U.S., EU Officials Mull Options to Help Export Ukrainian Farm Products

Fed chief Powell warns soft landing ‘won’t be easy’ and does not rule out higher rate hikes

Russia's limited gains in Donbas and the Ukrainian goal of reclaiming the entire territory portend a long battle in eastern Ukraine.

Head of the U.N. World Food Program says the world faces possible food shortages next year if Ukraine's seaports remain blocked.

Something to watch: EU and U.S. officials are mulling ways to export Ukrainian farm products. One option would have U.S. ships in international waters provide protection for Ukraine shipments. Meanwhile, the EU is finalizing a plan to facilitate land exports of Ukraine’s stocks of food products with the Russian invasion blocking access to the country’s vital Black Sea ports.

Elon Musk tweeted that his $44 billion takeover of Twitter Inc. is “temporarily on hold” until the billionaire receives more information about the proportion of fake accounts, sending the social media giant into an over 20% tailspin.

$7,657: Drewry Shipping Consultants’ World Container Index for average world-wide rates per 40-foot container for the week ending May 12, down 17.5% since the first week of March to the lowest level since the week of June 17, 2021.

An extended surge in diesel prices is challenging bets that inflation is easing. In the U.S., national average retail diesel prices rose to an all-time high for a 14th straight day Thursday, hitting $5.56 a gallon. They have shot up 56% in 2022, outstripping increases in the benchmark price for crude oil. Retail-unleaded gasoline prices have risen 34% to $4.42 a gallon.

Newly confirmed Fed head Jerome Powell said Thursday the Fed was prepared to act aggressively to bring down inflation to its 2% goal even if it created a short-term hit to the economy. He repeated his view that further half-percentage point increases would likely be appropriate at coming meetings but said the central bank could consider larger increases if economic data call for such steps. "Inflation is just way too high here in the United States," Powell said. The central bank's tools for taming that inflation are only focused on demand, and "supply is a big part of the story here." There are additional factors such as the war in Ukraine and new lockdowns in China to limit the spread of Covid-19, so there is no guarantee "whether we can execute a soft landing or not... it may actually depend on factors that we don't control."

Crop Insurance is a key to avoiding another farm economy downturn, according to a report from Dr. Joe Outlaw, Professor and Extension Economist, Co-Director, The Agricultural and Food Policy Center at Texas A&M. Details in. Policy section.

USDA Secretary Tom Vilsack on Thursday announced that the first U.S.-grown potato exports in 15 years arrived in a previously off-limits region of Mexico.

House leaders plan to vote next week on a bill to tackle gasoline price gouging (HR 7688), Speaker Nancy Pelosi (D-Calif.) said during a press conference yesterday. The bill would enable the president to issue an emergency declaration making it illegal to increase the price of gasoline. (Isn’t that the definition of price controls?)

The House next week will work on legislation to protect federal judges after the Senate passed legislation (S 4160) to do so on May 9. The House will take up Rep. Greg Stanton’s (D-Ariz.) Supreme Court Family Securities Act (HR 7712) which goes beyond the Senate’s bill by including not just the families of judges but also the families of judicial clerks and staffers.

In the Senate, lawmakers will move the around $40 billion aid package for Ukraine (HR 7691) next week, with a cloture vote on the motion to proceed to that bill planned for Monday night. The rescheduled vote comes after Sen. Rand Paul (R-Ky.) delayed a would-be vote yesterday seeking changes to the package.

The panel probing the Jan. 6 Capitol riot subpoenaed House GOP Leader Kevin McCarthy, among others. Details in Politics section. 

The White House announced measures to alleviate the ongoing baby formula shortage, which has worsened in recent weeks because of a major product recall and supply chain problems. Details below. 

Equities today: Global stock markets were mostly higher overnight. U.S. stock indexes are pointed toward higher openings in a relief rally. In Asia, Hong Kong’s Hang Seng added 2.7%, while Japan’s Nikkei 225 jumped 2.6%. The Shanghai Composite gained 1%. Europe’s Stoxx 600 index rose 1.3% as the lowest valuations since the start of the pandemic drew buyers.

     U.S. equities yesterday: The Dow finished down 103.81 points, 0.33%, at 31,730.30, despite a late push off its lows. The Nasdaq rose 6.73 points, 0.06%, at 11,370.96. The S&P 500 lost 5.10 points, 0.13%, at 3,930.08.

     Ratio between agriculture and equity markets is at its highest level since August 2017, according to Peak Trading Research, as supply shocks help to push food prices higher. The BCOM Ag Index is up 24.5% in 2022 while the S&P 500 is down 17.4%, the trading analysis firm says in a note. Agriculture's relative strength has come at a time when most commodity markets have softened on supply chain issues and a lack of demand, Peak says. "Agriculture futures are benefiting from tight balance sheets, significant weather problems (Corn Belt delayed planting, U.S. Plains drought, India heat), Black Sea export concerns, new export taxes/bans, strong demand, and bullish seasonals," the firm says.

Agriculture markets yesterday:

• Corn: July corn futures rose 3 cents to $7.91 1/2. December futures surged 17 1/4 cents to $7.53, a lifetime high settlement for the contract.
• Soy complex: July soybeans rose 7 cents to $16.13 3/4, a high close for the week, while new-crop November futures gained 8 1/4 cents to $14.80 1/2. July soymeal fell $1.90 to $396.00. July soyoil fell 93 points to 82.52 cents.
• Wheat: July SRW wheat rose 65 3/4 cents to $11.78 3/4, a two-month high. July HRW wheat rose 69 1/2 cents to $12.70, while nearby HRW posted a 14-year high. July spring wheat rose the daily 60-cent limit to $13.16, a lifetime-high close.
• Cotton: July cotton rose 193 points to 145.53 cents per pound, while new-crop December surged 292 points to 127.67 cents.
• Cattle: June live cattle fell $1.925 to $131.65, the lowest closing price since early October. August feeder futures fell $3.475 to $166.525.
• Hogs: June lean hogs fell $3.375 at $97.475, the contract’s lowest closing price since Jan. 11.
   

Ag markets today: Spring wheat futures built on Thursday’s limit-up performance overnight, while corn and soybeans also traded higher. Winter wheat futures eased a bit from yesterday’s strong gains. As of 7:30 a.m. ET, corn futures were trading around 2 cents higher, soybeans were 7 to 9 cents higher, SRW wheat was 4 to 6 cents lower, HRW wheat was near unchanged and HRS wheat was 7 to 10 cents higher. Front-month U.S. crude oil futures were around $1.75 higher and the U.S. dollar index was about 150 points lower after reaching the highest level since December 2002 on Thursday.

Technical viewpoints from Jim Wyckoff:

On tap today:

     • U.S. import prices for April are expected to rise 0.6% from the prior month. (8:30 a.m. ET)
     • University of Michigan consumer sentiment index is expected to fall to 64.1 in the opening weeks of May from 65.2 in April. (10 a.m. ET)
     • Baker Hughes rig count is out at 1 p.m. ET.
     • Federal Reserve speakers: Minneapolis's Neel Kaskhari on energy prices and inflation at 11 a.m. ET, and Cleveland's Loretta Mester on monetary policy during the pandemic at 1 p.m. ET.
     • CFTC Commitments of Traders report, 3:30 p.m. ET.
     • President Biden is scheduled to host King Abdullah II of Jordan at 10:45 a.m. ET. At 3:30 p.m. ET the president is set to participate in the final day of the  summit with leaders of the Association of Southeast Asian Nations countries.

Inflation watch:

• Samsung in talks to hike chipmaking prices by up to 20%.
• Prices for dry bulk’s largest capesize vessels have surged to a five-month high.
• U.S. egg prices are surging, partly because of deadly bird flu that’s killed almost 10% of the country’s hens. Taco prices are also going up so fast that one Miami restaurant is struggling to print new menus fast enough and is instead rewriting prices in pen on stickers.

House lawmakers blast STB commissioners on rail service. House Transportation and Infrastructure Chairman Peter DeFazio (D-Ore.) charged the railroads for “abysmal” service and challenged Surface Transportation Board (STB) commissioners to “act quickly and decisively to protect the railroad network.” DeFazio criticized Wall Street’s influence on Class I railroads’ operating models. “Stock buy backs and dividends cannot be the sole measures of success for freight railroads,” he said. “The ability for Wall Street to extract massive capital out of the railroads will undermine the U.S. freight rail network.” He praised STB commissioners for actions already taken to address rail service, but said changes are moving too slowly. “Let me be crystal clear that if the STB doesn’t move more quickly to rise to the occasion, this committee will legislate,” DeFazio said.

     STB Chairman Martin Oberman told the subcommittee on railroads, pipelines, and hazardous materials that rail service problems are due to a shortage of rail labor spurred by layoffs over the past six years, during which the Class I railroads cut their workforce by 29 percent. “With demand back, and against the backdrop of these significant labor cuts and other changes, railroads face major holes in their service…,” Oberman said. “Railroads must maintain a buffer to protect their operations against external shocks, and if they fail to do so, then ultimately, they will suffer—but even worse, their customers and the public will suffer more. What could not be more clear is that, at present — and for the past several years — the major railroads do not have sufficient redundancy to keep pace with rapid shifts in demand.”

     NGFA President and CEO Mike Seyfert previously told STB members the costs to NGFA members due to lost revenue and additional freight expenses were estimated to be over $100 million in the first quarter of 2022. Seyfert listed several instances of rail service failures and their consequences, including excessive dwell time at origin and delayed train delivery at grain export destinations. “Many NGFA members have a daily risk of slowing or shutting down operations due to reduced and inconsistent rail service,” he said. “Some individual NGFA member companies report losses and increased costs in the tens of millions of dollars and lost or reduced operating days totaling weeks.”

     The STB announced May 6 it will require all Class I carriers to submit several specific reports on rail service, performance, and employment.

Market perspectives:

     • Outside markets: The U.S. dollar index is weaker in early trading, but not far below this week’s 20-year high. The yield on the 10-year U.S. Treasury note is fetching 2.889% after trading above 3% earlier this week. For perspective, the German 10-year bund yield is presently 0.897% and the 10-year U.K. gilt yield is 1.718%. Gold futures fell 0.7% to $1,812.60 an ounce.

     • Bitcoin climbed 5.7% to about $30,205 on Friday, from its 5 p.m. ET level of $28,572.24 on Thursday. Yet elsewhere in the cryptocurrency markets, the beleaguered stablecoin TerraUSD continued to spiral lower, trading at 11 cents at 4 a.m. ET.

     • Crude oil futures: West Texas Intermediate crude rose 2.2% to $108.44 a barrel. Brent is above $109.15 per barrel.

     • Diesel costs are reaching new highs across the U.S., straining the operations of trucking companies and wrecking the transportation budgets of businesses that need to ship goods and adding still more costs for U.S. farmers. The price of the fuel that powers heavy-duty trucks has increased by more than $1.50 a gallon in roughly two months, according to the U.S. Energy Information Administration. The national average price has climbed to $5.62 a gallon, setting a record for the second week in a row, as prices at the pump surpassed $6 in some markets. Bottom line: The extended surge in diesel prices is challenging Wall Street bets that inflation is easing.

     • Gas prices in Europe shot up on Thursday, the day after Russia implemented sanctions on European energy companies. Futures tied to TTF, Europe’s wholesale gas price, rose by about 13% to €106 ($110) per megawatt hour. The sanctions mean gas will cease to flow from Russia to Germany via the Yamal pipeline. On Wednesday Ukraine had shut another major pipeline carrying gas from Russia.

     • USDA, in its monthly Supply and Demand Report, dropped its 2022-23 U.S. corn yield estimate to 177 bu. per acre, down 4 bu. from a previous trendline forecast and unchanged from 2021-22. Analysts expected a yield closer to 179.6 bu. per acre. The yield projection “is based on a weather-adjusted trend, estimated using the 1988-2021 time period, assuming normal summer growing season weather but lower to reflect the slow pace of planting progress as of early May,” USDA said in Thursday’s report.

        USDA estimated corn stocks at the end of the 2022-23 marketing year at 1.36 billion bu., down 80 million bu. from this year but 8 million bu. above the average pre-report trade estimate.

     • USDA estimated 2022-23 U.S. soybean production at an all-time high of 4.64 billion bu., about 27 million bu. above analysts’ expectations and 205 million bu. above 2021-22 production. USDA also lowered estimated 2021-22 U.S. ending stocks to 235 million bu., down 25 million bu. from a previous forecast and about 10 million bu. above expectations. USDA also increased estimated exports 25 million bushels (to 2.14 billion bu.) and left crush unchanged at 2.215 billion bu.

     • USDA’s initial U.S. winter wheat crop forecast is 103 million bu. below last year and 65 million bu. below trade expectations. USDA estimated the winter wheat yield at 47.9 bu. per acre, down 2.3 bu. from last year. U.S. harvested acres were seen at 24.499 million, down 965,000 acres from last year. USDA said abandonment for winter wheat is the highest since 2002. Old-crop U.S. wheat carryover was pegged down 23 million bu. from last month and fell 31 million bu. below the average trade estimate. USDA projected a 2022-23 national average on-farm cash wheat price of $10.75.

     • Wheat production in Ukraine is forecast by USDA at 21.5 million tons in 2022-23, 11.5 million lower than 2021-22 due to the ongoing war. USDA held 2021-22 Ukraine wheat exports at 19 million and Russia exports at 33 million. Ukraine’s 2022-23 export forecast is 10.0 million tons, down sharply from last year on reduced production and significant logistical constraints for exports.

     Russia is projected by USDA as the leading 2022-23 wheat exporter at 39.0 million tons, followed by the European Union, Australia, Canada, and the United States. Ukraine’s 2022-23 export forecast is 10.0 million tons, down sharply from last year on reduced production and significant logistical constraints for exports.

     • USDA also expects Ukraine’s production of coarse grains such as corn, sorghum, barley, oats, rye and millet to fall to 26.6 million metric tons in 2022-23 — a 50% drop from 53.5 million in 2021-22. Corn accounts for most of Ukraine’s coarse grain production. For that crop alone, USDA predicted Ukraine’s production to fall to 19.5 million metric tons in 2022-23, from 41.1 million in 2021-22.

     • While USDA projects U.S. cotton plantings to increase 1.01 million acres, estimated production came in 1.02 million bales below the latest old-crop estimate (at 16.50 million and 17.52 million bales, respectively). This reflects a major abandonment forecast for 2022-23 at 3.09 million acres, due to the ongoing Southwest drought. The elimination of a huge swath of poor cotton boosted the forecast national yield to 867 pounds per acre versus 819 pounds last fall. U.S. exports are seen dropping just 250,000 bales to 14.50 million from this year’s 14.75 million figure (unchanged from April). The net of the various forecasts was a projected 500,000-bale drop in the U.S. cotton carryout for 2022-23 to just 2.90 million bales.

     • France, the European Union’s top corn grower, will cut plantings of the crop by 6% to a four-year low, the country’s agriculture ministry said this week. That’s an indication of the trade-offs farmers are making due to expensive fertilizers.

     • Brazilian fertilizer prices eased from record highs, yet the threat of insufficient supply this year remains, given Russia's historic role as a top supplier poses multiple risks, Bloomberg Intelligence said.

     • Ag trade: Taiwan purchased 40,000 MT of U.S. milling wheat. 

     • NWS weather: Summer-like heat from the southern Plains to the Great Lakes and northern New England will continue to challenge daily records... ...Unsettled weather along the East Coast and in the Lower Mississippi Valley into the start of the upcoming weekend... ...Cooler and damp for in the Pacific Northwest with some periods of mountain snow this morning. 

Items in Pro Farmer's First Thing Today include:

     • Followthrough buying overnight in corn, beans and spring wheat
     • China new bank loans plunge amid Covid lockdowns (details in China section)
     • China soybean auctions to continue
     • Russian wheat export tax declines again
     • French wheat crop ratings dive
     • Traders not impressed with pickup in beef demand
     • Attitudes in hog market turn more pessimistic

— Summary: Russian President Vladimir Putin, in a message released by the Kremlin on Thursday, offered his support to Leonid Pasechnik, the head of pro-Russia separatists in the self-proclaimed Luhansk People’s Republic, part of eastern Ukraine’s Donbas region. Meanwhile, Ukrainian military resistance remains in the strategic southeastern port city of Mariupol. A sustained Ukrainian counteroffensive in the Kharkiv region was hampered after at least two bridges vital to continuing the Ukrainian advance were blown up.

• China’s former ambassador to Ukraine: Russia has been “significantly weakened.”  According to Bloomberg (link), “Russian setbacks in Ukraine have begun to prompt more explicit warnings in China about Moscow’s value as a diplomatic partner, in a sign of growing unease over President Xi Jinping’s strategic embrace of Vladimir Putin. Russia was headed for defeat and being ‘significantly weakened’ by the conflict, a former Chinese ambassador to Ukraine told a recent Chinese Academy of Social Sciences-backed seminar in remarks widely circulated online.” Bloomberg says the analysis was “attributed to retired diplomat Gao Yusheng, who served as China’s top envoy in Kyiv from late 2005 to early 2007.”
   
• U.N.: More than 6 million Ukrainians have fled. The United Nations says the number of people who have fled Ukraine to escape Russia’s invasion totaled 6.03 million as of Wednesday. Meanwhile, more than 8 million people are now displaced within Ukraine, with nearly half fleeing homes in the country’s east, according to the International Organization for Migration.
• Josep Borrell, the EU’s foreign policy chief, said that an EU embargo on Russian oil could be agreed in a few days.
• Russia’s foreign ministry said that it would be “forced to take retaliatory steps” to “stop threats to its national security” in response to the news that Finland will apply for membership in NATO. Finland’s joining the alliance would double the length of NATO’s border with Russia at a stroke. Sweden is also expected to join. NATO’s secretary-general, Jens Stoltenberg, said a “swift” Finnish entry would be “warmly welcomed.”
• U.K. government sanctioned retired Olympic rhythmic gymnast Alina Kabaeva, citing her alleged close relationship to Russian President Vladimir Putin (she’s Putin’s reported girlfriend).
• Siemens leaves Russia after 170 years. The German electronics giant Siemens joined the long list of companies that have left Russia since its invasion of Ukraine in February. Siemens said that in its second quarter it took a hit of 600,000 euros, or about $625 million, from Russian sanctions.
   

— Market impacts:

• Blocked Ukrainian ports are creating a global food crisis as U.S., allies mull possible options. “Millions of people around the world will die” if Ukraine’s Black Sea ports aren’t reopened, says the head of the U.N. World Food Program, David Beasley. The official is pleading with Russian President Vladimir Putin to reopen the channels, and the EU is proposing ways to ease the blockade of produce exports like corn, wheat and barley out of Ukraine (see next item).
• EC proposes plan to accelerate exports of Ukrainian wheat.  The European Commission proposed helping Ukraine export its wheat and other grains by rail, road and river to get around a Russian blockade of Black Sea ports, which is preventing those critical supplies from reaching parts of the world at risk of food insecurity. According to the Associated Press, the EC said the plan aims to establish “alternative routes and ease congestion between borders that also should facilitate getting humanitarian aid and other goods into the war-torn country.” The AP says “the blockade of Ukrainian ports has been particularly harmful, having accounted for 90% of grain and oilseed exports before the war,” and “the potential loss of affordable grain supplies that Africa, the Middle East and parts of Asia rely on has raised the risk of global food shortages and political instability.”
• Shell has agreed to sell its Russian retail-station and lubricants business to Lukoil.

— A vote on a nearly $40 billion aid package for Ukraine in the Senate was held up by Sen. Rand Paul (R-Tenn.). Citing economic concerns, the senator demanded that the legislation include greater oversight of spending. A vote on the bill, which has bipartisan support and has already passed the House of Representatives, is expected next week. No matter what happens, Paul is expected to vote no on the package that will eventually be approved.

— Crop Insurance key to avoiding another farm economy downturn: report from Dr. Joe Outlaw, Professor and Extension Economist, Co-Director, The Agricultural and Food Policy Center at Texas A&M. Key excerpt:

     “According to USDA survey data, U.S. agricultural producers, on average, have relatively low debt and many are in quite strong cash flow positions. Low debt makes farmers much less vulnerable to a collapse in land values. But, I think the biggest reason the U.S. won’t see a crisis like the 1980s again is the federal crop insurance program. Crop insurance had very low participation during the 1980s with less than 50 million acres covered generally at low levels of buy-up on yield policies.  Over time, a lot of innovation has occurred in crop insurance policies. Now, around 225 million acres are covered generally by revenue insurance policies bought up to at least the 70% coverage level. With virtually all cropland covered by some type of policy, significant within year price declines will be covered by revenue insurance.  Due to this, there wouldn’t be the tremendous pressure on farm incomes contributing to lower land values and increased loan defaults. What about a sustained price decline scenario? That is where crop insurance coupled with price loss coverage provides significant protection.” Link to full report.  

— Prevent plant question and answer:

     Q. I have a 40-acre field in which I am prevented from planting corn. During the late planting period I plant 20 of those acres to soybeans. Am I still eligible for a prevented planting payment?

     A. You may be eligible for a 100% prevented planting payment on corn if 1) you have history of planting both crops in the field in the same year or 2) you can provide proof you intended to plant corn on the acreage (including, but not limited to inputs purchased, applied or available to apply, or that acreage was part of a crop rotation).

     If you don’t meet either of these criteria for corn, you may still be eligible for a prevented planting payment on soybeans, if all other policy provisions are met.

     Note: If the soybeans were planted after the late planting period for corn, the 20 planted acres would instead be considered a second crop of soybeans, and the first crop of corn would have its prevented planting payment reduced to 35%. The 20 unplanted acres of corn would receive the full prevented planting payment for corn.

— Senate confirms Jerome Powell, 69, to second four-year term leading Federal Reserve. Powell, a Republican who was first nominated by former President Donald Trump, attracted bipartisan support, and Thursday’s vote was 80-19. (Perspective: Powell was confirmed to his first term in 2018 by an 84-13 vote.) Powell, whose term ended in February, was renominated for the role last year. The vote comes after Biden’s other nominees, Philip Jefferson and Lisa Cook, were confirmed as Fed governors earlier this week. Brainard has also been confirmed to the No. 2 spot at the central bank. Rounding out Biden’s picks is Michael Barr, whose confirmation hearing to be the top banking cop at the Fed will take place May 19. Separately, Powell said Thursday the Fed was prepared to act aggressively to bring down inflation to its 2% goal even if it created a short-term hit to the economy. “The process of getting inflation down to 2% will also include some pain, but ultimately, the most painful thing would be if we were to fail to deal with it,” Powell said, speaking on the Marketplace radio program. He repeated his view that further half-percentage point increases would likely be appropriate at coming meetings, but said the central bank could consider larger increases if economic data call for such steps.

     New presidents of the Fed regional banks in Boston (Susan M. Collins) and Dallas (Lorie Logan) are set to take over this summer, and there will soon be vacancies at the helm of the Chicago and Kansas City Fed due to mandatory retirements.

— Shipping rates tumble as lockdowns weigh on China’s export growth. Strict zero-Covid controls have slowed China’s export momentum in recent months, with container rates from Asia to Europe and the U.S. West Coast falling by more than 20% since March, industry figures show.

— Apple, Sony and Panasonic are projecting significant losses this quarter because of parts shortages, production shutdowns and lost sales caused by Beijing’s zero-tolerance policy. Apple projects $8 billion of lost revenue this quarter because of the shutdowns. Sony is facing delays procuring parts and is warning of a shortage of games consoles.

— China new bank loans plunge amid Covid lockdowns. Chinese banks extended 645.4 billion yuan ($95.14 billion) in new yuan loans in April, down about 80% from March, as Covid lockdowns slowed credit demand. Growth of outstanding total social financing (TSF), a broad measure of credit and liquidity in the economy, slowed to 10.2% in April from a year earlier and from 10.6% in March. This is the latest data suggesting the People’s Bank of China will soon announce new monetary easing moves to support its economy. China’s central bank said earlier this week it would step up support for the slowing economy, while closely watching domestic inflation and policy adjustments by other major economies.

— Economists are divided on whether the People’s Bank of China will move as early as Monday to support its economy by cutting the interest rate on one-year policy loans.

— A Chinese official said Covid tests will be made available within 15 minutes’ walk in big cities. In Beijing, officials denied the city will be locked down, while Shanghai said it plans to achieve “no community spread” of the virus by mid-May.

— U.S. and Mexico are close to resolving a long-running trade dispute over American potatoes entering Mexico. USDA Secretary Tom Vilsack on Thursday announced that the first U.S.-grown potato exports in 15 years arrived in a previously off-limits region of Mexico.

— House will vote on a bill next week addressing what Democrats allege are price gouging by oil companies. Comments from House Speaker Nancy Pelosi (D-Calif.): “While families are struggling to pay higher prices at the pump, oil and gas companies are recording record profits…Again and again, we see gas prices rise…Price gouging needs to stop. This is a major exploitation of the consumer… Our bill enables the president to issue an energy emergency declaration making it unlawful to increase gas and home energy prices in an exploitative and excessive way, which is part of the business plan of these companies.”

— Fonterra, the world’s biggest dairy exporter, reduced its forecast payment to its New Zealand farmers due to weaker global demand. Link to details via Bloomberg.

— North Korea announced its first Covid-19 deaths, the result of an “explosive” outbreak that state media says has sickened more than 350,000 in the country. North Korea has never reported Covid deaths before, though few believe the nation of 25 million, however isolated, has managed to avoid the effects of a deadly global virus. China has already offered assistance, and South Korea and the U.S. have said they are open to dialogue. Meanwhile on Thursday North Korea fired three ballistic missiles into the Sea of Japan.

— Boozman gets some re-election help. Republican Sarah Huckabee Sanders, likely the next governor of Arkansas, has cut an ad for Sen. John Boozman’s (R-Ark.) re-election campaign. Boozman is facing former NFL player Jake Bequette in the May 24 primary.

— Jan. 6 panel subpoenas GOP House leader Kevin McCarthy, other lawmakers. Congressional subpoenas for sitting members of Congress, especially for a party leader, are almost without precedent in recent decades. But now with Democrats in this Congress. The other three subpoenas went to Republican Reps. Jim Jordan of Ohio, Scott Perry of Pennsylvania, Andy Biggs of Arizona and Mo Brooks of Alabama. The panel had previously asked for voluntary cooperation from the five men, along with a handful of other GOP lawmakers, but all of them refused to speak with the panel.

— Charlie Cook: “Are we overestimating Roe’s impact on politics?” Cook of the Cook Political Report with Amy Walter, writes: “Everyone has their own take on what impact a reversal of Roe v. Wade will have on November’s midterm elections. Here’s mine: To the extent that overturning the 49-year-old decision benefits Democrats at all, it won’t be nearly enough to make up for the substantial headwinds they were already facing. In short, it will help out less than they hope and far less than they need.

— Republican lawmakers are calling on Attorney General Merrick Garland to enforce a 1950 federal law that makes it illegal to hold protests outside the homes of judges. Protesters have been holding peaceful demonstrations outside the homes of multiple conservative Supreme Court justices after the publication of a Supreme Court opinion that would overturn Roe v. Wade.

— More fiscal 2023 budget hearings are planned next week, including in the Senate Armed Services Committee Thursday where Energy Secretary Jennifer Granholm will testify on nuclear energy defense; the House Appropriations Labor-HHS-Education Subcommittee with testimony from Labor Secretary Marty Walsh on Tuesday; and the House Appropriations Financial Services Subcommittee on Tuesday, when Office of Management and Budget Director Shalanda Young will testify.

— Elon Musk says he is putting his bid to acquire Twitter on hold, weeks after agreeing to take the company private in a $44 billion deal. His announcement came in a Friday morning tweet. At 5:44 a.m. ET, Musk made the announcement to his 92.7 million followers: "Twitter deal temporarily on hold pending details supporting calculation that spam/fake accounts do indeed represent less than 5% of users." The tweet comes a day after Twitter’s CEO ousted two of the company's top execs and paused hiring, to be more fiscally responsible. Twitter shares plunged 21% premarket after the Musk news.

     Beyond the $1 billion breakup fee, Twitter could take Musk to court to force him to pay for the deal if his debt financing is intact, per the deal contract, the New York Times observes. (This is what happened in 2001 when Tyson Foods tried to back out of an acquisition.)

— It could take weeks before more baby formula is on U.S. store shelves and the issues behind the long-running shortages are addressed, manufacturers and retailers say. Republicans this week demanded answers from President Biden, the Food and Drug Administration and USDA. At “a news conference on Capitol Hill on Thursday, House Republicans blamed Biden for the shortage, saying his administration had failed to plan for it and calling it the latest failure by the president to deal with the economic challenges facing voters.

     House Democrats are planning hearings to better understand the shortage’s causes, what more needs to be done and press FDA officials on what happened. The House Appropriations Subcommittee on Agriculture will hold a hearing May 25 with FDA Commissioner Robert M. Califf on both oversight of infant formula (a recall is a factor in the current shortage) and the agency’s fiscal 2023 budget request. The House Energy and Commerce has a hearing planned, also for May 25, on the shortage and production of formula.

     President Biden met yesterday with infant formula manufacturers and retailers to discuss ongoing efforts to increase production and how the CEOs of Walmart and Target are working to stock shelves, particularly in rural areas. The White House also announced efforts to cut bureaucratic red tape to stock shelves more quickly; call on the Federal Trade Commission and state attorneys general to crack down on price gouging; and looming action to increase importation of certain infant formulas from overseas. More infant formula has been produced in the last four weeks than in the four weeks before a major recall of the product in February, officials said.