Big Fast Food Industry Fight in California; Will Dem Governor Sign or Veto?

Ukraine mounts counteroffensive | U.S. to sell $1.1 bil. in missiles & radar support to Taiwan

USDA daily export sale: 264,000 metric tons of soybeans to unknown destinations during the 2022-2023 marketing year. This should end speculation USDA won't be reporting any sales while it fixes technical difficulties with the weekly data reporting system. Daily sales are still being reported. (See next item)

USDA weekly export sales data unavailable until further notice. USDA retracted weekly export data it had released last Thursday amid technical difficulties, as we reported last week. It said Monday the weekly sales data would not be available until further notice, suggesting the technical issues haven’t been resolved. USDA’s FAS says: “We’re still scrubbing the data.”

President Biden remains undecided about easing tariffs on Chinese imports, as he weighs the possible impact on inflation against the impact on American workers, Commerce Secretary Gina Raimondo said.

Ukraine mounted a counteroffensive to retake Russian-occupied territory on Monday, just days after the U.S. pledged a $3 billion military aid package to support its war efforts. The counteroffensive is focused on the region of Kherson, which is located close to the Crimean Peninsula that Russia annexed in 2014. A Ukrainian presidential adviser said late Monday that Ukrainian forces had broken through the front lines in several places and had almost completely cut supply lines across the Dnipro River to Russian troops on its western bank. The result could set the tone for the next phase of the war. The development has raised fears that the United Nations-brokered Black Sea grain deal, which allows Ukrainian grain exports to flow, could collapse.

The Ukraine War is depleting U.S. ammunition stockpiles, the WSJ reported. The looming ammunition shortage isn’t for lack of funds, according to those familiar with the issue.

Iran has shipped its first plane loads of combat drones to Russia, U.S. officials said Tuesday, for use in Ukraine.

China’s Communist Party said it plans to hold a twice-in-a-decade congress in October as leader Xi Jinping prepares to extend his hold on power. The party’s 25-member Politburo has proposed Oct. 16 as the start date for the party’s 20th National Congress in Beijing, the official Xinhua News Agency said Tuesday. Work on the meeting was proceeding smoothly, Xinhua said, without detailing a specific schedule. Xi Jinping this week will deliver a work report at the congress that will be critical to understanding China’s policy agenda through 2027 and beyond. Xi’s report will shed light on the Party’s plan to turn China into a superpower, according to a full-page editorial in Tuesday’s People’s Daily: “The upcoming 20th National Congress of the CCP will cast a macro level outlook on the two-step strategic arrangement for building [China into] a modern socialist superpower in an all-round way, with a focus on the deployment of strategic tasks and major measures for the next five years.”

Kashkari ‘happy’ to see market rout in wake of Jackson Hole. Minneapolis Fed President Neel Kashkari said in an interview that “People now understand the seriousness of our commitment to getting inflation back down to 2%.”

European energy prices recently plunged on signs that the region is stepping up efforts to curb a crisis that threatens to tip the region into recession with winter approaching. Meanwhile, European officials plan to change how electricity is priced.

Oil helps give Russia an upper hand over the West. Moscow is earning an average of $20 billion a month from oil and gas exports, up 42% from a year ago, helping compensate for Western sanctions. Meanwhile, Exxon Mobil said it will sue the Russian government if it cannot pull out of the Sakhalin-1 oil and gas project.

Honda is speeding up plans to manufacture electrical vehicles in the U.S. to take advantage of a revised federal tax credit. Currently, Honda doesn’t sell cars in the U.S. that are powered solely by batteries but the $7,500 federal tax credit for new EVs in the Inflation Reduction Act inspired the pivot. The facility is anticipated to open in 2025, though Honda won’t yet confirm the location.

A group of large U.S. freight railroads has reached tentative agreements with unions representing more than 15,000 workers, a step to avoid a widespread strike after years of failed labor talks. The deals with three of the 12 rail unions come several weeks after a mediation board appointed by the White House issued recommendations including wage increases and expanded health coverage. The nine remaining unions and major carriers have until mid-September to accept or reject the plan.

In California, fast-food workers could start earning as much as $22 an hour, after a bill passed the state Senate and Assembly yesterday over business objections. The bill is headed to Gov. Gavin Newsom's desk, but he hasn't said whether he'll sign it. His administration released an analysis in June opposing it.

Election Day 2022 is 70 days away. Election Day 2024 is 798 days away. We have the latest on some recent election predictions in Politics & Elections section.

Equities today: Global stocks and Wall Street mostly rebounded today. The Dow opened up around 50 points higher. Asian stocks were mixed after Wall Street fell following last week's Federal Reserve pledge to fight inflation by keeping interest rates elevated. Shanghai and Hong Kong fell while Tokyo and South Korea advanced. Traders and investors are still concerned about Covid lockdowns in China that are crimping the world’s second-largest economy (see related item in China section). In Asia, Japan +1.1%. Hong Kong -0.4%. China -0.4%. India +2.7%. In Europe, at midday, London +0.2%. Paris +1.1%. Frankfurt +1.8%.

     U.S. equities yesterday: The Dow lost 184.41 points, 0.6%, to 32,098.99, while the Nasdaq was off 124.04 points, 1%, to 12,017.67. The S&P 500 dropped 27.05 points, 0.7%, to close at 4,030.61. The index is now below key resistance levels where the bears are likely to increase their selling and add momentum to the move. All the market needs is a catalyst for lower prices and that could come in the form of economic data. With a 75-basis point increase in the fed-funds rate all but nailed on for September, technical analysts see 3,900 as the next key support level for the S&P.

     The yield on the two-year Treasury note, which is more sensitive to near-term Fed policy expectations, rose to 3.427% from 3.391% Friday.

Agriculture markets yesterday:

• Corn: December corn surged 18 3/4 cents to $6.83, the contract’s highest closing price since June 22.  
• Soy complex: November soybeans fell 23 1/2 cents to $14.37 3/4. October soymeal fell 50 cents to $433.60 and October soyoil fell 27 points to 67.65 cents.
• Wheat: December SRW wheat rose 37 1/2 cents to $8.42 3/4, a four-week closing high. December HRW wheat gained 30 1/4 cents to $9.12 1/2, a six-week-high.
• Cotton: December cotton futures fell 52 points to 117.16 cents.
• Cattle: October live cattle fell 15 cents to $142.90, the contract’s lowest closing price since Aug. 2. October feeder cattle fell $2.325 to $181.075. Live steers averaged $144.79 last week, down $2.34 from the previous week’s average and ending a run of three consecutive weekly gains.
• Hogs: October lean hogs rose $1.60 to $92.25. Cash remained weak. The CME lean hog index fell $2.73 (as of Aug. 25) to $113.32, the lowest since July 12. Today’s quote is projected down another $2.06.
   

Ag markets today: Corn and wheat futures pulled back from Monday’s gains overnight, while the soybean market faced followthrough selling. As of 7:30 a.m. ET, corn futures were trading 9 to 11 cents lower, soybeans were mostly around 20 cents lower and wheat futures were mostly 7 to 15 cents lower. Front-month crude oil futures were $2.75 lower and the U.S. dollar index was down more than 300 points this morning.

Technical viewpoints from Jim Wyckoff:

On tap today:

     • S&P Case-Shiller's 20-city home-price index for June, due at 9 a.m. ET, is expected to increase 19.4% from one year earlier. UPDATE: The index rose 18% in the year ended in June, down from a 19.9% annual rate the prior month.
     • U.S. job openings, due at 10 a.m. ET, are expected to fall to 10.3 million in July from 10.7 million one month earlier.
     • Conference Board's consumer confidence index, due at 10 a.m. ET, is forecast to rise to 97.4 in August from 95.7 one month earlier.
     • Federal Reserve Bank of New York President John Williams answers questions about the U.S. economic outlook and the steps the central bank has taken to address inflation. 11 a.m. ET.
     • China's official purchasing managers indexes for August are out at 9:30 p.m.
     • USDA releases quarterly Outlook for U.S. Agricultural Trade, 3 p.m. ET. The report will include the first forecast of exports in fiscal 2023, which begins Oct. 1, and update the estimate of exports this fiscal year. Exports are currently are forecast at a record $191 billion in fiscal 2022, including a record $36 billion to China.
     • Farm Progress holds annual Farm Progress Show, "the nation's largest outdoor farm event," through Thursday, Boone, Iowa.

Kashkari ‘happy’ to see market rout in wake of Jackson Hole. Sharp stock-market losses show investors have got the message that Fed Chair Jerome Powell and his colleagues are serious about tackling inflation, said Minneapolis Fed President Neel Kashkari. “I was actually happy to see how Chair Powell’s Jackson hole speech was received,” Kashkari said in an interview Monday. “People now understand the seriousness of our commitment to getting inflation back down to 2%.”

In the second quarter, the U.S. downtown office vacancy rate surpassed the suburban vacancy rate for the first time in decades, according to CBRE Group. Vacancies fell slightly to 16.8% in the suburbs and rose to 17% in city centers, the brokerage firm said.

Home-price growth decelerated in June. S&P CoreLogic Case-Shiller index rose 18% in the year ended in June, down from a 19.9% annual rate the prior month. The average rate on a 30-year fixed-rate mortgage was 5.55% in the week ended August 25, up from 2.87% from a year earlier, according to housing-finance agency Freddie Mac. The median existing-home price rose 10.8% in July from a year earlier to $403,800, according to the National Association of Realtors.

     Tampa had the fastest home-price growth in the country, at 35%, followed by Miami, at 33%.

     A separate measure of home-price growth by the Federal Housing Finance Agency also released Tuesday found a 16.2% increase in home prices in June from a year earlier.

Market perspectives:

     • Outside markets: The U.S. dollar index is lower in early U.S. trading, on a corrective pullback after hitting a 20-year high on Monday. Meantime, the yield on the 10-year U.S. Treasury note is fetching 3.067%. Crude is lower, with U.S. crude around $94.20 per barrel and Brent around $100.10 per barrel. Gold and silver futures were lower, with gold around $1,743 per troy ounce and silver around $18.46 per troy ounce.

     • Saudi Arabia again raised the prospect of an OPEC+ production cut. Futures for international benchmark Brent crude increased by 16 cents to $101.15 a barrel, while futures for U.S.-based West Texas Intermediate, increased by 43 cents, to $93.48 a barrel. OPEC+ countries are slated to meet early next week to discuss policy.

     • Germany's ruling coalition will discuss restricting scope of financial support for energy companies to those under financial distress and introducing windfall tax on those that have increased profits.

     • Natural gas is becoming increasingly expensive in Europe, with Dutch TTF futures more than 1,000% higher than a year ago, and more pain could come as Russia's Gazprom shutters Nord Stream 1 this week. Electricity costs, too, have soared.  "Last week Europe awoke to a bitter truth: the energy crisis is here to stay," Bank of America analyst wrote Monday. Now, EU nations are scrambling to find alternative resources, with coal in particular emerging as a key commodity.

        European energy prices recently plunged on signs that the region is stepping up efforts to curb a crisis that threatens to tip the region into recession with winter approaching. German power for next year plunged as much as 26%, while Dutch natural gas fell as much as 11%. Both benchmark contracts extended losses from Monday, after surging to records last week. 

        U.S. National Security Council spokesman John Kirby said Monday the U.S. will be “latched up” with allies in the coming months as it works to curb any shortage. Also Monday, European Commission President Ursula von der Leyen said the EU is looking at ways to ease rising energy prices and eventually break the link between gas and the cost of electricity. The bloc is also convening an emergency meeting of energy ministers on Sept. 9.

     Despite the U.S. concern, Energy Secretary Jennifer Granholm earlier this month wrote to refiners, including Exxon Mobil Corp., Valero Energy Corp., and Phillips 66, warning that the administration is considering “emergency measures” to address fuel exports if supplies of gasoline and diesel fuel remain at low levels in the Northeast. U.S. officials say they are not considering export controls.

     • Shell CEO: Europe should be prepared for several years of gas rationing. Shell CEO Ben van Beurden said it is “unlikely” Europe’s gas crisis will last just one winter, warning the region that it may have to prepare for several years of gas rationing as it prepares for a future without Russian fossil fuels. Speaking at an event in Norway, van Beurden said the energy supply crisis is unlikely to be limited “to just one winter” in the bloc. “It may well be that we have a number of winters where we have to somehow find solutions through efficiency savings, through rationing and a very, very quick buildout of alternatives,” he said. “That this is going to be somehow easy, or over, I think is a fantasy that we should put aside.”

     • Canadian farmers are expected to harvest more wheat than expected, the government’s first official harvest estimates showed Monday. Statistics Canada estimated all-wheat production at 34.6 MMT, 55% over last year, and exceeding the industry's average estimate of 34 million.

     • A group of large U.S. freight railroads has reached tentative agreements with unions representing more than 15,000 workers, a step to avoid a widespread strike after years of failed labor talks. The deals with three of the 12 rail unions come several weeks after a mediation board appointed by the White House issued recommendations including wage increases and expanded health coverage. The nine remaining unions and major carriers have until mid-September to accept or reject the plan recommended by a mediation board appointed by the White House.

     • Improvements in backlog at California ports. The number of container ships headed for the California ports of Los Angeles and Long Beach — a traffic jam that once symbolized American consumer vigor during the pandemic — declined to the lowest level since the bottleneck started to build two years ago. Eight vessels were in the official queue as of late Monday, according to data from the Marine Exchange of Southern California & Vessel Traffic Service Los Angeles and Long Beach. That’s an all-time low, officials said in a statement, down from a record of 109 set in January and about 40 lined up a year ago. As a result, L.A. port officials want ships that diverted around the congestion to return.

     • Update on Pakistan floods. Pakistan is facing its heaviest rains in 30 years, unleashing a calamity that will ravage the country’s fragile economy, hit at its food supply and dent exports. The country’s climate minister, Sherry Rehman, said that a third of the country is underwater. The death toll climbed Monday to 1,061 people. Almost 1 million homes have been destroyed or damaged in torrential monsoon rains since mid-June, with the southern province of Sindh hit hardest. Finance Minister Miftah Ismail said the economic impact of the floods will be at least $10 billion and warned of food shortages. Separately the IMF approved $1.1 billion of a bail-out to help Pakistan avoid defaulting on its debts.

        Skyrocketing prices for food and fuel saw inflation reach 45% last week, while the rupee hits record lows against the dollar and forex reserves erode. Adding to the instability, Prime Minister Shehbaz Sharif recently took over from arch-rival Imran Khan, who was ousted in April, though fresh elections must be held by the second half of next year.

     • Ag trade: South Korea purchased 137,000 MT of corn that is expected to be sourced from South America and/or South Africa and 30,000 MT of optional origin non-GMO soybeans. Japan is seeking 95,497 MT of milling wheat in its weekly tender. The Philippines tendered to buy 100,000 MT of feed wheat from unspecified origins.

     • NWS weather: Slight risk of excessive rainfall across part of Texas on Tuesday... ...Showers and thunderstorms, locally heavy, likely across the Northeast, Mid Atlantic, and Florida/the Gulf Coast... ...Prolonged and record heat wave builds over the West this week.

Items in Pro Farmer's First Thing Today include:

     • Price pressure overnight
     • Consultant cuts U.S. corn yield
     • Corn CCI rating continues to fall
     • Ukrainian grain export update (see Russia/Ukraine section)  
     • Cash cattle expected to trade steady/weaker
     • Cash hog index continues to slide

— Summary: Ukraine mounted a counteroffensive to retake Russian-occupied territory on Monday, just days after the United States pledged a $3 billion military aid package to support its war efforts. The counteroffensive is focused on the region of Kherson, which is located close to the Crimean Peninsula that Russia annexed in 2014. A spokesperson for Ukraine’s forces in the South told NBC News that some Russian forces have started to retreat. The news came as British intelligence said Russian forces in that region, particularly those in and around the city of Kherson, could be shorthanded and disorganized. Meanwhile, a delegation from the International Atomic Energy Agency is set to touch down in the country this week to inspect the Russian-occupied Zaporizhzhia nuclear plant as the war stokes fears of a potential nuclear accident. Russia should agree to a demilitarized zone around Ukraine's Zaporizhzhia nuclear power plant, but a controlled shutdown would be the “least risky option," chief National Security Council spokesman John Kirby told reporters.

• The Ukraine war is depleting U.S. ammunition stockpiles, sparking Pentagon concern, the Wall Street Journal reports (link). The level of one type of combat rounds in storage is “uncomfortably low,” and the military is studying how to fill its ammunition needs while supplying Kyiv.
• Ukrainian grain export update. Another six ships carrying a total of 183,000 MT of agricultural products left Ukraine’s Black Sea ports today, bringing the running totals to 61 vessels and around 1.5 MMT since grain shipments resumed Aug. 1. The Ukrainian grain traders’ union said corn accounted for 62% of the total volume shipped. Wheat accounted for 17% and barley for 6%. Ukraine has also exported rapeseed, sunseeds, soybeans and other commodities.
• Germany and France want the EU to drive a wedge between Putin and the Russian people with a campaign to counter propaganda within Russia and a visa policy that signals Europe is still open to ordinary citizens. They call in a discussion paper for open channels of communication with the Kremlin, even as they urge broadening sanctions against Russian officials and continued support for Ukraine.
  
  In a joint statement Germany and France warned against banning Russian tourists from entering the EU, saying it could estrange future generations. Other European countries, such as the Czech Republic and Denmark, have advocated for such a step. EU ministers will discuss the proposal on Tuesday as they weigh up further sanctions on Russia for its attack on Ukraine.
• Russia pumps almost as much oil into the global market as it did before its invasion of Ukraine. With oil prices up, Moscow is also making more money. Demand from some of the world’s largest economies has given Russian President Vladimir Putin the upper hand in the energy battle that shadows the war in Ukraine and has confounded the West’s bid to cripple Russia’s economy with sanctions, the Wall Street Journal reports (link). Sales are booming in Russia’s export market, the world’s largest in crude and refined fuels. And new trade arrangements have given Putin cover to use natural gas exports as an economic weapon against Ukraine’s European allies. Before the war, Russia supplied Europe with 40% of its gas. It has since throttled flows through the Nord Stream pipeline to Germany and other conduits, driving prices higher and putting pressure on European households and businesses. Oil revenue more than makes up the difference.
  
  
   

— ERP payments increased to $6.53 billion as of Aug. 28. Payments under USDA’s Emergency Relief Program (ERP) for eligible 2020 and 2021 losses from natural disasters:

• ERP payouts at $6.53 billion as of Aug. 28, up from $6.47 billion
• $5.64 billion to non-specialty crop producers ($5.61 billion prior)
• $888.2 million to specialty crop producers ($862 million prior)
• North Dakota still leads with $1.03 billion paid out, followed by Texas at $799.6 million.
• By crop, $1.95 billion in payments for corn, $1.10 billion for soybeans, $928.3 million for wheat, and $639.3 million for cotton.
   

— Nominations: The Department of the Interior Monday announced several appointees, including Perrin Cooke to be oversight counsel at the Office of Congressional and Legislative Affairs.
 

— China is battling Covid-19 in every province despite the world’s strictest measures to keep the virus out. All 31 mainland provinces recorded at least one local Covid case over the past 10 days, reflecting the broadest exposure to the virus since at least February 2021.

— The U.S. is preparing to sell $1.1 billion in missiles and radar support to Taiwan, risking renewed protests from Beijing which says arms sales to the democratically governed island are a threat to its security. The State Department informally notified Congress of the sale late Monday. The deal, the largest since Biden took office, comes as the president faces calls to aid Taipei to deter China from acting militarily against the island it regards as its territory.

     How much trade goes through the Taiwan Strait? About 48% of the world's 5,400 operational container ships passed through the Taiwan Strait in the first seven months of this year, providing a steady supply of clothing, appliances, mobile phones and semiconductors. The 100-mile-wide strait divides Taiwan from China, one of the world’s busiest shipping lanes. Almost half of the global container fleet and a whopping 88% of the world’s largest ships by tonnage passed through the waterway this year, according to data compiled by Bloomberg.

— China halts some meat imports from U.S. processor Tyson Foods, the country’s customs office said on Monday. The halt affects products from a plant owned by Tyson Fresh Meats Inc., the beef and pork subsidiary, for shipments from Aug. 29, after some products from the producer failed inspection, according to a notice published on the customs website. USDA confirmed on its website that the Logansport, Indiana, facility was ineligible for exports to China. The move follows Beijing’s halt on shipments of meat products from two other U.S. plants in the past month or so, citing the presence of ractopamine, a feed additive used in the U.S. but banned by China. The Tyson suspension shouldn’t have much impact on the meat trade between the two countries as there are still a lot of U.S. plants eligible to export to China.

— China’s property market has slid into severe depression. Country Garden Holdings Co., which for years ranked as China’s top real-estate developer by contracted sales, on Tuesday reported a 96% drop in first-half profit after selling a third fewer homes than it did a year ago. The Guangdong-based company said the market has struggled with weakening expectations, sluggish demand and declines in property prices.

— U.S. business confidence in China falls to record low. Sentiment about operating in China among U.S. businesses has plummeted to a new low, driven largely by Beijing’s continued use of sudden Covid-19 lockdowns, an annual survey by an American business group found. The poll of member companies by the U.S./China Business Council found American multinationals increasingly losing confidence in the near-term prospects for their China ventures, according to results published Monday. This year, 21% of respondents said they were pessimistic or somewhat pessimistic about their five-year business outlook in the world’s second-largest economy, compared with 9% last year.

— Biden still undecided on Chinese tariffs: Commerce secretary. President Biden remains undecided about easing tariffs on Chinese imports, as he weighs the possible impact on inflation against the impact on American workers, Commerce Secretary Gina Raimondo said. “He is trying to balance the benefit to inflation from cutting the tariffs against potential harm to U.S. labor,” Raimondo said in an interview cited in the Wall Street Journal. “I know he’s looking at it. He takes it incredibly seriously."

     “It all depends on exactly how it is done and on which products…but I think there is merit to it,” Raimondo said Monday. “That decision is with the president himself. We have briefed him a number of times.”

     U.S. Trade Representative Katherine Tai has said the tariffs provide leverage in confronting China, which failed to meet goals set by a Trump-era bilateral trade agreement aimed at cutting the U.S. trade deficit.

— U.S., Europe expected to take bigger bite of global power battery production by 2026. A lot more of the world’s growing supply of electric-vehicle (EV) batteries will be produced by U.S. and European companies by 2026. Link for details.

     Honda and LG announced they will spend $4.4 billion to build a new EV battery plant in the U.S., with construction beginning as early as 2023 — part of the race to comply with a new EV tax credit requiring all eligible vehicles be assembled in North America. The joint venture is expected to have an annual capacity of roughly 40 gigawatt-hours, Honda said in a new company filing, with mass production expected to start as early as 2025. The location of the EV battery plant has not yet been decided, though Bloomberg noted earlier this summer that Ohio, where Honda already has a plant, could be a front-runner. Honda has an auto plant in Marysville, Ohio, and LG Energy has a joint venture with GM in Lordstown. Link for details.

     Honda plans to fully switch to EVs and fuel-cell cars by 2040, and LG Energy Solution wants its operations to be carbon-neutral by 2050. Honda is working with General Motors and Sony Group to develop 30 EV models by 2030.

     LG Energy controls about 20% of the EV battery market by units sold, the Wall Street Journal reported, citing SNE Research, and has joint-venture agreements with GM, Hyundai Motor, and Stellantis.

     Outlook: More auto makers are expected to join forces with battery makers to achieve economies of scale, amid surging demand, rising battery prices, and soaring raw material costs, according to S&P Global Ratings.

— A method under research to charge electric cars in 10 minutes could be available in five years. In a report released this week (link), government researchers said they have found a way to charge electric car batteries up to 90% in just 10 minutes. The method is likely five years away from making its way into the market, scientists said, but would mark a fundamental shift. Link for details via the Washington Post.

— Want to buy canned whipped cream in New York state? Don’t forget your ID. A little-known state law banning sales of cartridges used in cans of whipped cream to those under 21 has only recently been noticed — and enforced — to the amusement of customers unaware of the not-so-new regulation. The age limit was enacted nine months ago to curb teens’ possible abuse of nitrous oxide, commonly known as laughing gas. The nitrous oxide found in whipped cream canisters, when it is abused as a narcotic, is commonly referred to as “whippits” or “whip-its.”

— California’s Legislature passed a bill Monday to create a government panel that would set wages for an estimated half-million fast food workers in the state. The bill, known as the Fast Act (Assembly Bill 257), would establish a panel with members appointed by the governor and legislative leaders composed of workers, union representatives, employers and business advocates. They would set hourly wages of up to $22 for fast food workers starting next year and can increase them annually by the same rate as the consumer-price index, up to a maximum of 3.5%. If the council chose to raise the minimum wage to $22 an hour, it would lead to a 20% increase in restaurant food prices, the bill’s opponents say, citing a report from the UC Riverside School of Business’ Center for Economic Forecasting and Development.

     Democratic Gov. Gavin Newsom now has until Sept. 30 to decide whether to sign or veto the bill. Newsom has not stated a position on the bill, but his Department of Finance released an analysis (link) in June opposing the measure.

     One major change was the removal of a joint liability clause that would have made a corporate franchiser responsible for labor law violations of its franchisees, a provision that opponents of the measure argued would greatly discourage franchising in the state.

     Another reduces the size of the governing council and the number of seats allocated to state regulators, originally seven of 13 spots. The revised 10-person council includes four seats held by fast-food franchiser and franchisee representatives and four seats held by fast-food worker representatives and advocates. The last two seats are for representatives of the Department of Industrial Relations and the Governor’s Office of Business and Economic Development, both of which would be gubernatorial appointees.

     The bill establishes that legislators will have sufficient time to review and potentially block any standards set by the council, and the council has a sunset in six years, allowing legislators to evaluate its effectiveness.

— Summary:

• Global Covid-19 cases at 601,595,681 with 6,488,661 deaths.
• U.S. case count is at 94,280,464 with 1,044,332 deaths.
• Johns Hopkins University Coronavirus Resource Center says there have been 604,656,326 doses administered, 223,914,723 have been fully vaccinated, or 67.96% of the U.S. population.

— A new CBS News analysis out this weekend estimated that Republicans will win 226 seats in November, down from 230 estimated in July. (A majority is 218 seats.) Fox News has also changed its forecast from a 240-seat GOP majority to 234 seats, while Cook Political Report with Amy Walter now expects Republicans to pick up 10-20 seats, instead of 15-30.

     The Senate landscape is seeing similar changes, with FiveThirtyEight placing the odds of Republicans winning the chamber at 35 in 100, down from 54 in 100 at the beginning of July. FiveThirtyEight says Democrats are “slightly favored” to win the U.S. Senate in 2022. According to the website’s model that simulates the election 40,000 times, Democrats win in 67 of 100 outcomes. The site sees the GOP as “favored” to win the U.S. House with the website’s model forecasting Republicans winning in 77 out of 100 outcomes.

     Meanwhile, a Roll Call analysis (link) says Democrats are “within striking distance of winning in some states that [President] Biden barely carried” in 2020, “and it could be enough to hold the Senate majority.” While “achieving a net gain of one seat looked well within reach for the GOP,” a “combination of the Supreme Court’s reversal of Roe v. Wade, subsequent GOP efforts to eliminate access to legal abortion at the state level, revelations from the Jan. 6 House committee, continuing investigations into former President Donald Trump and even some improvement in gas prices have given Democrats a boost.” In addition, Republicans have “the Senate-specific challenge of underperforming nominees.”

     Republicans are optimistic that voters’ initial impressions will ultimately win the day: “It’s a grocery and gas election,” Rep. Tom Emmer (R-Minn.), the chair of the House GOP campaign arm, told the Wall Street Journal. “The No. 1 issue in every one of the battleground districts that we look at remains inflation and the economy.”

     Meanwhile, women’s voter sign-ups are surging after Roe ruling, buoying Democrats, especially in key midterm battleground states.

— Biden will discuss the “battle for the soul of the nation” in primetime speech Thursday. President Biden will deliver a primetime speech on “the continued battle for the soul of the nation” in front of Independence Hall in Philadelphia, the White House said Monday. The primetime address will come a week after Biden returned to the campaign trail with a fiery speech in which he offered one of his sharpest rebukes of Republicans still catering to former President Donald Trump.

— Brazil’s presidential race. As Brazil’s presidential elections loom, the two frontrunners — President Jair Bolsonaro and former President Luiz Inácio Lula da Silva, who currently holds the lead in polling — traded barbs in a heated television debate. While Bolsonaro accused his predecessor of corruption, Lula blamed the incumbent for ruining the country.  

— Summer recess: The Senate is on recess until September 6. The House is on recess until September 13.

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 | Election predictions: Split Ticket |