House Ag Leaders Urge House Vote on Broadband Bill

Leaders of the House Agriculture Committee Thursday called for a full-House vote on a bipartisan rural broadband bill. Chairman David Scott and Ranking Member Glenn GT Thompson requested that Speaker Nancy Pelosi and Republican leadership bring the Broadband Internet Connections for Rural America Act to the House Floor for a vote. The bill provides USDA with an authorization of $43.2 billion, which received a unanimous committee vote on July 14, 2021. In a letter to House leadership, Scott and Thompson jointly say, “We write today to ask you for your assistance for a floor vote on our bipartisan legislation.” The lawmakers say it is vitally important that USDA, with its unique expertise, experience, and 159-year history serving rural America, provide the leading role in the nation’s rural broadband strategy. Overall, the investments provide opportunities for rural communities to invest in the health and well-being of their communities, incentivize business growth, and expand economic opportunities.

Dominican Republic Confirmed Positive for African Swine Fever

The Department of Agriculture announced this week that the Dominican Republic has confirmed cases of African swine fever. The cases were confirmed as part of a cooperative surveillance program between the United States and the Dominican Republic. The United States remains free of ASF, an animal disease affecting only pigs with no human health implications, and imports no pork, animal feed or other pork-related products from the Dominican Republic. While the finding is concerning, National Pork Producers Council chief veterinarian Liz Wagstrom states, “The United States has significantly bolstered biosecurity to protect the U.S. swine herd since ASF broke in China nearly three years ago.” NPPC urges producers use caution when hosting on-farm visitors from an ASF-positive region, review biosecurity protocols and visit with feed suppliers to discuss the origin of feed ingredients. Additionally, NPPC encourages producers to fill out the Foreign Animal Disease Preparation Checklist and enroll in the Secure Pork Supply program.

USDA Announces $67 Million to Help Resolve Land Ownership and Succession Issues

Agriculture Secretary Tom Vilsack Thursday announced $67 million in competitive loans through the new Heirs' Property Relending Program. The program aims to help producers and landowners resolve heirs' land ownership and succession issues. Intermediary lenders, cooperatives, credit unions, and nonprofit organizations, can apply for loans up to $5 million at one percent interest once the Farm Service Agency opens the two-month signup window in late August. After FSA selects lenders, heirs can apply directly to those lenders for loans and assistance. Heirs' property issues have long been a barrier for producers and landowners to access USDA programs and services. The relending program provides access to capital to help producers find a resolution. Heirs may use the loans to resolve title issues by financing the purchase or consolidation of property interests and financing costs associated with a succession plan. Heirs may not use loans for any land improvement, development purpose, or payment of operating costs.

Midwest Lawmakers Urge Biden to Consider Biofuels in Environment Agenda

A group of Midwestern Senators urge the Biden administration to consider biofuels like ethanol as part of its environmental agenda. The climate focus by the administration includes a push towards electric vehicles. The lawmakers tell the administration in a letter,” Unfortunately, the promise of homegrown biofuels and our agriculture sector appear to be woefully underrepresented in your administration’s energy, environmental, and transportation agenda.” The group requested a meeting with President Joe Biden and cabinet members to discuss immediate and intermediate steps the administration can take to feature American agriculture and biofuels as part of the energy and environmental agenda. The lawmakers say recent studies have found corn ethanol to have 46 percent lower lifecycle emissions than gasoline. The letter also asks the administration to rigorously implement the Renewable Fuel Standard. Senate Republicans John Thune, Chuck Grassley, Roy Blunt, Jerry Moran, Deb Fischer, Mike Rounds, Joni Ernst, Ben Sasse and Roger Marshall signed the letter.

USDA Releases Economic Impact Analysis of the U.S. Biobased Products Industry

The Department of Agriculture Thursday unveiled an Economic Impact Analysis of the U.S. Biobased Products Industry. The report demonstrates that the biobased industry is a substantial generator of economic activity and jobs, and that it has a significant positive impact on the environment. According to the report, in 2017, the biobased products industry supported 4.6 million jobs, contributed $470 billion to the U.S. economy and generated 2.79 jobs in other sectors of the economy for every biobased job. Additionally, biobased products displace approximately 9.4 million barrels of oil annually, and have the potential to reduce greenhouse gas emissions by an estimated 12.7 million metric tons of CO2 equivalents per year. USDA deputy undersecretary for Rural Development Justin Maxson announced the report on the 10th anniversary of the creation of USDA’s Certified Biobased Product Label. Maxson says, “Biobased products are widely known for having a substantially lower impact on the environment compared to petroleum-based and other non-biobased products.”

USDA: 2021 Food Prices Rise Slower Than 2020

Retail food prices have increased 1.6 percent in the first six months of 2021, less than the rate over the same period last year. The Department of Agriculture’s Economic Research Service says the 2021 increase is equal to the historical average over the same six months from 2000 to 2019. In the first six months of 2021, prices for five food categories increased at a rate slower than in 2020 and years prior, including eggs, dairy, fresh vegetables, cereals and bakery products, and "other foods." Conversely, prices for three food categories increased in the first six months of 2021 at a rate faster than in 2020 and in years prior, including fresh fruits, fish and seafood, and fats and oils. Inflationary pressures differ by food category, according to USDA. For example, fresh fruit prices currently are increasing more than four times faster than their historical average rate because of low citrus supplies and increased exports.

Washington Insider: African Swine Fever Closer to Home

Europe and Asia are the areas in the world where African swine fever (ASF) has been the most prevalent. But USDA has now confirmed that ASF has been found in the Dominican Republic.

USDA's Foreign Animal Disease Diagnostic Laboratory confirmed ASF in samples from pigs in the Dominican Republic via a cooperative surveillance program, USDA announced. Dominican Republic officials said that testing of 389 samples from farm-raised and backyard pigs was conducted, and ASF was found in a "small population of backyard pigs from Sanchez Ramirez and Montecristi provinces."

According to the Animal and Plant Health Inspection Service (APHIS), pork and pork products are already banned from entering the U.S. due to restrictions linked to classical swine fever, and the Department of Homeland Security's Customs and Border Protection (CBP) is "increasing inspections of flights from the Dominican Republic to ensure travelers do not bring prohibited products" into the U.S.

APHIS also said that CBP will also be "ensuring that garbage from these airplanes are properly disposed of to prevent the transmission of ASF."

USDA said it has offered additional testing support and will consult with the country on any additional steps of actions to "support response and mitigation measures." USDA has offered similar help to Haiti that shares a border with the Dominican Republic and has a "high risk" for ASF.

The Dominican Republic said they were halting pig movements in two provinces and are mobilizing the military as they seek to contain ASF. The two provinces where the finds were will be quarantined, the government said.

There are about 1.8 million hogs in the Dominican Republic, with 15,000 in the Sanchez Ramirez province and another 4,600 in the Montecristi province.

This is not the country's first find of ASF as the World Animal Health Organization (OIE) said that a 1978 outbreak resulted in the country killing its entire hog herd.

Mexico has also acted as a result of the situation, announcing they will work with pork producers in the country to make sure that sanitary measures are up to snuff and that there is "epidemiological surveillance" due to the find.

Actions including reinforcing animal inspections at all ports, airports and border crossings, the country's Ag Ministry said, and kitchen and waste on commercial ships, cruise ships and airplanes will be returned to its origin country or the ministry ensures it is properly destroyed.

The U.S. stepped up its efforts when ASF appeared in Asia. USDA is working closely with other federal and state agencies, the swine industry, and producers to take the necessary actions to protect our nation's pigs and keep this disease out.

So we will see. One has to believe that if the U.S. avoided getting this in 1978 when it previously struck the Dominican Republic, ideally new and updates surveillance efforts should keep the U.S. even more protected. But this remains a very important situation to watch, Washington Insider believes.

Jacobs-Young Nominated as USDA Undersecretary.

President Joe Biden on Wednesday announced his intention to nominate Chavonda Jacobs-Young as USDA undersecretary for research, education and economics.

Jacobs-Young is administrator of the USDA Agricultural Research Service and serves as acting undersecretary for research, education and economics and acting USDA chief scientist.

She would be the first woman and person of color to lead this division of USDA, which manages an annual budget of $1.82 billion, the White House said.

The role of USDA undersecretary for trade and foreign agriculture is still open along with the chief ag negotiator spot at the Office of the U.S. Trade Representative.

US List of Facilities Eligible to Export to China Expands

USDA's Food Safety and Inspection Service has released an updated list of slaughter, processing or cold storage establishments that are eligible to export product to China.

Under the Phase One agreement with China, FSIS certifies establishments to the General Administration of China Customs (GACC) and those facilities must be listed on the GACC website before slaughtering and processing products for export to China.

A notification on the GACC site said that six U.S. facilities were added to the list of those eligible.

Information from FSIS indicates that on July 26 and 27, a total of eight facilities were added to the approved list for beef, seven were added for pork, and six were added for poultry. There have been 37 poultry plants added in 2021, bringing the total to 529; 31 have been added in 2021 for pork for a total of 508; and 34 added this year for beef bringing the total to 547.

Friday Watch List

Markets

The Labor Department issues its Employment Cost Index and a report on U.S. personal incomes for June is also due out at 7:30 a.m. CDT Friday. The University of Michigan's index of consumer sentiment for July is set for 9 a.m. CDT. Traders will continue to examine the latest weather forecasts and any hint of export sales news.

Weather

A system building off a frontal boundary in Nebraska and South Dakota will produce moderate to heavy rainfall from South Dakota southeast through northern Missouri on Friday. This includes the eastern half of Nebraska and western half of Iowa with good rainfall amounts for reproductive corn and soybeans.

House Agriculture Hearing Echoes NCBA Push for More Hook Space

The National Cattlemen's Beef Association says a House Agriculture Subcommittee hearing Wednesday echoed the organization's longstanding call to expand processing capacity. The Livestock and Foreign Agriculture Subcommittee hearing on the State of the Beef Supply Chain, examined shocks in the supply chain. Subcommittee Chairman Jim Costa says the shocks have "impacted millions of people along the entire supply chain.” Members of the committee also noted the need for greater transparency in cattle markets to create conditions that support both a reliable, affordable supply of U.S. beef. NCBA Vice President of Government Affairs Ethan Lane states, “The continued momentum we are seeing on expanding processing capacity, both on Capitol Hill and at USDA, is a positive sign.” Cattle industry concerns have seen increased attention recently from both sides of the aisle as NCBA has advocated for “commonsense solutions” that address the most urgent challenges facing producers, including legislation to help small and independent processors expand capacity.

Toomey, Shaheen Reintroduce Bill to Overhaul U.S. Sugar Program

Lawmakers this week in the House and Senate introduced the Fair Sugar Policy Act of 2021 to reform the federal sugar support program. Republican Senator Pat Toomey and Democrat Jeanne Shaheen introduced the bill in the Senate. In the House, North Carolina Republican Virginia Foxx, and Democrat Danny Davis introduced the bill. The lawmakers say the federal sugar support program currently costs consumers and businesses as much as $4 billion per year. Specifically, the legislation would lift restrictions on the domestic supply of refined sugar. The bill would also reduce taxpayer liability for sugar processor loan forfeitures and ensure that the impact on consumers, manufacturers and farmers is taken into account when the USDA administers the sugar program. Finally, the bill would reduce market distortions caused by sugar import quotas. Toomey states, “It is long past time we reform this corporate welfare program that jacks up food prices while threatening thousands of good-paying jobs.”

USDA Extends Crop Insurance Deadlines

USDA’s Risk Management Agency this week authorized Approved Insurance Providers to extend deadlines for producers. The extension includes premium and administrative fee payments, deferring and waiving the resulting interest accrual and other flexibilities to help farmers and ranchers through widespread drought. Producers now have additional time to pay premium and administrative fees, and interest will be waived for 60 days or the termination date on the policy, whichever comes first. RMA also authorized AIPs to waive interest for an additional 60 days for Written Payment Agreements due between August 1 and September 30, 2021. RMA Acting Administrator Richard Flournoy states, “Farmers and ranchers are weathering tough drought conditions this year, and we want to help ease the burden by extending payment deadlines and deferring interest accrual.” Additionally, RMA updated policy in June to allow producers with crop insurance to hay, graze or chop cover crops at any time and still receive 100 percent of the prevented planting payment.

USB: Consumer Research Unpacks Protein Perceptions

The United Soybean Board Wednesday released new consumer data shedding light on consumer perceptions around protein. More than half of consumers, 56 percent, say it is extremely or very important that plant-based proteins be complete, offering nutrition comparable to animal protein. Soy protein is uniquely positioned to help the food industry capitalize on current trends and consumer interests due to its protein quality, versatility and sustainability benefits, according to USB. The data shows most consumers recognize that protein is important to maintaining a healthy and balanced diet, with 82 percent of consumers ages 50 and under agreeing that it is extremely or very important. General health and wellness was given as the top reason for adding protein, animal- or plant-based, to their diets. The study also found the majority of U.S. consumers at 79 percent eat meat, and that 65 percent of the population is open to eating plant-based “flexitarian-friendly” food, with higher numbers reported among younger generations.

Purdue Survey Shows Indiana Farmland Prices Hit Record High in 2021

The Purdue Farmland Value and Cash Rents Survey shows farmland prices across Indiana reached all-time highs in June of 2021. Statewide, top-quality farmland averaged $9,785 per acre, up 14.1 percent from the same time last year. The high growth rate for top-quality farmland was closely followed by the growth in average and poor-quality farmland prices, which increased by 12.5 percent and 12.1 percent, respectively. Across all land quality classes, 2021 per-acre farmland prices exceeded the previous records set in 2014. Purdue says a unique combination of economic forces, including net farm income, expected income growth, crop and livestock prices, interest rates, exports, inflation, alternative investments, U.S. policy, and farmers' liquidity, all led to price increase. Cash rental rates also increased in 2021. Average rental rates increased by 3.9 percent for top-quality land, from $259 to $269 per acre. The cash rental rates for average- and poor-quality lands both increased by 4.6 percent to $227 and $183, respectively.

USDA Invests $21 Million To Support Historically Black Colleges and Universities

The Department of Agriculture announced Wednesday an investment of over $21.8 million to 1890 Land-grant Institutions to support research at Historically Black Colleges and Universities. Agriculture Secretary Tom Vilsack states, “this investment will strengthen the ability of our Land-grant Institutions to deliver innovative solutions that address emerging agricultural challenges impacting diverse communities.” USDA’s National Institute of Food and Agriculture awarded the funds to 1890 Land-grant Institutions to support 58 projects at Historically Black Colleges and Universities in the nation’s Land-grant University System and organizations as part of its Capacity Building Grants program. The program is designed to build capacity for teaching, research and extension activities at eligible institutions including curriculum design, materials development, faculty development, student recruitment and retention, and extension program development support. USDA says the investment will strengthen the quality and diversity of the higher-education workforce, and equip 1890 Institutions with resources needed to better address emerging challenges and create new opportunities.

Washington Insider: US Cattle Market Examination

If there has been an issue in recent years that sparks an active discussion and lots of finger pointing, it's the U.S. cattle market. While the origins of the current discourse in Washington on the topic didn't come from a fire at a cattle processing plant in Holcomb, Kansas, it exposed the challenges in the U.S. cattle industry.

Rarely have lawmakers met a problem they didn't love. But they are finding out that the solutions to addressing issues in the cattle market are not easy, and are many and varied.

Many have complained about the fluctuations in the cattle market after the 2019 Kansas fire, searching for solutions on how to make the cattle market work better.

There are clear camps on the issues. One is the four major cattle packers that control some 80% of the slaughter capacity in the U.S. Officials from two of the four companies -- JBS USA and Tyson Foods -- testified before the Senate Judiciary Committee. Shane Miller of Tyson Foods blamed the "law of supply and demand" for the price swings that have been seen. He said there have been "unprecedented market shocks" that have hit the markets the past 18 months.

But National Farmers Union President Rob Larew, often a critic of the big cattle packers, countered that "market manipulation by multinational meat companies like those represented here today" were to blame. He called on the panel to "push for much more vigorous antitrust enforcement to rein in the unchecked power of the packers, and if need be, bust 'em up."

When the Kansas fire took the plant out of operation, that backed up cattle in the system as they had to be moved to other locations for slaughter. That sent cattle prices down while meat prices rose at the store. Critics note that was repeated during the pandemic when plant workers caught COVID and facilities couldn't keep operating with staff. And then JBS was hit with a cyberattack and the same situation evolved on a smaller scale.

President Joe Biden signed an executive order which urged that the meatpacking industry be scrutinized for anticompetitive behavior.

That resulted in an announcement from USDA Secretary Tom Vilsack that the Agriculture Department was going to spend $500 million to get more cattle processing capacity. And they also announced another $155 million that was aimed at helping small and very-small processors stay in business and expand.

But even those dollars aren't going to come right away. Vilsack was hopeful things would be happening by the end of the year, expressing confidence the federal dollars would prompt even more private-sector investment.

Meanwhile, on the other side of the Hill, a House Ag subcommittee looked into the issue, bringing market analysts and academics in to given feedback to lawmakers. But even they raised issues with some of the suggested solutions, like the USDA effort to expand slaughter capacity.

Perdue University ag economics chair Jayson Lusk emphasized that lawmakers should not focus to heavily on the ripple effects from things like the Kansas plant fire and the pandemic. "Make policies for the future," he urged, noting new government investments in processing capacity to improve prices paid to farmers "may be fixing yesterday's problem."

Plus, he noted that the cost of building a plant is not the only issue as labor availability and regulatory issues also are a challenge.

Rabo AgriFinance vice president and animal protein analyst Dustin Aherin chimed in that there are cycles in the cattle market and focusing just on boosting slaughter capacity may still not address issues. "There is a point where industry capacity goes too far to withstand cyclical periods of high cattle supplies--drought risks and cyclical fundamentals must be considered," he cautioned.

Several lawmakers have pushed legislation that would require a certain percentage of cattle are sold on a cash basis in the market as opposed to via formula pricing that is sometimes less than clear. There too, Lusk cautioned, "An important distinction needs to be made between price levels and price volatility. And even if all cattle were traded on a negotiated basis, the price level would not necessarily improve."

Aherin noted that mandating cash market mandates could end reducing innovation in the cattle market. "Any mandate that would dictate that we have to price a certain number of cattle off of cattle cash transactions certainly hinders the ability to adapt to maybe some new opportunities to price cattle off of beef itself, sometime down the road," he observed.

So we will see. Once again, lawmakers are finding out that a solution is not as simple as passing a law. That's not to say action isn't needed. It is. But it has to be carefully considered and as the unintended consequences need to be watched very closely as they could create even more problems, Washington Insider believes.

Groups Lay Out Goals for WTO Reforms

A group of U.S. ag and commodity organizations has penned a letter to U.S. Trade Representative Katherine Tai, outlining what they would like to see done in terms of WTO reforms.

"WTO reform should focus on further market-based and sustainable trade liberalization, institutional improvements that help members better prevent or address trade problems, and a more effective and efficient dispute settlement system," the groups said. They urged action on "creative new approaches" including a modest outcome for the 12th Ministerial meeting in November relative to agriculture, one that is focused on "improved transparency and notifications" that "lays the groundwork for a more ambitious work plan for MC13."

And the groups also brought up a long-standing issue that the sector has urged administration after administration involved in WTO negotiations and the General Agreement on Tariffs and Trade (GATT) before that: Agriculture's long-term goals "should not be used as a trade-off for non-agriculture outcomes."

Several Ag Issues Cited in Exam of USMCA After Year One

The Senate Finance Committee held a hearing Tuesday to examine the status of the U.S.-Mexico-Canada Agreement (USMCA) one year after the trade pact started. Canada's inadequate implementation of new market access for U.S. dairy, Mexico's foot-dragging on agriculture biotech approvals, and the lack of a chief agriculture negotiator nominee were some of the key ag-related issues.

The U.S. dairy industry has expressed exasperation at what they charge is a lack of Canada implementing the dairy provisions in the USMCA that were supposed to bring more market access for U.S. dairy products into Canada.

And the issues aren't just with Canada. Another big concern among lawmakers and the ag industry is Mexico's lack of action on biotech crop approvals -- despite USMCA provisions requiring the approvals process to be science-based.

Biotechnology Innovation Organization (BIO) President and CEO Michelle McMurry-Heath told lawmakers the failure of Mexico to approve several new GMO crop varieties has no basis in science, calling the situation "particularly disturbing to not only our innovative agricultural businesses, but also to the investors that really support their work."

So far on the agriculture front, dairy is the only case pursued by the U.S. under USMCA procedures, but pressure is clearly rising on the key GMO issues with Mexico.

Thursday Watch List

Markets

USDA's weekly export sales report is due out at 7:30 a.m. CDT Thursday, along with weekly jobless claims and updates of U.S. second-quarter GDP and the U.S. Drought Monitor. The U.S. Energy Department's weekly report of natural gas inventories is set for 9:30 a.m. Traders continue to pay close attention to the latest weather forecasts and any news of export sales.

Weather

Severe storms that went through the Upper Midwest along a cold front on Wednesday continue across the eastern Midwest on Thursday while continuing to push southeast. This will bring moderate to heavy rainfall for some areas of the southern Midwest and a risk for continued strong winds and hail as well. Temperatures behind the front have cooled significantly and will put an end to the heat as the front continually pushes south through the weekend.

House Ag Approves WHIP+ Reauthorization for 2020, 2021

The House Agriculture Committee Tuesday approved reauthorization for WHIP+ in 2020 and 2021. Chairman David Scott, a Democrat from Georgia, stated during the hearing, the severity of recent natural disasters “has required supplemental assistance, and that’s why I have prioritized extending the Wildfire and Hurricane Indemnity Program Plus for 2020 and 2021.” Known as WHIP, the program provides payments to producers to offset losses from hurricanes, wildfires, and other qualifying natural disasters that occurred in 2018 and 2019. WHIP+ covers the losses of the crops, trees, bushes and vines that occurred as a result of those disaster events, milk losses due to adverse weather conditions, and losses to on-farm stored commodities. The bill, approved by a voice vote of the committee, would expand coverage to include the western drought, last year's derecho in Iowa, and another natural disaster in 2020 and 2021. Representative Mike Thompson, a California Democrat, introduced the bill in January.

AEM: 100,000 Equipment Manufacturing Jobs Possible Through Infrastructure Efforts

More than 100,000 family-sustaining equipment manufacturing jobs can be created before the end of President Biden’s first term in office, according to the Association of Equipment Manufacturers. AEM says these are high-skilled jobs in primarily rural areas that pay an average annual income of $88,000, which is 35 percent above the current national average. The data comes from a study by IHS Markit, which assumes new infrastructure spending will occur over eight years, beginning in 2022, with three-quarters of the spending taking place during the first five years. Finally, it assumes that the Surface Transportation Reauthorization Act of 2021 will pass in the fall of 2021 at a five-year total investment of $303 billion. AEM’s Kip Eideberg says, “It is time for policymakers on both sides of the aisle to put policy ahead of politics and pass the bipartisan infrastructure framework and secure a five-year surface transportation reauthorization as soon as possible.”

Center for Food Safety Files Lawsuit over Trump-Era GE Rule

The Center for Food Safety this week filed a federal lawsuit challenging the 2020 decision by the Trump administration to eliminate most genetically engineered organism oversight. Previously nearly all GE plants had to go through formal Department of Agriculture approval before open-air experiments or prior to commercial use. However, the center claims the new Trump USDA regulations exempt broad categories of GE organisms from any pre-market approval. Center for Food Safety legal director George Kimbrell says, "The rules unlawfully eviscerate and abandon USDA's responsibility to protect farmers and the environment." Instead of strengthening rules, the lawsuit alleges the rule either exempts most GMOs from regulation or subjects them to cursory reviews that sidestep serious analysis of their actual harms. The Plaintiffs in the case are National Family Farm Coalition, Center for Food Safety, Pesticide Action Network North America, Center for Environmental Health, Friends of the Earth, and Center for Biological Diversity.

FCC Announces $311 Million for Rural Broadband Efforts

The FCC this week announced more than $311 million in broadband funding through the Rural Digital opportunity fund. The FCC is ready to authorize the funding across 36 states and took steps to clear up issues with the program’s design originating from its adoption in 2020. As a result of the announcement, 48 broadband providers will bring one gigabit per second broadband speeds to nearly 200,000 homes and businesses over the next ten years and is the first funding approved through the Rural Digital Opportunity Fund. At the same time, the FCC also took steps to clean up the program. In light of complaints that the program was poised to fund broadband to parking lots and well-served urban areas, the FCC sent letters to 197 winning bidders. The letters offer providers an opportunity to withdraw their funding requests from those places already with service or where significant questions of waste have been raised. 

NACD Announces $2.1 Million in Grants to Local Conservation Districts

The National Association of Conservation Districts announced $2.1 million in technical assistance grants Tuesday. The grants were awarded to nearly 60 conservation districts in 23 states and territories. Made possible through an agreement with the Department of Agriculture’s Natural Resources Conservation Service, the grants complement the $13 million in technical assistance grants awarded to previous grantees in April of this year. NACD President Michael Crowder says, "These grants will help conservation districts carry out conservation plans for customers in high priority areas." State conservation partnership leaders helped identify high priority locations and workloads to guide where the awards would best be placed. The funds will support approximately 90 full- and part-time individuals, of whom nearly half are new hires. More than $600,000 of matching funds will be added to these awards, furthering the impact of the grants. To date, in 2021, NACD and NRCS have awarded $15 million in technical assistance grants.

USDA Announces Rural Economic Development, Social Disadvantaged Farmers Funds

The Department of Agriculture Tuesday announced $14 million in rural economic development project investments. USDA is providing the funding through the Rural Economic Development Loan and Grant program, which provides zero-interest loans and grants to utilities. The utilities then lend funds to local businesses for projects that create and retain employment in rural areas. USDA Rural Development undersecretary Justin Maxson says, “These loans and grants will help rural communities build back better and support job creation.” The announcement includes investments in Illinois, Iowa, Kansas, Kentucky, Minnesota, Missouri, Montana, North Carolina, Ohio and Tennessee. Meanwhile, on Monday, USDA announced $16.6 million for entities that help socially disadvantaged and veteran farmers and ranchers own and operate successful farms. That funding comes from USDA’s Outreach and Assistance for Socially Disadvantaged Farmers and Ranchers and Veteran Farmers and Ranchers Program, also known as the 2501 program. The 2501 program is administered by the USDA Office of Partnerships and Public Engagement.

Washington Insider: Fed Decision Awaited

The issue of inflation looms large as the Federal Open Market Committee (FOMC) -- the Fed's decision-making body -- concludes its two-day meeting Wednesday afternoon. And the topic of inflation has been one that continues to dominate a lot of attention throughout the country as consumers are seeing higher prices for several things, including food and fuel.

USDA recently updated its food price inflation outlook, but surprisingly did not raise its current expectations for prices. USDA maintains an outlook for all 2.5% to 3.5% in 2021, with food at home (grocery store) prices seen rising 2% to 3% in 2021. Restaurant prices, food away from home, are forecast to gain 3% to 4% from 2020 levels.

All three forecasts were steady with the prior month. That is somewhat surprising since USDA often times has made changes to its overall outlooks in July.

But prices this year are seen above the 20-year average, and come after upward revisions made in their forecast last month. But consumers are coming off a period of extended favorable prices at the grocery store.

Until 2020, prices had either risen far less than their 20-year average or had falling in two years going back to 2016. But after such a favorable run, it's no wonder that the food price inflation situation is of concern to consumers.

After all, the pandemic caused food price inflation to push even higher in 2020 compared with the forecast levels for 2021. As COVID vaccines have been given and restrictions have been lifted, consumers have been ready to get out and eat out more than they were able to for much of 2020 -- restaurant prices were up 4.2% from June 2020.

Food is one of those categories that is excluded from the Fed's favored inflation gauge -- Personal Consumption Expenditures (PCE). It is a broader reading than the Consumer Price Index (CPI) and still their favored PCE data is the one that strips out food and energy, the so-called core rate.

So what the Fed says about inflation when the meeting concludes Wednesday afternoon will be notable. They have insisted for months when each policy meeting has wrapped up that they see the higher prices as "transitory" and that they will not become established enough or significant enough to prompt a Fed response like raising interest rates.

The Fed has also been buying Treasuries and mortgage-backed securities at a pace of $120 billion per month. The concept is that buying those bonds will lower borrowing costs for consumers and businesses, and keep economic activity moving forward as we recover from the pandemic. But one of the first policy moves they will take is to "taper" those bond purchases. Fed Chairman Jerome Powell had insisted until the June meeting that it was too soon to "talk about talking about" tapering those bond buys. But after the June meeting, he acknowledged that "talk" had begun.

Expectations are that they will not have completed that discussion. But attention will be on whether or not Powell signals that they are close to a decision. That could prompt some market concerns as it will mark the start of the ending of the easy money policy by the Fed. Even so, Powell has promised there will be plenty of notice when the tapering of those bond buys start so the market will not get spooked. Still, even with all kinds of notice, some are likely to get spooked anyway.

So we will see. As the Fed moves closer and closer to removing some of the easy money from the market, it will prompt response higher in interest rates and that will start to add another cost factor in for agriculture that needs to be watched very closely, Washington Insider believes.

China's New US Ambassador Headed to Washington

China's new ambassador to the U.S., Qin Gang, is heading to Washington on Wednesday, ending speculation over who will be handed the difficult task of trying to ease fractious relations between the powers. The 55-year-old Qin has been a vice foreign minister and has had several western countries and regions in his portfolio.

However, he has no direct U.S.-related experience.

The South China Morning Post said he has spent the last several days meeting with U.S. businesses in Chin before departing for Washington. He replaces Cui Tiankai, 68, who was the longest serving ambassador to the U.S. and had passed the retirement age for senior Chinese ambassadors, according to Reuters.

Qin has also been a spokesman for the country's foreign ministry and many believe he will potentially take a tougher line than his predecessor.

Senate Agriculture Panel Approves Moffitt For USDA Post

The Senate Agriculture Committee voted via voice vote late Monday to advance the nomination of Jennifer Moffitt to be undersecretary for marketing and regulatory programs.

Timing for a vote in the full Senate is not yet known.

A full Senate vote on another nominee -- Janie Hipp to be general counsel -- is also uncertain as Senate Agriculture Committee Chair Debbie Stabenow, D-Mich., and Ranking Member John Boozman, R-Ark., said they believe a Republican Senator has a hold on the nomination. And, it's not clear for what reason as there has been little opposition heard on the Hill about Hipp

Wednesday Watch List

Markets

The latest weather forecasts remain the main attention for grain traders. The U.S. Energy Department's weekly inventories report is due out at 9:30 a.m. CDT Wednesday. The Federal Reserve's two-day meeting will likely keep the federal funds target unchanged and concludes with an announcement at 1 p.m. CDT. The Wheat Quality Council's spring wheat tour moves to day two after estimating a yield of 29.5 bushels an acre on day one.

Weather

Hot temperatures continue for another day but a cold front moving through the Northern Plains and Upper Midwest will send temperatures down closer to normal Thursday. This front will also produce some strong to severe thunderstorms across the Upper Midwest that could be damaging.

House to Consider Appropriation Bills

In a flurry of activity ahead of the August recess, the House of Representatives will consider appropriation bills this week, including the agriculture spending bill. The process began Monday with the House Rules Committee. The 2022 agriculture spending bill provides discretionary funding of $26.5 billion, an increase of $2.8 billion, or 12 percent above 2021. In total, the bill includes $196.7 billion for both discretionary programs funded on an annual basis and mandatory programs such as the Supplemental Nutrition Assistance Program. The bill is part of a package of seven total spending bills being considered this week in the House, including labor, energy, financial services, interior, military and transportation. The House Agriculture Committee also scheduled a hearing Tuesday on the 2020 WHIP+ Reauthorization Act, expanding the Wildfire and Hurricane Indemnity Program Plus to 2020. Meanwhile, the Senate looks to finalize its infrastructure package this week, ahead of the August recess, as well.

Thompson Seeks House Hearing on Senate Climate Bill

The top Republican on the House Ag Committee calls for a hearing on the Senate Growing Climate Solutions Act. In a letter to Chairman David Scott, a Georgia Democrat, Glen GT Thompson of Pennsylvania says, “I write to express concerns with this legislation and request further review by the House Committee on Agriculture.” Thompson has maintained concerns of government involvement in carbon credit markets. The legislation authorizes the Department of Agriculture to establish a voluntary Greenhouse Gas Technical Assistance Provider and Third-Party Verifier Certification Program to reduce entry barriers into voluntary environmental credit markets. Thompson counters, “I think this legislation is a solution in search of a problem,” adding, “The language is imprecise and disjointed, leaving questions related to how to interpret certain requirements and policy goals.” Sent last week, the letter requests a significant review of the bill, along with consideration of other proposals in Congress that have similar goals.

Bronaugh to Leading U.S. Delegation at UN Food Systems Pre-Summit

Agriculture Deputy Secretary Jewel Bronaugh (Bruh-NAW) is leading the U.S. delegation at the United Nations Food Systems Pre-Summit in Rome this week. Leading up to the UN Food Systems Summit in New York in September, Bronaugh and U.S. officials are working with other countries and food systems stakeholders in Rome to build coalitions and consensus around shared objectives, including food security and nutrition, climate change, and equity and inclusion. The Summit was convened by the UN Secretary-General with “the aim of placing the planet on the path to achieving the Sustainable Development Goals,”– proposals that are intended to establish a framework for global peace and prosperity. The fundamentals of the discussion include duly representing farmers, making science-based policies and recognizing agriculture as part of the solution to the main problems facing humanity. While in Rome, Bronaugh will also meet with Italian government officials and UN officials, including the Food and Agriculture Organization leadership.

Demand for American Lamb Continues to Rise

Consumer demand for lamb increased considerably during 2020. While all meat sales grew as more meals were consumed at home, lamb sales grew at a larger percentage than total meat sales overall, according to the American Lamb Board latest U.S. Retail Sales Report. The 2021 first-quarter report assesses the American lamb market by comparing four-week, 12-week, and 52-week intervals to one year prior. Last year saw a 24.7 percent increase in lamb dollar sales from 2019 and a 17.7 percent increase in pounds sold from 2019. Sales of racks exploded in the third and fourth quarters of 2020. Compared to 2019, rack sales increased 52.8 percent in terms of pounds sold. Sales of ground lamb also saw considerable growth, a 23.7 percent increase in volume sales. Meanwhile, sales of lamb in the first quarter of 2021 outperformed the same 12 weeks a year ago by a sizable margin as dollar sales increased 19.8 percent and volume sales increased 11.8 percent.

Oil and Gas Prices Decline Over COVID Concerns

Gas and diesel prices fell again in the last week, following a drop in the value of oil. GasBuddy reports the national average gas price dropped 2.9 cents to $3.14 a gallon, while diesel fell .7 cents to $3.26 per gallon. GasBuddy’s Patrick De Haan states, “With oil prices struggling under the weight of a rise in new Covid cases thanks to the Delta variant and OPEC’s increase in oil production, average gas prices in most states finally drifted lower.” However, U.S. gasoline demand surged to a new 2021 high last week, and De Haan warns of a bumpy end to summer regarding fuel prices. Implied gasoline demand rose 12,000 barrels per day to 9.3 million, just slightly under normal levels for this time of year. The national average for gas now stands 4.7 cents higher than a month ago and 97.2 cents higher than a year ago. Meanwhile, oil demand typically declines heading into fall.

Students Gather to Ensure the Future of Agriculture

This week, 44 FFA members gather in Indianapolis to discuss how agriculture will play a pivotal role in their future. It’s all part of the New Century Farmer conference – an opportunity for FFA members who plan to remain in production agriculture to work on their secession plans for success. During the week, participants will visit with producers around the state, learn from industry leaders, see innovative agricultural technology and network with others who also plan to stay in production agriculture. National FFA educational specialist for Programs and Events, Kate Wehby, says, “This program helps us continue to grow the next generation of leaders.” The conference was canceled last year due to the COVID-19 pandemic. Participants selected to participate in 2020 were invited to attend the 2021 event. New Century Farmer is sponsored by Case IH, Corteva Agriscience, Farm Credit, Nutrien Ag Solutions, and Meredith Agrimedia. Learn more about the program online at ffa.org.

Washington Insider: US, China Clashes Continue

The U.S. and China have moved into a contentious stance as the Biden administration has unfolded, and this week has indicated that relationship has not shifted a great deal.

The week opened with U.S. Deputy Secretary of State Wendy Sherman holding in China with top officials, including with Vice Foreign Minister Xie Feng. Interestingly, while that session was still going on, Chinese state media released a statement from Xie contended the U.S. had created an "imaginary enemy" in China to divert attention from domestic U.S. issues.

"The United States wants to reignite the sense of national purpose" with state media reporting that there would be "serious consequences."

Xie urged the U.S. to lift visa restrictions on Communist Party members, their families, and Chinese students; lift sanctions imposed on Chinese leaders, government officials and agencies; remove restrictions on Confucius Institutes and Chinese companies; cancel rulings determining Chinese media as foreign agents; and dropping its request to extradite Huawei financial chief Meng Wanzhou from Canada.

Sherman's meeting with State Councilor and Foreign Minister Wang Yi was labeled "frank and open" relative to "a range of issues, demonstrating the importance of maintaining open lines of communication between our two countries. They discussed ways to set terms for responsible management of the U.S.-China relationship, according to the U.S. State Department.

Sherman "underscored that the United States welcomes the stiff competition between our countries -- and that we intend to continue to strengthen our own competitive hand -- but that we do not seek conflict with the PRC (People's Republic of China)."

While that was unfolding in China, the U.S. and China butted heads at the WTO. The issue is the same one where they recently clashed at the world trade body -- over China's operation of their tariff rate quotas (TRQs) for wheat, rice and corn.

At a meeting of the Dispute Settlement Body, China contested the U.S. request for permission to impose trade retaliation on China over the TRQ issue. That means the matter is now headed to arbitration.

But China also submitted a request for a dispute panel to look at whether it had come into compliance with the WTO ruling on its TRQs which dates back to 2019. The U.S. blocked the request, but will not be able to block a second request. The U.S. believes that the retaliatory actions can move ahead while the two sides are in arbitration, but China said the arbitration should be suspended until the determination is made on whether they have changed their TRQ program and come into compliance with the WTO ruling.

China not only contends that it has come into compliance with the WTO ruling but they are also taking issue with the level of retaliation sought by the U.S.

And China has also made clear that it wants the U.S. tariffs imposed by the Trump administration to be removed. But so far, there has been no sign from the Biden administration that they are ready to take that step either.

So we will see. The level of acrimony continues to rise between the two countries, though no major actions have been taken by either side. Still, the situation should be watched closely in the coming weeks and months, Washington Insider believes.

China Warns EU Carbon Border Tax Violates Trade Principles

Plans outlined by the European Commission to implement a Carbon Border Adjustment Mechanism (CBAM) from 2026 would force companies sending carbon-intensive products into the European Union (EU) to pay carbon costs on such shipments.

"CBAM is essentially a unilateral measure to extend the climate change issue to the trade sector," said Ministry of Ecology and Environment spokesman Liu Youbin. "It violates WTO principles ... and (will) seriously undermine mutual trust in the global community and the prospects for economic growth."

The U.S. has also raised questions about the potential EU carbon tax, with U.S. Trade Representative Katherine Tai indicating the U.S. would not shy away from confronting the EU on the matter.

Vilsack Talks Food Inflation, Livestock Regs

USDA Secretary Tom Vilsack predicted the rise in U.S. food prices seen in June will start to moderate despite the concerns over inflationary pressures in the U.S. economy.

"There are certain selective items in the grocery store folks may see for a period of time increased costs," Vilsack said Friday in an interview on Bloomberg Television's Balance of Power with David Westin. "We think this will even out as we begin to recover, as we begin to get the supply and demand in better balance."

Meanwhile, Vilsack signaled USDA would soon announce proposed regulations to provide more protection to livestock producers in their dealings with the highly consolidated meatpacking industry. President Joe Biden's executive order on competition instructed the USDA to consider stronger regulations. "I think we will see significant action on that in the very near term," Vilsack said in the session.

Tuesday Watch List

Markets

A report on U.S. durable goods orders for June is due out at 7:30 a.m. CDT Tuesday, followed by a U.S. index of consumer confidence in July at 9 a.m. For grains, the main interests continue to be weather, export sales, any new developments concerning biofuels policy and the Crop Progress report, just released Monday afternoon.

Weather

Scattered showers will be found near the Great Lakes and across the south on Tuesday. Temperatures will be quite hot across most of the growing regions today. This will benefit the final stages of winter wheat harvest but cause further stress to drier areas.

Soy Sustainability Protocol Reaches 100-Million Metric Tons of Exports

The U.S. Soybean Export Council, United Soybean Board, and the American Soybean Association are happy to announce a new milestone for U.S. soy exports. More than 100 million metric tons of U.S. Soy Sustainability Assurance Protocol verified soy has been exported internationally over the seven years since the program launched in 2014. With the growing demand for sustainable soy globally, the SSAP has been recognized as compliant with the European Manufacturers’ Federation Soy Sourcing Guidelines, the Olympic and Paralympic Games Tokyo 2020 Organizing Committee’s sustainable sourcing code for ag products, the Consumer Goods Forum, and more. “As consumer consciousness about health, the environment, and the need to meet global nutrition and food security continue to drive demand for nutritious and sustainable protein, the U.S. SSAP enables us to provide our global food, feed, consumer packaged goods, and retail sector customers with verified, sustainable U.S. soy,” says Jim Sutter, CEO of the U.S. Soybean Export Council. “A reliable supply of high-quality, sustainably-produced U.S. soy plays a vitally important role in enabling families and the food-feed industry around the world to feed our growing planet sustainably.” The U.S. soy industry worked together with non-governmental organizations to develop the SSAP to back up U.S. soybean farmers’ commitment to sustainability.

Chinese Soybean Imports to Drop Later in 2021

China’s soybean imports are likely to slow sharply during the second half of this year after a record first-half buying spree. Reuters says that puts a dent in expectations for sustained growth from the top global soybean buyer and hurts U.S. market sentiment just as farmers will need to sell their new crop. A serious drop in hog profitability and a sharp rise in the use of wheat for feed are slowing down Chinese demand for soybeans, just as farmers are expecting to pull in their third-largest harvest in history. That will add further volatility to a critical crop, which rallied earlier in 2021 to nine-year highs. The manager of a crush plant in northern China told Reuters that, “Soymeal demand is reaching rock bottom as the basis hit its lowest point so far this year. We can’t place a lot of orders to make purchases, so U.S. soybean exports will surely be hit.” China imported a record 48.95 million tons in the first half of 2021, up nearly nine percent on the year as hog herds recovered from African Swine Fever and top producer Brazil shipped a record crop to the Asian nation.

New Ad Campaign Asks Washington to Stop Big Oil

Growth Energy launched a new digital ad campaign urging President Biden and congressional leaders to stop oil industry handouts. The campaign also asks Washington to uphold its commitments to reducing carbon emissions and supporting low-carbon fuels. The ads will appear online in the Washington Post and Politico and run until August. Readers will be directed to an action page focused on restoring year-round sales of E15 and emphasizing the importance of strong Renewable Volume Obligations under the Renewable Fuel Standard. In the wake of recent court decisions that could limit the market for U.S. biofuels, Growth Energy CEO Emily Skor emphasized the urgent need for action by regulators and lawmakers. “It’s time for leaders in Washington to make good on their commitments to clean, renewable energy and put a stop to Big Oil’s efforts to restore its monopoly over the U.S. fuel mix. The evidence is clear – Congress and the administration cannot decarbonize transportation without a growing role for low-carbon biofuels, which are vital to our climate, working families, and the economy.” She also says policymakers must act swiftly to ensure uninterrupted, year-round access to E15 and set ambitious biofuel blending levels.

Brazil Coffee Growers Hit Hard by Frost

A surprise frost that struck Brazil’s coffee belt last week hit farmers hard. Financial Post says industry experts fear farmers may default on deliveries of recently-harvested coffee that were sold to traders months ago at prices that are half of the current value. Temperatures dropped below the freezing level on the morning of July 20, delivering a big blow to the heart of the coffee belt, damaging trees so much that it may harm prospects for next year’s coffee crop. Late last week, industry estimates on possible losses to next year’s coffee crop varied widely. Initial forecasts for a loss of 1-2 million bags quickly increased. One Brazilian exporter expects a cut of approximately 4.5 million bags. Initial 2022 production estimates totaled almost 70 million bags. Judy Gaines, a U.S.-based commodity analyst, says it might be too soon to speculate on the damage. “There are a lot of aerial photos going around,” she says. “But nobody knows if those trees will only have to be pruned, which will result in zero production next year, or if they need to be taken out, which means no production for the next two or three years.”

NFU Praises FTC Decision on Right to Repair

The National Farmers Union praised the Federal Trade Commission’s 5-0 vote to adopt a policy statement to ramp up law enforcement against repair restrictions on equipment. Those restrictions prevent small businesses, workers, consumers, and government entities from fixing their products. “Farmers are among the most affected by such restrictions; currently, farm equipment manufacturers refuse to sell software repair tools to farmers or independent mechanics,” the organization says in a news release. “This all but forces farmers to take their broken machinery to a licensed dealership, which can be expensive and inconvenient.” The Hagstrom Report says the NFU has long supported a farmer’s right to repair. The organization is encouraged that the administration is finally taking action to eliminate unnecessary and unfair repair restrictions that will give farmers greater freedom to fix their equipment. The FTC says, “The policy statement adopted today is aimed at manufacturers’ practices that make it extremely difficult for purchasers to repair their products or shop around for service providers to do it for them.” By taking action against the restrictions that violate antitrust or consumer protection laws, the commission says it’s taking important steps to restore the right to repair.

Nutrition Research Improving Public Perception of Beef

The Beef Checkoff is celebrating its 35th anniversary, and the NCBA is talking about the successful promotion and research programs driving beef demand. The NCBA says consumers are more open to the nutritional benefits of beef than at any other time since the Checkoff first began more than three decades ago. The Beef Checkoff was implemented during a time when U.S. Dietary Guidelines suggested Americans should limit beef in their diet and reduce their intake of fat and cholesterol. “I’ve seen firsthand the evolution of nutrition behavior over the years,” says Becky Walth, a South Dakota producer and member of the Nutrition and Health Checkoff Committee. “The Beef Checkoff has been ahead of the curve, conducting research to demonstrate the importance of beef in a balanced diet.” Two landmark studies commissioned by the Beef Checkoff reinforced the idea that beef fits a heart-healthy diet. Because of checkoff-funded research, beef can now be Americans’ protein of choice in any gold standard, heart-healthy diet. Beef is also consistently recommended by scientists, physicians, and registered dieticians. In addition, 75 percent of consumers now agree that beef is nutritious.

Washington Insider: Debt Limit Looms

As attention remains on the trillions in dollars of spending being pushed by the Biden administration via the bipartisan infrastructure package and a "social" infrastructure plan, another spending issue is rising and it is one that, unlikely infrastructure, has to be dealt with -- the debt limit.

Treasury Secretary Janet Yellen penned a letter to congressional leaders late last week, urging them they needed to act on the debt limit before the end of September.

"Once the current debt limit suspension expires at the end of July, the department will begin using so-called extraordinary measures, or budget maneuvering," Yellen said, steps that will keep the U.S. from defaulting on its obligations.

It is not clear how long the government can use these extraordinary measures before they would hit a default. CQ said Yellen's plea was that lawmakers needed to act "as soon as possible," the publication said, "to avoid an event similar to or worse than the 2011 debt limit standoff when the country experienced the only credit rating downgrade in its history."

What can affect these extraordinary measures and how they can stave off a U.S. debt default? "The period of time that extraordinary measures may last is subject to considerable uncertainty due to a variety of factors, including the challenges of forecasting the payments and receipts of the U.S. government months into the future, exacerbated by the heightened uncertainty in payments and receipts related to the economic impact of the pandemic," Yellen said.

August 1 will see the Treasury start these measures as that is the date that the most-recent debt-limit deal expires. Treasury, Yellen said, would start by suspending sales of special state and local government securities, to remain technically within the borrowing cap, which on that day will reset to roughly $28.5 trillion. The agency's cash balance, which sat at $616 billion as of Wednesday, is expected to drop to $450 billion by the end of the month, CQ said.

The Congressional Budget Office last week predicted that the extraordinary measures will probably allow the Treasury to make to October or November before action would be needed by either raising the debt limit or suspending it once again.

But Yellen is not apparently in agreement with CBO. She said the Treasury was likely to burn through some $150 billion in available cash and extraordinary measures, including large payments for military retirement and health care benefits.

"There are scenarios in which cash and extraordinary measures could be exhausted soon after Congress returns from recess," Yellen said, referring to the Senate scheduled to return from the August congressional recess September 13 and the House September 20.

As for options for Congress, the Congressional Research Service (CRS) said there are four options: (1) leave the debt limit in place; (2) increase the debt limit to allow for further federal borrowing; (3) maintain the current debt limit and require the implementation of "extraordinary measures" that will postpone (but not prevent) a binding debt limit; or (4) temporarily suspend or abolish the debt limit.

Congress has enacted 98 separate debt limit modifications between the end of World War II and the present to accommodate the changes in federal debt levels, CRS said. Since 2001, Congress has passed 17 distinct changes to the debt limit.

The mention of 2011 comes to mind as an event where the debt-limit issue actually had some impacts on the government. For one, the U.S. debt rating was lowered. That sent shudders through financial markets. A 2013 report by the Treasury Department said, "Because the debt ceiling impasse contributed to the financial market disruptions, reduced confidence and increased uncertainty, the economic expansion [in 2011] was no doubt weaker than it otherwise would have been."

But Republicans have also thrown another potential roadblock up on the debt limit, saying they will either not help Democrats if they want to suspend the debt limit, or they have set up a list of demands that would get their support for action on the debt limit. But many view their apparent list as unrealistic.

One suggestion from 15 Republicans on the House Budget Committee would be another decade long series of spending caps on discretionary spending, similar to the 2011 deficit reduction law (PL 112-25) that the federal government is just emerging from.

However, Democrats could opt to use budget reconciliation to raise the debt limit, a move that would mean they would not need Republican support to take the action. But they would likely have to set a specific dollar amount for the allowable debt as opposed to just setting a new date for a suspension of the debt limit.

Yellen, however, called on congressional leaders to find a bipartisan solution. "In recent years Congress has addressed the debt limit through regular order, with broad bipartisan support," she wrote. "I respectfully urge Congress to protect the full faith and credit of the United States by acting as soon as possible."

So we will see. The debt limit looms as a truly must-have situation as a lack of action could have disastrous impacts that would likely raise borrowing costs and potentially slow the economic recovery from the pandemic and the situation will need to be monitored closely, Washington Insider believes.

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Former Iowa U.S. Rep. Finkenauer to Challenge For Grassley Seat

Former Rep. Abby Finkenauer, D-Iowa, defeated after serving one term in the House of Representatives, announced Thursday she will seek the Democratic nomination for the U.S. Senate seat currently held by longtime Republican Sen. Chuck Grassley.

Finkenauer is "the first major Democrat to announce a Senate run in Iowa," Axios reported, noting that Grassley has not yet said he will run for another term in office.

The Associated Press said that Finkenauer, "despite losing her House seat in 2020 after one term, remains a youthful prospect in the Iowa Democratic Party, which has struggled to produce a new generation for statewide office."

According to the Des Moines Register, Finkenauer has put her attention on "many of the themes that motivated her two campaigns for Congress, including a focus on working Iowans and support for the middle class."

Farm Bureau Says Mexico Official Assured Glyphosate Ban Does Not Apply to Feed

Mexican Economy Secretary Tatiana Clouthier met with American Farm Bureau Federation President Zippy Duvall in Washington last week, telling reporters that he got a key update from Clouthier on the country's coming ban glyphosate.

Duvall told reporters on Thursday he got clarity on the Mexican government's plan to ban the widely used herbicide glyphosate by 2024: It only applies to crops grown for human consumption and not those grown for animal feed, he said.

Meanwhile, the brief readout of the session between Clouthier and U.S. Trade Representative Katherine Tai did not mention the ag issues, but indicated the U.S. "remains committed to the full implementation of the USMCA, including the strong auto rules of origin, and Mexico's important labor reforms."

Monday Watch List

Markets

Back from the weekend and ready to start the final week of July, traders will be keeping a close eye on the latest weather forecasts, straining to get a glimpse of the possibilities in August. A report on U.S. new home sales for June is due out at 9 a.m. CDT, followed by USDA's weekly report of grain export inspections at 10 a.m. USDA's Crop Progress report is set for 3 p.m. and lower crop ratings seem likely, given the past week's lack of significant rain.

Weather

Periods of scattered showers will be found across the northern tier of the country and also from the Southern Plains to the Mid-Atlantic down to the Gulf Coast. The showers may have some localized benefit across the drier northwestern areas but are not expected to have a widespread effect. Temperatures approaching or eclipsing 100 degrees Fahrenheit will put stress on reproductive crops in drought areas.

U.S. and China Trading at a Brisk Pace

China and the U.S. are shipping goods back and forth at the quickest pace in years. Bloomberg says that’s making it look as if the tariff war and COVID-19 never interrupted the world’s largest bilateral trade relationship. Bilateral trade in goods is an area of stability in a relationship that otherwise continues to struggle. In February of 2020, monthly two-way trade dropped to $19 billion amid shutdowns. However, official Chinese data says the trade numbers rebounded over the past year to set new records. That boom is likely to remain as China purchases millions of tons of U.S. farm commodities for this year and next. While the U.S. government has somewhat different numbers on trade, the brisk pace has defied all expectations that the tariffs still in place on hundreds of billions of dollars worth of merchandise would interrupt supply chains. Both sides are living with the extra cost as China continues to buy large quantities of farm products to fulfill terms of the 2020 Phase One Trade Deal, while U.S. companies continue to purchase the products that they can’t get anywhere else to meet rising consumer demand.

White House Delaying Biofuel Mandates

The White House is delaying the annual process that decides how much ethanol and other biofuels will get blended into the nation’s fuel supply each year. Two sources told Reuters that the administration is looking for a solution to the issue which pits refineries against corn farmers. Lawmakers on both sides of the disagreement have pushed the Biden Administration for months to decide the issue. Refiners want low volumes of biofuels to keep their production costs down, while U.S. farmers want higher volumes to pump up sales of corn-based ethanol and other products. Sources say the White House has largely stayed out of the matter until now, but the administration is looking to take control of the situation. Both the refining and corn-based industries have waited anxiously for the Environmental Protection Agency to announce proposals for the level of biofuels that refiners must blend in 2021 and 2022. The 2021 amount is over half a year late due to the economic fallout from COVID-19. Many expected the proposals in June, which didn’t happen. A series of court rulings on the issues related to the Renewable Fuel Standard has only amplified confusion for both industries.

Vilsack Defends Farmworker Changes

Ag Secretary Tom Vilsack discussed proposed migrant farmworker programs during a hearing before the Senate Judiciary Committee. The hearing was set to talk about an earned pathway to citizenship for migrant farmworkers. Roll Call Dot Com says several Republicans on the committee said they won’t support such legislation without first improving security on the southern border. South Carolina Republican Lindsey Graham said, “You don’t give amnesty and hope people won’t keep coming. You secure the border, then you provide legal status. We’re doing it completely backward.” In March, the House passed legislation that would allow migrant workers who had already worked a certain number of years to apply for legal status. Vilsack defended the bill, saying he doesn’t believe its passage would cause an influx of immigrants at the border. The debate over citizenship for migrant farmworkers comes soon after a federal judge ruled that the Obama Administration’s Deferred Action for Childhood Arrivals program is illegal. The program was designed to protect certain undocumented immigrants brought to the United States as children.

NIFA Announces $7 Million in Ag Research Grants

The USDA’s National Institute for Food and Agriculture announced more than $7 million in research grants to non-land-grant colleges and universities. “These grants aim to increase research, education, and outreach capacity at non-land-grant institutions to support the development of the innovations and workforce needed to sustain the agriculture industry in the future,” NIFA said in a news release. Carrie Castille, director of NIFA, says, “The National Institute of Food and Agriculture awards research, education, and extension grants to solve the grand challenges before all of us. These efforts will help improve rural economies, increase food production and agricultural profitability and sustainability, address climate change and related issues, ensure food and nutrition security, and train the next generation of the agricultural workforce.” Among the 24 funded projects, Texas A&M will study how pollinator-friendly perennials in ornamental landscapes can provide a solution to decades of major declines in pollinator populations. Other grants will help train networks of scientists and educators who will work on climate-ready and sustainable agricultural practices, as well as other studies on soil and water quality.

Ethanol Production Drops to a Five-Week Low

Ethanol output during the week ending on July 16 dropped to the lowest level in five weeks while inventories climbed higher. The Energy Information Administration says production of the biofuel dropped to an average of 1.028 million barrels a day. That’s down from 1.041 million barrels a day, on average, the previous week and the lowest production level since the week ending on June 11. In the Midwest, which produces the most ethanol of any region in the country, output averaged 980,000 barrels a day, also a five-week low. The Midwest decline accounted for the entirety of the losses for the week as production in the Gulf Coast rose to an average of 18,000 barrels per day last week. East Coast output was unchanged at 12,000 barrels a day, Rocky Mountain production stayed around 10,000 barrels a day, and the West Coast production level stayed at 9,000 barrels a day. Ethanol stockpiles jumped to their highest level in almost five months during the week ending on July 16. Inventories rose to 22.51 million barrels last week, up from 21.1 million during the previous week and the highest level since the week ending on February 19.

Consumer Demand for Lamb Protein Keeps Rising

Consumer demand for lamb increased considerably during 2020. While all meat sales grew during the year as more meals were eaten at home, lamb sales grew at a larger percentage than total meat sales overall. That’s according to the U.S. Retail Sales report commissioned by the American Lamb Board. First-quarter sales in 2020 increased by almost 25 percent from 2019 to 2020, and the pounds of lamb meat sold increased by 17.7 percent during that same time. Sales of rack of lamb exploded in the third and fourth quarters of 2020. Compared to the previous year, rack sales increased almost 53 percent in terms of pounds sold. Sales of ground lamb also saw significant growth, increasing by 23.7 percent. California has seen the most growth since 2019, thanks to a 30 percent increase in dollar sales and a 29.6 percent increase in pounds sold. The Northeast U.S. remains the highest-selling region by a significant margin, accounting for 29 percent of all lamb sales in the U.S. Lamb retail sales remained strong into the first quarter of 2021. Compared to the first quarter of 2020, dollar sales grew by almost 20 percent, and volume sales climbed almost 12 percent higher.

Washington Insider: Immigration Remains a Hot Ag Topic

Typically the debate over immigration doesn't always involve agriculture. But the Senate Judiciary Committee this week held a hearing on just that topic -- how immigration issues affect agriculture.

The attention was on the Farm Workforce Modernization Act (FWMA), with the use of H-2A visas one of the key areas for U.S. ag companies when it comes to bringing in immigrant workers.

Under the FWMA, there would be five-year visas to undocumented farm workers who meet specific eligibility criteria. But they would also be provided with a pathway to permanent legal status and that became one of the key issues that Republican lawmakers focused on in the session.

USDA Secretary Tom Vilsack told lawmakers that they needed to support the FWMA. The bill, he said, marked a "very delicate compromise" which the House approved earlier this year.

Vilsack, a seasoned official in terms of testifying before Congress, turned the questions on lawmakers themselves. That doesn't always happen. But Vilsack pressed Sen. John Kennedy, R-La., on how it could be viewed as amnesty. He specifically noted that he did not see how it could be amnesty "when the bill provides for the payment of a fine of $1,000, I don't quite understand why we're talking about amnesty." Kennedy's simply said, "Because it is amnesty, and I think most Americans see it as amnesty, and I see it as amnesty."

But Sen. Chuck Grassley, R-Iowa, likened it to a 1986 immigration reform effort that included an amnesty provision, noting that under that law many agricultural workers that obtained legal status ended up leaving the sector, eventually forcing employers to bring in more illegal immigrants. "The cycle simply began once again," he noted.

Sen. Lindsey Graham, R-S.C., said extending citizenship to even one worker under the farmworker bill would result in "a run on the border." Vilsack countered that farmworkers would only qualify for citizenship when they had been in the country for a while.

Graham called the idea of passing the farmworker legislation "ass-backwards," saying that the U.S. needs to be addressed first.

But some of the liveliest activity came when Sen. Ted Cruz, R-Texas, held the questioning time for Vilsack. He took issue with Vilsack's assertion that if the economic conditions in the countries where immigrants typically have come were addressed, there would not be the flow of those trying to enter the U.S.

But Cruz was not having it, noting that those were in poverty last year when the immigration rates were low. "Mr. Secretary, if we were having a hearing on the optimum fertilizer for growing corn, I think you might be a very good witness," Cruz said. "And with all due respect your answers on immigration were fertilizer."

And the U.S. agriculture sector is not unified behind the FWMA. The American Farm Bureau Federation opposes the FWMA in part because they say it would make it easier for employees to sue producers. Farm Bureau President Zippy Duvall sent a letter to the committee saying, "Congress must recognize the dangers of incomplete, shortsighted agricultural labor reform initiatives" and urging broad-based reform of the H-2A program."

The bottom line from the hearing is what has kept the issue of immigration from being addressed by the U.S. government: There is not a unified view that will gain support from enough lawmakers to make it through Congress.

So we will see. Agriculture and immigrant labor is very linked and this is something that needs to be watched closely as effort continue to try and find that still-elusive ground to get immigration reform through, Washington Insider believes.

House Approves Legislation Regulating 'Forever Chemicals'

The House on Wednesday approved a bill setting deadlines for the Environmental Protection Agency to implement drinking water regulations for so-called forever chemicals. Perfluoroalkyl and polyfluoroalkyl substances (PFAS) are widely used, man-made compounds that are found in manufacturing and consumer products like Scotchguard, flame-resistant materials, nonstick cooking surfaces and firefighting foam used on military bases since the 1940s.

They have been found in water wells and thousands of water sources across the country. The bill approved Wednesday 241-182 orders the EPA to designate two PFAS compounds as hazardous air and water pollutants and set drinking water regulations for their use within two years of the bill becoming law.

For years the agency has only established a non-enforceable health advisory level on the compounds in drinking water. It also gives the EPA four years to set regulations for the discharge of the chemicals in industrial runoff and wastewater, and five years to set standards for the use of the thousands of other PFAS compounds.

The bill requires cleanup of PFAS-contaminated sites and reimburses local water agencies for efforts to reduce the amount of PFAS in drinking water.

Republicans Block Procedural Vote in Senate on Infrastructure

Senate Republicans blocked Democrats' attempt to start formal debate on a bipartisan infrastructure plan Wednesday, arguing that Democrats are rushing the procedural vote before the final bill has been written.

The Senate voted 49-51, failing to reach the 60 votes needed to proceed.

The move could be only a delay for President Biden's infrastructure plan, as at least 11 Republicans said they would support the vote if it came up again Monday, when an agreement on the final details of the bill is expected.

Talks are expected to continue. Wednesday's vote fell along party lines, though Majority Leader Chuck Schumer, D., N.Y., joined Republicans in voting against moving forward due to Senate rules that make it easier for him to call up a repeat vote after voting no.

Democrats are trying to enact the plan in two parts. The bipartisan infrastructure plan, which amounts to $579 billion in new spending and nearly $1.2 trillion overall, would invest in the so-called hard infrastructure projects.

Friday Watch List

Markets

Headed into the weekend, traders continue to keep a close eye on the latest weather forecasts and any news pertaining to biofuels policy. Friday's only significant reports are July 1 cattle on-feed and July 1 cattle inventory, both scheduled to come from USDA at 2 p.m. CDT.

Weather

A front moving through the Northern Plains on Friday will bring beneficial rainfall, though showers and thunderstorms will be scattered so there will be areas that are missed. Severe winds and hail will be possible in the storms as well. Other isolated showers will be found around the Great Lakes and in the Southeast.

Lawmakers Introduce Bill to Repeal RFS

The National Corn Growers Association strongly opposes a bill introduced in the U.S. Senate this week, referred to as the Corn Ethanol Mandate Elimination Act. NCGA says the legislation would remove the implied conventional biofuel blending requirement from the Renewable Fuel Standard. NCGA President John Linder states, “This bill is ill conceived and would have a devastating impact on air quality, the diversity of our energy supply, fuel prices and rural economies.” Senate Republicans Pat Toomey of Pennsylvania and Susan Collins of Maine, and Democrats Dianne Feinstein of California and Bob Menendez of New Jersey introduced the bill. The lawmakers claim the bill would help reduce carbon emissions from fuels by removing the volume requirements for corn ethanol while leaving in place the volume obligations for advanced and cellulosic biofuels and biodiesel. Senator Toomey states, “The RFS drives up the cost of gas and food, harms our environment, and damages engines,” calling the RFS a “backwards policy.”

USDA Announces More Key Staff Appointments

Agriculture Secretary Tom Vilsack Wednesday named Daniel Whitley as Administrator of the Foreign Agricultural Service. Whitley most recently served as Acting Administrator for the USDA branch. Prior to that role, he was the Associate Administrator responsible for leading the agency's trade policy and market analysis teams. Whitley began his career with the Economic Research Service, working on market access issues in the World Trade Organization. Dr. Basil Gooden was named Director of State Operations for Rural Development. Gooden recently served as a Visiting Scholar in the Sustainable Food Access Core of the Institute for Inclusion, Inquiry and Innovation at Virginia Commonwealth University. USDA also announced Michael Amato as communications director in the Office of Communications and Marissa Perry as a speechwriter in the Office of Communications. Secretary Vilsack says of the staff additions, "Each is an essential member of our growing team and we are grateful to have them serving in these roles.”

Midwest Universities Researching Electric Weed Control

Southern Illinois University Carbondale is collaborating on a project testing the use of electricity to control weeds in agricultural settings. Karla Gage, associate professor of weed science and plant biology, is working with researchers Mandy Bish and Kevin Bradley from the University of Missouri on testing The Annihilator 6R30 Weed Zapper. The tool is a patented electric weed control unit mounted to a tractor. The multistate project is funded by the North Central Soybean Research Program with support from the Missouri Soybean Merchandising Council, who purchased the implement, and includes researchers from Iowa State University, University of Nebraska, Kansas State University and Purdue University. Gage states herbicide resistance means “growers are looking for new weed control tools to use.” While electricity is one alternative, another option researchers are exploring is called harvest weed seed control. In that method, weed seeds are managed or destroyed before they go back into the soil seed bank to germinate the following season.

Corps Monitors Low Water on Upper Mississippi River, Navigation Continues

The U.S. Army Corps of Engineers, St. Paul District, is closely monitoring water levels on the Upper Mississippi River as drought conditions continue across Minnesota, Wisconsin and Iowa. However, the low water is not affecting shipping conditions on the river, and navigation continues. Dan Fasching of the St. Paul District states, "Low flow is exactly the conditions for which the locks were built," adding, "The locks, combined with dredging efforts, are used to maintain navigable depths in the main channel." The lowest flow recorded at Lock and Dam 2, in Hastings, Minnesota, was in 1976, when the flow fell to only 500 cubic feet per second and navigation continued. The current flow at Lock and Dam 2 is around 3,000 cubic feet per second. Earlier this month, water flows were reduced on the Missouri River at Gavins Point Dam in South Dakota due to drought conditions in the Upper Missouri River basin.

Restaurant Sales and Prices Increase

Consumers ramped up restaurant spending during the first half of 2021. Restaurant sales posted an increase in June, as consumers continued to burn off their pent-up demand for socialization and experiences, according to the National Restaurant Association. Restaurants registered total sales of $70.6 billion on a seasonally adjusted basis in June, according to preliminary data from the U.S. Census Bureau. That was up 2.3 percent from May’s sales volume, and represented the fifth solid increase in the last six months. Driven by the steady gains during the first half of 2021, restaurant sales in June were nearly $4.4 billion, or 6.6 percent above the February 2020 pre-pandemic sales volume of $66.2 billion. However, consumers are also paying more to eat out. Rising food costs caused by inflation are forcing many restaurants to choose between eating the increased costs, raising prices or removing items from their menus altogether. Average menu prices have increased more than four percent in the last year.

Apply by August 20 for Farm Bureau Ag Innovation Challenge

The American Farm Bureau Federation, in partnership with Farm Credit, is accepting online applications for the 2022 Farm Bureau Ag Innovation Challenge through August 20. The national business competition showcases U.S. startup companies that are providing innovative solutions to either traditional or new and emerging challenges faced by America’s farmers, ranchers and rural communities. Farm Bureau will award a total of $165,000 in startup funds through the competition. Farm Bureau and Farm Credit will select ten startup companies to compete as semi-finalists at the AFBF Convention in January 2022 in Atlanta, Georgia. The ten semi-finalist teams will be announced in October. Entrepreneurs must be Farm Bureau members to qualify as top ten semi-finalists. Applicants who are not Farm Bureau members can join a state Farm Bureau of their choice. Detailed eligibility guidelines, the competition timeline, videos and profiles of past winners, along with the application process, are all available online. Visit fb.org/challenge.

Washington Insider: FTC Addresses Right to Repair

The Federal Trade Commission (FTC) is forging ahead on plans to address the issue of "right to repair," one that ag interests have long been raising as an issue.

The White House directed FTC to address the issue in the recently issue executive order on competition. Before you think that the FTC has hastily put this effort together, it has been a long time in coming.

The FTC effort actually dates back to 2019. That's when the agency held a workshop in July of 2019 entitled, "Nixing the Fix: A Workshop on Repair Restrictions." Even the title suggested the agency was looking to wade into the issue.

The 2019 workshop spawned a report the FTC adopted 4-0 called "Nixing the Fix," a report agreed to and announced May 6. That report indicated there was "scant evidence to support manufacturers' justifications for repair restrictions." Again, another sign that the FTC was about the delve into the issue and mostly likely it would not be favorable for those who backed keeping consumers or small repair shops from fixing products.

The FTC this week approved a policy statement on the issue on a unanimous vote. "Restricting consumers and businesses from choosing how they repair products can substantially increase the total cost of repairs, generate harmful electronic waste, and unnecessarily increase wait times for repairs," FTC said. "In contrast, providing more choice in repairs can lead to lower costs, reduce e-waste by extending the useful lifespan of products, enable more timely repairs, and provide economic opportunities for entrepreneurs and local businesses."

And FTC Chair Lina Khan dove right into the issue when the regulator's open meeting started on Wednesday. "These types of restrictions can significantly raise costs for consumers, stifle innovation, close off business opportunity for independent repair shops, create unnecessary electronic waste, delay timely repairs, and undermine resiliency," Kahn stated. "The FTC has a range of tools it can use to root out unlawful repair restrictions, and today's policy statement would commit us to move forward on this issue with new vigor."

And FTC Commissioner Rohit Chopra noted the situation has gone beyond just competition issues. "While we typically view improper repair restrictions through its effects on fair competition, consumers, and small businesses, the Right to Repair movement also showed us how these problems can be matters of life and death," he observed.

But Chopra also spoke to the issue as it relates to agriculture. "Farmers relying on tractors and other equipment have been blocked from an open repair market, which can lead to spoiled crops and missing out on critical income," he stated.

After the unanimous vote for the policy statement, the FTC said it will "prioritize" investigations into these "unlawful repair restrictions." They want to have the public to "submit complaints and provide other information to aid in greater enforcement of the Magnuson-Moss Warranty Act." Current law does not provide for civil penalties, but the FTC will consider filing suit on the issues. Plus, they will look at rulemaking.

They will also "scrutinize repair restrictions for violations of antitrust laws." What do they mean by that? "Certain repair restrictions may constitute tying arrangements or monopolistic practices -- such as refusals to deal, exclusive dealing, or exclusionary design -- that violate the Sherman Act."

They will also look at whether repair restrictions run afoul of the Federal Trade Commission Act. Plus, they will work throughout their agency to find expertise to "combat unlawful repair restrictions," and will "closely coordinate with state law enforcement and policymakers to ensure compliance and to update existing law and regulation to advance the goal of open repair markets."

While the White House directed the FTC to take action on "right to repair," it certainly appears they were ready to do so whether the executive order came or not.

So we will see. Now the focus will be on the FTC and their pledge to act, and no doubt farmers and small repair shops might be some of the first to get in touch with the agency as they look at a machine that will not operate properly due to a situation they have no control over, something which should be watched closely, Washington Insider believes.

Maritime Commission Sets Up Ocean Carriers Audit Program

A new audit program and dedicated audit team has been established at the Federal Maritime Commission (FMC) to "assess carrier compliance with the Agency's rule on detention and demurrage as well as to provide additional information beneficial to the regular monitoring of the marketplace for ocean cargo services."

The FMC established the "Vessel-Operating Common Carrier Audit Program" July 19 to analyze the top nine carriers by market share relative to compliance on detention and demurrage practices in the U.S., and the FMC may use the information to establish industry best practices. The audit may also focus on "practices of companies related to billing, appeals procedures, penalties assessed by the lines, and any other restrictive practices."

FMC Chairman Daniel Maffei said in announcing the audit effort that "if the audit team uncovers prohibited activities, the Commission will take appropriate action. Furthermore, the information gathered by the audit process might lead to changes in FMC regulations and industry guidance if warranted."

Biofuels Battles Continue

U.S. biofuel policy continues as a focus in Washington, with Reuters reporting Tuesday the White House has opted to push back the proposed levels under the Renewable Fuel Standard (RFS) for 2021 and 2022 out of political considerations.

If the report is on the mark, the Biden administration appears to be trying to find a solution on biofuel policy that is acceptable to both refiners and biofuel supporters. That proved elusive for several years in the Trump administration.

But others maintain the recent court rulings are also a factor.

Meanwhile, Sens. Pat Toomey, R-Pa., Dianne Feinstein, D-Calif., Susan Collins, R-Maine, and Bob Menendez, D-N.J., have introduced the Corn Ethanol Mandate Elimination Act which would end the 15-billion-gallon conventional (primarily corn-based) ethanol requirement under the RFS. The measure frames the effort in a bid to reduce carbon emissions from transportation fuels by only removing the corn-based ethanol component and leaving the volume obligations in place for advanced and cellulosic biofuels and biodiesel.

Thursday Watch List

Markets

USDA's weekly export sales is due out at 7:30 a.m. CDT, along with weekly U.S. jobless claims and an update of the U.S. Drought Monitor. A report on U.S. existing home sales for June and an index of leading indicators are due out at 9 a.m., followed by the Energy Department's weekly natural gas inventories at 9:30 a.m. USDA's monthly cold storage report is due out at 2 p.m. CDT. Traders will remain focused on the latest weather forecasts and any news pertaining to grain exports or biofuels policy.

Weather

A frontal boundary in the Upper Midwest will continue to produce some isolated showers while another boundary moving through the Northern Plains will do the same. Scattered showers will continue near the Gulf Coast as well while the middle of the country remains dry, benefiting winter wheat harvest. Showers across the north will not have an impact on the ongoing drought.

USDA Announces Pandemic Assistance for Timber Harvesters and Haulers

The Department of Agriculture is providing up to $200 million to provide relief to timber harvesting and timber hauling businesses that experienced losses due to COVID-19. Announced Tuesday, the funding is part of USDA's Pandemic Assistance for Producers initiative. Loggers and truckers can apply for assistance through USDA's Farm Service Agency from July 22 through October 15, 2021. The Pandemic Assistance for Timber Harvesters and Haulers program is administered by FSA in partnership with the U.S. Forest Service. Agriculture Secretary Tom Vilsack states, “the pandemic caused a major disruption for loggers and timber haulers including lack of access to wood processing mills.” The Consolidated Appropriations Act of 2021 authorized assistance for the timber industry. Timber harvesting and hauling businesses that have experienced a gross revenue loss of at least ten percent between January 1 and December 1, 2020, compared to 2019, are encouraged to apply. The maximum amount that a person or legal entity may receive directly is $125,000.

Argentina Reducing Biodiesel Blends

Argentina is reducing its biodiesel blends, a move that will result in more exports of Argentine soy oils. Argentina is the top soy oil exporter globally, and last week lawmakers approved a measure to allow reductions in the amount of soy-based biofuel mixed into domestically consumed diesel. A government official tells Reuters that because of the reduction, more oil will be exported, adding, “That could impact international soy oil prices, considering the large portion of the international market that Argentina has.” The new law, aimed at guaranteeing the sustainable use of biofuels in diesel and gasoline, foresees a minimum use of biodiesel of five percent, which could drop to three percent, in diesel for sale to the public, from the previous ten percent. Data from the U.S. Department of Agriculture shows Argentine soy oil averaged $1,181 per metric ton last month, versus $1,233 in Brazil and $1,608 in the United States.

More Farmers Join Discrimination Suit Against USDA

Farmers from Minnesota and North Dakota recently joined a discrimination lawsuit against the Department of Agriculture. The group behind the lawsuit alleges a USDA COVID-19 relief program for socially disadvantaged farmers discriminates based on race. A lead attorney for the case filed in North Dakota tells the Grand Forks Herald, “Their concern is the inequality and discrimination against them just on the basis of their race or skin color.” In similar lawsuits, white farmers argue the program violates their constitutional rights. USDA announced the program in April that includes $4 billion of loan assistance for Black, Hispanic, Native American and Asian American farmers. The funds are on hold via court injunctions, and Agriculture Secretary Tom Vilsack defends the program as addressing “longstanding racial equity issues within the department and across agriculture.” The attorney representing North Dakota farmers claims the federal government has two options, either amend the program to allow aid to all farmers, or to disband the program entirely.