New Jobless Claims Edge Higher Amid Delta Variant Concerns
China buys more U.S. soybeans | Pelosi comments on infrastructure deal with centrists
In Today’s Digital Newspaper
Market Focus:
• New jobless claims edge higher amid Delta variant concerns
• U.S. 2Q GDP revised up slightly
• USDA daily export sales:
— 100,000 MT corn to Colombia during 2021-2022 marketing year (MY)
— 133,000 MT soybeans to China 2021-2022 MY; and
— 132,150 MT soybeans to unknown destinations during 2021-2022 MY
• Economic growth in the U.S. appears to be slipping: White House economic team
• European Central Bank prepared to respond to any market disruptions
• South Korea first big Asian economy to raise interest rates since start of pandemic
• El Salvador plans to become first country to adopt bitcoin as national currency
• World wheat business has picked up… key is Iran say traders
• Winds in Iowa two days ago a local problem… area 50 x 50 miles
• Focus on coming U.S. grain harvest
• Ag demand update
• Light pressure on corn and soybeans, but wheat bounces back
• Argentina’s new National Ports Admin. to manage dredging operations on Parana River
• Belarus bans grain exports for six months
• Timeline for B40 in Indonesia is slipping
• Philippines approves Golden Rice for commercial use
• Another West African country reports an outbreak of H5N1 avian flu
• Oregon may classify animal slaughter as aggravated abuse; AI & castration sexual assault
• Beef prices soften for second consecutive day
• Pork demand questions heading into fall
Policy Focus:
• USDA unveils much-delayed Dairy Donation Program
• About 89% of rental assistance funds have not been distributed
Afghanistan:
• Update
• Blinken: All American citizens who want to leave will be able to
Biden Administration Personnel:
• Gary Gensler appoints Wall Street critic Barbara Roper to key advisory role at SEC
China Update:
• Big new-crop soybean sales to China confirmed in weekly USDA report
• China cracks down on vaccine deniers
• SEC Chair Gensler has warning for hundreds of Chinese companies
Trade Policy:
• Harris touts tariff actions by Vietnam
• USTR readout on Tai session with Ethiopia notes issues on human rights
Energy & Climate Change:
• Schumer releases U.S. climate change analysis
• House Democrats' proposal includes oil drilling bans, conservation funds
• Green, farm groups offer plan for huge conservation spending in reconciliation bill.
• Bipartisan House bill would promote ethanol use
• RFA highlights high-octane, low-carbon fuels in EPA GHG hearing
Livestock, Food & Beverage Industry Update:
• USDA raises food price forecasts for 2021 vs prior outlook as inflationary pressures mount
• Price changes at McDonald’s clearly show food inflation
Coronavirus Update:
• U.S. Covid-19 hospitalizations surpass 100,000 for first time since January
• Delta vs Delta… Delta Air Lines to raise health insurance premiums for unvaccinated
• Canada will require a Covid vaccine to fly: Will U.S. follow?
• European Union will discuss whether to reimpose curbs on U.S. visitors
• WHO virus origins team says window closing for probe
Politics & Elections:
• GOP takes aim at 6 members of House Ag panel
• How Donald Trump turned off swing voters in 2020
• Democrats switch from 'defund' to 'refund' the police
• Dem Calif. Gov. Newsom will officially be up for a recall election on Sept. 14
Congress:
• House panel demands records tied to Jan. 6 attack
• Pelosi downplays deal with Democratic centrists
• Pelosi: House will write $3.5 trillion budget bill with Senate
Other Items of Note:
• H-2A visas surge
• Racial justice agreements announced by USDA
• Why baby on Nirvana’s ‘Nevermind’ album is suing now
MARKET FOCUS
Equities today: Global stock markets were mixed to weaker overnight. The U.S. Dow opened up around 50 points higher. Asian equities were mostly lower despite US gains registered Wednesday. Japan’s Nikkei was up 17.49 points, 0.06%, at 27,742.29. Hong Kong’s Hang Seng fell 278.26 points, 1.08%, at 25,415.69. European equities are mostly lower. The Stoxx 600 is down 0.3% with most regional markets seeing losses of 0.3% to 0.6%. Swiss markets, however, were higher.
U.S. equities yesterday: The Dow closed up 39.24 points, 0.11%, at 35,405.50. The Nasdaq and S&P 500 both finished at new record highs. The Nasdaq gained 22.06 points, 0.15%, at 15,041.86. The S&P 500 rose 9.96 points, 0.22%, at 4,496.19. Markets have been boosted by signs that Delta variant cases could be peaking.
Treasury yields continued their near-term momentum, climbing as high as 1.35%
On tap today (see detailed list of events and reports below):
• European Central Bank releases minutes from its July 21-22 meeting at 7:30 a.m. ET.
• U.S. jobless claims are expected to rise to 350,000 in the week ended Aug. 21 from 348,000 a week earlier. (8:30 a.m. ET) Update: The number of Americans newly seeking jobless benefits edged slightly up last week from a pandemic-era low as the labor market fights to recover amid concerns over the surge in Covid-19 cases driven by the Delta variant. Initial filings for unemployment benefits, seen as a proxy for layoffs, reached 353,000 last week, up 4,000 from the prior week’s revised level of 349,000. It’s the first increase in weekly new claims in over a month as the labor market mounted a strong recovery in July and August that saw claims hit a pandemic-era low.
• U.S. gross domestic product is expected to grow at a 6.7% annual pace in the second quarter, upwardly revised from an initial estimate of 6.5%. (8:30 a.m. ET) Update: U.S. 2Q GDP revised up slightly. U.S. GDP in the second quarter was revised up to a rate of 6.6% from the initial 6.5% level, reflecting stronger consumer spending and exports compared with data for the initial estimate issued last month. Despite the second quarter data, unease still exists on the third quarter prospects due to the Delta variant and continued labor and materials shortages that have driven up prices for a host of goods. But the third quarter pace may not falter much from the second-quarter mark.
• USDA Weekly Export Sales report, 8:30 a.m. ET.
• Kansas City Fed's manufacturing survey is expected to fall to 26 in August from 30 a month earlier. (11 a.m. ET)
• President Biden welcomes Israeli Prime Minister Naftali Bennett to the White House as he seeks to establish a new tone for the U.S.-Israel relationship following 12 years of Benjamin Netanyahu’s premiership.
Economic growth in the U.S. appears to be slipping. The White House’s economic team has lowered its informal internal forecasts for this year, renewing efforts by the administration to get two multitrillion-dollar spending bills through Congress as soon as possible.
The European Central Bank is prepared to respond to any market disruptions that may arise when the Federal Reserve starts to unwind monetary stimulus, ECB Chief Economist Philip Lane told Reuters. Lane stressed that policy makers are determined to keep financing conditions across the 19-nation euro region favorable and signaled that they’ll take their time to decide how to conduct bond purchases once their pandemic emergency program expires.
South Korea became first big Asian economy to raise interest rates since the start of the pandemic, as record household debt and rocketing property prices outweighed fears over Seoul’s struggle to contain the Delta coronavirus variant. In a closely watched decision today, the Bank of Korea (BoK) raised its benchmark rate to 0.75%, increasing the seven-day repurchase rate 25 basis points from a record low of 0.50%. It marked the country’s first rate rise since September 2018, while interest rates have remained unchanged since the BoK cut them by 50 basis points in May last year. "We won't be doing things in a hurry, but we also won't hold off," BoK Governor Lee Ju-yeol said at a news conference. "As for timing for the further hikes, we will consider how the Covid-19 situation plays out, and changes in the Fed's policy stance, which would have an important impact for us, as well as how the financial imbalances play out."
U.S. Federal Reserve Chair Jerome Powell will signal the direction of U.S. monetary policy on Friday in a virtual speech at the Fed’s annual symposium.
Market perspectives:
• Outside markets: The U.S. dollar index was slightly firmer ahead of U.S. economic updates with only the British pound showing weakness against the greenback. The yield on the 10-year U.S. Treasury note was slightly higher ahead of U.S. GDP, other economic data, with a firmer tone to global government bond yields. Gold and silver futures are mixed ahead of U.S. economic updates, with gold around $1,791 per troy ounce and silver around $23.70 per troy ounce.
• Bit player. El Salvador plans in less than two weeks to become the first country to adopt bitcoin as a national currency.
• Crude oil prices are lower ahead of U.S. trading with U.S. crude around $67.60 per barrel and Brent around $70.65 per barrel. Crude was under pressure overnight in Asian action, with U.S. crude down 40 cents at $67.96 per barrel and Brent down 29 cents at $71.96 per barrel.
• The world wheat business has picked up. Iran, Turkey, Pakistan, Tunisia, and the Philippines all have announced tenders. The Iran tender is the important one, says grain trader and analyst Richard Crow. He says “market talk is they need around 5 million tons of wheat. If they buy, it keeps them on the schedule of needing that amount.”
• Winds in Iowa two days ago were a local problem for about an area 50 x 50 miles.
• Focus on coming U.S. grain harvest. The Surface Transportation Board holds a meeting today by teleconference of the National Grain Car Council to discuss rail carrier preparedness to transport the 2021 grain harvest. The group will hear from Nate Kauffman with the Kansas City Fed on the economic recovery, a presentation on the “changing landscape for agriculture” by Ankush Bhandari of Gavilon and then explore the rail situation ahead of the 2021 harvest.
• USDA daily export sales:
— 100,000 MT corn to Colombia during 2021-2022 marketing year (MY)
— 133,000 MT soybeans to China 2021-2022 MY; and
— 132,150 MT soybeans to unknown destinations during 2021-2022 MY
• Ag demand: Turkey tendered to buy around 300,000 MT of milling wheat. Pakistan provisionally purchased around 160,000 MT of milling wheat in an international tender for up to 400,000 MT of the grain. Jordan bought around 60,000 MT of hard milling wheat to be sourced from optional origins. It has at least two participants in its tender to buy 120,000 MT of animal feed barley. South Korea’s largest animal feed maker Nonghyup Feed Inc. bought around 135,000 MT of animal feed corn in an international tender. A group of importers in the Philippines are through to have rejected all offers and made no purchase in a tender for up to 168,000 MT of animal feed. Japan’s ag ministry purchased 29,805 MT of food-quality wheat from the U.S. and 52,048 MT from Canada.
• NWS weather: Severe thunderstorms and the potential for flash flooding are forecast across portions of the Northern Plains and Midwest through Friday... ...Uncomfortable and potentially dangerous heat continues throughout much of the central and eastern United States, as well as the Desert Southwest.
Items in Pro Farmer's First Thing Today include:
• Light pressure on corn and soybeans, but wheat bounces back
• Argentina’s new National Ports Admin. to manage dredging operations on Parana River
• Belarus bans grain exports for six months
• Timeline for B40 in Indonesia is slipping
• Philippines approves Golden Rice for commercial use
• Another West African country reports an outbreak of H5N1 avian flu
• Oregon may classify animal slaughter as abuse; AI & castration sexual assault
• Beef prices soften for second consecutive day
• Pork demand questions heading into fall
POLICY FOCUS
— USDA unveils much-delayed Dairy Donation Program (DDP). USDA on Wednesday finally unveiled details of its long-awaited DDP, which will utilize $400 million in funding from the 2021 Consolidated Appropriations Act to reimburse producers for the donation of surplus dairy products and facilitate distribution of the products to people in need. Under the DDP, eligible dairy organizations partner with non-profit feeding organizations and the partnerships can then apply for reimbursements to cover some expenses related to eligible dairy product donations.
“The goal is to facilitate timely dairy product donations at times when traditional purchase programs don't move quickly enough,” explained USDA Deputy Secretary Jewel Bronaugh during a media briefing on DDP. “When there is surplus milk production, we're encouraging the milk to be donated instead of losing milk to loss and waste.” The effort is based on the Milk Donation Reimbursement Program (MDRP) established under the 2018 Farm Bill but “can be used for a full range of dairy products, not just fluid milk,” and “also reimburses dairy processors for a significantly larger portion of the cost of the donated products,” she detailed. DDP is intended to “help someone in need, minimize food waste, and support the US dairy industry,” Bronaugh said.
The draft interim final rule USDA released for the DDP also includes a supplemental reimbursement for participants in MDRP, Bronaugh noted. Notably, the program will also retroactively reimburse eligible organizations for donations made before their DDP plans are formally approved by USDA, but total reimbursement for products donated between Jan. 1, 2020, and Dec. 27, 2020 (when funding for the program was enacted) are capped at $50 million and will be prorated if reimbursement requests exceed that amount.
The interim final rule has yet to be published in the Federal Register. Once published, there will be a 60-day period for public comment.
Program eligibility: Dairy farmers, cooperatives, or processors — Eligible Dairy Organizations (EDOs) — that purchase fresh milk or bulk dairy products to process into retail-packaged dairy products and meet other requirements can participate in the effort. Those participating in MDRP are automatically considered eligible for DDP.
Reimbursements under DDP will cover all or part of the following:
- Input costs - fresh fluid milk or bulk dairy commodity product milk equivalent used in the eligible dairy product;
- Manufacturing costs; and,
- Transportation costs - moving the product between the production plant and distribution location.
Products eligible for reimbursement must be made primarily from cow’s milk produced in the U.S., be packaged in consumer-sized packaging, meet applicable provisions for dairy products in the Federal Food, Drug, and Cosmetic Act, and have a sell-by, best-by, or use-by date no sooner than 12 days from delivery to the eligible distributor. Since the program is intended to encourage the use of excess fresh fluid milk for donation, the draft rule notes that reimbursement is not extended to powders and other dry dairy products used as an ingredient in eligible dairy products such as powder used to fortify cheeses or ice cream.
Questions on program rollout, alignment with other USDA goals. Senate Ag Committee Chair Debbie Stabenow (D-Mich.) joined Bronaugh on the call and said dumping of milk unable to be sold during the early stages of the Covid-19 pandemic at the same time there were long lines at food banks motivated Congress to set aside funding for the effort. “The question was, How do we address this very important, nutritious commodity and be able to get it to families in need,” she remarked, calling the resulting program “a win-win.”
Stabenow noted that the program is inspired by efforts undertaken in Michigan following the Flint water crisis, where the Michigan Milk Producers Association (MMPA) partnered with the Food Bank of Eastern Michigan to offer donated dairy products to families in need. That effort, she noted, has been expanded statewide and seen more than 250,000 gallons of fluid milk donated since it began. “We're excited about continuing those efforts — and more importantly, seeing this being expanded beyond the boundaries of just here in Michigan,” said MMPA President and CEO Joe Diglio. He added that he is enthusiastic about “the flexibility that this program has in it,” including reimbursement for manufacturing and transportation costs associated with donations.
Asked about why USDA is rolling out the program now — as milk demand is beginning to return to pre-pandemic levels as children return to school, Stabenow commented that she would have “loved to have had [DDP] sooner,” but said she believed that high levels of food need in some regions mean the program is still relevant.
Bronaugh maintained the Biden administration “really hit the ground running” on efforts to bolster nutrition and feeding efforts, adding that “the need for these [dairy] products will continue.” The program was originally to have been up and running within 60 days of the Consolidated Appropriations Act being signed into law. Hit the ground running now has a new definition.
In terms of how much food waste DDP is expected to eliminate, Bronaugh said USDA does not yet have estimates. But “as we con tinue to roll out the program, I think in time we will be able to better monitor and talk about the results of the program, which is to reduce loss and waste of our dairy products.” She added that DDP “certainly feeds into [USDA’s] overall goal of reducing total food loss and waste domestically and internationally [50%] by 2030.”
Eligible dairy organizations (EDOs) can apply for reimbursement based on the Federal Milk Marketing Order (FMMO) minimum classified value on the date of production for fresh fluid milk products used to make the donated eligible dairy product.
DDP is part of USDA’s broader $6 billion Pandemic Assistance for Producers (PAP) initiative and comes on the heels of the department’s rollout of Pandemic Market Volatility Assistance Program (PMVAP) for dairy farmers last week. In all, USDA has announced over $2 billion in aid for the dairy sector through PAP.
Comments: Still awaited are $580 million in supplemental Dairy Margin Coverage (DMC) payments that are to be targeted to small and medium size producers and the actual payouts have yet to start on the $350 million in pandemic payments to dairy producers announced Aug. 19.
— About 89% of rental assistance funds have not been distributed, figures show. The $46.5 billion rental aid program created to pay rent accrued during the pandemic continues to disburse money at a slow pace, as the White House braces for a Supreme Court order that could strike down a new national moratorium on evictions. Just $1.7 billion was released last month, bringing the total so far to $5.1 billion of the $46.5 billion appropriated by Congress to prevent evictions amid the Covid-19 pandemic, according to the U.S. Treasury Department. The White House yesterday released a fact sheet outlining new guidance for state and local authorities that it hopes will help speed the process.
AFGHANISTAN
— Quick update:
- Up to 1,500 Americans could still be seeking to leave Afghanistan, State Dept. says.
- Canada says it might not be able to evacuate everyone it wants to before Aug. 31.
- Kabul residents are running out of cash and struggling with rising prices.
- U.S. and allied planes flew an additional 19,200 people out of Kabul in the past 24 hours, but more than 10,000 people were still inside the international airport awaiting flights out of the country.
- The U.S. embassy — along with the British and Australian governments, warned citizens to stay away from Kabul’s airport — going so far as to warn Americans to avoid certain entrances to the airport.
- Biggest immediate threat to both Americans and the Taliban is a common rival that is lesser known: Islamic State Khorasan, or ISIS-K, the terrorist group’s affiliate in Afghanistan.
- U.S. Treasury Department has given humanitarian organizations a green light to provide aid to Afghanistan, easing concerns that antiterrorism sanctions on the Taliban could prevent the country from getting the food and other supplies it needs to stem a growing economic crisis.
- Russia starts Kabul evacuations as security situation worsens; Kremlin shift comes as Moscow and Beijing stress need to prevent spillover of instability to region.
- Chancellor Angela Merkel of Germany called for talks with the Taliban to preserve progress made for Afghans.
- A burgeoning trade relationship between Iran and the Taliban threatens to undermine key U.S. pressure campaigns against both. Link to WSJ item.
— Secretary of State Antony Blinken on Wednesday promised that all American citizens who want to leave will be able to do so, even after next Tuesday’s deadline for withdrawal of Western troops from the country. Blinken also vowed to use “every available tool” to eventually rescue vulnerable Afghans whose lives under Taliban rule would be especially perilous but whose transport from the country is vastly more complicated, particularly those who worked with the U.S. over the last two decades. “Let me be crystal clear about this: There is no deadline on our work to help any remaining American citizens who decide they want to leave to do so,” he said. “That effort will continue every day past Aug. 31.” Blinken made the same assurance to “the many Afghans who have stood by us over these many years, want to leave and have not been able.”
Blinken revealed that what came to be the waning weeks of the U.S.-backed Afghan government, the State Department sent 19 messages advising, then urging American citizens to leave Afghanistan. It is unclear how many heeded the advice, but the Taliban takeover unfolded far more rapidly than U.S. officials or others expected, finishing essentially in 11 days and putting an end to the 20-year U.S.-led war.
White House Press Secretary Jen Psaki said the U.S. intended to set up some form of consular services for Afghans who would want to leave Afghanistan after the end of the month. “This effort does not end Aug. 31,” Blinken said.
BIDEN ADMINISTRATION PERSONNEL
— SEC Chairman Gary Gensler tapped a Wall Street critic as a senior adviser. Gensler appointed Barbara Roper, the longtime director of investor protection at the Consumer Federation of America, to serve as a senior adviser focused on policy issues, broker-dealer oversight and investment-adviser oversight.
CHINA UPDATE
— Big new-crop soybean sales to China confirmed in weekly USDA report. The flurry of daily sales announcements that were made during the week ended Aug. 19 were confirmed in USDA’s weekly update of U.S. export sales of ag goods to China. USDA reported sales of 934,500 tonnes of soybeans to China for 2021-22 with the only other 2021-22 activity reported as 7,374 running bales of Upland cotton.
Activity for 2020-21 included net reductions of 26,585 tonnes of wheat, net reductions of 135,240 tonnes of corn, net sales of 16,754 tonnes of sorghum and 90,806 tonnes of soybeans.
Net sales of 1,537 tonnes of beef and 1,264 tonnes of pork for 2021 were also reported.
— China cracks down on vaccine deniers. Authorities in at least 12 cities in China have warned residents that people who refuse vaccinations could be punished if they are found responsible for outbreaks.
— Securities and Exchange Commission Chair Gary Gensler has a warning for hundreds of Chinese companies that have raised billions of dollars in U.S. markets: Submit to more scrutiny soon or get kicked out.
TRADE POLICY
— Harris touts tariff actions by Vietnam. The White House issued a fact sheet (link) on the visit to Vietnam by Vice President Kamala Harris, noting “Vietnam’s positive consideration” of a U.S. proposal to eliminate or reduce Most-Favored Nation (MFN) import duties on corn, wheat and pork products. However, Bloomberg reported that Harris did not outline to reporters “any potential resolution to ongoing situation, though [she] said the U.S. will follow up on the issue.” U.S. Wheat Associates issued a statement welcoming what they labeled a suspension in the import tariffs on wheat. Those tariffs had been lowered by Vietnam in 2020, the group noted. There has been no other information provided by the administration on the situation.
— USTR readout on Tai session with Ethiopia notes issues on human rights. U.S. Trade Representative (USTR) Katherine Tai raised human rights issues in a session Wednesday with Ethiopia's Senior Policy Advisor and Chief Trade Negotiator Mamo Mihretu. A readout of the session from the Office of the USTR noted Tai “raised the ongoing violations of internationally recognized human rights amid the ongoing conflict and humanitarian crisis in northern Ethiopia, which could affect Ethiopia’s future African Growth and Opportunity Act (AGOA) eligibility if unaddressed.” But the recap also noted the two “agreed” on the importance of working together.
ENERGY & CLIMATE CHANGE
— U.S. climate change analysis released. Senate Majority Leader Chuck Schumer (D-N.Y.) released climate change analysis showing the Democrats-only reconciliation plan — and to a much lesser degree the bipartisan infrastructure deal — would essentially put the U.S. on track to meet President Biden's pledge under the Paris Agreement. The April pledge vows a 50%-52% cut in U.S. greenhouse gas emissions by 2030. Two key parts of the Senate reconciliation plan are focused on electricity: payments and penalties that push utilities to speed up zero-carbon power deployment, and new and expanded clean energy tax credits.
— House Democrats' proposal said to include oil drilling bans, conservation funds. Democrats on the House Natural Resources Committee aim to spend roughly $31.5 billion on priorities including conservation programs, environmental analysis and abandoned mine cleanup as a part of the $3.5 trillion reconciliation plan, according to a draft proposal circulated by committee staff and seen by Bloomberg. The lawmakers also intend to eliminate a congressional mandate to auction off Arctic National Wildlife Refuge oil and gas leases by Dec. 22, 2024, a move that would cost an estimated $40 million, and ban offshore drilling in most U.S. waters, at a cost of roughly $50 million.
— Green, farm groups offer plan for huge conservation spending in reconciliation bill. Congress should provide $30 billion for climate-friendly agricultural practices and organic production in the upcoming reconciliation bill, said five dozen farm, environmental, and food groups in a letter to Democratic leaders on Wednesday. They also backed $10 billion for debt relief “to stabilize operations of producers who have not received a fair share of aid from recent federal support programs”; $5 billion for sustainable and organic agriculture research; and $3 billion for value-added agriculture, rural renewable energy, and infrastructure for local processing of crops and livestock. Link to letter.
“We will have robust investment” in land stewardship in the reconciliation bill, Senate Ag Committee chairwoman Debbie Stabenow (D-Mich. Said. She declined to attach a price tag to her forecast but said, “It will be enough to move forward in a robust way.” Earlier this year, she advocated a $50 billion increase over 10 years for conservation programs.
— Bipartisan House bill would promote ethanol use. Rep. Cheri Bustos (D-Ill.) and five other Democrats and Republicans introduced legislation (HR 5089) aimed at increasing the use of low-carbon, high-octane fuels including ethanol to improve vehicle efficiency and performance, as well protect the environment and public health. Co-sponsors of the bill are Democrats Emanuel Cleaver (Mo.), Cindy Axne (Iowa) and Republicans Darin LaHood (Ill.), Jason Smith (Mo.), and James Comer (Ky.).
The Next Generation Fuels Act of 2021 would phase in higher gasoline octane levels through greater use of low-carbon renewable fuels, starting with a 95 Research Octane Number and increasing to 98 RON. The bill would require automakers to use a test fuel that contains 20% ethanol with a minimum 95 RON octane value for new vehicle emissions and fuel economy standards starting with model year 2026 cars.
— RFA highlights high-octane, low-carbon fuels in EPA GHG hearing. U.S. biofuels can plan a positive role in reducing auto emissions, particularly high-octane, low-carbon fuels like ethanol, the Renewable Fuels Association (RFA) testified at a hearing Wednesday put on by EPA on their emissions standards for 2023-2026 light-duty vehicles. “If our nation is to reach its goal of net-zero GHG emissions by mid-century, we’ll need both cleaner, more efficient cars and cleaner, more efficient fuels,” RFA President and CEO Geoff Cooper said in prepared remarks. “That’s why RFA’s member companies recently committed to achieving a net-zero carbon footprint by 2050 or sooner.” Cooper said it was disappointing that EPA only focused on engines and vehicles while ignoring what he said was the important impact that fuels have on emissions and mileage. “Unfortunately, EPA’s proposal fails to recognize that the fuels we put into our engines can have as much—or more—impact on fuel economy and GHG emissions as the engine technologies themselves,” Cooper said. “The proposed rule counts on broad deployment of high-compression ratio engines that will require high-octane fuel but does nothing to ensure those high-octane fuels will actually be produced and available in the marketplace.”
Cooper also said the agency needed to focus on higher-octane fuels for model years beyond 2027 to address emissions and encourage automakers to make more engines that use such fuels.
LIVESTOCK, FOOD & BEVERAGE INDUSTRY
— USDA raises food price forecasts for 2021 vs prior outlook as inflationary pressures mount. U.S. food price inflation is now seen at 3% to 4% in 2021, up from a prior forecast for food price inflation of 2.5% to 3.5% in 2021, according to updated forecasts from USDA’s Economic Research Service (ERS). Food prices overall in 2020 increased 3.4%, putting the updated forecast level just above that based on the midpoint of the forecast range.
For food away from home (restaurant) prices, USDA now seeks them rising 3.5% to 4.5% in 2021 compared with 2020 when they rose 3.4%. USDA previously expected those prices to increase 3% to 4%.
Food at home (grocery) prices are now forecast to increase 2.5% to 3.5% in 2021, up from a prior expectation of an increase of 2% to 3%. But that still puts the forecast increase for 2021 below the 3.5% rise that was registered in 2020.
Forecasts for 2021 have all increased since USDA’s initial forecasts issued in June 2020. At that point, ERS expected 2021 overall food prices to increase 2% to 3%, grocery store prices were expected up 1% to 2%, while restaurant prices were only expected to increase 1.5% to 2.5%.
Levels for 2022 seen steady with prior outlooks. While food prices are forecast to increase more than the prior outlooks in 2021, ERS left their 2022 food price inflation outlooks steady with previous forecasts. All food prices are seen rising 2% to 3%, with grocery store prices seen moving up 1.5% to 2.5% and restaurant prices are seen increasing 3% to 4%.
Several shifts in specific commodities. Forecast ranges for 12 of the 22 food categories forecast by USDA were revised upward this month, ERS detailed, including those for beef and veal, pork, poultry, fish and seafood, dairy products, fats and oils, and sugar and sweets.
Meat prices are seen rising more than the prior outlook from ERS, with meats now seen rising 3.5% to 4.5%, with beef prices seen increasing 4% to 5%. But that forecast increase in beef prices is still far less than the 9.6% rise registered in 2020. USDA noted that beef, pork and poultry prices have seen five straight months of increasing prices, with ERS noting that, “prices have been driven up by strong domestic and international demand, high feed costs, and supply chain disruptions. Winter storms and drought impacted meat prices this spring, and processing facility closures due to cybersecurity attacks impacted beef and other meat production in May.”
Fish and seafood prices are also seen rising 3% to 4%, up from a prior outlook. ERS chalks the increased outlook to “low imports, labor shortages and strong domestic demand, particularly in the foodservice sector.”
Perspective: Even no change in the forecast levels for 2022 from prior forecasts means those increases are coming from a higher starting point of 2021 prices, which means consumers still will feel higher food prices ahead.
— More on food inflation. When President Donald Trump left office, the average price for an order of large French fries at McDonald’s was $1.89. A double quarter pounder with cheese cost $4.79, a Big Mac $3.99, Filet O Fish $3.79. As millions of Americans who frequent the fast-food chain today have recognized, their bill is much higher. A large French fry averages $3.89 — a whopping 106% increase from just a year ago. A double quarter pounder with cheese is now $6.79, a Big Mac $5.59, Filet O Fish $5.29 — all about $2 higher than 2020.
McDonald’s is not the only fast-food chain raising prices. Chipotle implemented a 4% price increase across its menu in June. Taco Bell’s food now costs consumers 10% more, the cost of donuts and coffee at Dunkin’ Donuts has spiked 8%, according to a Gordon Haskett analysis, which evaluated 24 restaurant chains over the span of a year. The analysis found quick-service restaurants made the largest price increases, averaging 6%, and most were implemented in March. Exact prices vary by market and franchise. Link for more details via the Washington Times.
CORONAVIRUS UPDATE
— Summary: Global cases of Covid-19 are at 213,967,020 with 4,464,245 deaths, according to data compiled by the Center for Systems Science and Engineering at Johns Hopkins University. The U.S. case count is at 38,223,219 with 632,272 deaths. The Johns Hopkins University Coronavirus Resource Center said that there have been 364,842,701 doses administered, 171,773,370 have been fully vaccinated, or 52.3% of the U.S. population.
— U.S. Covid-19 hospitalizations have surpassed 100,000 for the first time since January, nearly doubling since the start of August. While the figure remains below the country’s winter peak, hospitals in some parts of the U.S. are straining under the load, and officials in states including Georgia, Kentucky, Tennessee and Idaho have requested extra personnel and resources.
— Delta vs Delta… Delta Air Lines to raise health insurance premiums for unvaccinated employees to cover higher Covid costs. Starting Nov. 1, unvaccinated employees enrolled in Delta's health care plan will be subject to a $200 monthly charge for the "financial risk" created by remaining unvaccinated — Recent hospital stays because of Covid have cost Delta about $50,000 per employee, and every one of those workers was not fully vaccinated, Delta’s CEO, Ed Bastian, said in a memo to staff (link). The company has about 75,000 employees and roughly 75% of them are fully vaccinated. Federal law allows employers to charge higher health insurance premiums to workers based on a health factor only if that factor is within a "wellness program.”
— Canada will require a Covid vaccine to fly: Will U.S. follow? All passengers and workers on commercial air flights in Canada will soon have to prove they've been vaccinated against the coronavirus. Canada's government will also require all federal workers to be vaccinated, citing a "dynamic public health situation" due to the Covid-19 pandemic. The new travel vaccination policy will apply to passengers and workers in the federally regulated air, rail and cruise ship sectors. It will be enacted "as soon as possible in the fall and no later than the end of October," the Canadian Treasury Board said recently.
— European Union will discuss whether to reimpose curbs on U.S. visitors as new coronavirus cases soar among Americans who refuse to be vaccinated. Scotland reported 5,021 new infections Aug. 24, a daily record. The change is said to be recommended by Slovenia, which holds the EU’s rotating presidency and is responsible for triggering an assessment of countries allowed non-essential travel there. The Airlines for Europe lobby group said such a decision would be “hugely disappointing” for European carriers.
— WHO virus origins team says window closing for probe. An embattled group of scientists charged by the World Health Organization with studying the origins of the coronavirus pandemic is pleading for support of its work, saying a new approach that includes a focus on the lab-leak hypothesis would take too long to gather fading evidence. “The window is rapidly closing on the biological feasibility of conducting the critical trace-back of people and animals inside and outside China,” the experts wrote in an editorial in the journal Nature (link). “We were getting a little concerned that there really is virtually no debate about the bulk of the recommendations that are not related to the lab hypothesis, and of course there’s a lot of discussion of the lab story, particularly coming from the U.S.,” one of its co-authors said.
POLITICS & ELECTIONS
— GOP takes aim at 6 members of House Ag panel. Six members of the House Agriculture Committee are among the 15 Democrats targeted by the House Republican campaign committee in ads declaring an "inflation crisis" in America. Link to NRCC.
— How Donald Trump turned off swing voters in 2020. The latest edition of Sabato's Crystal Ball includes these summary comments from Alan I. Abramowitz, Senior Columnist (link for details):
- The number of swing voters — those who change their minds between presidential elections — has been declining over time.
- However, there are still some swing voters, and they can be decisive in the nation’s highly competitive presidential elections.
- Swing voters helped Joe Biden win the White House, and perceptions of Donald Trump’s stronger conservative ideology in 2020 compared to 2016 may have pushed some swing voters away from the incumbent and toward the challenger.
— Democrats switch from 'defund' to 'refund' the police. The mayors of Portland and Seattle, who respectively slashed police funding by $15 million and $7.5 million last year, are now moving to restore those budgets amid spikes in violent crime made worse because police officers are choosing to retire rather than stay where their work is scorned by their employers. Something similar is happening in Chicago.
— Democratic California Gov. Gavin Newsom will officially be up for a recall election on Sept. 14. A recall ballot in California contains two questions: whether the incumbent should be recalled? and if so, which challenger should replace them? If a majority of voters favor removing Newsom by selecting “yes” on the first question, then the recall candidate with the most votes will finish his term as governor of the Golden State. Out of the dozens of contenders that will appear on the ballot, the frontrunner to replace Newsom if the recall vote is a success: longtime conservative radio host Larry Elder.
Perspective: Jill Cowan writes in the New York Times (link) that the push to recall Newsom “was once a long shot initiated by Republicans who disliked the governor’s positions on issues like the death penalty and immigration. But the effort gained steam during the coronavirus pandemic, as conservative Californians bridled at business restrictions and mask mandates.” Democratic voters “vastly outnumber Republicans in California, but experts say Newsom could be stymied by ambivalence and a lack of awareness about the election, particularly among those most likely to support him.”
CONGRESS
— House panel demands records tied to Jan. 6 attack. The House select committee investigating the Jan. 6 riot issued its first sweeping requests Wednesday for records from federal agencies pertaining to the attack on the Capitol.
— Pelosi downplays deal with Democratic centrists. House Speaker Nancy Pelosi (D-Calif.) on the Sept. 27 physical infrastructure vote commitment: “We would have had to pass the infrastructure bill by Sept. 30 anyway because the authorizations expire for highway and some of the things in the bill, and so we’re talking about a couple of days earlier,” she said.
— Pelosi: House will write $3.5 trillion budget bill with Senate. House Speaker Nancy Pelosi (-Calif.) said that House committees, working with the Senate, are “coming to closure on some of the particulars” of a $3.5 trillion reconciliation package with the expectation that all panels involved will report out their pieces of the legislation within three weeks. Pelosi said, “Some committees will be marking up before Sept. 15, but everyone by Sept. 15. ... We write a bill with the Senate because it’s no use our doing a bill that is not going to pass the Senate.”
OTHER ITEMS OF NOTE
— H-2A visas surge. The annual total of H-2A certified positions could exceed 300,000 for the first time ever this fiscal year, continuing the rapid expansion, averaging 14% a year, of the past decade. Link for details via Farm Bureau.
— Racial justice agreements announced by USDA. Up to $50 million is available to organizations, colleges, and individuals to carry out Racial Justice and Equity Conservation Cooperative Agreements that expand the delivery of conservation assistance to historically underserved farmers. Link.
— Why baby on Nirvana’s ‘Nevermind’ album is suing now. Spencer Elden, 30, says Nirvana engaged in child pornography when the band used a picture of him naked on the cover of the breakthrough album. Link to details via the NYT.
EVENTS AND REPORTS
Thursday, Aug. 26
· 2021 harvest preparedness. Surface Transportation Board holds a meeting by teleconference of the National Grain Car Council to discuss rail carrier preparedness to transport the 2021 grain harvest.
· China nuclear efforts. The Hudson Institute holds a virtual discussion with Navy Admiral Charles Richard, commander of US Strategic Command, on China's nuclear program, what its "strategic breakout portends for the United States and our allies, and how integrated deterrence must meet the challenges of today's varied nuclear threat environment."
· China vs US. The Brookings Institution holds a virtual book discussion on "The Long Game: China's Grand Strategy to Displace American Order."
· Chinese data laws. The George Washington University (GWU) Elliott School of International Affairs holds a virtual discussion on "Killing Two Birds with One Stone: How New Chinese Laws Facilitate Data Sovereignty in the Name of Personal Data Protection."
· Economic reports. Jobless Claims | GDP | KC Fed Manufacturing
· Energy reports. EIA Natural Gas Report
· USDA reports. FAS. Export Sales ERS: Livestock and Meat Domestic Data | Agricultural Exchange Rate Data Set | Outlook for US Agricultural Trade
