Brazil to Plant Record Soy Crop for 2018/19

Farmers from Brazil are expected to plant another record soybean crop. This would be the 12th consecutive year that Brazil plants a record land area of soybeans, amid strong demand from Asia. Reuters reports that Brazil is likely to expand the area to a record 36.28 million hectares, the equivalent to 89.65 million acres, this season, which farmers will start planting around September. The expected planted area represents a 3.2 percent expansion from the previous growing cycle. A Rabobank analyst says the trade war between the U.S. and China is supporting Brazilian soybean prices in the export markets and could be a contributing factor to the increase. Brazil, the world's largest soybean exporter, is expected to collect an estimated 119.76 million metric tons of the crop in the next growing cycle, up 0.65 percent from the last growing season.

AFBF Exec Named North American Meat Institute CEO

The North American Meat Institute this week named Julie Anna Potts its next president and CEO effective September 24, 2018. Potts succeeds retiring President and CEO Barry Carpenter. Potts has served the American Farm Bureau Federation since 2011 as its executive vice president and treasurer. She first joined AFBF in 2004, serving as general counsel until 2009. In late 2009, she was named chief counsel of the Senate Agriculture Committee, serving under then-Chairman Blanche Lincoln of Arkansas. The North American Meat Institute is the nation’s oldest and largest trade association representing packers and processors of beef, pork, lamb, veal, turkey and processed meat products. Member companies account for more than 95 percent of United States output of those products. The Meat Institute provides regulatory, scientific, legislative, public relations and educational services to the meat and poultry packing and processing industry. 

USDA's Perdue Says Farmer Aid Package Details Coming Monday

The expected Friday release of details of the farmer aid package has been pushed to Monday, according to USDA Secretary Sonny Perdue. The rule covering USDA plans to make the aid payments and take other actions to help farmers impacted by trade actions is still under review at the Office of Management and Budget (OMB). "Those details are going to be out Monday," Perdue stated. As for the specific amounts of aid, Perdue would not comment on reports that the payments to soybean farmers would be $1.65 per bushel and one cent per bushel for corn. "We will acknowledge that dairy and pork and soybeans will be the commodities that are most dramatically affected by the tariffs," Perdue stated. "It's not going to make everybody whole. It's not going to make everybody happy. It's not going to seem like it's equitable."

US-China Talks End with No Major Breakthrough

Chinese leader Xi Jinping and his trade officials are not budging after two days of trade policy talks that ended Thursday in Washington. A Trump administration official acknowledged that President Trump and his team have repeatedly laid out for Chinese officials the changes in behavior they would like to see. “But so far,” the official said, “we have yet to see those.” Negotiators made no real progress at the two-day meeting, although Beijing described the talks as “constructive and frank" and said the two sides would stay in contact about the next steps. A fresh round of U.S. tariffs on $16 billion of Chinese imports went into effect on Thursday, and Beijing retaliated with tariffs on $16 billion of American imports.

Washington Insider: US a Currency Manipulator?

Although charges of currency manipulation are most often made against developing countries—and used to browbeat China — some Wall Street observers are saying that the President’s “sustained campaign” to weaken the dollar as a way to reduce the U.S. trade deficit “can’t be dismissed,” Bloomberg reports. “The trade debate will increasingly include the currency issues,” said Charles Dallara, a former U.S. Treasury official and one of the architects of the Plaza Accord, the 1985 watershed agreement between the U.S. and four other countries to jointly depreciate the dollar. “It’s inevitable.” Granted, Dallara didn’t specifically use the word manipulation, Bloomberg said. There’s something of a reluctance among analysts to associate the U.S., the standard-bearer for free-market principles, with the term. They prefer to refer to it as foreign-exchange intervention. Semantics aside, a shift to a more protectionist and interventionist policy, a la 1985, would not only reverberate across the $5.1 trillion-a-day currency market and undermine the dollar’s status as the world’s reserve currency, but could also weaken demand for U.S. assets. Since falling toward a three-year low in April, the dollar has appreciated almost 6%, according to the Bloomberg Dollar Spot Index. Its advance last quarter was the strongest since 2016, as it appreciated against all 16 major currencies. The dollar is also 11% above its average over the 13-year span of the dollar index. A strong-dollar policy has been a cornerstone for successive U.S. administrations. The U.S. was also a key supporter of the July Group-of-20 pact that member economies will “refrain from competitive devaluations, and will not target our exchange rates for competitive purposes.” Yet like many other things, this administration “has shown a penchant for upending the status quo,” Bloomberg said. After a flurry of recent tweets in which President Trump complained that the dollar is blunting America’s “competitive edge,” Michael Feroli, JPMorgan Chase’s chief U.S. economist, wrote that he can’t rule out the possibility the administration will intervene in the currency markets to weaken the greenback. Both Deutsche Bank and OppenheimerFunds echoed the view, saying dollar intervention was no longer far-fetched. For example, the President recently complained to wealthy Republican donors that he was “not thrilled” with the Federal Reserve’s interest-rate increases under Chairman Jerome Powell, which have boosted the dollar. So what tools does the administration have if it intended to go beyond mere talk? The President could order the U.S. Treasury to sell dollars and buy currencies using its Exchange Stabilization Fund, according to Viraj Patel, an FX strategist at ING. But because the fund only holds $22 billion of dollar assets, the impact would likely be minimal. Any direct intervention that is larger and more ambitious in scope would also require congressional approval, he said. However, Patel says there is a loophole the President could exploit to get around the fund’s constraints and bypass Congress altogether: he could declare FX intervention a “national emergency,” and then force the Fed to use its own account to sell dollars. Such a move would be a long shot by any stretch of the imagination, but since the President has invoked “national security” to impose tariffs, Patel says he can’t “completely rule out” the possibility. There are plenty of caveats, Bloomberg says, and the odds of any kind of U.S. intervention are still low. At the G-20 summit, Treasury Secretary Steven Mnuchin assured fellow finance ministers the U.S. wouldn’t meddle in foreign-exchange markets. And while White House trade adviser Peter Navarro has broached the subject of a global accord on currencies in the past, the chances of a multilateral agreement on the dollar are remote. Plus, there’s always the threat of retaliation by other nations if the U.S. goes it alone. Nevertheless, many who recall the events in the early 1980s that culminated in the Plaza Accord see certain parallels to what’s happening today. Then, as now, the dollar’s strength on the back of rising interest rates was at the center of trade tensions between the U.S. and other major economies. Protectionism was on the rise, as were fears of foreign imports costing American jobs. Then, the bogeyman was Japan. Today, it’s China. And as the trade war with China intensifies, some worry about the recent precipitous drop of the yuan. It has tumbled 9% since April, when trade friction with China started to intensify. The magnitude of the decline, by some measures the fastest since the 1994 devaluation, boosted speculation the People’s Bank of China is deliberately weakening the yuan to offset the tariff impact. And, while there is plenty of criticism from administration officials, Bloomberg emphasized that the Treasury Department, conducts twice-yearly reviews of international foreign-exchange policies and, in April declined to formally name China a currency manipulator based on its own criteria. However, Bloomberg says that bankers have long memories that many recall how in the early 1980s the Fed’s quantitative easing sowed frustrations in emerging markets over what some officials saw as a means to manufacture a weaker dollar. Whatever the case, Dallara is bracing for more turbulent times. He says he has “lived through a lot of market gyrations in my career, and I have an uneasy feeling that I can’t validate by data that tensions are going to, at some point, emerge into volatile market dynamics. This is a risk,” he told Bloomberg. So, currency policies and trends are yet another factor that producers should watch closely as the political season approaches, especially if the trade wars escalate to the point that they become major threats in the fall elections, Washington Insider believes. 

FMCSA Seeking Public Comment on Rewriting Hours of Service Rules

The Federal Motor Carrier Safety Administration (FMCSA) is embarking on the process of revising certain hours of service (HOS) provisions based on requests from Congress and the public in the wake of the deployment of electronic logging devices in trucks.To address these requests, FMCSA said it is seeking public input on the situation via an advance notice of public rulemaking in the Federal Register.FCMSA is asking for comment on the short-haul HOS limit; the HOS exception for adverse driving conditions; the 30-minute rest break provision; and the sleeper berth rule to allow drivers to split their required time in the sleeper berth. The request will be published in today's Federal Register with comments due 30 days after that.FMCSA will also hold a public meeting on the situation August 24 in Dallas, Texas.

Washington Insider: Grocers Chasing Amazon

The New York Times is reporting that the complexion of the grocery business changed recently when Amazon bought Whole Foods Market. The $13.4 billion deal set off a frenzy of deals and partnerships that continues to intensify.The Times details some of the shifts – Kroger announced a partnership with Ocado, an online grocery company, to use its robots to pack online orders. Target acquired Shipt, a start-up offering same-day delivery services, for $550 million. Walmart acquired Parcel, a start-up offering same-day delivery, and announced a partnership to use Alert Innovation, a small company that employs automated carts to fulfill grocery pickup orders at stores. It concludes that even greater changes for the sector are on the way.Chieh Huang, the chief executive of Boxed, asked the Times, “are technology folks like us going to figure out retail faster than the retailers figure out technology?” NYT noted that on Tuesday, Boxed announced that it had sold a minority stake to Aeon Group, one of the largest retail chains in Japan. Alongside investors including Alpha Square Group and CDIB Capital, Aeon invested $110 million in Boxed. The deal values the start-up at $600 million, according to a person familiar with the agreement.Food shopping is one of the last major holdouts to online retail. There are reasons: groceries are perishable, fragile and heavy. And, the customers often shop at the last minute, like to see the food they are about to eat and don’t want to pay high delivery fees, the Times says.Even Amazon, with its Amazon Fresh online grocery service, has struggled to gain ground in the business. The company’s Whole Foods deal, paired with Walmart’s 2016 acquisition of Jet.com, underscored that the future of selling food and household items requires cooperation between the digital natives and the old-school retailers.Grocery companies “are realizing that with Walmart and Amazon moving at their pace, you need to pick yours up, too,” said Greg Spragg, a former chief merchant at Sam’s Club, the wholesale retailer owned by Walmart, who now consults at GrowthWise Group. “I wouldn’t call it fear. I would call it a wake-up call.”Global food retailing is a $5 trillion business, with just 3 percent of that online last year—but online grocery sales are expected to double over the next four years, reaching $334 billion by 2022.Phil Lempert, a grocery industry analyst, predicted store closings for chains that do not evolve to meet the changing needs of customers. Stores offering curated selections, specialty items, cooking classes and the option to buy online and pick up in person will thrive, he said.“The bulk of stores — they haven’t been doing exciting things for a long time,” Lempert said.Josh Hix, chief executive of Plated, a meal kit start-up, said the Amazon-Whole Foods deal had immediately changed his discussions with grocery chains. Meal kit companies have a checkered record. But the grocery companies saw an opportunity to use Plated’s data and research on recipes and taste preferences.“The pace of follow-ups went from ‘This is interesting, and we’ll be in New York again in five months’ to ‘This is really interesting, and how’s tomorrow at 9 a.m. look for another call?’” Hix said. After years of not being taken seriously, “it was very cathartic.”Huang also fielded numerous acquisition offers for Boxed, creating a harrowing few months. Most of the big grocers “have wanted to kill us, partner with us, invest in us or buy us — all probably in the course of the same conversation,” he said.Huang, who previously founded a gaming company decided that the opportunity was too good to sell now but he has joined other technology companies in the Aeon Group, one of the largest retail chains in Japan.This ownership structure allows Boxed to license its technology to its retail competitors in the United States as they try to become more digital. The company says it is in talks with 10 or so potential partners for various pieces of its technology. They include mobile app technology, personalization software, a packing algorithm that maximizes space in shipping boxes, software that tracks item expiration dates, order management software and warehouse robotics automation.Boxed, which is based in New York City and has about 250 full-time employees, sells food and other everyday essentials in bulk.Grocery delivery is difficult to do affordably, but tech-driven efficiencies like those developed by Boxed, Amazon and others are forcing change on the industry, the Times says.“Consumers want convenience and will pay more for it,” said Michael Pachter, an equities analyst at Wedbush Securities. “Once they stop going to grocery stores,” he added, “grocery stores are going to have a problem.”So, change is coming rapidly to food retailing, a shift that is especially important because retailers are in a position to observe consumer preferences rapidly — and to make sure that producers and wholesalers comply when markets shift. The retail sector changes are a trend that producers need to follow closely as they intensify, Washington Insider believes.