Evening Report | Aug. 11, 2021
Check our advice monitor on ProFarmer.com for updates to our marketing plan.
Estimates for Russia’s wheat crop continue to slide amid dry, hot weather… IKAR lowered its Russian wheat crop forecast from 78.5 MMT to 77.0 MMT. And SovEcon on social media indicated it had made another cut to its production estimate that stood at 76.4 MMT last week, without sharing its official number. Falling crop estimates from Russia-based firms increase attention on whether (how much) USDA cuts its crop peg. In July, USDA pegged Russia’s 2021-22 wheat crop at 85 MMT.
U.S. inflation remains at 13-year high in July… The Labor Department reported that its consumer price index (CPI) rose 5.4% in July from a year earlier, the same pace as in June and the highest 12-month rate since 2008. That topped expectations for a 5.3% year-over year gain. The CPI climbed a seasonally adjusted 0.5% in July from June, a slightly cooler pace than its 0.9% increase in June from May. The so-called core price index, which excludes the often-volatile categories of food and energy, increased 4.3% from a year before. The inflation rate wipes out the wage gains seen over the past year.
Meanwhile, current Federal Open Market Committee (FOMC) voter Chicago Fed President Charles Evans said Tuesday he wants to see more jobs data before the Fed opts to adjust monetary policy and start tapering its monthly bond purchases. He expected the conditions for tapering the bond buys will be met “later this year.”
As for inflation, Evans still believes current price pressures will be temporary, but said the price increases are challenging for consumers and businesses. He said the Fed needed to follow the framework adopted last year to prove it is serious about reaching maximum employment and inflation averaging 2% over time. “We should not preemptively end a strong improvement in the labor market because somebody is getting nervous about inflation,” Evans said.
His view makes clear there is not yet a unified view within the U.S. central bank for timing on adjusting U.S. monetary policy.
Brazil issues temporary decree relaxing rules on who can sell hydrous ethanol… Brazilian President Jair Bolsonaro on Wednesday signed a temporary decree permitting producers and importers of hydrous ethanol to sell the biofuel directly to consumers at gas stations. Gas stations with the brand of a distributor will also be able to sell fuels from other suppliers, so long as the consumers are informed where the product originates from. The temporary decree is meant to boost competition in the fuel sector and will take effect in December. For the measure to become law, Congress would need to approve it within 120 days.
White House urges OPEC to boost oil production amid Covid-19 recovery… Recent planned oil production increases by OPEC would “not fully offset previous cuts” made during the pandemic, National Security Adviser Jake Sullivan said. “At a critical moment in the global recovery, this is simply not enough,” Sullivan said.
Republicans urge Biden to oppose European Union carbon tariffs… A group of 19 Senate Republicans is calling on President Joe Biden to “safeguard” U.S. commercial interests and oppose the European Union’s plan to impose “carbon tariffs” against countries that lack aggressive emissions-reduction policies. The EU last month unveiled a carbon border adjustment proposal to prevent domestic industries from moving overseas to escape the bloc’s aggressive plans to raise the price of using fossil fuels.
Senate Republicans led by Senator Kevin Cramer (N.D.) wrote a letter to Biden, warning the EU’s plan is “unfair to the U.S.” and would harm small manufacturers of products targeted by the scheme, such as steel, aluminum, cement, electricity, and fertilizer. They called it a “guise to promote green protectionism.” The Republicans wrote, “Instead of punishing U.S. imports, our European allies should work with us to advance a common approach in curbing overseas emissions, particularly those from China.”
A similar proposal by Senate Democrats is part of the $3.5 trillion “human” infrastructure and climate spending package that is designed to impose a “polluter import fee” on exporters of carbon-intensive goods, though it is far less detailed than the EU’s plan.
Argentine beef exports down nearly 30% from year-ago during June due to export restrictions… Argentina exported around 35,000 MT of beef during June, a 29% decline from year-ago, according to the country’s beef industry chamber. A temporary ban on beef exports was in place for much of June, and when it was lifted June 22, producers were still only able to export 50% of last year’s average. “It was the lowest volume in the last sixteen months,” the chamber said.
Poultry merger draws Grassley scrutiny… The Justice Department should carefully examine the proposed merger of Sanderson Farms and Wayne Farms for antitrust implications, since the new poultry processor would control an estimated 15% of the U.S. chicken market, said Senator Chuck Grassley (R-Iowa) the ranking Republican on the Senate Judiciary Committee.
Food supply chains are getting whipsawed by the changing direction of the pandemic recovery... U.S. restaurants are seeing the early-summer return by customers start to turn downward, the Wall Street Journal reports, as the Delta variant of Covid triggers new outbreaks around the country and sends many Americans back to eating at home. Black Box Intelligence says national restaurant same-store sales in the week ended July 25 were the worst weekly performance in the last five weeks, although they remained higher compared to the same period in 2019. Some states and cities seeking to tamp down the variant spread are restoring some restrictions and some restaurant operators are trying to assess emerging requirements to check vaccination status of customers. For foodservice suppliers, that could mean a revival of the disruptions of 2020, including operations tailored more for supermarket sales and to-go options for restaurants.
