USDA Issues WASDE Report Today with Focus on Brazil Corn, U.S. Tight Stocks

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NPPC’s agenda | EPA water rule | Inflation report today | China and climate change


In Today’s Digital Newspaper


Market Focus:
• USDA reports today
• Consumer price index rose 5% year-over-year, vs. 4.7% est. (fastest since 2008)
• Bond market signals investors are not too concerned about inflation prospects
NYT offers p
erspective on coming near-term boost in inflation

• Global food import costs to be record in 2021: FAO
• Jobless claims for week ended June 5 at 376,000 in another pandemic low
• El Salvador first nation to make bitcoin legal tender
• Global regulators calling for cryptocurrencies to carry tough bank capital requirements
• U.S. rail regulators set timetable for Canadian National-Kansas City Southern merger
• Fertilizer shippers are asking federal rail regulators to investigate
• Weather update
• Ag demand update

Corn and soybeans favoring upside leading up to USDA reports
• USDA’s S&D, Crop Production Reports out today
• More rain coming for the Northern Plains, but not a shift in the dry pattern
• Consultancy hikes soft wheat crop and export forecast for the EU
• FAO: World food import bill to surge 12% from last year’s high
• Steady to slightly higher cash cattle action
• Cash hog prices jump, but so do weights

Policy Focus:
• USDA sends Dairy Donation Program plan to OMB for review

China Update:
• Cotton, sorghum, corn and meat main sales to China in most recent week
• China passes anti-sanctions law, providing means to counter foreign measures
• China arrested over 1,100 suspects in a crypto-related money-laundering crackdown
• To boost growth, China is limiting its efforts to cut emissions

Energy & Climate Change:

• Biden admin. will restore environmental protections for streams, other bodies of water
• Company behind the Keystone XL oil pipeline canceled the project
• Biggest American-owned solar-panel maker to invest $680 million in new Ohio factory

Livestock, Food & Beverage Industry Update:
WSJ: JBS paid $11 million to resolve ransomware attack
• NPPC lists top issues for industry
• Starbucks faces shortage of cups, syrup as eased Covid-19 boosts sales
• Trump plan to reduce SNAP/food stamp eligibility is withdrawn

Coronavirus Update:
• U.S. to donate 500 million vaccine doses
• Labor Dept. will limit emergency Covid-19 workplace safety rules to health care sector  
• Moderna asks FDA to clear Covid vaccine for adolescents 12 to 17

Politics & Elections:
• Renacci announces primary challenge to DeWine

• Surface transportation bill clears committee
• Antitrust bill in House
• Legislative proposal wants to identify race of farm aid recipients

Other Items of Note:
• Migrants still crossing southern U.S. border in large numbers
• Biden’s G7 agenda
• Kim Jong Un’s apparent weight loss sparks speculation over health




Equities today: Global stock markets were mixed overnight, with European shares mostly flat and Asian shares mostly firmer. U.S. stock indexes are once again pointed toward narrowly mixed openings. Asian markets closed broadly higher. The Shanghai Composite Index ended the day up 0.5%, while Japan’s Nikkei 225 edged up 0.3%. European equity markets are posting mixed to mostly lower in early activity with an eye on the European Central Bank meeting conclusion. The Stoxx 600 was down 0.1% with regional markets seeing gains of 0.2% to losses of 0.6%.

     U.S. equities yesterday: The Dow ell 152.68 points, 0.44%, at 34,447.14. The Nasdaq declined 13/16 points, 0.09%, at 13,911.75. The S&P 500 lost 7.71 points, 0.18%, at 4,219.55.


On tap today:

     • European Central Bank releases a policy statement at 7:45 a.m. ET, and ECB President Christine Lagarde holds a press conference at 8:30 a.m. ET.
     • U.S. jobless claims are expected to fall to 370,000 in the week ended June 5 from 385,000 a week earlier. (8:30 a.m. ET) Update: Jobless claims for the week ended June 5 came in at 376,000. The estimate was 370,000. The total still marked the lowest of the pandemic era.
     • U.S. consumer prices in May are expected to rise 0.5% from a month earlier and 4.7% from a year earlier. Excluding food and energy, prices are expected to climb 0.5% and 3.5%. (8:30 a.m. ET) Update: Consumer prices for May accelerated at their fastest pace in nearly 13 years. The CPI rose 5% from a year ago. Economists surveyed had been expecting a gain of 4.7%. The reading represented the biggest CPI gain since the 5.3% increase in August 2008, just before the worst of the financial crisis sent the U.S. spiraling into the worst recession it had seen since the Great Depression. A separate gauge that excludes volatile food and energy prices increased 3.8%, vs the estimate of 3.5% for so-called core inflation.
     • USDA Weekly Export Sales report, 8:30 a.m. ET.
     • USDA WASDE report, noon ET.

     • U.S. federal budget figures for May are out at 2 p.m. ET.
     • Treasury Secretary Janet Yellen appears virtually before a House subcommittee at 2 p.m. ET.
     • President Biden begins his first foreign trip as president in the U.K. See below for details.

Bond market signals investors are not too concerned about inflation prospects. The yield on the benchmark 10-year Treasury note closed below 1.5%, its lowest level in more than three months, dragged down by tepid economic data and high demand. Market-based measures of inflation expectations have also cooled in recent days. Federal Reserve officials have said inflation expectations are critical as they navigate the current price environment.


Perspective on coming near-term boost in inflation. Prices are rising for airfares, used cars, burritos and other products. New data due later today will provide some signals as to whether these increases are temporary. Analysts note that a big increase today is in part due to technical factors, since last May’s price level was particularly depressed by pandemic lockdowns. The NYT has a chart to explain how these “base effects” work:

     Inflation perspective

Global food import costs to be record in 2021: FAO. Food import costs are expected to rise 12% in 2021 to a record $1.715 trillion, according to the UN Food and Agriculture Organization (FAO) Food Outlook report. Those costs, including transportation, were at $1.530 trillion in 2020. An index of food import costs that incorporates transportation costs hit a record in March, beating out prior high-water levels seen during food price increases in 2006-08 and 2010-12. China import demand is one factor in the equation, the FAO said, with FAO forecasting China’s corn imports at 24 million tonnes in 2021-22 after hitting 22 million tonnes in 2020-21.

Market perspectives:

     • Outside markets: The U.S. dollar index was slightly higher ahead of U.S. economic updates with the euro, yen and British pound all slightly weaker versus the greenback. The yield on the 10-year US Treasury note was firmer, trading just above 1.50%, ahead of U.S. economic updates amid a mixed tone in global government bond yields. Gold and silver futures are seeing sizable declines ahead of US inflation data at the consumer level. Gold was trading around $1,875 per troy ounce and silver around $27.66 per troy ounce.       

     • Crude oil futures have edged into positive territory ahead of the U.S. trading start. U.S. crude is trading around $70 per barrel and Brent around $72.40 per barrel. Crude was lower in Asian action, with U.S. crude down 54 cents at $69.42 per barrel and Brent down 56 cents at $71.66 per barrel.

     El Salvador is the first nation to make bitcoin legal tender, a move championed by its president. El Salvador’s Legislative Assembly has approved a bill making the cryptocurrency bitcoin legal tender in the country, the first nation to do so, just days after President Nayib Bukele made the proposal at a Bitcoin conference. The digital currency, originally created to be money out of the control of governments, can be used in any transaction, and any business will have to accept payment in bitcoin, with the exception of those lacking the technology to do so. The U.S. dollar will also continue to be El Salvador’s currency, and no one will be forced to pay in bitcoin, according to the legislation approved late Tuesday. Bukele said that anyone who invests three bitcoins in El Salvador — currently about $105,000 — will be entitled to permanent residency.

     • Global regulators are calling for cryptocurrencies to carry the toughest bank capital requirements of any asset, arguing that institutions should have to hold the highest level of capital against crypto assets such as bitcoin, far above conventional stocks and bonds.

        Bitcoin prices

     • U.S. rail regulators set a timetable for considering the Canadian National-Kansas City Southern merger starting on June 14. The Surface Transportation Board (STB) timetable (link) calls for the Class Is to file specific documents by June 14 and requires comments on the voting trust agreement by June 28, with replies due July 6. CP officials said the company will file comments by June 28 that explain "why the public interest costs of CN's proposed voting trust outweigh the non-existent benefits." Canadian Pacific (CP) remains "confident" that the STB will ultimately reject CN's proposal to use a voting trust in its KCS merger plan." CN's arguments in favor of a trust amount to the claim that CN and KCS should be able to decide what is in the public interest based on which railroad is offering more money to acquire KCS — that argument elevates private interests over the public interest," CP officials said in a press release.

     • Fertilizer shippers are asking federal rail regulators to investigate what they say are widespread service problems at CSX. For the past several months, CSX has had serious rail service problems, hindering the fertilizer industry’s ability to serve its farmer customers,” Corey Rosenbusch, chief executive of The Fertilizer Institute (TFI), wrote in a letter (link) to the Surface Transportation Board last week. “While we understand CSX is trying to fix its network, TFI urges the Board to conduct enhanced oversight to ensure it is successfully done as quickly as possible,” Rosenbusch wrote. The fertilizer shippers pointed out service problems in 10 states on the CSX system, with New Orleans, Chicago, and Birmingham, Ala., being focal points for delays. CSX CEO Jim Foote last week said the railroad is working to improve its service and hire and train new crews.“In most of the markets — rail, truck, anything — there’s more demand than there is transportation product supply. It’s as simple as that,” Foote says. “The transportation product is struggling in our case for one reason and one reason only: We’ve been trying to hire since the beginning of the year.” CSX lost 7% of its train and engine crews to attrition last year and was unable to hire at the height of the pandemic because social distancing requirements made it impossible to hold training classes for new conductors, Foote explains.

     • Ag demand: Tunisia’s state grain agency issued an international tender to buy around 50,000 MT of soft wheat. Japan purchased 94,890 MT of food-quality wheat from the U.S., as well as 37,000 MT of the grain from Canada and 49,465 MT from Australia.

     • Weather update: Heavy rain from the Ohio Valley to the East Coast... ...Scattered severe storms are likely Thursday afternoon and evening across the Northern Plains... ...Elevated to Critical Fire Weather conditions are in place across much of the Interior West.

        Weather map general
        NWS 1

Items in Pro Farmer's First Thing Today include:

     • Corn and soybeans favoring upside leading up to USDA reports
     • USDA’s S&D, Crop Production Reports out today
     • More rain coming for the Northern Plains, but not a shift in the dry pattern
     • Consultancy hikes soft wheat crop and export forecast for the EU
     • FAO: World food import bill to surge 12% from last year’s high
     • Steady to slightly higher cash cattle action
     • Cash hog prices jump, but so do weights




— USDA sends Dairy Donation Program plan to OMB for review. USDA has sent its interim final rule for the Dairy Donation Program (DDP) to the Office of Management and Budget (OMB) for review. USDA offered up general guidelines for the program in April based on provisions in the Consolidated Appropriations Act of 2021. The program will require that a donation and distribution plan must be submitted to and approved by USDA and the reimbursement will be at least equivalent to the minimum classified value of milk used to make the donated product on the date of manufacturing. The program will also require records related to donating and receiving products must be maintained and available for review and/or audit. Eligibility for the program is open to dairy farmer cooperatives and processors who “account to” a federal milk marketing order (FMMO) and donate dairy products to any private or public nonprofit food distribution entity.

     The program will also allow for retroactive reimbursements back to December 27, 2020, when the legislation was signed into law. The reimbursement rate will be set at a level that encourages the donation, reduces volatility, maintains traditional FMMO price relationships, or stabilizes on-farm milk prices. USDA has said dairy organizations should plan on that reimbursement rate being equal to the minimum classified value of the milk when the donated product was processed. The rule at OMB will contain more details on that reimbursement rate.

     There will also be a supplemental reimbursement available for those that also participate in the Milk Donation Reimbursement Program (MDRP), equal to the difference between the MDRP reimbursed level and the value reimbursed in the DDP. But those supplemental payments will not be made until the DDP becomes effective. The dairy industry has been awaiting the DDP effort, particularly in the wake of the Biden administration ending the popular Food Box program which included dairy products provided to recipients and fostered additional demand for U.S. dairy products.



— Cotton, sorghum, corn and meat main sales to China in most recent week. U.S. export sales activity to China the week ended June 3 focused mostly on corn, sorghum, Upland cotton, pork and beef.

     In concluding the 2020-21 marketing year May 31 for wheat, USDA said the week’s activity for China included net reductions of 2,036 tonnes and accumulated exports to the country of 3,212,514 tonnes, with 5,497 tonnes of sales carried into the 2021-22 marketing year, putting their total purchases for the new marketing year at 266,497 tonnes.

     For other commodities, net sales of 66,204 tonnes of corn, 50,786 tonnes of sorghum, 2,008 tonnes of soybeans and 18,801 running bales of Upland cotton.

     Meat: Net sales of U.S. beef to China for 2021 were at 2,338 tonnes and pork at 8,132 tonnes for the week.

— China passes anti-sanctions law, providing means to counter foreign measures. China has issued counter-sanctions in response to sanctions against it from the U.S., the European Union, Britain and Canada over Beijing’s political crackdown in Hong Kong and treatment of ethnic minorities in Xinjiang. Chinese foreign ministry spokesman Wang Wenbin said that the passage of the new law showed China’s determination to protect its sovereignty and core interests and would not affect its relations with other countries.

— China arrested over 1,100 suspects in a crypto-related money-laundering crackdown. Criminal clients paid up to 5% commission for the conversion of dirty money into crypto, a ministry said.

— To boost growth, China is limiting its efforts to cut emissions. A national carbon-trading system is set to go into effect this month, designed to help China achieve its goal of reaching peak carbon emissions by 2030 and net-zero emissions by 2060. But China's top economic planners have limited its scope, highlighting the challenges facing countries aiming to balance competing environmental and economic priorities, the Wall Street Journal reports (link). While China's environmental ministry has become more prominent in recent years, the drafting of a road map aimed at fulfilling the country's climate pledges was led by the economic planning office, which sets China’s energy and emissions targets. In the U.S., previous efforts to draft a national cap-and-trade market for carbon emissions have failed due to similar concerns about the impact on businesses. China's carbon-trading program initially would have included 6,000 companies across eight sectors. For now, it will involve 2,200 companies in the power sector, and the plan won't start off with absolute caps on emissions as originally proposed.

     China emissions



— Here we go again… Biden administration will repeal a Trump administration water rule and rewrite it. First there was the Waters of the U.S. (WOTUS) rule under the Obama administration. Then the Trump administration nixed the WOTUS rule in favor of a more farmer-friendly water regulation approach. Now the Biden administration announced that announced they intend to repeal the Trump administration’s definitions of the waters of the U.S. and rewrite the definitions.

     Details: EPA said it would ask the Justice Department to “remand” the 2020 Navigable Waters Protection Rule because “a broad array of stakeholders — including states, Tribes, local governments, scientists, and non-governmental organizations — are seeing destructive impacts to critical water bodies under the 2020 rule… After reviewing the Navigable Waters Protection Rule as directed by President Biden, the EPA and Department of the Army have determined that this rule is leading to significant environmental degradation,” said EPA Administrator Michael Regan. “We are committed to establishing a durable definition of ‘waters of the United States’ based on Supreme Court precedent and drawing from the lessons learned from the current and previous regulations, as well as input from a wide array of stakeholders, so we can better protect our nation’s waters, foster economic growth, and support thriving communities.”

     “Communities deserve to have our nation’s waters protected. However, the Navigable Waters Protection Rule has resulted in a 25 percentage-point reduction in determinations of waters that would otherwise be afforded protection,” said Acting Assistant Secretary of the Army for Civil Works Jaime Pinkham. “Together, the Department of the Army and EPA will develop a rule that is informed by our technical expertise, is straightforward to implement by our agencies and our state and Tribal co-regulators, and is shaped by the lived experience of local communities.”

     “The lack of protections is particularly significant in arid states, like New Mexico and Arizona, where nearly every one of over 1,500 streams assessed has been found to be non-jurisdictional,” agencies said, adding that they are “aware of 333 projects that would have required Section 404 permitting prior to the Navigable Waters Protection Rule, but no longer do.”

     It didn’t take long for the ag sector to negatively react. Rep. Glenn “GT” Thompson (R-Pa.), ranking member on the House Agriculture Committee, said, “President Trump’s Navigable Waters Protection Rule provided long-overdue certainty and clarity for landowners affected by the scope of Waters of the United States (WOTUS) jurisdiction. The process laid out in [the\ announcement by the EPA and Army Corps is a step backward that will return farmers and ranchers to regulatory confusion. If the disastrous 2015 Obama/Biden rule is any indication of where EPA is headed, rural America is in trouble. I implore the Biden administration to retain the current WOTUS definition and to not engage in another massive land grab through government overreach.”

     But Sen. Tom Carper (D-Del.), the EPW chairman, said the announcement is “a welcome sign that the Biden administration is committed to getting it right when it comes to protecting our nation’s waters. Among its many faults, the previous administration’s Navigable Waters Protection Rule ignored science and put downstream communities — many of them disadvantaged — at an increased risk of being exposed to pollution. EPA now has an opportunity to learn from its previous regulatory efforts and work in an inclusive way to create a rule that stands the test of time.”

     “Every day the ‘Dirty Water’ rule remains in effect, it causes irreparable harm to our health, to our environment, and to our economies,” Rep. Peter DeFazio (D-Ore.), chairman of the House Committee on Transportation and Infrastructure, said in a statement.

     Other Republicans lambasted the announcement and vowed to fight it saying that Trump’s policy had protected farmers and removed what many felt were onerous cleanup burdens. “It’s a shame the Biden administration wants to undo the good work of the Trump administration,” Sen. Kevin Cramer (R-N.C.) said, adding that his state was “well-positioned in the event of overreach” to fight the Biden EPA’s new plan. Sen. Joni Ernst (R-Iowa), called it a “gut punch” to her state. Sen. John Boozman (R-Ark.) dubbed it a “Biden administration power grab.” Sen. Roger Marshall (R-Kan.) said, “This level of federal overreach is not only uninformed, but unacceptable.”

     Farm Bureau not happy. Zippy Duvall, president of the American Farm Bureau Federation, said the group was “extremely disappointed… We call on EPA to respect the statute, recognize the burden that overreaching regulation places on farmers and ranchers, and not write the term ‘navigable’ out of the Clean Water Act,” Duvall said in a statement. “On this issue, and particularly prior converted croplands and ephemerals, we also urge Secretary [Tom] Vilsack to ensure that we don’t return to the regulatory land grab that was the 2015 WOTUS Rule.”

     Comments: The coming details of the Biden administration approach will test the relatively positive attitude many in the ag sector have for EPA Administration Michael Regan. The announcement does not start the process of revising the regulation. That will come when EPA officially promulgates a proposed new rule, possibly later this year. So, this week’s action was a legal move in which the Department of Justice and Department of the Army formally requested repeal of the Trump-era rule.

— Keystone pipeline canceled after Biden had blocked permit. Calgary-based TC Energy said it would work with government agencies “to ensure a safe termination of and exit from” the partially built line, which was to transport crude from the oil sand fields of western Canada to Steele City, Nebraska. Construction on the 1,200-mile pipeline began last year when former President Donald Trump revived the long-delayed project after it had stalled under the Obama administration. It would have moved up to 830,000 barrels (35 million gallons) of crude daily, connecting in Nebraska to other pipelines that feed oil refineries on the U.S. Gulf Coast.

     Alberta officials said Wednesday they reached an agreement with TC Energy, formerly known as TransCanada, to exit their partnership. The company and province plan to try to recoup the government’s investment, although neither offered any immediate details on how that would happen. Alberta invested more than $1 billion in the project last year.

     Republicans targeted Biden for the pipeline stoppage. Sen. John Barrasso (R-Wyo.), ranking member of the Senate Committee on Energy and Natural Resources, placed the blame for the cancellation on Biden. “President Biden killed the Keystone XL Pipeline and with it, thousands of good-paying American jobs,” Barrasso said in a statement. “On Inauguration Day, the president signed an executive order that ended pipeline construction and handed one thousand workers pink slips. Now, ten times that number of jobs will never be created. At a time when gasoline prices are spiking, the White House is celebrating the death of a pipeline that would have helped bring Americans relief.”

     Sen. Jon Tester (D-Mont.)  said he was "bitterly disappointed" at the cancellation. "It’s frustrating that national politics killed a project that would have yielded big benefits for our state, but I am going to keep fighting to create jobs in rural Montana, ensure our energy independence, and get our state’s economy firing on all cylinders," he said in a statement.

— Biggest American-owned solar-panel maker announced plans Wednesday to invest $680 million in a new Ohio factory, in one of the largest bets on domestic solar manufacturing since China began dominating the industry a decade ago. First Solar Chief Executive Mark Widmar said the investment reflected the growth of the American market and what he viewed as bipartisan government commitment to encourage domestic manufacturing in alternative energy. Imports hold an 85% share of the American solar market, and First Solar itself would still import 40% of its panels from its Vietnam and Malaysia factories after its Ohio plant is completed. But the company says the U.S. production will help it save on freight costs.





— JBS paid $11 million in bitcoin to resolve ransomware attack, the Wall Street Journal first reported (link). The Brazilian meat supplier’s U.S. chief executive, Andre Nogueira, says the company paid cyberattackers to avoid more disruptions and to limit the potential impact on restaurants, grocery stores and farmers that rely on JBS. “It was very painful to pay the criminals, but we did the right thing for our customers,” Nogueira said Wednesday in an interview with the WSJ. He added that the payment was made after the majority of JBS plants were up and running again. Nogueira said the company’s technology team began shutting down the meat supplier’s systems to slow the attack’s advance. JBS called in technology vendors that had previously worked with the company, as well as cybersecurity experts and consultants who began negotiating with the attackers. The FBI last week attributed the JBS attack to REvil, a criminal ransomware gang. Nogueira said that JBS and outside firms are conducting forensic analyses of its information-technology systems, and that it isn’t yet clear how the attackers accessed JBS’ systems. JBS maintains secondary backups of all its data, which are encrypted, Nogueira said.

— NPPC policy agenda: line speed lawsuit, California Prop 12, labor reform and China tariffs. National Pork Producers Council (NPPC) officials said convincing the Biden administration to appeal a court decision curbing line speeds at several pork processing plants and a legal challenge to California’s Prop 12 animal welfare rules remain the group’s top priorities. The policy agenda was highlighted during a media briefing held Wednesday (June 9) on the sidelines of NPPC’s 2021 World Pork Expo.

  • Line speed ruling: A major focus is the March 31 ruling by U.S. District Judge Joan Ericksen vacating portions of USDA’s New Swine Inspection System (NSIS) rule that allow qualified pork processing plants to run at line speeds above 1,106 head per hour. The group said if the ruling is not appealed and takes effect at month’s end, line speeds at the six affected plants would slow by as much as 25% and reduce overall U.S. pork harvest capacity by 2.5%. The group cited data from Iowa State University Ag Economist Dermott Hayes that found the reduced line speeds will cost hog farmers over $80 million in lost revenue during 2021 alone. USDA Secretary Tom Vilsack this week suggested the call for appeal lies with the U.S. Solicitor General and said the case has put the department in an uncomfortable position.

Cross purposes. NPPC Vice President and Counsel of Global Government Affairs Nick Giordano said the administration’s push to bolster supply chains — including efforts to boost processing capacity at meat plants and support small producers — is at odds with any decision not to appeal the ruling. “If this thing is unchecked, it is going to disproportionately hurt small producers,” he stressed. “Didn't we just this week have a supply chain initiative announcement? The point: to add capacity.” If allowed to take effect, he said, the ruling will give more market power to meatpackers and hurt producers. Giordano also stressed that the ruling would upend nearly 25 years of operation at higher line speeds for five of the affected plants, which have been enrolled in a pilot program allowing them to operate at current levels since the 1990s.  He also pushed back on the assertion by labor unions, who brought the line speed challenge, that removing the limits negatively impacts worker safety. “The data, in fact, don't suggest higher levels of worker injury,” he said. “They suggest lower level of worker injuries at these plants.”

“First and foremost, we need a stay of the judge's order,” stressed Giordano. “We'd like to see USDA and ideally the union support that — just maintaining the status quo.”

  • Livestock market reform and the relationship between farmers and packers. Outgoing NPPC CEO Neil Dierks said the group is monitoring discussions among policymakers and various ag interest groups that have primarily focused on the cattle sector. Dierks announced that he will retire from the post at year’s end and was lauded by his NPPC colleagues for his many ears of work in the position. NPPCs chief concern is accurate market information, he explained. As policymakers look at reforms spurred by issues seen in cattle markets, “our concern with it is that we just want to make sure whatever goes forward doesn't create additional unintended consequences that actually create bigger problems by trying to fix a problem,” he said.
  • California Prop 12 involves new animal welfare rules in California as it implements Prop 12 — a ballot measure approved by Golden State voters in 2018. The initiative sets strict space requirements for pork and veal producers, and by 2022, pork producers will be required to provide each breeding pig with 24 square feet of space. NPPC and the American Farm Bureau Federation (AFBF) have challenged the rules, arguing that because they impose the requirements on all pork sold in the state the rule runs afoul of the dormant Commerce Clause of the U.S. Constitution. Oral arguments before the Ninth Circuit Court of Appeals took place this spring, and NPPC expects a ruling to come by mid-summer. California’s Department of Food and Agriculture issued a proposed rule that would implement Prop 12, and NPPC will be submitting comments on the proposal before a July 12 deadline.

As for how producers are preparing for Prop 12 to potentially take effect, NPPC Assistant Vice President and General Counsel Michael Formica noted that California is running so far behind on issuing regulations, that it is “a good question” how farmers can even comply. “Sure, you need 24 square feet, but you've lost the use of your individual breeding, and how exactly is that going to work? We don't know.” While the initiative is intended to protect animal welfare, Formica also argued it could have the opposite effect and said California “admit[s] that it's going to cause incredible welfare problems” because of increased sow mortality from new breeding restrictions.” The biggest questions, said Formica, include what the Prop 12 certification system will look like, how extensive will inspections be and what sort of paperwork requirements will be involved. “And again, we need to figure this out by Jan. 1 (when the requirements are set to take effect). We need final rules and California has not issued final rules.”

  • Trade policy. Chinese retaliatory tariffs on U.S. pork have been a long-running concern for NPPC, as the tariffs were not lifted as part of the Phase 1 U.S./China trade deal. The group has long said the duties are impairing the ability of U.S. exporters to fill a lingering supply void in China as it continues to recover from an outbreak of African swine fever (ASF) that decimated herds there. “We've certainly made our views known both to the last administration and the current administration,” Giordano said regarding the Chinese duties. “But as I'm sure most of you who follow trade understand… we don't appear to be close to seeing those tariffs lifted.”

Regarding new trade agreements, NPPC remains strongly supportive of a U.S. re-entry to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) “which currently includes as signatories multiple large pork consuming nations,” said Sorenson. However, she said “given its current focus on economic and pandemic recovery,” the group does not expect the Biden administration to make any moves on the deal this year. NPPC also continues to press for lower pork tariffs to the Philippines and expanded market access to Vietnam, as both countries deal with the fallout from their own ASF outbreaks, Sorenson noted.

  • Labor reform. As the entire livestock sector faces “a serious labor shortage,” NPPC President Jen Sorenson said the pork group remains hopeful that ag labor legislation will again move forward in Congress — namely the Farm Workforce Modernization Act (FWMA). The bill includes provisions that would authorize H-2A visas for workers to fill year-round labor needs, which Sorenson said is a key for the pork sector. “The current visa programs to bring in new employees or hire those already in our communities fail to meet the workforce needs of hog farmers and other year-round livestock producers,” she remarked. Besides addressing year-round labor needs under the H-2A program, Giordano added that the group “along with most of the ag groups, want a path to legal status for those in the country.”
  • Climate policy. NPPC supports legislation by Sens. Debbie Stabenow (D-Mich.) and Mike Braun (R-Ind.) via their Growing Climate Solutions Act along with other measures “to further reduce our U.S. carbon footprint including voluntary incentive-based tools to maximize the sequestration of carbon and other greenhouse gas emissions.”

— Starbucks is running short in some stores on basics including cups and coffee syrups, baristas said, as the chain grinds back to full operations in the wake of the Covid-19 pandemic. As the U.S. economy gains momentum, many businesses have run short on labor and the goods they need to serve customers.

     Meanwhile, higher costs cut into profits at Campbell Soup. Campbell and others are raising prices to compensate for higher transportation, commodity and labor costs, the Wall Street Journal reports (link).


— Trump plan to reduce SNAP/food stamp eligibility is withdrawn. The Biden administration withdrew a Trump-era proposal on Wednesday to tighten eligibility rules for food stamps and reduce SNAP enrollment by 3.1 million people. It was the second major Trump SNAP regulation to be voided under the new administration.



Summary: Global cases of Covid-19 are at 174,458,307 with 3,759,039 deaths, according to data compiled by the Center for Systems Science and Engineering at Johns Hopkins University. The U.S. case count is at 33,414,117 with 598,765 deaths. The Johns Hopkins University Coronavirus Resource Center said that there have been 34,753,476 doses administered, 140,980,110 have been fully vaccinated, or 43% of the total U.S. population. So far, 63.9% of adults over the age of 18 have received at least one vaccine with 53.3% over 18 having been fully vaccinated.

— U.S. to get 500 million vaccines to poor. The U.S. will buy 500 million doses of Pfizer’s Covid-19 vaccine to donate to impoverished nations. President Biden will announce the plan today before attending the annual summit of the Group of 7, made up of the leaders of seven of the world’s largest democracies, in Cornwall, England. The Pfizer doses will be provided to COVAX, an international partnership for distributing vaccines to low-income countries.

     The U.S. will provide 200 million Pfizer doses this year and 300 million in the first half of next year, according to reports. The vaccines will be provided through COVAX to 92 countries and the African Union, which comprises 55 nations. The Pfizer vaccine requires two doses to be fully effective, so the donations would be enough to vaccinate 250 million people. By comparison, 140 million Americans have been fully vaccinated.

— Labor Department will limit long-awaited emergency Covid-19 workplace safety rules to the health care sector, Labor Secretary Marty Walsh said Wednesday. The regulations are expected to be released today. The Biden administration has decided it will update its optional guidance for general industry and has “tailored” the mandatory safety requirements to apply only to healthcare settings, Walsh said.

— Moderna asks FDA to clear Covid vaccine for adolescents 12 to 17. If approved by the FDA, it would significantly expand the number of shots available to middle and high school students ahead of the next school year. Pfizer and German partner BioNTech were cleared last month to use their vaccine for 12-to-15-year-olds. Moderna said on May 25 its Covid vaccine was 100% effective in a study of 12-to-17-year-olds.


— Renacci announces primary challenge to DeWine. The Washington Post reports (link) former Rep. James B. Renacci (R), an “ally” of former President Donald Trump, announced that he will challenge Ohio Gov. Mike DeWine in the Republican primary next year, accusing the incumbent of being more aligned with President Biden than with Trump. Renacci attacked DeWine’s handling of the pandemic, “during which the Ohio governor embraced the kind of strict public health guidances that Trump and his supporters opposed.” In an ad launching his campaign, Renacci said, “Then, covid happened and he made a choice to rule like Andrew Cuomo instead of leading like President Trump. ... DeWine represented fear over freedom. He cost Ohio big time. So many jobs are gone. Local businesses perished. Shutdowns, schools closed.”



— Surface transportation bill clears committee. The House Transportation Committee early this morning (around 5 a.m. ET) approved its $547 billion surface transportation bill after a marathon 17-hour markup session. The final vote was 38-26 with Reps. Brian Fitzpatrick (R-Pa.) and Jenniffer González Colón (R-P.R.) voting with Democrats for the package. The session featured intense partisan bickering on a host of topics, some not even linked to transportation issues. Now the focus turns to trying to meld the version approved in the committee early this morning with efforts in the Senate Environment and Public Works Committee.

— Antitrust bill. House lawmakers have drafted legislation to restrict large online platforms from certain lines of business and curtail their ability to buy competitors.

— Legislative proposal wants to identify race of farm aid recipients. Agriculture Committee members Rep. Bobby Rush (D-Ill.) and Sen. Cory Booker (D-N.J.) introduced legislation to tackle what they said were discriminatory lending practices by USDA that disproportionately affect Black farmers. The bill would require USDA to track and publicly disclose the race and gender of those who apply for farm aid, including those who are rejected.


— Migrants still crossing in large numbers; data show a nearly eightfold increase at the southern border and dozens of deaths. Newly released data show that migrants were stopped 180,034 times across the southern border last month — nearly eight times the total during May 2020 and among the highest monthly totals in recent years. That brought total apprehensions for the year to 711,784, nearly five times the total during the same period last year, though direct comparisons are difficult because of a policy implemented early in the Covid-19 pandemic that dramatically increased the number of people who have been caught multiple times. Between October and the end of April, at least 148 migrants died along the border, according to U.S. Customs and Border Protection.

— Biden’s G7 agenda. Speaking to U.S. military personnel after landing in England, President Biden said he would use the summit to urge allied nations to play a larger role in addressing the coronavirus and other problems like climate change. Biden will meet with Prime Minister Boris Johnson and Queen Elizabeth II. On Sunday, he will travel to Belgium to meet at the European Commission in Brussels. He will also participate in a summit of the North Atlantic Treaty Organization and meet with Turkish President Recep Tayyip Erdogan. He’ll then travel to Geneva to sit down June 16 with President Vladimir Putin of Russia, which is not part of the G7. Russia designated Aleksei Navalny’s political group as extremist, a warning to Biden before his meeting with Vladimir Putin next week. Biden says he will let Putin “know what I want him to know.”

— Kim Jong Un’s apparent weight loss sparks speculation over health. North Korea leader Kim Jong Un’s apparent weight loss might be a sign of deteriorating health. The despot looked noticeably slimmer in photos released by state media Saturday — after not being seen publicly for a month, the Guardian reported. South Korea-based NK News, which analyzed photos of Kim addressing a ruling party politburo meeting last week, said he appeared to have lost a “significant amount of weight.”



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