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Cotton producers: Exit 2024-crop hedges... December cotton futures enter delivery on Friday. With hefty profits in the 15% 2024-crop hedge held in December futures at 69.84 cents and the market short-term oversold, we advise hedgers to exit the position. We’ll reevaluate whether we need additional hedges after a correction – in time and/or price. Our exit was 66.67 cents for a 3.17 cent profit.
Trump team targets auto mileage rules he blasted as ‘EV mandate’... President-elect Donald Trump’s incoming administration is looking to slash fuel-efficiency requirements for new cars and light trucks as part of plans to unwind President Joe Biden’s policies he has blasted as an “EV mandate,” people familiar with the matter to Bloomberg. Trump advisers reportedly plan to reexamine fuel economy requirements that were finalized in June. They’re also targeting related standards imposed by EPA that limit tailpipe emissions of carbon dioxide and smog-forming compounds.
Trump’s plan takes aim at Biden policies to cut greenhouse gas emissions and push the auto industry toward electrification. Although the policies don’t explicitly order EVs, critics argue the rules are so strict that they act as a de facto requirement to sell EVs in large numbers.
Trump picks Lutnick as Commerce Secretary... Trump said on Tuesday he will nominate Wall Street CEO Howard Lutnick to serve as commerce secretary, where he will oversee the agency that has become the weapon of choice against China’s tech sector. Lutnick, the head of brokerage firm Cantor Fitzgerald, will also have direct responsibility for the Office of the United States Trade Representative, Trump said. Lutnick is a big proponent of tariffs, especially aimed at China.
USCC releases annual report on China... The U.S./China Economic and Security Review Commission (USCC) released its 2024 annual report to Congress. This report continues the USCC’s mandate to monitor and assess the national security implications of the economic and trade relationship between the United States and China. Here are the key highlights from the 2024 report:
Ongoing tensions and strategic concerns
• The report emphasizes that U.S./China relations remain fraught with tensions, particularly in areas such as technology transfer, military capabilities and geopolitical strategies. It notes that high-level diplomatic engagements have not translated into significant improvements in bilateral relations.
• The Commission warns that China is increasingly leveraging its economic and military capabilities to assert its influence globally, raising concerns about its aggressive foreign policy, especially regarding Taiwan.
Focus areas for congressional action
• USCC has identified several critical areas where it recommends legislative action. This includes enhancing export controls, improving transparency in foreign investments and addressing cybersecurity threats posed by Chinese technology.
• A notable recommendation is to expand the authority of the Committee on Foreign Investment in the United States (CFIUS) to scrutinize investments that could pose national security risks, particularly those related to artificial intelligence and advanced technologies.
Economic challenges in China
• The report highlights structural economic challenges facing China, including a sluggish post-Covid recovery and an unsustainable debt burden from previous investments in real estate and infrastructure. These factors may hinder China’s ability to compete effectively in high-tech sectors.
• The Commission also points out issues within China’s education system that affect its capacity to develop a skilled workforce necessary for technological advancement.
Taiwan and defense strategies
• A significant portion of the report focuses on Taiwan, advocating for stronger U.S. support for Taiwan’s defense capabilities. This includes recommendations for military training and economic sanctions against China if it were to invade Taiwan.
• The USCC suggests creating a joint U.S.-Taiwan center to counter misinformation and cyber threats from China.
Bottom line: The 2024 Annual Report serves as a comprehensive assessment of the current state of U.S./China relations, reflecting on both economic interdependencies and security challenges. USCC’s recommendations aim to guide Congress in formulating policies that address these complex dynamics effectively. The report underscores a bipartisan recognition of the need for vigilance in managing the evolving relationship with China, particularly considering its assertive global posture.
Mexico’s push for self-sufficiency in dry bean production may reduce U.S. imports... Mexico has not formally imposed an embargo against U.S. dry beans, but recent agricultural policies under President Claudia Sheinbaum indicate a significant shift toward self-sufficiency in bean production that could reduce reliance on U.S. imports. This initiative is part of a broader strategy aimed at revitalizing domestic agriculture and ensuring food sovereignty, reminiscent of practices from the 1980s.
The Sheinbaum administration aims to boost bean production by approximately 30% over the next six years. This includes establishing research facilities to develop higher-yield bean seeds and providing support to farmers.
The government’s focus on enhancing domestic production may lead to a decrease in bean imports from the U.S., which has historically been a key supplier. This shift could potentially strain trade relations with the United States, as it contradicts the principles of free trade established under the U.S.-Mexico-Canada Agreement (USMCA) by prioritizing domestic production through government interventions.
Under previous agreements like NAFTA, Mexico eliminated import licensing requirements for U.S. dry beans, allowing for duty-free access up to certain quotas. However, the recent push for self-sufficiency might lead to changes in these arrangements.
If Mexico’s agricultural policies result in reduced market access for U.S. beans or if they implement protective measures such as price supports, this could lead to trade disputes under the USMCA framework. Such actions may be perceived as protectionist and could provoke legal challenges or retaliatory measures from the United States. This especially would be the case once President-elect Donald Trump assumes his second term.
Bottom line: While there is no outright embargo on U.S. dry beans, Mexico’s strategic shift toward self-sufficiency in bean production may significantly impact its import patterns and trade relations with the United States. The emphasis on domestic agriculture reflects a broader trend in Mexican policy that could challenge existing trade agreements and alter the dynamics of agricultural exports between the two countries.
Concerning H5N1 genetic mutations identified... The genetic sequencing of the H5N1 virus infecting a hospitalized teenager in British Columbia revealed mutations that increase its potential for human infection. The teenager remains critically ill, contrasting with typically milder recent H5N1 cases linked to poultry and dairy exposure. Despite no evidence of human-to-human transmission, researchers note the virus likely mutated during infection, highlighting its adaptability. Experts caution against overreaction but recognize the potential threat of transmissibility among humans. Analysts say this case stresses the need for vigilant global monitoring and public health preparedness.
California reports possible H5N1 case in child... California’s public health department reported a possible case of H5N1 in a child with mild symptoms on Tuesday, but said there was no evidence of human-to-human transmission of the virus and that the child’s family members tested negative.
Booker urges EPA to ban dicamba herbicide amid crop damage concerns... Sen. Cory Booker (D-N.J.), a member of the Senate Ag Committee, is calling on EPA to halt the use of dicamba, a herbicide he said is known to drift and cause damage to millions of acres of sensitive crops. In a letter to EPA Administrator Michael Regan, Booker urged the denial of three pending applications for dicamba product re-approval, stating that past attempts to mitigate its harmful effects have consistently failed. Dicamba has been used for decades on various crops and non-agricultural areas like lawns and turf, according to EPA.
Maersk’s pioneering methanol conversion of a large containership... Maersk has achieved a major milestone in sustainable shipping by converting the Maersk Halifax, a 15,226 TEU container vessel, to operate on methanol fuel. The retrofit, completed at the Zhoushan Xinya Shipyard in China over 88 days, marks the first-ever methanol conversion of a large containership. The project involved extensive modifications, including engine conversion by MAN Energy Solutions, hull expansion, and increased capacity. Maersk said its efforts underscore its commitment to reducing emissions and pave the way for more retrofits, contributing to the shipping industry’s green transformation and broader adoption of methanol as a marine fuel.