Speaker 1: well, welcome back to Agritalk. Everyone we are live on
Speaker 1: a Tuesday morning. Thanks for tuning in on your favorite
Speaker 1: agricultural radio station or your preferred digital device, your pal,
Speaker 1: Davis Michaelson in for chip Flory all week this week.
Speaker 1: Glad to be here behind the big green leafy microphone
Speaker 1: of Agritalk. We've got to separate the signals from the
Speaker 1: noise in this crazy mixed up world that we all
Speaker 1: have to live in. Jim Weiss. Meyer is here Washington
Speaker 1: policy analyst to help us do that. Good morning here.
Speaker 1: Vice Mayer, how is everything
Speaker 2: very good. After a long holiday weekend that I just
Speaker 2: simply relaxed. But
Speaker 2: You know, the signal to noise, it's usually 90% noise.
Speaker 2: So we, it, it's getting hard to separate it.
Speaker 1: Yeah. Yeah. Well, when, when you get, when you get
Speaker 1: money waters, it's hard to fish, isn't
Speaker 2: it?
Speaker 1: Um, let's, let's start with the tragic news of the
Speaker 1: shootings in
Speaker 1: Chicago. Now, this comes on the heels of a number
Speaker 1: even before, uh, the, uh,
Speaker 1: the parade
Speaker 1: incident. Um, and as I understand, they've got a guy
Speaker 1: in custody, right. Have we gotten any further
Speaker 2: alleged
Speaker 1: alleged, okay.
Speaker 1: Um, but even before that, you know, and I guess
Speaker 1: we see it every summer time.
Speaker 1: I'm looking at Chicago specifically. I imagine it's around the
Speaker 1: rest of the nation as well. Gun violence, certainly on
Speaker 1: the rise as, as the mercury rises.
Speaker 1: Um,
Speaker 1: there's, there has been some legislation, some gun control kind
Speaker 1: of stuff coming out of Washington.
Speaker 1: I don't know that this incident necessarily changes any of
Speaker 1: that or, or
Speaker 1: maybe there's a, there's an approach coming forward that, that
Speaker 1: I'm unaware of.
Speaker 1: Can you give us an update on gun control stuff?
Speaker 2: Well, they did pass a major, you know, bipartisan approach now. It's,
Speaker 2: it's not gonna do much, but at least that's the
Speaker 2: step many people think in the right direction, it's going
Speaker 2: to take time, you know, Davis. But I think added
Speaker 2: to this in the legislation dealt in part,
Speaker 2: this is dealing with mental illness
Speaker 2: and that's going to take a while and that was
Speaker 2: amplified due to the pandemic that we went through that
Speaker 2: that's a fundamental change. I think in what's happening across
Speaker 2: the nation.
Speaker 1: Did I see 306 mass shootings so far this year
Speaker 1: in the United States.
Speaker 1: Does that sound right?
Speaker 2: Yeah,
Speaker 2: that's
Speaker 1: an awful lot. It seems to indicate a problem.
Speaker 2: 306 too many
Speaker 1: yes, agreed agreed.
Speaker 1: Well, our thoughts and prayers go out to the families
Speaker 1: those injured and
Speaker 1: you know, sadly it it wound up shutting down
Speaker 1: all sorts of celebrations around that area there and, and
Speaker 1: that's just another casualty of an event like this. You
Speaker 1: hate to see that as well. But an abundance of
Speaker 1: caution does seem to serve.
Speaker 2: Yeah, I think we're going to get better and better
Speaker 2: at monitoring the
Speaker 2: uh, social web the right way by, by, you know,
Speaker 2: going on keywords kill and things like that because apparently
Speaker 2: this individual did put some things out. So I think
Speaker 2: we're gonna get,
Speaker 2: uh, an improvement in the years they had on that
Speaker 2: front to avoid. To avoid. Yeah,
Speaker 1: sure, sure. I sure hope you're right.
Speaker 1: Um, move us over to Ukraine
Speaker 1: $750 billion dollars to rebuild once the conflict is over
Speaker 1: is what I saw this morning.
Speaker 1: Um, the meanwhile the Russian incursion just continues to roll
Speaker 1: forward up to uh, roughly 20% of Ukraine now under
Speaker 1: Russian control.
Speaker 1: Um, we keep pouring money into Ukraine. Is that the
Speaker 1: right way to go?
Speaker 2: Well, it's it's first starting, you know, Ukraine said that
Speaker 2: you indicate it needs 60-65 billion just this year to
Speaker 2: meet its funding requirements. So,
Speaker 2: And 750 billion over the next decade.
Speaker 2: There's some push to use some of the Russian
Speaker 2: uh, products companies, etcetera to help offset that. But there
Speaker 2: are a lot of legislative hurdles on that one. But
Speaker 2: we're far away from reconstructing, you know, Davis that we
Speaker 2: have to end, we have to end the war first
Speaker 2: and uh, the best people I know say that's gonna
Speaker 2: be years in the making.
Speaker 1: Um, meanwhile, you had the G7 leaders, the group of
Speaker 1: seven
Speaker 1: um, seem to have come to an agreement on at
Speaker 1: least a plan to cap the price of Russian oil.
Speaker 1: Can you help me get my head around what they're
Speaker 1: thinking there
Speaker 2: well, and, and if that's the case, as I pointed
Speaker 2: out this morning, there are ways you can do it.
Speaker 2: However,
Speaker 2: uh, not talked about too much is what would Putin's
Speaker 2: reaction be because he could really,
Speaker 2: uh, stop the flow of oil, not completely, but significantly.
Speaker 2: And that would dramatically raise the price of oil. So
Speaker 2: I think he's got the leverage here right now because
Speaker 2: of the policy, energy policy actions taken by a host
Speaker 2: of countries including Germany
Speaker 2: and the United States. So I think the more they
Speaker 2: look into this, uh, you know, sanctions capping prices paid
Speaker 2: for Russian oil, uh, they better not try to second
Speaker 2: guess Putin because he's shown he takes the extreme, you know,
Speaker 2: maneuvers and you can see he's got his bravado back,
Speaker 2: uh, as it more than appears Russia has the upper
Speaker 2: hand right now, uh, at least, uh, lately the last
Speaker 2: few weeks in
Speaker 1: Ukraine.
Speaker 1: And, and educate me just a little bit, we don't
Speaker 1: send a whole lot of us oil
Speaker 1: to china, do we? I mean, Putin's got that whole
Speaker 1: market almost,
Speaker 1: well, maybe not to himself, but he's certainly
Speaker 1: got a willing willing participant in the market in china.
Speaker 2: Well, yeah, and you saw Iran over over the weekend,
Speaker 2: lowered their price to compete
Speaker 2: With the cheaper Russian crude. I mean, they, they, they
Speaker 2: priced it at nearly $10 a barrel below Brent futures.
Speaker 2: And that puts it on par with the Russian cargoes
Speaker 2: scheduled to arrive in
Speaker 2: in china during august, you know, traders, you know, said so, uh,
Speaker 2: that shows the, the global politics going on in the
Speaker 2: energy market, not limited to western countries uh, at
Speaker 1: all.
Speaker 1: Well, and it it does seem like there's quite the
Speaker 1: divide forming between those guys and the west.
Speaker 1: We've been obsessed with this green energy thing, which is great,
Speaker 1: I get it,
Speaker 1: whatever.
Speaker 1: But it's been at the expense of encouraging coal product.
Speaker 1: We've discouraged coal production, energy production just in general. And
Speaker 1: now we're seeing energy producers
Speaker 1: turning whether it's the eu whether it's the us turning
Speaker 1: back
Speaker 1: toward coal, I think we're moving in the wrong direction.
Speaker 1: From the green perspective.
Speaker 2: Well, that should because of the short term uh, lack
Speaker 2: of strategy on the U. S. And and you know,
Speaker 2: primarily Germany uh, in europe there they've go, the energy
Speaker 2: starved world is back to turning to cole,
Speaker 2: uh, and you've got coal prices on the run here
Speaker 2: and and now it's in chart supply
Speaker 2: because there's been declining investment in new minds and resources.
Speaker 2: So we're off to the races and in cold in
Speaker 2: cold country around the world.
Speaker 1: Meanwhile, we just heard from Kirkenes from bam bam WX.
Speaker 1: That july is gonna seem an awful lot like july.
Speaker 1: And I thought about it this morning when I got
Speaker 1: up
Speaker 1: to turn on, you know, to turn on my air conditioner.
Speaker 1: I bumped it hire a couple of degrees just because. Gosh,
Speaker 1: I mean, what what a strain on our own grid,
Speaker 1: which was already looking a little bit sketchy going into
Speaker 1: what is shaping up to be a hot july
Speaker 2: Yeah, it's the continued days, if you get 100 plus,
Speaker 2: that usually takes out at least some portions of the
Speaker 2: grid and test the uh, you know, backstops. I think
Speaker 2: texas
Speaker 2: has really looked at their backup system and they better
Speaker 2: hold up because they're saying that they,
Speaker 2: you know, they took the action after last year, you know, to,
Speaker 2: to look at their uh whole uh, you know, flow
Speaker 2: through on, on the energy sector.
Speaker 1: Yeah. And I guess my public service announcement to you
Speaker 1: beloved listener, maybe just just bump up your air a little,
Speaker 1: a couple degrees higher, you know, instead of whatever it is,
Speaker 1: I went from uh 72 I'm up at 75 now.
Speaker 1: Um you'll get used to it, you'll get used to it.
Speaker 1: Um and just
Speaker 1: try to do everything that you can and not only that,
Speaker 1: but energy prices, what you're paying for energy is much
Speaker 1: more expensive to keep that air conditioner running this year.
Speaker 1: Jim
Speaker 2: Yes. Well, and the, the inflation inflation inflation. Now we're
Speaker 2: starting to see the stories, Wall Street Journal is a
Speaker 2: big story this morning looking at a host of commodities,
Speaker 2: including add commodities on, on the, on the trip down
Speaker 2: and they've significantly been lowered over the last what two
Speaker 2: weeks or
Speaker 2: ourselves. So they're beginning to farm the uh the, the
Speaker 2: story of his inflation peaked and at the time that
Speaker 2: the White House is pulling out any of their so
Speaker 2: called stops to lower the price of, you know, gasoline.
Speaker 1: Mhm.
Speaker 1: Um
Speaker 1: Meanwhile speaking of gasoline, you have President biden once again
Speaker 1: leaning into the microphone telling the gasoline stations to lower
Speaker 1: their prices.
Speaker 1: And Jeff Bezos
Speaker 1: steps in and says, look, either you guys really don't
Speaker 1: understand or you're trying to wreck something here is biden
Speaker 1: leaning way too far, kowtowing to the progressive far left here.
Speaker 2: As usual. Yes, the answer is yes there. And uh
Speaker 2: it consistently shows he doesn't understand how markets work. You know,
Speaker 2: and that's what the Wall Street Journal and
Speaker 2: and Bezos and and these are
Speaker 1: the leaders of our country, Jim he's
Speaker 2: been a politician all of his life. So he doesn't
Speaker 2: know risk.
Speaker 1: Huh?
Speaker 2: It doesn't know risk.
Speaker 1: I kind of don't get it, I don't get it.
Speaker 1: But
Speaker 1: yeah, I guess it would make sense. You've got a
Speaker 1: guy like like bas oh said he's done very well
Speaker 1: from the free market system, from the capitalist system, understand
Speaker 1: he understands, look, you can't just say, well now the
Speaker 1: prices should be lower. Do you foresee a move toward
Speaker 1: more strict price controls from the administration?
Speaker 2: No,
Speaker 2: I always say, I hope not. I think that I
Speaker 2: do think that we're going to see we have reached
Speaker 2: peak inflation. It'll take a few months to show up
Speaker 2: in the data. So I'm going to say, we won't
Speaker 2: see dramatic push on on the price controls. Now, all
Speaker 2: bets are off. If they try this maneuver on Russia,
Speaker 2: you know, to cap the price then that, that's a
Speaker 2: new land there then because then he he would take
Speaker 2: action and you've got,
Speaker 2: you know, some of the investment analysts are saying sky
Speaker 2: high
Speaker 1: jim switching gears. Now, tariffs on china, there does seem
Speaker 1: to be a little bit of disagreement between Catherine trade
Speaker 1: representative and some other parts of the biden administration. These
Speaker 1: were the tariffs that president trump introduced here. There's talk, yeah,
Speaker 1: we should take those off Katherine tai says, yeah, probably shouldn't.
Speaker 1: Where are we at in that?
Speaker 2: Well, as usual with any government. Uh, it'll probably be
Speaker 2: way in between uh Davis. I mean by that over
Speaker 2: the weekend, the Wall Street Journal broke the story that
Speaker 2: Treasury Secretary Janet Yellen was on a video conference call
Speaker 2: with a high ranking chinese official
Speaker 2: and but they didn't put any details on that. I,
Speaker 2: some say tariffs were discussed. But this is gonna be
Speaker 2: biden's first major trade policy move.
Speaker 2: Now, if he lifts some of the tariffs as is
Speaker 2: widely speculated, uh, it won't take a nanosecond for republicans
Speaker 2: to say to, to say that he's being soft on china.
Speaker 2: So they're very sensitive to that.
Speaker 2: But the latest word is that he could only lift
Speaker 2: tariffs on, just $10 billion Chinese goods, we have around
Speaker 2: $370 billion China that have those tariffs on. So uh
Speaker 2: once again if that's the case, if if it is
Speaker 2: the announcement, it's a lot about nothing.
Speaker 2: Uh you know, we discussed on agritalk for many times
Speaker 2: when this was going on.
Speaker 2: Uh did the tariffs on china raise us prices for consumers?
Speaker 2: The solid answer now is yes because
Speaker 2: you know, chinese exports exporters generally didn't lower prices to
Speaker 2: keep their goods
Speaker 2: competitive. So that means U. S. Importers past the duties
Speaker 2: on and the U. S. Treasury has collected as of
Speaker 2: june 8th. I side here had collected more than 100
Speaker 2: and $40 billion worth of duties on chinese goods. So
Speaker 2: sometime this week the rumor is that we could get
Speaker 2: a lifting of some of the tariffs on chinese goods
Speaker 2: but not all that much. And if that's the case
Speaker 2: then they're gonna come up with some
Speaker 2: complex program that additional tariffs could be lifted depending on
Speaker 2: uh some comment periods and other appeals by us businesses.
Speaker 2: So I think that's what we're going to get this week.
Speaker 1: So if I'm hearing you, it feels like it could
Speaker 1: be that this drop in the bucket could
Speaker 1: grease the skids for a slippery slope. More tariff reductions
Speaker 1: to come
Speaker 2: see how they how they work out. Yes. I I
Speaker 2: I think that's the bottom line.
Speaker 1: Mhm.
Speaker 1: Um You've you mentioned a couple of times you feel
Speaker 1: like inflation has peaked.
Speaker 1: Um we've got the Biden administration reportedly considering cutting premiums
Speaker 1: for federal housing loans would cut payments for some customers
Speaker 1: 50-70 bucks a month.
Speaker 1: Is this an indication that that the administration does not
Speaker 1: believe that inflation is peak?
Speaker 2: Absolutely. They do not because they were wrong at the
Speaker 2: front end and they're gonna be wrong at the back end.
Speaker 2: Now again, I'm not saying it's gonna stop tomorrow. Okay.
Speaker 2: It takes a while, but you're already beginning to see
Speaker 2: some analysis that I know. Chip and I discussed at
Speaker 2: the milk conference in las Vegas earlier this year and
Speaker 2: we pointed out watch the inventory build up of at
Speaker 2: companies like target
Speaker 2: walmart to a degree and that's happening right now. And
Speaker 2: so they're sitting with flooded
Speaker 2: with excess goods right now for for products that it
Speaker 2: appears
Speaker 2: americans may not want at this particular time. So we've
Speaker 2: got to disconnect the other way Davis and I think
Speaker 2: this is going to eventually play into some of the
Speaker 2: inflation stats maybe within three months from now,
Speaker 1: what else is going on inside the beltway that maybe
Speaker 1: causes you to raise that one eyebrow and go, hmm,
Speaker 2: well included. There was a bill, House lawmakers including republicans
Speaker 2: are saying keep china out of U. S. Agriculture. So, uh,
Speaker 2: there's a bill out there. It's called promoting agriculture safeguards
Speaker 2: and Security Act that's sponsored by uh, some leadership in
Speaker 2: the Republican
Speaker 2: Party and it would be in Russia, Iran north Korea
Speaker 2: as well as china from any merger
Speaker 2: acquisition or takeover that would result in foreign control of
Speaker 2: the U. S.
Speaker 2: Ag company. So that's something to watch. I'm you know
Speaker 2: lawmakers are out and their staff are out on holiday
Speaker 2: holiday recess but I'm gonna be tracking this in the
Speaker 2: weeks ahead.
Speaker 1: I heard um some talk of some smithfield plants, one
Speaker 1: particular in California closing down. They said it was because
Speaker 1: the regulations were no good. Is this sort of the
Speaker 1: kind of thing that you're talking about there?
Speaker 2: Well it would not have allowed uh you know uh
Speaker 2: you know what was it Chinese 2013 purchase of Smithfield
Speaker 2: Foods for what? Just under $5 billion wh
Speaker 2: holdings and at the time that was the largest entry
Speaker 2: into the U. S. Business world by chinese
Speaker 2: company and as you know smithfield is the largest U. S.
Speaker 2: Pork producer.
Speaker 1: Yeah. Yeah, interesting. I also see that you wrote chinese
Speaker 1: real estate developers are accepting wheat, garlic and peaches.
Speaker 1: It's down payments for properties. Is that an indication that
Speaker 1: there's some trouble in the real estate market in china?
Speaker 1: That's digging deep. This is crazy.
Speaker 2: Yes. I tell at one of my conferences I got
Speaker 2: the question, this was up in in pennsylvania by the
Speaker 2: way they say Ag stands for always growing.
Speaker 2: That's the definition of Ag and I love that one
Speaker 2: when every time I go there they say that. But
Speaker 2: I got a question, what about china's real estate and
Speaker 2: was spot on because I said when you look at
Speaker 2: the numbers,
Speaker 2: china's problems in real estate are about double what they
Speaker 2: were when we had the blow off in in U. S.
Speaker 2: Real estate.
Speaker 1: Davis. They
Speaker 2: have a problem.
Speaker 1: Yeah yeah.
Speaker 1: Um we've got about 30 seconds remaining here. Jim what
Speaker 1: are you what are you looking ahead? It's a short
Speaker 1: week coming up but uh probably planning to watch for.
Speaker 1: Well
Speaker 2: I'm watching for any movement on a reconciliation package by
Speaker 2: the democrats because that would bring in portions of the
Speaker 2: Green new deal.
Speaker 2: I still think that they'll be successful even though most
Speaker 2: people say it's not gonna happen,
Speaker 2: watch that it'll have some ag related provisions in it. Davis.
Speaker 1: Well jim you your countenance is very relaxed, very soothing today.
Speaker 1: I appreciate you spending some time with us. You must
Speaker 1: have had a very relaxing long holiday weekend.
Speaker 2: Very
Speaker 1: I'm glad to hear that. Jim Wiesemeyer, pro farmer policy analyst.
Speaker 1: Thanks for
Speaker 1: for separating the signals from the noise with us today.