 million kiloliters for 2025, up from 13.4 million kiloliters under B35.

Palm oil use: Energy-related consumption could surge to 13.9 million metric tons, a significant increase from 11 million tons under B35.

Export declines: Indonesia’s palm oil exports dropped 10% in November 2024, with further declines expected as B40 preparations intensify.

Production limits: Slower production growth raises fears that global supply may not keep pace with escalating demand.

Gradual implementation is anticipated, with full adoption potentially delayed until 2026. Industry experts question feasibility due to tight CPO supplies, subsidy pressures, and the need for export levy restructuring. While B40 could cut CO₂ emissions by up to 40 million tonnes annually, environmentalists warn of deforestation risks, with potential clearing of 1.5 million hectares of forest by 2039 to meet rising demand.

— USDA daily export sales:

• 132,000 MT corn to unknown destinations, 2024-2025 marketing year
• 132,000 MT soybeans for to China, 2024-2025 marketing year

— Ag trade update: Algeria tendered to buy a nominal 50,000 MT of optional origin milling wheat.

— NWS outlook: Heavy rain and mountain snow returns to the West Coast region Monday
night... ...Showers and thunderstorms developing over portions of the south-central states... ...Relatively mild conditions across the majority of the country leading up to Christmas..

(NWS)

Items in Pro Farmer’s First Thing Today include:
· Grains mildly firmer to open the week
· Wholesale beef prices return to recent comfort zone
· February hogs now at premium to cash index
· Cold Storage Report also out this afternoon

— Senate Judiciary Committee releases report on Supreme Court ethical lapses. The Democratic staff of the Senate Judiciary Committee has unveiled a report on December 21, 2024, following a 20-month investigation into alleged ethical violations by U.S. Supreme Court justices. The report identifies several critical issues, including:

• Undisclosed luxury trips and gifts from billionaires.
• Allegations of legal violations regarding ethical conduct.

The report calls for:

• Enforceable ethics reforms specifically for the Supreme Court.
• Greater transparency in justices’ financial and personal activities.
• Creation of a formal code of conduct for Supreme Court justices.

Potential outcomes include legislative proposals for stricter ethical guidelines, increased public discourse, and potential policy changes around financial disclosures.

— North Korea intensifies military support for Russia in Ukraine. North Korea is reportedly planning to deploy additional soldiers to assist Russia in its war in Ukraine, according to South Korea’s armed forces. Alongside troop deployments, North Korea is believed to be developing military equipment, including drones, for supply to Russia. South Korean estimates indicate that approximately 11,000 North Korean soldiers have already been sent to Ukraine, with around 1,100 killed or wounded in the conflict.

— Russia’s wartime economic woes slow railway trade with China. Russia’s ability to transport goods to China via its eastern rail network is under strain as wartime economic pressures and sanctions exacerbate longstanding logistical issues, Bloomberg reports (link). Russian Railways JSC, the state-run carrier, has announced a 30% cut to its investment program due to soaring borrowing costs and shifting government priorities toward military expenditures.

Key challenges include increased demand for rail capacity, inefficient infrastructure, and bottlenecks that hinder the shipment of coal and aluminum. United Co. Rusal International PJSC, a major aluminum producer, has faced delays in shipping to China, while coal miners report difficulties in meeting export targets. These strains come despite President Vladimir Putin’s assurances of economic stability and growth.

Efforts to expand the Eastern Polygon rail network, a critical trade artery linking Russia to Asia, are falling short, with significant investment reductions proposed. As freight volumes decline and commodity exports face growing obstacles, the situation reflects broader challenges in Russia’s war-affected economy.

— Paul Neiffer of Farm CPA Report shared an update on agricultural economic aid and disaster assistance tied to the Continuing Resolution passed by Congress on Dec. 20, 2024. Farm CPA Report is hosting a webinar to explain the aid distribution process and answer related questions. Open to all subscribers (both free and paid) as it covers critical information on the implementation and potential impacts. The webinar link and further updates can be accessed through the Farm CPA Report. Readers are encouraged to subscribe for ongoing insights.

— U.S. launches new probe into legacy Chinese chips. The Biden administration announced a last-minute trade investigation into Chinese-made “legacy” semiconductors that will offer Trump a choice about whether to enact new tariffs on Chinese-made chips. Legacy chips use older, mature manufacturing processes and are found in a wide range of mass market applications. They do not include advanced chips for use in artificial intelligence applications or sophisticated microprocessors. The U.S. Trade Representative’s office, which will conduct the new probe, said it is aimed at protecting American and other market-driven chip producers from China’s massive state-driven buildup of domestic chip supply. USTR Katherine Tai said the trade agency has found evidence Beijing is targeting the semiconductor industry for global domination, similar to its buildup in steel, aluminum, solar panels, electric vehicles and critical minerals. The Biden administration will begin accepting public comments on the probe on Jan. 6, and has planned a public hearing for March 11-12, according to a Federal Register notice.

— USMCA panel sides with U.S. in GMO corn dispute; Mexico to comply. In a special report on Friday (link) we noted a USMCA dispute settlement panel ruled in favor of the United States in its complaint against Mexico’s GMO corn policy, concluding that Mexico violated its trade agreement obligations. The panel sided with the U.S. on all seven issues, criticizing Mexico’s measures as unscientific and restrictive to market access under USMCA.

Mexico, while disagreeing with the ruling, pledged to respect it, citing the dispute resolution system as vital to the trade pact. Mexico has 45 days to comply, potentially revising proposed constitutional reforms that ban GMO corn for human consumption.

President Claudia Sheinbaum expressed intent to legislatively uphold the GMO corn ban, emphasizing biodiversity protection. The decision may mitigate fears of a broader ban on U.S. GMO corn for animal feed.

However, Mexico will prohibit planting of GM corn by Constitutional reform. Mexico said it would adhere to the USMCA ruling, which obliges it to eliminate restrictions on imports of U.S. GM corn. Sheinbaum announced she will seek to prohibit the planting of GM corn in the country through a reform to the Constitution in 2025. Mexico’s Ag Minister Julio Berdegué will aim to increase non-GM white corn production, to eliminate the need to import corn.

— Holiday bakers in the U.S. are facing record egg prices as an intensifying bird-flu outbreak kills millions of the nation’s laying hens. In the Midwest, a dozen large eggs cost an average of $5.67 last week, topping a previous high set two years ago, according to price-reporting service Expana.

(Expana, Bloomberg)

— USDA made substantial revisions to its 2025 food inflation forecast, with the Consumer Price Index (CPI) for all food now projected to rise by 1.9%, down from 2.5% in November. Grocery prices are expected to increase by just 0.8%, a sharp decrease from the 1.6% previously forecast. Restaurant prices, however, are now forecasted to rise 3.5%, up from 3.1%.

Among specific food categories, egg prices are a notable outlier. USDA predicts an 11.4% increase, compared to 3.4% previously. The forecast range for egg prices widened significantly, with estimates from a 9.2% decline to a 37.7% increase. Three food categories are expected to see price declines in 2025: processed fruits and vegetables (-1.0%), cereals and bakery products (-1.6%), and the broader “other foods” category (-0.9%).

2024 price forecasts hold steady. For 2024, USDA kept its projections unchanged for three consecutive months:

• Overall food prices: +2.3%
• Grocery prices: +1.2%
• Restaurant prices: +4.1%

Notable declines are expected in fish and seafood prices (-1.9%) and dairy products (-0.3%).

Long-Term Context. While 2025 food price increases are expected to remain below the 20-year average in most categories, volatile sectors like eggs and nonalcoholic beverages buck the trend. For 2024, beef and veal (+5.5%) and egg prices (+7.7%) are projected to rise significantly above their 20-year averages. The revisions suggest that food inflation is moderating but emphasize the rarity of overall grocery price declines, seen only in 2016 and 2017. These trends raise doubts about political promises to curb food costs effectively.

— Iowa announces first human case of HPAI. The Iowa Department of Health and Human Services announced Friday the state’s first human case of the highly pathogenic avian influenza (HPAI). The individual is a commercial poultry worker who was exposed by a flock in northwest Iowa, though the county of the outbreak wasn’t announced. The individual reported mild symptoms.

— Shares of Novo’s rival rose premarket. Late on Friday, Eli Lilly said the Food and Drug Administration had approved Zepbound, another obesity drug, for some sleep-apnea patients.

— Ontario Liberals push for Trudeau’s resignation amid growing dissent. More than 50 Liberal Members of Parliament (MPs) from Ontario have reached a “consensus” that Prime Minister Justin Trudeau should resign, according to the Canadian Broadcasting Corp. (CBC). This internal pressure represents roughly a third of the Liberal caucus but lacks a formal mechanism to force Trudeau’s departure.

The Liberal Party, which governs without a majority, has faced increasing turmoil following Finance Minister Chrystia Freeland’s resignation on Dec. 16. Opposition parties, including the New Democratic Party (NDP), have signaled intentions to vote down the government early next year.

Despite growing calls for his resignation, Trudeau reportedly has no plans to step down over the holidays, according to the Globe and Mail. However, prominent Liberals like Chandra Arya and Anthony Housefather argue that a leadership change is essential to avoid electoral defeat, with Freeland emerging as a potential successor.

Trudeau has served as prime minister for nine years but faces dwindling support amid political and economic challenges.

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