Vilsack Sees Initial Round of Airline-Delivered Infanta Formula via Operation Fly Formula

Washington Focus

The Senate is in, but the House is out this week.

Inflation continues to be the big topic in Washington DC and the country. National Economic Council (NEC) Director Brian Deese on Sunday recognized the risk of the U.S. falling into a recession amid rising prices and elevated inflation but would not say if the country is headed in that direction. Asked by co-anchor Dana Bash on CNN’s State of the Union if the U.S. is falling into a recession, Deese said “there are always risks,” but argued that the country is in a transition period and could see growth.

Sen. Rick Scott (R-Fla.) on Sunday said the Biden administration has been slow to react to economic issues and rising inflation, calling it a political failure that could hinder Democrats in the upcoming midterm election. “The president is slow to react — whether it’s the border, whether it’s inflation, whether it’s gas prices — even Ukraine,” Scott told CBS host Margaret Brennan on Face the Nation.

On the ag policy front this week, USDA Secretary Tom Vilsack will testify Thursday, May 26, before the Senate Ag Committee hearing on “Opportunities and Challenges Facing Farmers, Families, and Rural Communities. That should bring on several topics like fertilizer prices and availability, implementation of the WHIP+/ Emergency Relief Program (ERP) program for eligible 2020 and 2021 disasters, and the food price situation, including USDA’s role in dealing with the lack of infant formula. USDA on Wednesday releases updated food price forecasts.

On Sunday, Vilsack was in Indianapolis, Indiana, to greet the arrival of the first shipment of formula brought to the U.S. under Operation Fly Formula in response to the infant formula shortage caused by Abbott Nutrition’s voluntary recall,” a USDA statement said. Vilsack saw the arrival of 132 pallets of Nestle Health Science Alfamino Infant and Alfamino Junior formula. While manufacturers say the pandemic disrupted their supply chains, an Abbott Laboratories recall of formula in February and the closing of an Abbott plant turned the shortfall into a crisis, prompting Biden on Wednesday to invoke the Defense Production Act to boost supplies. "These formulas have been prioritized because they serve a critical medical purpose and are in short supply in the United States," USDA said. "Additional flights will be announced in the coming days." The formula shipment on U.S. military aircraft is originating from Zurich, Switzerland, after Biden announced the Operation Fly Formula program to bring imports in from overseas. The first load means as many as 1.5 million bottles of "safe Nestle infant formula" will be coming to U.S. shelves as soon as possible, Biden said on Twitter on Friday. All the formula being shipped is hypoallergenic and can be fed to babies intolerant of protein in cow milk. "They serve a critical medical purpose," the White House said. The plane specifically landed in Indianapolis to use Nestle's supply chain infrastructure to get the products across the states, with 78,000 pounds of baby formula arriving on the first flight of 'Operation Fly Formula'.

Trade policy issues will likely surface with Vilsack again being asked about administration plans on dealing with Canada relative to their controversial dairy policy and the USMCA case against it. Meanwhile, President Biden is expected to unveil a list of nations on Monday who will be joining a long-anticipated Indo-Pacific trade pact, but Taiwan won't be among them. White House national security adviser Jake Sullivan confirmed that Taiwan isn't among the governments signed up for the launch of the Indo/Pacific Economic Framework, a trade pact that's meant to allow the U.S. to work more closely with key Asian economies on issues including supply chains, digital trade, clean energy and anticorruption. Biden is slated to highlight the launch of the framework as he meets with Japanese Prime Minister Fumio Kishida on Monday. China, in anticipation of the launch of the pact, has criticized the U.S. effort. “We hope they will build an open and inclusive circle of friends in Asia-Pacific, rather than an exclusive cliques, and do more for peace and development, rather than creating turmoil and chaos in the region,” Chinese Foreign Ministry spokesperson Wang Wenbin said.

Vilsack likes to break news shortly before or during a congressional hearing so some policy announcements could be coming.

President Joe Biden signed into law the around $40 billion U.S. aid package for Ukraine passed by large bipartisan majorities in Congress. The funds, intended to support Ukraine through September. Biden, in South Korea on Saturday, is expected to fly to Japan on Sunday.

Ukraine President Volodymyr Zelenskyy indicated he would be satisfied if Ukraine’s borders can be restored to pre-February locations. He called on Ukraine’s allies to help ensure Russia is made to pay reparations.

Biden led a list of 963 U.S. citizens personally sanctioned by Moscow, announced Saturday by Russia’s Foreign Ministry. The sanctions include a ban on entry to Russia. Besides Biden and his son Hunter, the list includes Secretary of State Antony Blinken, Republican Sen. Lindsey Graham of South Carolina, Deputy Treasury Secretary Adewale Adeymo, and former Obama adviser Valerie Jarrett. Also listed were current and former U.S. lawmakers, judges, prosecutors, FBI agents, businesspeople and private citizens.

Russia’s Foreign Ministry also announced sanctions against 26 Canadian citizens, including the spouses of Prime Minister Justin Trudeau and Vice Prime Minister Chrystia Freeland. The move comes a day after Canada unveiled new measures over President Vladimir Putin’s decision to invade Ukraine, including restrictions on 14 Russian individuals and a ban on the export or import of luxury goods to and from Russia.

A federal judge blocked plans by the Biden administration to lift Title 42, a measure allowing border police to expel asylum-seekers and other migrants on the grounds of public health. The policy, put in place by then-president Donald Trump in 2020, was set to expire on May 23. The Department of Justice said it would appeal the ruling.

On the RFS front, Growth Energy and EPA reached a deal on the 2023 RFS/RVO timeline. A consent decree worked out between the Environmental Protection Agency and biofuel trade association Growth Energy would require EPA to propose the Renewable Volume Obligations (RVOs) for 2023 no later than Sept. 16 this year and then finalize those targets by April 28, 2023. Growth Energy filed suit against EPA in April, asking a court to impose a schedule on the agency for setting the RVOs. Growth Energy CEO Emily Skor called the new timeline a “significant victory in our mission to ensure certainty when it comes to biofuel blending, especially as we face a new era of the RFS.” Link for details.

Meanwhile, the Biden administration will soon announce a plan to give small oil refineries more “flexibility" in fulfilling older biofuel-blending requirements when the facilities are denied exemptions from the requirements, according to reports. The plan under White House review comes as EPA prepares to deny scores of refinery waivers from 2019, 2020, and 2021 biofuel-blending quotas. Biofuel proponents view the move as closing waivers on the one hand but reopening them on the other via a different means.

Senate Banking Committee holds its annual hearing with the heads of the largest U.S. banks on Wednesday, May 25. Topics include market turmoil and returning to work.

Other hearings of note include:

Tuesday, May 24:

Senate Energy and Natural Resources Committee hearing on the Forest Service FY 2023 budget.
House Select Committee on the Climate Crisis hearing, “Climate Smart from Farm to Fork: Building an Affordable and Resilient Food Supply Chain.”

Wednesday, May 25:

Senate Environment and Public Works Committee hearing on the nomination of Joseph Goffman to be assistant administrator for EPA’s Office of Air and Radiation.
House Energy and Commerce Oversight Subcommittee hearing on baby formula supply with FDA Commissioner Robert Califf.

House Agriculture subcommittee hearing, "Supporting Careers in Conservation: Workforce Training, Education and Job Opportunities."
House Ag Appropriations Subcommittee hearing on the infant formula crisis.
Congressional Budget Office releases The Budget and Economic Outlook: 2022 to 2032.
USDA Undersecretary for Rural Development Xochitl Torres Small will appear before the Senate Banking Committee to testify on USDA’s Rural Housing Service.
Senate Finance Committee hearing, “Supply Chain Resiliency: Alleviating Backlogs and Strengthening Long-Term Security.”
Senate Energy and Natural Resources subcommittee hearing to consider numerous pieces of legislation.
House Ag Appropriations Subcommittee Member Day hearing.

EPA and the Army Corps of Engineers on Monday will hold an online WOTUS roundtable on the Biden administration’s plan to redefine the waters of the United States (WOTUS), which determines jurisdiction of the Clean Water Act. The event is one of 10 roundtables the agencies are conducting through June 24. This one was organized by the Regenerative Agriculture Foundation. Link

The Securities and Exchange Commission (SEC) will vote Wednesday on whether to propose environmental, social and governance (ESG) investing rules. The agency will consider proposing rules that would push asset managers and other financial firms to detail their sustainability-related activities and investment products in a more standardized manner.

Bank of America Corp. CEO Brian Moynihan will discuss global ESG standards in a livestreamed Davos session at 11:30 a.m. ET Wednesday.

SEC Chair Gary Gensler will participate in a fireside chat at the Investment Company Institute's 2022 Leadership Summit on Thursday at 8:45 a.m. ET.

Climate change policy focus. The Center for Climate and Energy Solutions (C2ES) and The Climate Registry are hosting the annual Climate Leadership Conference in Washington, D.C., Tuesday through Thursday. The conference will have speakers from the Environmental Protection Agency, the Department of Energy and the Department of the Interior, along with major utilities, discussing clean energy, electric vehicles and transportation and building decarbonization.

The keynote address from deputy administrator for the EPA Janet McCabe and Andrew Mayock, chief sustainability officer for the White House Council on Environmental Quality, will look into the administration's track record on climate action and next steps for carbon reduction as President Biden aims for at least a 50% percent reduction in emissions by 2030 from 2005 levels.

On Wednesday, Commodity Futures Trading Commission staff will hold a public roundtable starting to discuss and receive feedback on CFTC proposals to offer "non-intermediated" or direct trading and clearing of margined products to retail customers.

The Hill and the American Bankers Association are hosting an event to "check the pulse of the economy with lawmakers, economists, regulators and business leaders" on Wednesday at 1 p.m. ET Senate Banking Committee Chair Sherrod Brown (D-Ohio) and House Financial Services Committee ranking member Patrick McHenry (R-N.C.) are among the participants.

NATO will conduct its Parliamentary Assembly Spring Session on Friday, May 27, in Lithuania, on the border with Russia.

Primaries on Tuesday include Sen. John Boozman (R-Ark.), ranking on the Senate Ag Committee. He faces a GOP primary challenge from the right by Jake Bequette, a former professional football player and Army veteran.

Details: Primaries will be held in Alabama, Arkansas, Georgia and Texas.

In Texas, a closely watched runoff will decide Republicans’ nominee for state attorney general after incumbent Ken Paxton fell short of clinching a majority in the March primary.

Former President Donald Trump has also been closely monitoring the Alabama Senate race between Rep. Mo Brooks, Army veteran Mike Durant and Katie Britt, a former aide to retiring GOP Sen. Richard Shelby. Republican National Committee Chairwoman Ronna McDaniel said the race for the party’s nominee in the Alabama Senate contest is likely headed to a runoff. McDaniel told Fox News Sunday the race between Rep. Brooks, Britt and Durant will be too close to call on Election Day for any one candidate to declare victory. “I don’t think we’re going to have a final say on this Alabama race,” McDaniel said, adding that the candidates have to clinch 50% of the vote to win. “I don’t think any of the three candidates are going to get over 50% so we’re going to go to a runoff, and then we’ll figure out who the nominee is.”

In Georgia, former Vice President Mike Pence is rallying support for Gov. Brian Kemp as the Republican incumbent seeks to fend off a May 24 primary challenge from Trump-backed former Sen. David Perdue. The decision by Pence to campaign for one of Trump's top GOP targets marks yet another break with his former boss. A special primary election is also set to occur to succeed former Minnesota Rep. Jim Hagedorn, who died in February after battling kidney cancer. He was 59.

On Saturday, May 28, President Biden will deliver the commencement address at the University of Delaware, his alma mater. Some 4,000 graduates are expected to attend the ceremony, with approximately 16,000 family and friends, the university said in a statement (link). The commencement also will also be livestreamed.

Economic Reports for the Week

Economic data this week include the May manufacturing and services purchasing managers’ indexes on Tuesday and the Census Bureau's durable goods report on Wednesday. The Bureau of Economic Analysis' personal income and spending data for April will be released on Friday. Finally, minutes from the Federal Open Market Committee's early-May monetary-policy meeting will be published on Wednesday.

The World Economic Forum in Davos kicks off after the event's two-year hiatus due to Covid-19. On Monday morning, International Monetary Fund Managing Director Kristalina Georgieva and Citigroup Inc. Chief Executive Jane Fraser headline a panel on the Global Economic Outlook. Also on Monday, the New York Times will host a livestreamed panel discussion on the U.S. Economic Outlook, which will include Sen. Patrick Toomey (R.-Pa.), ranking member of the Senate Banking Committee, PayPal Holdings Inc. CEO Dan Schulman and Nasdaq Inc. CEO Adena Friedman. Georgieva and Credit Suisse AG Chairman Axel Lehmann are among the participants in a panel to discuss how central bank digital currencies can reshape financial systems.

Monday, May 23

JPMorgan Chase hosts its 2022 investor day. Shares of the largest U.S. bank are down 26% this year, underperforming the KBW Bank by six percentage points, in part due to concerns of increased spending without clear-cut benefits.
Federal Reserve Chair Jerome Powell will give welcome remarks at the National Center for American Indian Enterprise Development 2022 Reservation Economic Summit at 9:25 a.m. ET.

Tuesday, May 24

Census Bureau reports residential sales statistics for April. The consensus estimate is for a seasonally adjusted annual rate of 750,000 new single-family homes sold, slightly less than March’s 763,000.
S&P Global releases both its Manufacturing and Services Purchasing Managers’ indexes for May. Expectations are for a 57.8 reading for the Manufacturing PMI, while the Services PMI is seen coming in at 57. This compares with 59.2 and 55.6, respectively, in April.

Wednesday, May 25

MBA Mortgage Applications
Federal Open Market Committee releases minutes from its early-May monetary-policy meeting.
Census Bureau releases the durable goods report. Economists forecast that orders for manufactured durable goods rose 0.7%, month over month, in April, to $277 billion.

Thursday, May 26

Jobless Claims
Bureau of Economic Analysis (BEA) reports its second estimate for first-quarter gross domestic product. The consensus estimate is that GDP declined at a seasonally adjusted annual rate of 1.4%, unchanged from the BEA’s advance estimate, released in late April.
Fed Balance Sheet
Money Supply

Friday, May 27

BEA reports personal income and spending data for April. Income is expected to have risen 0.55%, month over month, while personal expenditures likely rose 0.6%. This compares with increases of 0.5% and 1.1%, respectively, in March.

Key USDA & international Ag & Energy Reports and Events

USDA updates food price forecasts on Wednesday and the only thing consistent is recent increases in the forecasts, with more expected this week.

Monday, May 23

Ag reports and events:

Export Inspections
Crop Progress
Cold Storage
MARS monthly EU crop conditions report
Holiday: Canada