EPA’s Regan Cautious on RFS Plans Ahead of Yet-to-be Completed Final Version

House Republicans searching for debt limit measure votes as plan is unveiled
 

More corn sales to China confirmed in weekly USDA sales data. USDA’s weekly Export Sales data for the week ended April 13 included the expected sales of U.S. corn to China. For 2022-23, net sales of 419,975 tonnes of corn, net reductions of 22 tonnes of sorghum, net sales of 35,055 tonnes of soybeans and net sales of 9,530 running bales of upland cotton were reported. Sales of 272,000 tonnes of corn to China were reported for 2023-24. Net sales for 2023 of 2,093 tonnes of beef and 248 tonnes of pork were reported.

House Republicans hope to vote as soon as next week on Speaker Kevin McCarthy’s (R-Calif.) debt limit plan. Released yesterday, the proposal would raise the borrowing cap by $1.5 trillion or suspend it through March, potentially pushing the so-called X-date — when the government would run out of money to pay its bills — to the middle of the presidential primary season. We have details and analysis in the Policy section.

Following Tuesday's federal income tax return filing deadline, the Treasury Department's cash balance rose to $252.55 billion, up from $144.08 billion the day before. It's still uncertain whether the cash infusion could provide the U.S. federal government with any extra time before hitting the debt ceiling.

Our summary of some past farm bills continues with the 2014 Farm Bill. See Policy section.

EPA Administrator Michael Regan appeared Wednesday before the House Ag Committee. As expected, panel member questions focused on the RFS and the recent tailpipe emissions proposed rule. We have details and analysis in the Energy & Climate Change section.

Oil refining capacity is likely to rise around the world, easing a bottleneck and helping curb inflation by boosting the supply of gasoline and diesel, writes Bloomberg Opinion’s Javier Blas. 

Commodity Futures Trading Commission Chairman Rostin Behnam today joins the Bipartisan Policy Center for an event titled, "What's the Federal Role in Improving Carbon Credits?"

Treasury Secretary Janet Yellen will speak today on economic relations between the U.S. and China, amid a backdrop of issues like Beijing’s close ties to Russia, the suspected spy balloons from earlier this year, differences over Taiwan, privacy and TikTok, among others. Many U.S. companies, including Apple, Starbucks, Tesla and Ford remain active there.

Ukraine said it had shot down a number of drones overnight as the country’s Western backers prepared to meet to discuss military supplies and NATO’s head made his first trip to Kyiv.

Eggs and breakfast prices are not going over easy in England. See Food section for details.

The Mississippi River was forecast to crest eight feet above normal later this week in St. Paul, Minnesota, part of the high water on the upper Mississippi that has inundated farmland in the state.

Equities today: Global stock markets were mixed to weaker overnight. U.S. Dow opened around 160 points.

     U.S. equities yesterday: The Dow ended down 79.62 points, 0.23%, at 33,897.01. The Nasdaq rose 3.81 points, 0.03%, at 12,157.33. The S&P 500 eased 0.35 point, 0.01%, at 4,154.52.

     Earnings update. Of the 9% of S&P 500 companies that have thus far reported earnings through Wednesday morning, 84% reported better-than-expected earnings per share, according to FactSet.

Agriculture markets yesterday:

• Corn: May corn fell 5 1/4 cents to $6.72 1/4, near the session low.  
• Soy complex: May soybeans fell 12 3/4 cents at $15.06 1/2. May soybean meal dropped $6.70 at $454.40. May bean oil closed down 34 points at 55.02 cents.  
• Wheat: May SRW futures fell 16 1/4 cents to $6.81 3/4, near the daily low. May HRW fell 19 1/2 cents to $8.61 3/4, also on the low of the day. Spring wheat futures fell 18 1/2 cents to $8.67.
• Cotton: May cotton futures dropped 131 points to 83.24 cents. July cotton fell 118 points at 83.65 cents.
• Cattle: Expiring April live cattle futures fell $1.05 to settle at $175.425, while most-active June futures fell $1.60 to $163.6. Expiring April feeder futures fell $1.25 to $204.675, while most-active May futures fell $1.025 to $210.475.
• Hogs: June lean hog futures bounced from early lows, settling 67 cents higher at $86.425.
   

Ag markets today: Corn, soybean and wheat futures extended recent losses overnight amid a lack of supportive news and elevated risk aversion. As of 7:30 a.m. ET, corn futures were trading 3 to 5 cents lower, soybeans were 9 to 12 cents lower, SRW wheat futures were 7 to 8 cents lower, HRW wheat was 11 to 13 cents lower and HRS wheat was 3 to 5 cents lower. Front-month crude oil futures were more than $1 lower, and the U.S. dollar index was around 150 points lower.

Market quotes of note:

• Fed’s Williams: Banking stress likely to tighten credit. Federal Reserve Bank of New York President John Williams said that while the banking sector has stabilized following the second-largest bank collapse in U.S. history, the recent stress may make it more challenging for households and businesses to access credit.
   
• The world is building new refineries and expanding older ones at a speed unseen in almost two generations, Javier Blas writes (link). It’s starting to have an impact, with refining margins dropping significantly in recent weeks. For central banks, the increased capacity offers some hope that gasoline and diesel prices will stay low.
  
  
   
• Ryanair CEO Michael O’Leary said Brexit has been “unbelievably messy” for companies, and has led to the UK labor market being “broken.” He also says he’s expecting to see double-digit price increases for airfares this year.
   
• U.S. planting season: Says grain trader and analyst Richard Crow: “The planting season is here and will get more attention.  Progress should be good this week, except for the North, where cold temperatures still hamper it.  The chance of the North getting fully planted is the question.”
   

On tap today:

     • U.S. jobless claims are expected to rise to 240,000 in the week ended April 15 from 239,000 one week earlier. (8:30 a.m. ET) UPDATE: The number of Americans filing for unemployment benefits rose by 5,000 to 245,000 last week, above market expectations of 240,000. The result was in line with a batch of recent data that suggested some softening in the U.S. labor market, following the aggressive rate hikes delivered by the Fed over the past months.

     • Philadelphia Fed's manufacturing survey is expected to rise to minus 19.9 in April from minus 23.2 one month earlier. (8:30 a.m. ET)

     • USDA Weekly Export Sales report, 8:30 a.m. ET

     • U.S. existing-home sales are expected to fall to an annual pace of 4.49 million in March from 4.58 million one month earlier. (10 a.m. ET)

     • Conference Board's leading economic index for March is expected to fall 0.7% from the prior month. (10 a.m. ET)

     • Federal Reserve speakers: Governor Christopher Waller on financial innovation at 12 p.m. ET, Cleveland's Loretta Mester on cryptocurrencies at 12 p.m. ET, governor Michelle Bowman and Dallas's Lorie Logan at a Fed Listens event at 3 p.m. ET, Atlanta's Raphael Bostic on economic conditions at 5 p.m. ET, and Philadelphia's Patrick Harker on the economic outlook at 7:45 p.m. ET.

Japan’s trade deficit narrowed for the second month in March, as the price of fuel eased and brought down import costs. Imports grew 7.3% from a year ago, the smallest gain in two years, and exports were up 4.3% from a year earlier, led by car shipments.

Fed’s Beige Book: The U.S. economy stalled in recent weeks, with hiring and inflation slowing and access to credit narrowing, the Federal Reserve said in its Beige Book survey of regional business contacts.

Fed’s District agriculture summaries:

• Atlanta: Agricultural conditions were mixed. Domestic supplies of chicken exceeded demand as the Avian Flu limited exports. Though foreign demand for poultry improved as some countries loosened import regulations. Demand for eggs exceeded supply but softened in response to elevated prices. Cattle supply remained low, and beef producers expressed concerns that falling chicken prices may cause consumers to substitute chicken for beef. Demand for cotton and soybeans fell from already low levels. Reduced cotton plantings are expected this year as discretionary spending softens.
   
• Chicago: With input costs remaining elevated and many product prices down, lower agricultural incomes are expected in 2023 compared with a strong 2022. Cattle prices increased as the U.S. herd was squeezed by a harsh winter. Egg prices rose while dairy and hog prices moved lower. Prices for agricultural land continued to increase, reportedly at a slower pace.
   
• St. Louis: District agriculture conditions changed little from the previous report. Acres planted to corn, cotton, rice and soybeans increased around 1% compared with last year; outcomes were similar for all District areas. Cotton and soybeans were planted in lesser quantities, while corn and rice acreages increased.
   
• Minneapolis: Agricultural conditions were stable at strong levels entering the planting season. Most contacts reported farm incomes continued to increase from a year earlier, while capital spending was steady. Though persistent wintry weather, including a severe snowstorm, has delayed preparation for spring planting in many areas.
   
• Kansas City: The tenth District reported strong economic and credit conditions, noting elevated commodity prices continue to support profit opportunities for many producers. Farm loan repayment rates improved at a gradual pace in the first quarter and indicators of credit challenges were limited. Agriculture bankers throughout the region reported their liquidity position was adequate to meet current demand and deposit withdrawals, though the impact of higher interest rates on borrower finances and farmland markets is a growing concern. More broadly, drought and elevated production costs continued to affect many areas of the region.
   
• Dallas: Drought conditions persisted in the western part of the district while soil conditions were quite favorable elsewhere. The La Niña pattern has ended, and rainfall is expected to increase moving into summer and fall. Cotton acres are expected to be significantly lower this year, with producers favoring crops with a relatively higher price and drought tolerance. Cattle prices increased dramatically over the past six weeks and were up from the same time last year, with demand remaining solid.
   
• San Francisco: Activity in agriculture and resource-related sectors decelerated slightly. Exports of agricultural goods weakened, while domestic demand was mixed. Growers in the Pacific Northwest reported weaker sales overall, producers in California reported strong, stable demand for fresh produce and other agricultural goods. Persistent rains and flood conditions in California affected plant pollination, delaying the planting of crops such as tomatoes and cotton and casting doubt on the viability of some orchard crops.
   

Market perspectives:

     • Outside markets: The U.S. dollar index was little changed, with most foreign currencies slightly weaker against the greenback. The yield on the 10-year U.S. Treasury note eased to trade around 3.57%, tracking a lower tone in global government bond yields. Crude oil futures were under pressure, with U.S. crude around $78 per barrel and Brent around $81.95 per barrel. Gold and silver futures were firmer, with gold around $2,013 per troy ounce and silver around $25.41 per troy ounce.

     • India will welcome more of Russia’s oil supplies as users in the country become more adept at arranging cargoes to feed burgeoning nationwide demand, according to the head of Ratnagiri Refinery & Petrochemicals Ltd., a new refinery that’s backed by Saudi Arabia.

     • The head of Alcoa Corp., the largest U.S. aluminum producer, warned that London Metal Exchange warehouses are poised to be inundated with Russian-origin material, rendering the global benchmark disconnected from the real market price.

     • Spot discount for soybeans from Brazil, the world’s top producer and exporter, is now the deepest in almost 20 years, thanks to a record crop in the Latin American country. In Europe, meanwhile, rapeseed oil is cheaper than palm oil, the world’s most-consumed cooking oil. Typically palm oil lags behind pricier rivals, but that’s now in reverse for the first time in a quarter-century, according to Fastmarkets AgriCensus. To blame are the large volumes from Ukraine reaching European crushers.

     • Ag trade: Japan purchased 66,377 MT of milling wheat, including 35,477 MT from the U.S. and 30,900 MT from Australia. The Philippines purchased 60,000 MT of Australian feed wheat and 60,000 MT of corn expected to be sourced from South America.

     • NWS weather outlook: There is a Slight Risk of severe thunderstorms over parts of the Middle/Lower Mississippi Valley and Southern Plains on Thursday... ...There is a Slight Risk of excessive rainfall over parts of the Middle/Lower Mississippi Valley, Tennessee Valley, and the Southern Plains on Thursday and Friday... ...Moderate to heavy snow over parts of the Northern Plains/Upper Mississippi Valley on Thursday; snow over the Cascades, Northern Intermountain Region, and Northern/Central Rockies on Thursday and Friday.

Items in Pro Farmer's First Thing Today include:

     • Followthrough grain market selling overnight
     • Argentine grain union strike ends
     • Argentina again allows delay in wheat shipments
     • Cattle traders stay conservative
     • Hog traders reducing premiums

— Ukraine has received more Western hardware, including French armored vehicles, U.S. Patriot missile defense systems, and a highly effective system from Germany for combating cruise missiles. Denmark and the Netherlands have also jointly agreed to "acquire, refurbish and donate" 14 Leopard tanks for Ukraine, as Western allies increase efforts to bolster Kyiv's military ammunition amid dwindling supplies.

     Leopard 2 tanks are seen as a vital, modern military vehicle that would strengthen Kyiv's forces and help Ukraine quickly.

     This comes as the U.S. pledged an additional $325 million security assistance package to Ukraine on Wednesday.

     Key quote: "Russia could end its war today," Secretary of State Antony Blinken said after announcing the aid. "Until Russia does, the United States and our allies and partners will stand united with Ukraine for as long as it takes."

— Hungary to allow transit of Ukrainian grain, bans some meat imports. Hungary will continue to allow transit of Ukrainian grain, ensuring the departure of such shipments “in a controlled manner,” its agriculture minister, Istvan Nagy, told state news agency MTI after talks in Brussels. Talks were ongoing about further products that could fall under a current import ban, in addition to wheat, maize, rapeseed and sunflower. Hungary also said it has banned imports of certain meat products and honey in addition to grains from Ukraine until June 30.

— Ukraine asked Turkey to seize a ship docked there. At a time of heightened tensions around the so-called Black Sea grain corridor, prosecutors in Kyiv say the UAE-owned ship holds thousands of tons of grain stolen from Russian-occupied Ukraine, according to correspondence reviewed by the Wall Street Journal (link). They have asked Turkey — trying to straddle the divide between Russia and the West — to take grain samples and to question the captain and crew.

— Russia may permit grain export quota sharing. Russian grain suppliers may be able to waive a part of their export quotas so they can be redistributed to other companies, a draft regulation shows, as Moscow seeks to maximize exports and avoid domestic oversupply. According to the draft, which was opened to input from the industry on Wednesday before being finalized, exporters who have already used up their quotas will be able to claim more from companies that do not use theirs. They will not be allowed to top up their initial quota by more than 45%, however, the document says.

— With global grain traders pulling out of Russia, the founder of farming conglomerate Ros Agro, Vadim Moshkovich, intends to invest in a new homegrown player, Russian newspaper Kommersant reports (link), citing officials in the grain market.
 

— House Republicans propose to lift the debt limit by $1.5 trillion or until March 31, 2024, whichever comes first. House GOP leadership released text of the bill Wednesday (link).  

     Details: House Republicans’ debt limit bill would pair a $1.5 trillion increase in the debt ceiling with $4.5 trillion in savings, Speaker Kevin McCarthy (R-Calif.) said Wednesday. The bill unveiled Wednesday, dubbed the Limit, Save, Grow Act, proposes reverting discretionary spending for non-defense programs to fiscal year 2022 levels, a $130 billion cut, while proposing limiting growth to 1% annually over the next decade.

     Health & social programs:

• Impose work requirements on Medicaid recipients who don’t have children
• Increase age limit for work rules under SNAP (to age 55, from the current 49). House Ag Chair G.T. Thompson (R-Pa.) said the leadership’s bill “is a sensible proposal” to rein in federal spending. The GOP package would apply the 90-day limit for ABAWDs — able-bodied adults without dependents — to people ages 18 to 55, up from the current 18 to 49. The bill also would end the ability of states to carry over from year to year so-called individual exemptions from the time limit. “The Limit, Save, Grow Act is a sensible proposal for raising the debt ceiling, which reins in federal spending and invests taxpayer dollars more wisely,” said Thompson in a statement. SNAP would account for just over 80% of spending in the new farm bill. House Republicans made a similar proposal in the 2018 Farm Bill to end the carryover of individual exemptions but dropped it in the face of Senate opposition. Senate Agriculture Committee Chair Debbie Stabenow (D-Mich.) and Georgia Rep. David Scott (D-Ga.), the senior Democrat on the House Agriculture panel, have said they will not accept SNAP cuts in the farm bill this year.
• Make it harder for states to spare certain families from federal work requirements — a flexibility some states have used to help lower-income people during times of high unemployment.
• Require states to report on work outcomes under TANF (Temporary Assistance for Needy Families)

     Energy: In total, the Republican strategy would repeal or revisit 24 tax incentives that were established or tweaked by the Inflation Reduction Act (IRA).

• Aims to increase domestic energy production by streamlining the oil permitting process.
• Enact House GOP energy package (HR 1)
• End tax breaks for clean-energy projects and qualifying electric vehicles
• Repeal the sustainable aviation fuel credit
• Eliminate the increase to the "energy credit for solar and wind facilities placed in service in connection with low-income communities."
  
  The legislation retains the new electric vehicle purchase tax credit of up to $7,500. While it retains that incentive, it changes the tax credit's formal name from the "Clean Vehicle Credit" to the "New Qualified Plug-in Electric Drive Motor Vehicle Credit."

     Other programs:

• Eliminate bulk of $80 billion provided to IRS in 2022 tax and climate law
• Rescind unspent Covid-19 relief funds
• Cancel student loan regulations for payment suspensions, debt discharge
• Require congressional approval before major regulations could take effect

     McCarthy comments. “Now that we’ve introduced a clear plan for Responsible debt limit increase, they have no more excuse and refuse to negotiate,” McCarthy said on the House floor.

     Ahead of the bill’s release, McCarthy said that it would help lead to $4.5 trillion in savings for taxpayers, partly through spending cuts, clawing back unspent coronavirus funding previously allocated by Congress and targeting the Biden administration’s student loans forgiveness decision. The bill additionally includes measures targeting aspects of the Inflation Reduction Act, a signature piece of Biden’s domestic agenda that Democrats passed without GOP support last year. It would pull roughly $70 billion in an IRS funding boost and end that legislation’s “green giveaways,” McCarthy said in an apparent reference to green energy tax credits.

     Democrats have called for an increase in the debt limit without conditions. President Biden has said he will only accept an unconditional debt ceiling increase but that he’s open to separate budget talks on fiscal 2024 spending levels. Biden said Republicans are trying to “squeeze out more of America’s middle class,” painting McCarthy’s the debt ceiling and spending cut proposal as lacking detail and benefiting the wealthy.

     Next step: The bill is expected to get a floor vote next week, with McCarthy telling reporters on Wednesday that he’s confident about the bill’s chances of passage in the days ahead. Given Republicans’ slim majority, McCarthy can only afford to lose four GOP votes in the House. But, the plan is doomed in the Senate.

     Estimates vary as to when the nation will reach the so-called “X-Date,” but some projections say the country faces a possible default threat as early as mid-June. If no deal is reached, it would come as early as the first half of June, Goldman Sachs researchers calculated this week after reviewing “weak tax collections so far in April.”

• Treasury Secretary Janet Yellen has said default date likely wouldn’t be before early June; CBO, BPC projected in February extraordinary measures could be exhausted between June and September.
• Treasury has been using “extraordinary measures” since Jan. 19 to juggle cash flow, stay below the cap.
• Defaulting on debt would harm U.S. economy and global financial stability, Yellen warned in Jan. 13 letter to lawmakers.

— Bipartisan House Problem Solvers Caucus proposes suspending debt limit through the end of the year.  A bipartisan group of moderate House lawmakers on Wednesday proposed a backup plan to set aside the U.S. debt limit through year-end, in case President Joe Biden and House Speaker Kevin McCarthy (R-Calif.) fail to reach a deal on a longer-term solution in the coming weeks. By suspending the debt limit until Dec. 31, “this will afford us time” to complete the 2024 annual federal appropriations bills and pull together a longer-term deficit-stabilization program, the House Problem Solvers Caucus said in their release. The caucus includes 31 Republicans and 32 Democrats, and is chaired by Reps. Josh Gottheimer (D-N.J.) and Brian Fitzpatrick (R-Pa.).

    Upshot: The proposal reflects growing concern among members of the 64-person group that a US payment default could come as soon as June, amid little sign of an end to the partisan faceoff over the debt limit.

— Missouri curb on farmland. The Missouri Senate passed and sent to the House legislation to permit no more than 0.5% of agricultural land in the state to be owned by foreigners, down from the current ceiling of 1%. Link to more via the St. Louis Post-Dispatch.

— Highlights of the 2014 Farm Bill. The Agricultural Act of 2014, also known as the 2014 Farm Bill, was signed into law on Feb. 7, 2014. Some of the key highlights of the bill include:

• Commodity Programs: The bill eliminated the Direct and Counter-cyclical Payment (DCP) and Average Crop Revenue Election (ACRE) programs, replacing them with two new programs: the Agriculture Risk Coverage (ARC) and Price Loss Coverage (PLC). These programs aimed to provide better risk management tools for farmers in the face of volatile market conditions. In the 2014 Farm Bill, cotton was no longer considered a covered commodity under Title I commodity programs. Instead, cotton was provided with its own risk management tool called the Stacked Income Protection Plan (STAX), which is an insurance-based program under the Federal Crop Insurance Title of the bill. This change was made in response to a World Trade Organization (WTO) dispute between the U.S. and Brazil, in which the WTO ruled that certain U.S. cotton subsidies were not in compliance with international trade rules. Cotton was eventually put back into the Title 1 program via a funding bill in 2018, ahead of the 2018 Farm Bill debate.
• Crop Insurance: The 2014 Farm Bill expanded the federal crop insurance program, introducing new insurance products like the Stacked Income Protection Plan (STAX) for cotton growers and the Supplemental Coverage Option (SCO) for other crops. The bill also made reforms to the program to ensure its long-term sustainability.
• Conservation: The bill consolidated and streamlined various conservation programs, reducing their total number from 23 to 13. This aimed to make conservation efforts more efficient and effective. The Environmental Quality Incentives Program (EQIP) and the Conservation Stewardship Program (CSP) were among the major programs that continued to receive funding.
• Nutrition: The Supplemental Nutrition Assistance Program (SNAP), formerly known as food stamps, was one of the most debated parts of the 2014 Farm Bill. The final bill cut SNAP funding by about $8 billion over 10 years but maintained the overall structure of the program.
• Specialty Crops and Organic Agriculture: The bill provided increased support for specialty crops (fruits, vegetables, nuts) and organic agriculture, including research, marketing, and data collection initiatives. The Specialty Crop Block Grant Program and the Organic Agriculture Research and Extension Initiative were among the programs receiving funding.
• Energy: The 2014 Farm Bill continued support for renewable energy and bio-based products. The Biomass Crop Assistance Program (BCAP), the Rural Energy for America Program (REAP), and the Biorefinery Assistance Program were some of the key energy programs that received funding.
• Rural Development: The bill aimed to support rural communities by providing funds for various rural development initiatives, such as broadband access, water infrastructure, and business development.
• Research and Extension: The 2014 Farm Bill authorized funding for various agricultural research and extension programs, including the Agriculture and Food Research Initiative (AFRI) and the creation of the Foundation for Food and Agriculture Research (FFAR).
• Trade: The bill reauthorized and funded trade promotion programs, such as the Market Access Program (MAP) and the Foreign Market Development (FMD) program, to help expand the market for U.S. agricultural products.
• Beginning Farmers and Ranchers: The 2014 Farm Bill recognized the need to support new and beginning farmers and ranchers, providing funding and policy changes to improve access to credit, crop insurance, and conservation programs.  

— Biden’s Labor secretary nominee faces lingering doubts in Senate. President Biden’s nominee to be the next labor secretary, Julie Su, will testify to the Senate today with key Democrats unwilling to voice support for her confirmation, creating uncertainty about her prospects in the narrowly divided chamber. Biden in February picked Su, a civil rights attorney and the current deputy labor secretary, to replace Marty Walsh, the former mayor of Boston, to lead the Department of Labor. Su was previously confirmed as the deputy labor secretary, but has faced opposition from business groups critical of her record leading California’s labor department.  

— German Foreign Minister warns Beijing becoming systemic rival. Reuters reports (link) German Foreign Minister Annalena Baerbock “on Wednesday described parts of her recent trip to China as “more than shocking” and said Beijing was increasingly becoming a systemic rival more than a trade partner and competitor. The blunt remarks followed Baerbock’s visit to Beijing last week where she warned that any attempt by China to control Taiwan would be unacceptable.” In remarks to the lower house of Germany’s parliament, the Bundestag, Baerbock said “some of it was really more than shocking.”

— Yellen: Security worries on China eclipse economic interests. Treasury Secretary Janet Yellen said the Biden administration was prepared to accept economic costs as it sought to protect U.S. national security interests from threats posed by China, even as she appealed to Beijing to cooperate on shared global concerns.

— China official: Little growth in soybean area for 2023. China is not expecting to see soybean area increase for 2023 as it did in 2022 following release of supports and incentives for farmers to plant soybeans, according to a Reuters report quoting an official from the Ministry of Agriculture and Rural Affairs. Incentives and prices in 2022 encouraged farmers to boost soybean plantings but prices are not encouraging soybean area expansion this year, said Pan Wenbo, director general of the Department of Crop Production. “Frankly speaking, due to the low soybean market price and low comparative benefit, the enthusiasm and willingness of farmers to plant soybeans has declined compared with this time last year,” he observed.

     Soybean acreage is expected to be stable or slightly increase, he noted. Production in 2022 was at 20.3 million tonnes.

— Highlights of EPA Administrator Michael Regan’s appearance Wednesday before the House Ag Committee (link to a video of the hearing or to read Regan’s written testimony):

• EPA is not yet ready to issue an emergency declaration to allow E15 fuel to be sold during the summer months as they did in 2022. While Regan said that many of the conditions are still in place that prompted the 2022 emergency waiver, he said EPA staff has not yet brought him enough evidence to issue an emergency waiver. He cautioned that administrative moves by the Trump administration to allow year-round E15 sales did not survive court challenges. But he said no options are off the table as of yet and that EPA was continuing to work with the Department of Energy and others on the situation.
• Why proposed 2023, 2024 and 2025 Renewable Fuel Standard volumes for biomass-based diesel and advanced volumes do not match the industry’s current production. Regan: “Let me just say that in 2022 we set the highest volumes ever in EPA’s history. So we’re proud of that and what we plan to do is continue that trajectory. As you know we proposed a rule and we’re in that proposal phase and there aren’t too many things that I can comment during this time of comment but what I can say is that 2023, 2024, and 2025 will continue that positive trajectory. We’re taking in a lot of comments on the role of biodiesel. We’re taking a lot of comments in on these amounts. And so we’re taking a very close look at those, and I can assure you we’ve met with a number of stakeholders who have offered us a lot of new data and we believe that will be reflected in the final rule.” 
  
  Rep. Bost (R-Ill.) said the proposed RVO undercuts the bio-based diesel growth to just about 190 million gallons over three years. And when in 2022 alone the RVO increased bio-mass diesel by 330 million gallons, Bost asked what data did the EPA use to reach the 190 million gallons over three years? And will the final rule increase blending targets for biomass-based diesels to reflect that industry’s growth that’s going to occur? Regan: “I have met with the biomass diesel folks to kind of talk through that. We were using the number that USDA uses and I’ve sort of recognized that they are also looking at some infrastructure that they believe will be in place over the next five to ten years that will be able to facilitate a larger volume. So what I can say there, because we’re in a proposal phase, is that we’ve engaged and taken the comments and we’re taking a look at how we come out with our final in terms of that number.” Bost then asked, “Do you ever take into consideration what it may do to the markets in the future?” Regan: “I’d love to follow up on that."
  
  Rep. Brad Finstad (R-Minn.) said without the RFS market, soybean prices could drop by about 13%. Meanwhile, he noted, the EPA has proposed volumes for advanced biofuels and biomass-based diesel for the next three years that are below what the industry is producing today. “So, are you aware that there’s been over $6 billion in announced investment to increase oil-seed crush capacity, and this is now in jeopardy as a result of the EPA’s RFS proposal?” Regan: “I have met with the biodiesel, biofuels groups, and they’ve made us aware of some information. They’ve also given us some information through the comment period. And listen, we’re taking that information under consideration. I can’t say more because this is a comment period, but I can tell you that we’ve heard these communities and we’re governing ourselves accordingly.”
  
  Perspective: EPA on Dec. 30 published its proposed RFS levels for 2023-2025, with comments due on Feb. 10. The agency also held a public Jan. 10 to gather more public input on its proposed RFS levels. The agency has not yet sent its final version to the Office of Management and Budget (OMB) for review with a deadline of finalizing the plan by June 14 according to a court agreement it reached with Growth Energy.

• Rep. David Scott (D-Ga.), asked Regan the role he sees biofuels playing in the future. Last week, EPA announced emission standards for new cars. That announcement led to concerns from the biofuels industry and farmers in regard to the administration’s view on the role biofuels have been playing and can continue to play in reducing emissions and powering our cars and trucks. Regan was asked what he would you say to our farmers and our domestic biofuels industry – the role he sees biofuels playing in the future. His response: “Well, I think we see a significant role. It’s called walking and chewing gum at the same time. I think that when you look at the policies of this EPA, and the investments that we’re making in biofuels and advanced biofuels, just by the last RVO volumes we set and the ones we’re anticipating setting, and then the partnership that I have with Secretary Vilsack and Secretary Buttigieg as we look at the role of biofuels with aviation fuels, we see a tremendous market for biofuels that is complimentary to the EV fuels future. And so we think that we can do both – we see a balance here. And in both cases, we’re trying to follow the markets, follow technology, and follow the science as well.”
  
  As for the recent EPA proposal which would tighten tailpipe emissions and force more electric vehicles (EVs) to be used, Regan said the plans do not work against biofuels. EPA is working to implement complimentary policies on that front. “We see a tremendous market for biofuels that is complementary to the EV fuels future,” he said.
• WOTUS: Rep. Don Bacon (R-Neb.) said the Waters of the U.S. (WOTUS) rule on wetlands protections and declared, “Any goodwill the administration has built with farmers and ranchers is gone.” House Ag Chair G.T. Thompson (R-Pa.) said: “Historically, EPA has over-regulated the agriculture industry,” criticizing agency actions on pesticides, electric vehicles, and WOTUS. The Supreme Court is expected to rule soon on an Idaho case that would restrict federally recognized wetlands to territory with a direct surface connection to a waterway. Regan said the EPA issued its WOTUS rule last December in the face of “looming litigation” over not having a regulation. A Trump-era WOTUS rule was overturned by a federal judge in 2021. Courts have put on hold the recent Biden/EPA rule in 26 states.
• Rep. Angie Craig (D-Minn.) told Regan: “The U.S. is currently transitioning to a cleaner, greener economy to ensure that we preserve a healthy planet for our children to grow up in. That being said, I am concerned about the EPA’s approach with regard to this clean energy transition. In the past few months, despite previous support, your policies have alienated the renewable fuels sector. The EPA’s proposed RVOs shifted away from investments in the higher blends infrastructure incentive program. Biomass based diesel supports over 75,000 jobs, contributes over 23 billion annually to the American economy, and reduces greenhouse gas emissions by approximately 74% when compared to petroleum diesel. These RVO standards overlook those advancements. Furthermore, the EPA’s proposed new car pollution rules released last Wednesday was another hit to the renewable fuels sector. These rules also overlook the strides biofuels have made in decreasing greenhouse gas emissions and further limit the biofuels market. You referenced in your testimony that you have a strong desire to work closely with the farming community to promote practical, science-based policies that protect the environment and support the U.S. ag system. I’m concerned that these proposals are not practical for the agricultural community. Not only do these recent EPA actions fail to consider the existing capabilities of the renewable fuels market and its potential for growth, but they undervalue the American farmers who rely on the same biofuels market the U.S. government has been incentivizing for the last decade.”

— To control nitrogen emissions, the Dutch government needs to shut down thousands of farms and order farmers to significantly reduce livestock. Instead, more operations continue to open, Foreign Policy says in a column (link) on the political challenges of curbing greenhouse gases coming from the agricultural sector.

— Energy Department backs rooftop-solar bonds. As part of the Biden administration’s green-financing effort, the department will guarantee payments on $3 billion of $3.3 billion in debt securities that Sunnova Energy will sell to investors to fund rooftop solar installations. That should lower the renewable provider’s borrowing costs and make more capital available to it. Under the deal, Sunnova will devote part of its lending to homeowners with below-average credit scores and to Puerto Rico, where a rickety electric grid has boosted demand for solar.

— For food price inflation clues, watch India. India’s monsoons are an essential economic indicator for a country that relies on rainfall to feed 1.4 billion people. A poor season can topple governments and threaten global food security. U.S. and Australian forecasts now point to an increased probability of an El Niño episode in 2023. El Niño is a periodic weather event that drives monsoon clouds away from India — and has historically hurt food production. A subpar monsoon is an underappreciated threat to global food security and inflation, writes the Wall Street Journal (link).

— Indiana is HPAI-free. Indiana, one of the first states to be hit by highly pathogenic avian influenza in 2022, has been recognized as HPAI-free by the World Organization for Animal Health. Link for more.

— The price of a full English breakfast jumped to a new high, showcasing the struggle to curb the steep rise in food costs. The average price of ingredients to make a traditional fry-up soared almost 23% from a year earlier in March, the biggest increase since Bloomberg started the Breakfast Index in June.

— Supreme Court on Wednesday temporarily extended access to the abortion drug mifepristone, a move meant to give the justices more time to consider the issue. The deadline for the justices to weigh in on the case has been moved to Friday after Justice Samuel Alito previously said the court would rule by 11:59 p.m. ET on Wednesday. Some observers say the delay suggests the court doesn’t agree on how to handle the case.

— The CDC updated its recommendations on Covid-19 vaccines to allow another booster dose for people who are 65 and older or those who have weakened immune systems and "want the option of added protection." The move aligns with the FDA's actions this week to allow these groups to get additional booster doses ahead of its fall vaccination campaign.

     The CDC now recommends the updated vaccines for everyone 6 and older, even if they didn't finish the two-dose series of the original shots. However, only about 17% of eligible Americans — fewer than 1 in 5 — have gotten a recommended booster dose. The FDA says it intends to make decisions about future vaccinations for most Americans in June.

— Researchers said an existing drug that’s already approved to treat multiple sclerosis symptoms might also be able to stop the disease before people experience any symptoms. It’s early research for now, but a ray of hope for patients who could someday be spared the worst of the devastating and incurable neurological condition. Link for details.

— Small donors are abandoning Sens. Kyrsten Sinema and Joe Manchin as they stray from the Democratic Party, the Wall Street Journal reports (link). The two senators are attracting larger donors with ties to the  centrist group No Labels, according to campaign filings, report Julie Bykowicz and Anthony DeBarros, but grass-roots fundraising strength is often seen as a proxy for popular support for candidates. 

— ‘Jungle primary’ shelved. A Montana House committee set aside legislation that would allow only the top two finishers in the U.S. Senate primary in 2024 to appear on the general election ballot. Link for details.
 

— Microsoft plans to drop Twitter from its ad platform. The tech giant said that users of Microsoft Advertising would not be able to manage their Twitter accounts via the service starting next week, citing sharply increased prices to use the social network’s A.P.I., the technical gateway to its content.

— WSJ: The Consumer Financial Protection Bureau said that a former agency employee made an unauthorized transfer of records containing the confidential personal information of about 256,000 consumers and confidential supervisory information on 45 institutions when they forwarded an email to their personal email account. There is no evidence that the information was shared outside of the employee's account, but the agency called the situation a major incident. Link to WSJ article.

— U.S. gov’t is tracking more than 650 potential UFO cases, according to the Pentagon. Lawmakers on Wednesday viewed a declassified video from an unresolved case showing a small orb moving through the sky in the Middle East. This type of footage of so-called "unidentified aerial phenomena" often fuels speculation, but Pentagon officials reiterated this week that there's no evidence of extraterrestrial life in the sightings.

— Happy 420 day. Don Levin has hung out with Hunter S. Thompson, lost his car while high on edibles and he sells more rolling papers than anyone else in the world. But the billionaire owner of brands like E-Z Wider and Zig-Zag doesn’t actually smoke pot — or even know how to roll a jay. In addition to producing more than 1.2 billion packs of rolling papers annually, Levin owns the entire supply chain that transforms hemp, wood, bamboo and rice into what eventually wraps joints worldwide. At the helm of an empire that generates $230 million in cash flow off an estimated $650 million in revenue each year, Forbes estimates Levin is worth at least $1.7 billion. Link for more via Forbes.

WASDE | Crop Production | USDA weekly reports | Crop Progress | Food prices | Farm income | Export Sales weekly | ERP dashboard | California phase-out of gas-powered vehicles | RFS | IRA: Biofuels | IRA: Ag | Student loan forgiveness | Russia/Ukraine war, lessons learned | Russia/Ukraine war timeline | Election predictions: Split-ticket | Congress to-do list | SCOTUS on WOTUS  | SCOTUS on Prop 12 | New farm bill primer | China outlook | Omnibus spending package | Gov’t payments to farmers by program | Farmer working capital | USDA ag outlook forum |