Powell Pivot: Fed Holds and Likely Three Rate Cuts Next Year Produce ‘Everything Rally’

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USDA finally details PARP payments… and caveats


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Today’s Digital Newspaper

 

MARKET FOCUS

  • The Fed pivots and markets rally
  • Chief Investment Strategist at Sanctuary Wealth holds a positive outlook for 2024
  • Tesla recalls more than two million vehicles over Autopilot software
  • SEC orders more trading in U.S. Treasury bonds to go through central clearinghouses
  • ECB keeps rate on hold but lowers inflation forecast
  • Bank of England maintains benchmark interest rate at 5.25% for third consecutive time
  • Retail sales in U.S. unexpectedly increased by 0.3% month-over-month
  • IEA boosts 2024 world oil demand forecast by 130,000 bpd
  • Ag markets today
  • USDA daily export sale: 400,000 MT soybeans, unknown destinations, 2023-2024 MY
  • Indonesia seeks military help to plant rice
  • Ag trade update
  • NWS weather outlook
  • Pro Farmer First Thing Today items

 

CONGRESS

  • Senate negotiators discuss border policy in Ukraine and Israel aid talks
  • Senate approves $886 billion defense policy bill
  • House votes to authorize impeachment inquiry into Joe Biden
  • House passes Whole Milk for Healthy Kids Act of 2023

 

ISRAEL/HAMAS CONFLICT 

  • Jake Sullivan, national security adviser, will meet Binyamin Netanyahu
  • U.S. intel: Half of Israeli munitions in Gaza since Oct. 7 unguided, raising civilian risk
     

RUSSIA & UKRAINE

  • Russian leader Putin to hold press conference today
  • Russia attacking Ukraine almost nightly with Iranian-designed Shahed drones
     

POLICY

  • PARP details finally unveiled by USDA and farmers will not like them
  • U.S./Canada ag sector policy podcast
     

CHINA

  • Chinese military ramping up ability to disrupt key American infrastructure
  • China tries to boost slumping housing market
  • China buyer of more than 1 MMT U.S. wheat
  • ‘There’s no such thing as pure free trade’: Katherine Tai defends China tariffs
  • U.S. Fed interest rate stance could help ‘pummeled’ yuan
     

TRADE POLICY

  • Philippines extends lower tariffs for corn, rice and pork imports
     

ENERGY & CLIMATE CHANGE

  • Manchin criticizes upcoming hydrogen tax credit rules under Biden's climate law
  • IMF deputy calls for higher carbon prices to fight global warming
     

LIVESTOCK, NUTRITION & FOOD INDUSTRY

  • Grass-fed beef isn’t more climate-friendly than traditional grain-fed
  •  Agri Stats: Data-driven meatpacker efficiency raises collusion concerns
  • Food and Drug Administration releases report on reorganization of its foods division
  • Canada sees sharp rise in HPAI infections in poultry flocks
  • Biden administration calls for $1 billion boost to WIC funding.
     

HEALTH UPDATE

  • Drug companies could be forced to pay rebates to Medicare
  • Pfizer shares tumble to lowest close in more than nine years
     

POLITICS & ELECTIONS

  • Donald Trump surges ahead in Michigan
  • Top court clears path for Democrats to redraw House map in New York
     

OTHER ITEMS OF NOTE

  • Earliest version of Mickey Mouse set to become public domain in 2024
  • Media start-ups actively expanding offerings in various ways

 

MARKET FOCUS


— Equities today: Asian and European stock markets were mostly higher overnight. U.S. Dow opened slightly higher. In Asia, Japan -0.7%. Hong Kong +1.1%. China -0.3%. India +1.3%. In Europe, at midday, London +2.2%. Paris +1.3%. Frankfurt +0.7%.

     U.S. equities yesterday: All three major indices finished with gains as the Dow scored a record finish in the wake of the Fed leaving rates unchanged. The Dow rose 512.30 points, 1.40%, at 37,090.24. The Nasdaq gained 200.57 points, 1.38%, at 14,733.96. The S&P 500 gained 63.39 points, 1.37%, at 4,707.09. The broad-based S&P 500 finished above 4,700 for the first time since January 2022, and the Nasdaq hit a 52-week high.

     In the 488 trading days since the Dow’s last record, worries about inflation, higher interest rates and a potential recession sent stocks tumbling. Wars in Europe and the Middle East added to the uncertainty. The Dow fell more than 8,000 points, or 22%, to its low in September of last year, before making a sharp U-turn. Growing enthusiasm about artificial intelligence and hopes that the Fed’s work to cool the economy is done have sent stocks charging higher again.

     Index performance

— Tesla recalls more than two million vehicles over Autopilot software. The automaker said it would update the driver assistance program in nearly every car it has manufactured in the U.S. since 2012 to help prevent misuse. Tesla remains under investigation from federal regulators over safety concerns.

— The SEC ordered more trading in U.S. Treasury bonds to go through central clearinghouses, an effort to help stabilize the $26 trillion market. Link to details via Reuters.

— Agriculture markets yesterday:

  • Corn: March corn fell 5 3/4 cents to $4.79 1/2, marking the lowest close since Nov. 29.  
  • Soy complex: January soybeans fell 16 1/4 cents to $13.07 1/2. March soybean meal dropped $8.00 to $393.60. March bean oil closed down 56 points at 49.85 cents.  
  • Wheat: March SRW futures fell 20 1/4 cents before settling at $6.05 1/4, nearer session lows. March HRW futures dropped 24 3/4 cents to $6.32. March spring wheat fell 16 cents to $7.13 1/2.
  • Cotton: March cotton rose 13 points to 81.18 cents and near mid-range.
  • Cattle: After trading on both sides of unchanged, cattle futures moved lower Wednesday. Expiring December live cattle fell 75 cents to $166.95, while most-active February dropped $1.375 to $167.225. January feeder futures tumbled $1.8075 to $217.375.  
  • Hogs: February lean hog futures dropped $1.525 to $66.725, settling nearer session lows. December futures, which expire at noon tomorrow, rose 10 cents to $67.925.
     

— Ag markets today: Corn and wheat futures posted mild corrective gains throughout the overnight, while soybeans traded on both sides of unchanged. As of 7:30 a.m. ET, corn futures were trading 2 to 3 cents higher, soybeans were 2 cents lower to a penny higher, SRW wheat futures were 6 to 7 cents higher, HRW wheat was 3 to 4 cents higher and HRS wheat was mostly 7 cents higher. Front-month crude oil futures were around $1.25 higher, and the U.S. dollar index was more than 500 points lower this morning.

     Slow developing cash cattle market. So far, only a small amount of cash cattle have traded around $1.00 in the northern market, though volume wasn’t enough for a true gauge of this week’s market. If cattle futures face pressure the remainder of the week, cash prices are likely to trend lower again. But strength in futures could be enough to entice steady to possibly firmer bids from packers.

     Cash hog index ticks up. The CME lean hog index firmed 43 cents to $68.13, the first daily increase since Nov. 8. It’s going to take more than one daily uptick in the index to signal a seasonal low is in place, though December hogs, which expire today, finished Wednesday at a 20.5-cent premium. That suggests traders sense a little more near-term strength before the contract settles on Dec. 18. However, February futures ended yesterday at a $1.405 discount to today’s index.  

— Quotes of note:

  • Investors are looking past Fed Chair’s Powell’s warning. Yesterday, Powell painted a picture of a cooling economy and jobs market. That slowdown has helped bring down inflation in recent months, but, he added, “the path forward is uncertain.” And rate rises could again be back on the table if inflation were to increase again, Powell noted. “Powell played Santa Claus early,” said Diane Swonk, chief economist at KPMG.
     
  • Mary Ann Bartels, Chief Investment Strategist at Sanctuary Wealth, holds a positive outlook for various asset classes in 2024. She believes that the gains observed this year indicate a promising future, particularly for stocks, which she views as being in a long-term bullish trend. Bartels anticipates that stock markets will reach new record highs in 2024. Link for details.
     

— The Federal Reserve left its benchmark interest rate unchanged at 5.25-5.5%, but signaled that it would loosen monetary policy next year. That caused a frenzy of share buying on Wall Street and later in Asia. The Fed pointed to an easing of inflation, although it remains above its target. Highlights of Wednesday’s FOMC statement, presser by Fed Chair Jerome Powell, and updated Fed projections:

  • While the Fed expressed caution regarding the need for higher rates, they also released updated forecasts indicating a potential three rate cuts by the end of 2024. Those moves are projected to lower the Fed’s prime lending rate to 4.6%, a notable drop from the central bank’s last estimate in September.
     
  • The key change in the post-meeting statement compared to the prior meeting was the acknowledgment of a slowdown in the U.S. economy. Job gains had moderated, but the labor market remained strong. Inflation, while easing, was still considered elevated. “Inflation has eased from its highs, and this has come without a significant increase in unemployment,” Powell said. “That’s very good news.” Inflation is not expected to reach the Fed's 2% target until 2026.
     
  • Fed officials emphasized that they could still raise rates if necessary, but the insertion of the word "any" in the statement suggested they may be nearing the peak rate for the current cycle.
     
  • The Fed also mentioned its readiness to adjust monetary policy as needed to achieve its goals and confirmed the continuation of the balance sheet runoff.
     
  • Updated forecasts included an improved outlook for 2023 GDP growth but a slight downgrade for 2024. Inflation forecasts were also lowered. The "dot plot" showed expectations of a lower Fed funds rate at the end of 2024 and 2025.
     
  • Powell reiterated that while inflation had come down, it was too soon to declare victory. The Fed would carefully assess whether further action was needed based on data. Powell mentioned prices are not coming down generally.
     
  • Timeline murky. While discussions about rate reductions were taking place, Powell didn't provide a specific timeline for cuts and emphasized that political events like the 2024 presidential election wouldn't influence their decisions.
     
  • The Fed's focus remains on data-driven decisions as they navigate economic uncertainties, particularly in relation to inflation and the high prices consumers still face for some goods and services.
     
  • Market impacts: U.S. stock indexes hit new highs for the year, gold prices soared back above $2,000, the U.S. dollar index dropped sharply, and Treasury yields declined. The benchmark 10-year note yield dropped below 4%. That’s good news for borrowers because many common long-term loans, including mortgages, tend to track the yield on the 10-year Treasury. The Fed’s dovish pivot bolstered bets on faster, earlier moves from central banks. Goldman now expects cuts in March, May and June, while traders priced in 150 basis points of reductions next year. Attention now turns to today’s BOE and ECB meetings. Traders are pricing in six quarter-point ECB rate cuts in 2024 and five by the BOE.

    Cuts
    Fed moves
    Core prices
    Unemployment rates

     

— ECB keeps rate on hold but lowers inflation forecast. The European Central Bank maintained interest rates at multi-year highs for the second consecutive meeting on Thursday, amid efforts to address high inflation and despite indications pointing to a slowdown in economic growth. The main refinancing operations rate remained at a 22-year high of 4.5%, while the deposit facility rate held steady at a record of 4%. Market focus now turns to President Lagarde's comments, particularly regarding her acknowledgment of the unexpectedly rapid decline in inflation and the ECB's stance on speculations of potential interest-rate reductions.

— During its December meeting, the Bank of England maintained its benchmark interest rate at 5.25% for the third consecutive time, with a majority decision of 6-3 in favor of this action. This decision reflects the central bank's commitment to addressing inflation concerns, despite signs of a challenging economic environment. Three members of the bank's committee advocated for a 25-basis point rate hike, pointing to the relatively tight labor market and ongoing inflationary pressures. The Bank of England has emphasized the likelihood of a prolonged period of restrictive monetary policy to control inflation, while acknowledging the potential need for further tightening if inflationary pressures persist.

     Investor expectations suggest a reduction in U.K. interest rates next year. However, these expectations have shifted slightly, with the first rate cut now fully priced in for June, as opposed to May, which was the initial expectation before this decision.

     Market impact: The British pound extended its recent gains to above the $1.27 mark in December, the highest since late August, as hawkish signals from the Bank of England coincided with the dovish turn from the Federal Reserve.

— In November 2023, retail sales in the U.S. unexpectedly increased by 0.3% month-over-month, marking a rebound from the previously revised 0.2% decline in October. This result surpassed market expectations, which had anticipated a 0.1% decrease. The figures indicate a strong start to the holiday shopping season.

     Notable increases in sales were observed in various sectors, with the largest gains recorded in food services and drinking places (1.6%), nonstore retailers (1%), health and personal care (0.9%), and furniture stores (0.9%). Other sectors also saw positive growth, including clothing stores (0.6%), motor vehicles and parts dealers (0.5%), and food and beverage stores (0.2%).

     Conversely, sales at gasoline stations experienced a notable decline of 2.9% due to lower gas prices. Decreases were also reported in miscellaneous store retailers (-2%), electronics and appliance stores (-1.1%), building material and garden equipment and supplies dealers (-0.4%), and general merchandise stores (-0.2%).

     When excluding automotive, gas, building materials, and food services, retail sales still showed a robust increase of 0.4%. It's important to note that retail sales data are not adjusted for inflation.

Market perspectives:

— Outside markets: The U.S. dollar index was weaker ahead of U.S. economic updates, with the euro and British pound both scoring slight gains against the greenback. The yield on the 10-year U.S. Treasury note was weaker, still trading under 4% at around 3.95%, with a negative tone in global government bond yields. Crude oil futures maintained gains seen earlier in overnight action, with U.S. crude around $71.15 per barrel and Brent around $76 per barrel. Crude rose in Asian action, with US crude around $71.10 per barrel and Brent rose to around $75.70 per barrel. Gold and silver futures were registering big gains, with gold around $2,051 per troy ounce and silver around $24.37 per troy ounce.         

— IEA boosts 2024 world oil demand forecast by 130,000 bpd. The International Energy Agency (IEA) revised its forecast for world oil consumption in 2024, anticipating a quicker rise of 1.1 million barrels per day (bpd), an increase of 130,000 bpd from its previous projection. This upward revision is primarily attributed to an improved outlook for U.S. oil consumption. The IEA cited a "somewhat improved" global GDP outlook, especially in the United States, where a more stable economic trajectory is emerging, as a contributing factor to the updated forecast. Additionally, the decline in oil prices is expected to further stimulate oil consumption.

     For 2023, the IEA predicts oil demand growth of 2.3 million bpd, a reduction of 90,000 bpd compared to its previous estimate. This adjustment is mainly due to a nearly 400,000 bpd reduction in the IEA's fourth-quarter expectation as economic activity disappoints in Europe, Russia and the Middle East amid high interest rates around the world.

— Indonesia seeks military help to plant rice. Indonesia ordered the military to help farmers plant rice as severe drought has reduced output, lifting prices, requiring increased imports and threatening food security. With planting behind schedule due to dryness fueled by the El Niño weather phenomenon, President Joko Widodo requested military supervisory officers in villages to help take advantage of recent rains and immediately plant rice.

— Ag trade update: Japan purchased 102,493 MT of milling wheat in its weekly tender, including 68,345 MT U.S. and 34,148 MT Canadian. Saudi Arabia tendered to buy 715,000 MT of optional origin milling wheat.

— NWS weather outlook: Moderate to heavy snow and below average temperatures likely over portions of the Southern Rockies/High Plains through early Friday morning... ...Increasing Excessive Rainfall concerns over Florida... ...Northern tier and West warm up.

     NWS_121423

Items in Pro Farmer's First Thing Today include:

     • Corn and wheat firmer, beans choppy overnight
     • Fed pivot entices strong market reactions
     • U.K. wheat production drops 10%

 

CONGRESS

— Senate negotiators discuss border policy in Ukraine and Israel aid talks, uncertainty remains before holiday break. In a recent meeting, Senate negotiators and administration officials discussed border policy within the context of a Ukraine and Israel aid package. Progress was reported during this meeting. However, it's important to note that this progress does not guarantee that a final agreement will be reached before the Senate adjourns for the holiday season.

     The House is scheduled to adjourn for the remainder of the year, which reduces the urgency for senators to hurry with an agreement, especially if it won't be considered in the House until January or possibly later. This delay is compounded by the fact that congressional lawmakers are facing a government funding deadline shortly after their return.

     Time is running out for legislative action this year. Even if an agreement is reached, the legislative process in the Senate can be slow and complex, particularly when dealing with intricate immigration legislation. Transforming an agreement into legislation can take several days, and navigating the procedural hurdles on the Senate floor often adds an additional week to the process, making it unlikely for the legislation to pass before Christmas.

     The negotiators are discussing increased detention and expedited deportations.  

     The White House has floated a proposal to allow border officials to expel migrants without asylum screenings on days when border crossings are particularly high. Sen. Thom Tillis (R-N.C.), who has been involved in the negotiations, said Wednesday that he believed the authority to reject asylum attempts should kick in on days when crossings reach 3,000 or less, while some Democrats prefer a higher number of 5,000 crossings or more before agents can turn away migrants.”

     Democratic pushback. Rep. Pramila Jayapal (D-Wash.) said during a press conference with over a dozen House and Senate Democrats that the White House should not agree to the demands and denounced the border talks’ focus on asylum restrictions.

— The Senate approved an $886 billion defense policy bill that could grant the largest pay raise for U.S. service members in over 20 years. This comprehensive legislation authorizes a 5.2% salary increase for military personnel, along with various provisions addressing benefits, housing, and childcare for service members.

     Additionally, the bill contains a short-term extension of a contentious law that allows warrantless surveillance of foreign nationals abroad using U.S.-based communication services. Supporters argue that these searches are essential for safeguarding Americans' privacy, while critics contend that the law's loopholes enable the FBI to access collected data without proper justification.

     The House will meet at 9 a.m. ET with a vote expected on the NDAA.

— House of Representatives voted to authorize an impeachment inquiry into Joe Biden, focusing on alleged corruption related to his son Hunter's business deals. This probe was initiated in September, with three House committees conducting related hearings. Republicans argue that this resolution will bolster their ability to enforce subpoenas. President Biden dismissed it as a "political stunt."

     GOP leadership made a point to indicate that formalizing the inquiry does not mean impeachment is inevitable. The vote came as the president's son, Hunter Biden, defied Republican investigators' subpoena for closed-door testimony and reiterated he is willing to testify publicly instead. Republicans said they will initiate contempt proceedings against him for not appearing. The younger Biden's legal woes are a basis of the impeachment probe as Republicans try to connect the president to his son's million-dollar overseas deals.

— House passed the Whole Milk for Healthy Kids Act of 2023 (HR 1147), which aims to permit schools to include whole milk as an option alongside low-fat, lactose-free, and nonfat milks. Whole milk was removed from school menus following 2012 guidelines established under a 2010 child nutrition law. The bill was approved with a vote of 330-99 in the House, but it remains uncertain whether the Senate will take any action on the companion measure. In the Senate a companion bill (S1957) is being led by Sens. Roger Marshall (R-Kan.) and Peter Welch (D-Vt.) with the support of 9 additional bipartisan cosponsors.

 

ISRAEL/HAMAS CONFLICT

— Jake Sullivan, national security adviser, will meet Binyamin Netanyahu, Israel’s prime minister, and other Israeli officials on Thursday and Friday. Earlier this week President Joe Biden said support for Israel’s “indiscriminate bombing” in Gaza is waning.

— U.S. intel: Half of Israeli munitions in Gaza since Oct. 7 are unguided, raising civilian risk. U.S. intelligence reports indicate that nearly half of the munitions used by Israel in its conflict with Hamas in Gaza since Oct. 7 are unguided, often referred to as "dumb bombs." Unguided munitions are generally less accurate and can pose a higher risk to civilian populations. This may contribute to the rising number of civilian casualties in Gaza. As of the latest available information, over 18,600 people have been killed in Israeli attacks on Gaza since October 7, according to the Gaza Ministry of Health, which is run by Hamas. Despite recent attempts to restart negotiations, Hamas has not responded to these efforts, leaving hostage release talks unresolved.

 

RUSSIA/UKRAINE

— Russia is attacking Ukraine almost nightly with Iranian-designed Shahed drones, and power stations are prime targets as winter sets in. The Wall Street Journal looks at how Kyiv keeps warm (link).
 

POLICY UPDATE

— USDA initiated the issuance of $223 million in payments through the Pandemic Assistance Revenue Program (PARP). This program aims to provide financial assistance to producers who experienced a decline in allowable gross revenue due to the Covid-19 pandemic in 2020. Payments will be directed to those who suffered a 15% or greater reduction in revenue during that calendar year. Link to USDA release.

     USDA received a significant number of applications, totaling over $7 billion, from 38,500 applicants. To determine payment amounts, USDA will apply a 9.5% payment factor to all PARP payments.

     To ensure accuracy and address any errors, omissions, or appeals, USDA has established a small national reserve within the program. While payments were set to begin processing on Dec. 13, county offices have been instructed not to certify and sign PARP payments in the national payment system until they receive notification that the required reviews have been completed.

— U.S./Canada ag sector policy podcast. I teamed with Shaun Haney of RealAgriculture yesterday for an interview on U.S. and Canadian topics of note to the ag sector. Here is a link.

 

CHINA UPDATE

— Chinese military is ramping up its ability to disrupt key American infrastructure, including power and water utilities as well as communications and transportation systems, the Washington Post reports (link).

— China tries to boost slumping housing market. Beijing and Shanghai relaxed home purchase restrictions, including lowering the minimum deposit ratio for first and second homes, suggesting renewed efforts by Chinese authorities to revive the sluggish housing market. Beijing authorities said they would lower the minimum deposit ratio for first homes to 30% from 35% to 40% previously. The minimum deposit ratio for second homes will be lowered to 50% in the six urban districts and 40% for the non-urban districts from 60% to 80% previously. Shanghai lowered the minimum deposit ratio for first homes to 30% from 35% previously. The minimum deposit ratio for second homes in Shanghai will be lowered to 40% to 50% from 50% to 70% previously.

— China buyer of more than 1 MMT U.S. wheat. The USDA weekly Export Sales report for the week ended Dec. 7 confirmed that China was a major buyer of U.S. wheat. Activity for 2023-24 for the week included net sales of 1.120 million metric tons (MMT) wheat, 143,260 MT of corn, 15,035 MT of sorghum, 718,343 MT of soybeans and net reductions of 984 running bales of upland cotton. For 2023, USDA reported net sales to China of 1,273 MT of beef and 970 MT of pork, with net reductions for 2024 of 115 MT of beef and 125 MT of pork.

— ‘There’s no such thing as pure free trade’: Katherine Tai defends China tariffs. U.S. Trade Rep Katherine Tai defended tariffs against China at Semafor’s Made in America Event on Wednesday, saying that “tariffs are a part of the U.S./China bilateral relationship” because of an “unfair” global economy. The U.S. has “to get pragmatic in order to compete” with China, Tai said, which means adopting similar industrial policies that Beijing has used to hinder American production and trade. “We can’t just rely on the promise of this very beautiful vision of a very pure free trade taking us to the promised land,” Tai said.

— U.S. Fed interest rate stance could help ‘pummeled’ yuan; China could feel ripple effects of 2024 cuts. The U.S. Federal Reserve voted to keep its benchmark overnight borrowing rate steady, but said cuts could begin to “come into view”, which could benefit China’s yuan, exports and capital flows, observers said. Link for more via the South China Morning Post.

 

TRADE POLICY

— Philippines extends lower tariffs for corn, rice and pork imports. The Philippine government approved an extension of lower tariff rates on rice, pork and corn imports as the country battles inflation. The modified rates for most favored nations, approved in 2021, were due to expire at the end of this year.

 

ENERGY & CLIMATE CHANGE

— Manchin criticizes upcoming hydrogen tax credit rules under Biden's climate law. Sen. Joe Manchin (D-W.Va.) expressed strong dissatisfaction with the upcoming Treasury Department guidance for claiming hydrogen production tax credits under President Joe Biden's climate law. He described the rules as "horrible" and believes they will make it extremely challenging for applicants to qualify.

     These rules have been a subject of intense debate within the Biden administration, particularly regarding the sources of power allowed for hydrogen production. Manchin, who played a role in crafting the hydrogen tax credit provisions of the climate law, is determined to oppose these rules. He claims that the upcoming rules are far more stringent for hydrogen production than the law intended.

     The Treasury Department is legally obligated to consider the lifecycle greenhouse gas emissions resulting from clean hydrogen production. Ignoring these emissions could provide subsidies for hydrogen production that exceeds the statutory emissions thresholds.

     An administration official argues that the hydrogen tax credit is essential for the U.S. to lead in the clean hydrogen industry, create jobs, reduce costs, and lower emissions in hard-to-reach sectors like heavy-duty transportation and industry.

     Hydrogen is considered a crucial fuel for decarbonizing heavy industries like steel and cement, and the tax credit is seen as a vital incentive for its development. However, there are concerns that without strict rules mandating the use of clean-power sources for hydrogen production, it could increase demand for fossil-fuel-based electricity and result in more greenhouse gas emissions.

     The forthcoming guidance is expected to align with the three pillars advocated by some in the environmental community and industry: new clean supply, hourly matching, and deliverability. It may limit the tax credit to hydrogen production powered by recent clean-power projects and require ongoing use of clean-power sources.

     Bottom line: Manchin, known for his support of the natural gas industry, has disagreed with the Biden administration over various policy matters. He opposes the inclusion of environmental safeguards as a prerequisite for accessing the tax credit and is actively working to raise awareness about the potential consequences of these rules, including legal challenges.

— IMF deputy calls for higher carbon prices to fight global warming. Countries should hike carbon prices significantly to curb global warming, Li Bo, a deputy managing director of the International Monetary Fund (IMF), said earlier this month. Link for details.
 

LIVESTOCK, NUTRITION & FOOD INDUSTRY

— Grass-fed beef isn’t more climate-friendly than traditional grain-fed meat largely because of the amount of land needed for grazing, according to a study that could impact policymaking to mitigate agriculture emissions. A study (link) based on reviews of 100 beef production operations across 16 countries reveals that claims of low-carbon beef often overlook a significant factor: the carbon opportunity cost of land use. The research, led by Daniel Blaustein-Rejto, director of food and agriculture at the Breakthrough Institute, examined the carbon footprint of beef production.

     Land use is key. The study highlights that to accurately assess the carbon footprint of beef production, land use impacts must be considered. Specifically, the study compared the relative carbon footprint of grass-fed beef, where cattle consume grass and forage, with grain-fed beef produced in feedlots. It found that beef from pasture-finished operations, which rely more on grazing, produces 20% higher greenhouse gas emissions and has a 42% higher carbon footprint than beef from feedlot operations.

     This difference arises primarily in the "finishing stage" for cattle, where pasture-finished cattle continue to eat hay and grasses until they reach slaughter weight, while some cattle in feedlot operations are transitioned to a grain-based diet.

     The study also emphasizes that grass-fed and other pasture-finished operations can displace native ecosystems and reduce land available for restoration efforts, such as tree planting. Some mitigation measures to reduce emissions include improved grazing management and breeding animals more resistant to disease and heat.

     The findings have implications for policy strategies aimed at mitigating emissions from beef production, as beef-related emissions account for a significant portion of global greenhouse gas emissions, ranging from 6% to 14.5% in various estimates.

— Agri Stats: Data-driven meatpacker efficiency raises collusion concerns. Agri Stats, an Indiana-based company, is known for its data-driven approach to assist meatpackers in optimizing efficiency and maintaining low prices. They collect and analyze extensive data to provide insights and recommendations to their clients in the meat processing industry. However, the government has raised concerns that the data provided by Agri Stats could potentially enable companies to engage in collusion. According to a Wall Street Journal profile (link), the company's client list has been substantial, including up to 97% of the U.S. chicken industry, valued at around $60 billion, and 80% of pork processors. This profile highlights the significant role Agri Stats plays in the meat industry's operations and pricing strategies.

     Agri Stats

— Food and Drug Administration releases report on reorganization of its foods division. The FDA proposal (link) is aimed at reorganizing its foods division, addressing issues highlighted in a recent independent Reagan-Udall report and addressing lapses following an internal review of an infant formula recall and nationwide shortage. The proposed reorganization seeks to improve coordination between investigators in the Office of Regulatory Affairs and subject matter experts throughout the FDA, with a focus on enhancing food safety responses during crises. The new Human Foods Program will concentrate on three key areas: Microbiological Food Safety, Nutrition Center of Excellence, and Food Chemical Safety, Dietary Supplements, and Innovation. The proposal is currently under review at the FDA's parent agency, the Department of Health and Human Services.

— Canada sees sharp rise in HPAI infections in poultry flocks. In Canada, there has been a significant increase in the number of commercial poultry flock infections with Highly Pathogenic Avian Influenza (HPAI) since Sept. 11, totaling 70 cases. Out of these, 49 infections have occurred in British Columbia, while Alberta has reported 10 affected commercial flocks. The Canadian Food Inspection Agency's HPAI web tracking does not provide details regarding flock size or the species of the affected flock.

     Background: In 2022, Agriculture and Agri-Food Canada reported around 2,823 regulated chicken producers in Canada, whereas the United States has approximately 25,000 chicken operations. Additionally, Turkey Farmers of Canada has 520 members, while the United States has around 2,500 turkey operations. In comparison, data from the USDA's Animal and Plant Health Inspection Service, as of Dec. 12, showed that the U.S. had reported 99 infected flocks in the poultry sector.

— Biden administration calls for $1 billion boost to WIC funding. The Biden administration is urging Congress to allocate an additional $1 billion for the Women, Infants, and Children (WIC) nutrition program in January as part of funding for the USDA and other federal departments. Administration officials argue that without this additional funding, up to 2 million parents and children could be denied benefits by September, a situation deemed unacceptable. Rising food costs and increased enrollment are contributing to higher WIC expenses. The White House initially requested $6.3 billion for the program in fiscal year 2024, which was supported by the Democratic-controlled Senate, and called for an additional $1 billion in the fall. In contrast, the Republican-led House has proposed $6 billion for WIC, matching the fiscal 2023 level.

 

HEALTH UPDATE

 President Biden will announce today drug companies that could be forced to pay rebates to Medicare due to price hikes that violated the Inflation Reduction Act.

— Pfizer shares tumbled to their lowest close in more than nine years, after the giant drugmaker overestimated Covid-19 vaccine use and the company was forced to warn about its prospects.

 

POLITICS & ELECTIONS

— Donald Trump has surged ahead in Michigan, and a Bloomberg News/Morning Consult poll reveals that he currently leads in all seven crucial swing states that will play a pivotal role in determining the outcome of the 2024 election. This shift in momentum is partially attributed to women and union members becoming less supportive of Joe Biden. Furthermore, Biden is facing challenges in winning over younger voters. Despite his efforts to address student loan debt, many in the younger generation believe that his actions are insufficient, and they remain dissatisfied with his performance on this issue.

     Michigan poll

— Top court clears path for Democrats to redraw House map in New York. The ruling could allow Democrats to tilt anywhere from two to six GOP-held seats leftward. Republicans vowed to challenge any gerrymandered map. Link for details via the New York Times.
 

OTHER ITEMS OF NOTE

— Earliest version of Mickey Mouse is set to become public domain in 2024. In a moment many close observers thought might never come, at least one version of intellectual property and perhaps the most iconic character in American pop culture will be free from Disney’s copyright.

— Media start-ups are actively expanding their offerings in various ways:

  • Punchbowl News has made an acquisition deal to purchase Electo Analytics, a legislation analytics provider. This stock deal values the Washington-focused media outlet at over $100 million, signaling its commitment to enhancing its services and presence.
  • Semafor has formed a strategic partnership with notable figures, including Penny Pritzker, the former commerce secretary, and David Rubenstein, co-founder of the Carlyle Group. Together, they are organizing a conference in Washington, scheduled to coincide with the IMF and World Bank meetings in the spring. This collaboration represents a move to broaden the reach and impact of their media-related activities.

 

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 | Student loan forgiveness | Russia/Ukraine war, lessons learned | Russia/Ukraine war timeline | Election predictions: Split-ticket | Congress to-do list | SCOTUS on WOTUS | SCOTUS on Prop 12 pork | New farm bill primer | China outlook Omnibus spending package | Gov’t payments to farmers by program | Farmer working capital | USDA ag outlook forum | Debt-limit/budget package |


 

Latest News

H&P Report negative compared to pre-report expectations
H&P Report negative compared to pre-report expectations

Nearly every category topped the average pre-report estimates.

After the Bell | March 28, 2024
After the Bell | March 28, 2024

After the Bell | March 28, 2024

Pro Farmer's Daily Advice Monitor
Pro Farmer's Daily Advice Monitor

Pro Farmer editors provide daily updates on advice, including if now is a good time to catch up on cash sales.

PF Report Reaction: Bullish USDA data for corn
PF Report Reaction: Bullish USDA data for corn

Corn planting intentions and March 1 stocks came in lower than expected.

Report Snapshot: USDA shows lighter-than-expected corn acres and stocks
Report Snapshot: USDA shows lighter-than-expected corn acres and stocks

USDA reported corn acres of 90.036 million acres for 2024 and March 1 stocks of 8.347 billion bu., both well below trade estimates. Soybean acres were slightly lower than expectations, while stocks were higher.