Evening Report | June 7, 2022

Click here to view weekly Commitments of Traders charts.

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

World Bank slashed global growth forecast, warns of 1970s-style stagflation... The World Bank slashed its global economic growth for 2022 to 2.9% from 5.7% last year – 1.2 percentage points lower than it forecast in January. Russia’s invasion of Ukraine and the resultant surge in commodity prices have compounded existing pandemic-induced damage to the global economy, which the World Bank said is now entering what may be “a protracted period of feeble growth and elevated inflation.” World Bank President David Malpass warned, “The war in Ukraine, lockdowns in China, supply-chain disruptions and the risk of stagflation are hammering growth. For many countries, recession will be hard to avoid.”

Economic growth in advanced economies is projected to decelerate sharply to 2.6% in 2022 from 5.1% in 2021. Expansion in emerging market and developing economies, meanwhile, is projected to fall to 3.4% in 2022 from 6.6% in 2021, well below the annual average of 4.8% from 2011 to 2019.

The World Bank expects economic growth to hover around its forecast level for this year through 2023 and into 2024, while inflation is expected to remain elevated.

An extended period of high inflation and weak growth has drawn parallels with the 1970s, a period of intense stagflation. The World Bank’s June report offers what it calls the “first systematic” comparison between the situation now and that of 50 years ago. Clear parallels exist between the situation then and now, it said. Those include supply-side disturbances, prospects for weakening growth, and the vulnerabilities emerging economies face with respect to the monetary policy tightening that will be needed to rein in inflation.

However, there are now also a number of differences, such as the strength of the U.S. dollar and broadly strong balance sheets at major financial institutions, which present room for maneuver. To reduce the risks of a repeat of the 1970s, the World Bank urged policymakers to coordinate aid for Ukraine, counter the spike in oil and food prices, and set up debt relief for developing economies.

Yellen: ‘Unacceptable’ inflation levels not caused stimulus... The U.S. faces “unacceptable levels of inflation” and an appropriate budgetary stance is needed to help dampen price pressures without undermining the economy, Treasury Secretary Janet Yellen told senators on Tuesday. At a Senate Finance Committee hearing, Yellen pushed back against Republican assertions the highest inflation in 40 years was caused by President Joe Biden's $1.9 trillion American Rescue Plan (ARP) spending legislation to combat the Covid pandemic.

“We’re seeing high inflation in almost all of the developed countries around the world. And they have very different fiscal policies,” Yellen said. “So it can’t be the case that the bulk of the inflation that we’re experiencing reflects the impact of the ARP.” Instead, Yellen said the bulk of inflation is being caused by supply and demand mismatches, including excessive demand for goods over services during the pandemic and severe supply-chain disruptions. High energy and food prices caused by Russia’s invasion of Ukraine also have pushed inflation higher, she said.

She insisted that addressing inflation was Biden's top priority and said that elements of the president's proposed social and climate legislation could help lower costs for Americans. Yellen had come under fire from Republicans after admitting she was “wrong” last year in forecasting that inflation would be transitory and quickly subside.

She also will appear before the House Ways and Means Committee on Wednesday.

Consultant raises Argentine soybean crop estimate... Soybean yields in northern Argentina are a little better than expected. As a result, Crop Consultant Dr. Michael Cordonnier raised his Argentine soybean crop estimate by 1 MMT to 41 MM. Cordonnier kept his Argentine corn crop estimate at 49 MMT. He also maintained his Brazilian corn crop estimate at 107 MMT, which is lower than most other forecasts.

Regan again assures coming WOTUS regs will be ‘complementary’ to Supreme Court ruling... EPA Administrator Michael Regan said the new definition of Waters of the U.S. (WOTUS) that EPA is writing will be “complementary” to an expected ruling from the Supreme Court in a case covering the scope of the Clean Water Act relative to waters and wetlands connected to large navigable bodies of water. According to Bloomberg, the Supreme Court is expected to narrowly define what constitutes WOTUS in a case pending before it. EPA is preparing a rule with a new definition of what constitutes WOTUS and has held three out of 10 regional roundtables to gather stakeholder input. Regan said if EPA held back waiting on the Supreme Court it would be even further behind on the regulation.

Court orders full EIS for California offshore fracking permits... The U.S. Court of Appeals for the Ninth Circuit ruled the Interior Department must conduct more extensive environmental impact reviews before authorizing the use of advanced well stimulation techniques such as hydraulic fracturing and acidization for drilling off California’s coast. According to the ruling, federal agencies issued permits without first completing a full environmental impact statement (EIS) as required by the National Environmental Policy Act.

Primary elections in seven states today will set the stage for U.S. House, Senate races this fall... Some races to monitor:

• California: In a heavily Democratic district in the state’s Central Valley farm belt, Republican U.S. Rep. David Valadao is seeing pushback for his vote to impeach Trump over the Jan. 6 U.S. Capitol riot. Republican Chris Mathys has made Valadao’s vote a centerpiece in his campaign to oust him. High California gas prices are rattling Democrats, especially ahead of eventual Nov. 8 midterms. Meanwhile, San Francisco voters are considering whether to recall District Attorney Chesa Boudin, a progressive Democrat who critics say has failed to prosecute repeat offenders, amid widespread frustration with crime and homelessness.
• Iowa: Several Democrats are jockeying for the chance to take on seven-term Republican Sen. Chuck Grassley, with the campaign showcasing the breach between the Democratic Party’s progressive and establishment wings. Retired Navy Vice Adm. Michael Franken is waging a competitive contest with former U.S. Rep. Abby Finkenauer in a bid to take on the 88-year-old Grassley, who has been endorsed by former President Donald Trump. Meanwhile, three Republicans are competing for a chance to run against Iowa’s lone Democratic member of Congress, Rep. Cindy Axne.
• Mississippi: Republican U.S. Rep. Steven Palazzo is facing a large field of challengers after a congressional ethics watchdog raised questions about his campaign spending.
• Montana: Former Trump Interior Secretary Ryan Zinke is seeking the GOP nomination in a newly created House district in Montana. His opponents are drawing attention to Zinke’s troubled tenure at the agency, which was marked by multiple ethics investigations. Three Democrats are vying for their party’s nomination: public health advocate Cora Neumann, Olympic rower and attorney Monica Tranel and former state Rep. Tom Winter.
• New Jersey: A dozen House districts are on the ballot.
• New Mexico: Five Republican candidates are competing to take on Democratic Gov. Michelle Lujan Grisham. The incumbent is favored to keep her job in a state where Democrats control every statewide office and dominate the Legislature.
• South Dakota: Gov. Kristi Noem, considered a potential White House prospect, is favored to win the GOP nomination. U.S. GOP Sen. John Thune has no well-known challenger. One of his opponents, Mark Mowry, was among the crowd that demonstrated near the Capitol on Jan. 6. In the House, Republican state lawmaker Taffy Howard is trying to unseat GOP Rep. Dusty Johnson in the state’s lone district. Johnson touts his conservative voting record while keeping an ability to work across party lines, but, according to the Associated Press, Howard has tried to paint him as a foot soldier for House Speaker Nancy Pelosi.