Evening Report | June 13, 2023

Evening Report
Evening Report
(Pro Farmer)

Check our advice monitor on ProFarmer.com for updates to our marketing plan.

 

EPA will temporarily delay final rule on biofuels mandates... EPA is expected to release a final rule on biofuel blending volume mandates for 2023 to 2025 by June 21, after seeking a one-week extension on a deadline for the rule, according to a court document. EPA had a court-ordered deadline of June 14 to issue the biofuels blending mandates under the Renewable Fuel Standard, but today agreed to the extension with Growth Energy.

 

Putin says Russia could exit Black Sea grain deal amid West’s ‘cheating’... Russian President Vladimir Putin said his country was considering withdrawing from the Black Sea grain deal because the West had cheated Moscow by implementing none of the promises to help with Russia’s ag exports. “We are thinking about getting out of this grain deal now,” Putin said. “Unfortunately, we were once again cheated – nothing was done in terms of liberalizing the supply of our grain to foreign markets. There were a lot of conditions that the Westerners had to fulfill under the leadership of the UN. Nothing has been done.”

Putin said he would discuss grain trade with some African leaders expected to visit Russia soon, adding that Moscow was ready to supply grain for free to the world’s poorest countries.

 

Consumer inflation continues to ease... The U.S. consumer price index (CPI) increased 0.1% last month, down from a 0.4% rise the previous month. On an annual basis, the CPI climbed 4.0%. That was the smallest annual increase since March 2021 and followed a 4.9% rise in April. Core inflation, which excludes volatile food and energy prices, rose 0.4% on a monthly basis and 5.3% annually.

Food prices increased 0.2% during May and stood 6.7% above year-ago. Food at home (grocery store) prices increased 0.1 last month and 5.8% annually. Food away from home (restaurant) prices rose 0.5% during May and 8.3% from year-ago.

After the consumer inflation data, the Fed on Wednesday is widely expected to pause its monetary policy tightening following a string of interest rate hikes. Traders also trimmed bets on a Fed rate hike in July.

 

Bunge, Viterra announce merger... Agricultural firms Bunge and Viterra have officially announced their merger in a cash and stock deal that has been in the works for several weeks. Viterra shareholders will receive 65.6 million Bunge shares worth $6.2 billion and $2 billion in cash, while Bunge assumes $9.8 billion of Viterra debt. The deal is expected to close in mid-2024, with Viterra shareholders owning around 30% of the combined company. After Bunge’s planned $2 billion repurchase of stock, Viterra’s ownership stake will increase to around 33%.

 

Debt bill impacts USDA aid efforts... The signing of the Fiscal Responsibility Act on June 3 has impacted USDA aid efforts, as it rescinds unobligated funds under specific programs.

On June 2, FSA halted the Coronavirus Food Assistance Program 1 (CFAP 1), CFAP 2, Pandemic Assistance for Timber Harvesters and Haulers (PATHH), Pandemic Livestock Indemnity Program (PLIP), Spot Market Hog Pandemic Program (SMHPP) and Organic and Transitional Education and Certification Program (OTECP) so as not to incur any “unauthorized obligations.” Only the national FSA office can process CFAP 1 approvals. OTECP and PARP applications are still being processed, but the payment processing status for PARP has yet to be determined.

As of June 11, payments under CFAP 1, CFAP 2, and Phase 1 of the Emergency Relief Program (ERP) remained mostly unchanged. ERP Phase 2 payments have crossed the $1 million threshold, totaling $1.23 million for 653 recipients, averaging $1,878 per payment.

 

Livestock producers must have prescriptions for antibiotics... This week, livestock owners are required to obtain prescriptions from veterinarians to purchase medically important antibiotics for their animals, as per the FDA's announcement. As a step in a multiyear campaign to preserve antimicrobial efficacy for human disease treatment, these new restrictions have been put in place.

Over a two-year transition period, drug companies have voluntarily changed the marketing status of the affected antibiotics or removed them from over-the-counter sales. GFI No. 263, which came into effect in June 2021, impacted 4% of sales of these types of antibiotics for food-bearing and companion animals. GFI No. 213 had already been implemented in 2017, putting an end to using these antibiotics for weight gain in cattle, hogs, and poultry. The drugs are still available for disease prevention and treatment in livestock, under veterinary supervision. Farmers and ranchers can still access appropriate antimicrobials for their animals by consulting a licensed veterinarian.

 

Less spending... The House Appropriations Committee, led by Chair Kay Granger (R-Texas), has set spending allocations for fiscal year (FY) 2024 at $1.471 trillion, which is $119 billion below the caps established in the debt limit package. The nondefense sectors of the budget will face major reductions, amounting to around $159 billion less than FY 2023 levels. However, the plan also aims to recover about $115 billion in unspent funds from previous allocations, bringing the actual spending closer to the $1.59 trillion cap. While the specific sources of these unspent funds have not been disclosed, it is expected to come from agencies like the IRS, EPA and USDA. The House Appropriations Committee is set to discuss relevant bills this week, while the Senate is not expected to agree with the proposed reductions by House Republicans and intends to adhere to the original debt limit package.

 

SNAP measure unveiled... A new Democratic bill aims to make permanent the exemptions to work requirements for certain vulnerable individuals in the Supplemental Nutrition Assistance Program (SNAP). These exemptions, set to expire in 2030, were part of the debt ceiling negotiations and include veterans, homeless people, and young adults aging out of foster care.

The proposed Food Access and Stability Act, backed by Democratic Reps. Yadira Caraveo (Colo.), Jahana Hayes (Ct.), and Emilia Sykes (Ohio), seeks to solidify these work exemptions as part of Democrats’ strategy to expand, rather than cut, the nutrition aid program.

However, this legislation may face challenges in the GOP-controlled House due to potential costs, as even temporary exemptions are estimated to increase SNAP spending by $2.1 billion over a decade. GOP lawmakers have disputed these calculations, but with Speaker Kevin McCarthy (R-Calif.) pushing for further SNAP changes, Democratic concerns remain.

House Agriculture Chairman Glenn “GT” Thompson (R-Pa.) said dealing with the SNAP work requirement debate now, rather than in the fall’s farm bill, takes away a partisan obstacle that’s delayed such legislation in the past.

 

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