Retro Farm Bill Debate Surfaces: Planted Vs Base Acres

Yellen on China | CBO updated forecasts May 12 | House debit-limit plan vote next week
 

A new farm bill retro debate is occurring with a push by some but not many to return to basing farm program payments on planted vs base acres. We cite sources saying why that is a bad idea. Meanwhile, we continue our review of some past farm bills, with the latest being the 2008 version. See Policy section.

House Republicans plan to vote next Wednesday or Thursday on debt-limit plan. Leaders are still wooing conservatives who want the measure to require stricter work. Details below.

U.S. housing-market slowdown is weighing on prices, and we have details in Market section.

The volatility in the electrical car market continues as Tesla raised the prices on Tesla’s Model S and X vehicles just a day after CEO Elon Musk signal the company will continue cutting prices. Meanwhile, the Energy section discusses the virtual race for lithium supplies and the move by Chile's President Gabriel Boric to nationalize the lithium industry of the country.

The Sevens Report answers the question: Why did the VIX hit 52-week lows?

On the GOP presidential contest, Donald Trump tops Ron DeSantis in a test of the GOP presidential field as no candidate beyond the two leaders draws substantial support in the still-developing primary race. Meanwhile, Amy Walter answers her own question: Is the Republican presidential contest over before it even began? She gives some reasons why that may not be the case. See Politics & Elections section.

Treasury Secretary Janet Yellen was her own debating partner in a Thursday speech on U.S./China relations. Meanwhile, U.S. lawmakers want to toughen the bars against imports from China’s Xinjiang region. See China section.

The Fed's Mester sees policy rate going over 5% because of high inflation and below we recap recent comments from other Fed officials.

Veteran recession watcher know that the transportation sector usually is a good barometer to watch. A Wall Street Journal item notes a drop in transportation stocks foreshadows a weakening economy.

Bloomberg is contemplating life without its founder. Michael Bloomberg is lining up succession and one of the largest charitable donations in history and a Financial Times article on this topic is a must read.

California boosts water allocations to 100% for first time in nearly 20 years. Meanwhile, the U.S. Bureau of Reclamation also announced an increase to 100% of requested water allocations for almost all farms, homes and industries served by the federal Central Valley Project, which provides critical irrigation and water to the San Joaquin Valley, San Francisco Bay Area and Central Valley.

West Coast dockworkers, firms have tentative pact on some issues.

The Russia/Ukraine section includes several items on the Ukraine grain export situation and how various countries are reacting. Meanwhile, a group of conservative lawmakers criticized funding for Ukraine, saying U.S. aid “threatens further escalation” with Russia.

Whoops. Russia said that one of its jet fighters had accidentally bombed its own city of Belgorod near the Ukrainian border, causing an explosion and leaving several injured.

A GOP senator vows to block all Energy Department nominations.

The Biden administration could start restocking the Strategic Petroleum Reserve (SPR) in the third quarter of this year if prices are “in the right place,” according to Amos Hochstein, special presidential coordinator for global infrastructure and energy security. More in Energy section.

Livestock exports by New Zealand have formally come to an end, New Zealand’s Agriculture Minister Damien O’Connor announced, finalizing a ban the country put in motion in 2021 based on animal welfare concerns.

California appeals glyphosate decision.
 

Equities today: Global stock markets were mostly lower overnight. U.S. stock indexes are pointed toward slightly lower openings. European shares remained subdued Friday, but headed for a fifth week of gains, as investors digested the latest PMI surveys and a batch of corporate earnings. Data showed the service activity growth rates in both the Eurozone and U.K. accelerated more than expected in April, while the regions' manufacturing sectors remained under pressure amid a slump in demand for goods. In Asia, Japan -0.3%. Hong Kong -1.6%. China -2%. India flat. In Europe, at midday, London +0.2%. Paris -0.1%. Frankfurt -0.4%.

     U.S. equities yesterday: The Dow was down 110.39 points, 0.33%, at 33,786.62, the S&P 500 fell 24.73 points, 0.60% at 4,129.79, and the Nasdaq was down 97.67 points, 0.80%, at 12,059.56.

     Companies reporting results today include HCA Healthcare, SAP and Procter & Gamble, which beat Wall Street’s expectations for earnings and revenue, each rising from the same period a year ago. The company also lifted its sales forecast for its fiscal year — now in its fourth quarter. Still, P&G isn’t immune to economic challenges. CEO Jon Moeller called it “a very difficult cost and operating environment.”=

     U.S. regional banks' shares slip as deposit flight counters higher interest income. A clutch of U.S. regional lenders joined peers in reporting deposit outflows for the first quarter as customers spooked by a banking crisis moved funds to bigger institutions or sought higher yields in money market funds.

     Tesla raised the prices on Tesla’s Model S and X vehicles just a day after CEO Elon Musk signal the company will continue cutting prices. It’s likely no coincidence that the move comes after Tesla shares slid 9.7% on Thursday following Musk’s initial suggestion. Investors are responding favorably to the change, with shares in the electric vehicle behemoth rising in U.S. premarket trading.

Agriculture markets yesterday:

• Corn: May corn futures fell 8 1/2 cents to $6.63 3/4, near the daily low.
• Soy complex: May soybeans fell 9 cents, marking a mid-range close after dropping as low as $14.88 1/4, the lowest intraday level since April 11. May meal fell $3.10 to $451.20, while May soyoil closed 59 points lower at 54.43 cents.
• Wheat: May SRW wheat fell 14 cents at $6.67 3/4, near the session low. May HRW wheat dropped 21 1/2 cents at $8.40 1/4, near the session low and hit a four-week low, while May HRS wheat fell 11 1/4 cents to $8.55 3/4.
• Cotton: May cotton closed down the 400-point limit at 79.24 cents, below several key areas of chart support.  
• Cattle: Cattle futures move mostly higher Thursday, with the only exception being a $1.325 drop by the expiring April fed cattle contract, which settled at $174.10. Most-active June cattle rose 75 cents to $164.35. May feeder futures surged $1.875 to $212.35.
• Hogs: June lean hogs fell $1.35 to $85.075, nearer the session low and posting a contract low close.
   

Ag markets today: Corn and soybean futures extended this week’s losses during overnight trade, while wheat traded mostly firmer on mild corrective buying. As of 7:30 a.m. CT, corn futures were trading 1 to 2 cents lower, soybeans were 7 to 12 cents lower, SRW wheat was 3 to 4 cents higher, HRW wheat was around a penny higher and HRS wheat was narrowly mixed. Front-month crude oil futures were modestly firmer, while the U.S. dollar index was trading near unchanged.  

Market quotes of note:

• The Brazil cash market continues to weaken in both corn and beans. Commodity analyst and trader Richard Crow says, “for the week, as research firms work their balance sheets, cutting bean exports and increasing imports of beans could change their bottom line 20 to 40 million bushels.” Crow also alerts: “As the Arg harvest progresses, the soy yields are worse than the number suggests. Ultimately, the Arg bean crop could be down to 20 to 22 million tons. If that happens, the meal will have issues as we advance.”
   
• Blackstone president warns market is overestimating chance of Fed rate cuts. Blackstone president Jonathan Gray said that while the Fed would probably hold off from further interest rate rises because of cooler inflation, financial markets have overpriced the odds of the central bank reducing the cost of borrowing. “The Fed is likely to pause or maybe go 25 basis points higher from here, but I think they’re unlikely to pivot as quickly as the market is expecting,” he told the Financial Times in an interview (link/paywall_. He added that the Fed would “hold rates at an elevated level for an extended period of time” to stamp out remaining inflationary pressures.
   
• Why did the VIX hit 52-week lows? The VIX is trading at the lowest levels since the S&P 500 hit its standing all-time high in the early days of 2022 (just over 4,818). The Sevens Report notes that the single, most-dominant market dynamic right now is the deeply inverted yield curve, so it looked back to periods in history when the yield curve was inverted, the economy was on the brink of, or actually in, a recession, and stocks were either in, or falling into, a bear market. It concludes: “Today, we are looking at the yield curve hovering just above its deepest inversion since the early 1980s while the VIX is sitting on fresh 52-week lows and obviously nowhere near overbought levels on the weekly time frame, a development that preceded all three of the major market bottoms in the ‘VIX era’ of market history (the VIX was first published in real time in 1993). That suggests we remain in a ‘calm before the storm’ holding period and until we see the VIX reach over-bought territory on the weekly chart (via the RSI indicator), among multiple other developments of course, it will be hard to believe the market is poised to casually cruise towards new record highs from here (i.e. the bottom of this bear market is not in).”
   
• Musk foresees economic storms. The economic “stormy weather” could continue for about a year or so, Elon Musk said on Tesla’s first-quarter earnings call. The billionaire said he didn’t have a crystal ball and stressed that was his “guess” but it does highlight how he’s thinking about the next 12 months. Tesla has cut the price of its vehicles several times this year, including this week, and it’s likely to keep doing so.
   
• Fed's Mester sees policy rate going over 5% because of high inflation. Cleveland Federal Reserve President Loretta Mester said the U.S. central bank still has more interest rate increases ahead of it, while noting the aggressive move to boost the cost of borrowing over the last year to quash high inflation is getting near its end.
   
• Fed recap: Fed officials backed another rate hike while also hinting at the need to pause sometime thereafter. Patrick Harker said rates are “close to where we need to be.” Raphael Bostic backed a “one and done” approach. And as noted above, hawkish Loretta Mester noted prudence is needed amid tighter credit conditions.
   
• The recent turmoil that hit regional banks in the U.S. didn’t rise to the level of crisis, Bank of America Chief Executive Officer Brian Moynihan said. “Crisis is too strong a word, and words like that get used a lot,” he said Thursday at Bloomberg’s Sell-Side Leaders Forum in New York. Deposit insurance, he said, “worked pretty well.”
   

On tap today:

     • S&P Global's preliminary U.S. manufacturing index for April is expected to tick down to 49.0 from 49.2 at the end of March. The services index is forecast to fall to 52.0 from 52.6. (9:45 a.m. ET)
     • Baker Hughes rig count is out at 1 p.m. ET.
     • CFTC Commitments of Traders report, 3:30 p.m. ET.
     • Federal Reserve governor Lisa Cook speaks about economic research at 4:35 p.m. ET.
     • President Biden is scheduled to deliver remarks and announce environmental actions at 2:15 p.m. ET. He is set to depart the White House for Camp David at 4:10 p.m. ET.

Drop in transportation stocks foreshadows weakening economy. Economically sensitive stocks, like those of transportation and small-cap companies, are trailing the broader market, reflecting growing investor concern about a potential recession, the Wall Street Journal reports (link). Historically, transportation and small-cap stocks have led in market recoveries but also sold off faster during periods of economic downturns when demand for goods, materials and travel slow.

The global Artificial Intelligence (AI) in agriculture market size is expected to be worth around $10.2 billion by 2032 from $1.2 billion in 2022, growing at a compound annual growth rate (CAGR) of 24.5% during the forecast period from 2022 to 2032. According to Dr. Kimberly Morgan of the University of Florida, “Southeastern U.S. farms growing perishable and seasonal food continue to achieve gains due to economies of scale and scope, largely dependent on management decisions made based on market information.”

     At the Ai in Agriculture conference, in Orlando, Florida this week, a panel went deeper on how accuracy of data across the globe will impact the models and therefore the ability to impact decision-making positively. Agtools Inc. CEO Martha Montoya commented: “The models should be run several crop seasons to ensure that farmers and their communities will benefit first and foremost sustainability of food flow and environment stewardship. Increasing yield is crucial yet avoiding wasting production is becoming crucial to increase financial outcomes to farmers who are under pressure with high production costs and less time to recuperate.” As weather-related events are impacting food supply chains, Montoya added: “Equally important, the models must include proper weather patterns related to the crop and the microclimates which do impact markets and therefore subsegments of our industry.”

Eurozone private sector growth at 11-month high. The Composite PMI in the Eurozone rose to 54.4 in April, the highest since May and above expectations of 53.7. The reading suggested the bloc's economy has gained momentum at the start of Q2 led by the services sector. Demand improved, employment growth was the highest in a year, and price pressures moderated.

Japan inflation rate edges down to six-month low. The annual inflation rate in Japan inched down to 3.2% in March 2023 from 3.3% in the previous period. It was the lowest print since last September, as transport costs rose the least in 6 months (1.6% vs 1.7% in February). Prices of fuel, light, and water charges dropped much faster (-2.8% vs -0.3%), mainly due to electricity (-8.5% vs -5.5%). Prices grew further for furniture & household utensils (9.4% vs 8.7%) and medical care (1.3% vs 0.9%). Also, the cost of food has advanced the most since September 1980 (7.8% vs 7.5% in February). On a monthly basis, consumer prices rose by 0.3%, shifting from a prior 0.6% fall.

Bloomberg is contemplating life without its founder. Michael Bloomberg is lining up succession and one of the largest charitable donations in history. Link/firewall to Financial Times article. Some nuggets from the article:

• “’Time for you to leave,’ Salomon Brothers’ cigar-chomping chief executive John Gutfreund told Michael Bloomberg. With the $10mn he got as compensation for being fired, Bloomberg started a company, Innovative Market Systems, the next day.”
• “Out of Bloomberg’s more than $12bn of annual revenue, only about $500 million comes from media, according to people familiar with the matter. The vast majority of its profits come from banks and investment companies renting ‘the terminal’, its clunky-but-powerful data and analytics portal.
• “His $94 billion fortune — as estimated by Forbes since Bloomberg News’ billionaires index doesn’t track its owner — means that only Warren Buffett has ever made more money out of the business of money. If data really is the oil of the 21st century, then Michael Bloomberg is today’s John D Rockefeller.”
• “In February, Michael Bloomberg turned 81. People with knowledge of the company’s internal dynamics and its founder suggest he is likely to transfer ownership of his empire to a trust that will finance Bloomberg Philanthropies for perpetuity.”
• “According to most insiders, Bloomberg’s likely successor as CEO is Jean-Paul Zammitt, a company veteran. Yet some note that a new internal contender has recently emerged and that the mercurial Bloomberg might also look outside the company when he finally steps back, as he did when he left to be New York mayor in 2002.”
   

U.S. home prices in March posted the biggest annual decline in 11 years, according to the National Association of Realtors. U.S. existing-home sales decreased 2.4% in March from the prior month to a seasonally adjusted annual rate of 4.44 million, the National Association of Realtors (NAR) said Thursday. March sales fell 22% from a year earlier. March marked the 13th time in the previous 14 months that sales have slowed. The housing market had a surprisingly strong February, when sales rose a revised 13.75% from the previous month. But after mortgage rates ticked higher, March sales resumed the extended period of declines.

     The national median existing-home price decline of 0.9% in March from a year earlier to $375,700 was the biggest year-over-year price drop since January 2012, NAR said. Median prices, which aren’t seasonally adjusted, were down 9.2% from a record $413,800 in June. Home prices in the western half of the U.S. experienced some of the biggest gains for many years but are now falling the fastest.

Market perspectives:

     • Outside markets: The U.S. dollar index was slightly weaker ahead of U.S. market action with the euro edging higher against the greenback. The yield on the 10-year US Treasury note was weaker, trading around 3.53%, with a mostly weaker tone in global government bond yields. Crude oil futures have firmed, with U.S. crude around $77.55 per barrel and Brent around $81.25 per barrel. Gold and silver are under pressure, with gold under $1,999 per troy ounce and silver under $25.29 per troy ounce.

     • Oil heads for sharp weekly decline. WTI crude futures steadied above $77 per barrel on Friday but were still on track to lose more than 6% on the week, erasing most of the OPEC-driven rally amid lingering concerns about higher interest rates, slowing global growth, and softening energy demand.

     • IGC raises global corn, soybean crop forecasts. The International Grains Council (IGC) raised its forecast for 2023-24 global corn production, driven primarily by an improved outlook for the United States. IGC now forecasts global corn production at 1.208 billion MT, up 6 MMT from its prior outlook. U.S. corn production was seen at 381.8 MMT, up from a previous forecast of 377.7 MMT and last year’s 348.8 MMT output. IGC left its 2023 Ukraine corn crop projection at 21 MMT, though that would be down 6 MMT from last year.

     IGC raised its 2023-24 world soybean production forecast 2 MMT to 401 MMT, which would be up 31 MMT from 2022-23.

     IGC maintained its 2023-24 world wheat crop outlook at 787 MMT, down from 803 MMT last year.

     • West Coast dockworkers, firms have tentative pact on some issues. The labor union representing 22,000 West Coast dockworkers in contract-renewal talks said it has reached a tentative agreement with their employers on “certain key issues” and that negotiations will continue until they reach a definitive pact.

     • Ag trade: South Korea purchased 137,000 MT of optional origin corn.

     • California boosts water allocations to 100% for first time in nearly 20 years. For the first time since 2006, California officials have increased allocations from the vital State Water Project to 100% of requested supplies, as reservoirs across the state are nearing capacity with an epic snowmelt forecast for the coming weeks. After an unusually wet winter pulled much of the state out of a punishing years-long drought, the U.S. Bureau of Reclamation also announced an increase to 100% of requested water allocations for almost all farms, homes and industries served by the federal Central Valley Project, which provides critical irrigation and water to the San Joaquin Valley, San Francisco Bay Area and Central Valley. Link for more via the Los Angeles Times.

     • NWS weather outlook: Showers and thunderstorms continue eastward along a cold front from the Mississippi Valley today to the East Coast this weekend with possible severe weather and isolated flash flooding... ...Moderate to locally heavy snow across the northern Plains and upper Midwest will gradually taper off through today into tonight... ...Mountain snow and coastal rain today for the northern/central Rockies and Pacific Northwest; tranquil conditions for California and the Southwest.

Items in Pro Farmer's First Thing Today include:

     • Corn and beans weaker, wheat mostly firmer overnight
     • Cattle on Feed Report to show continued contraction of feedlot supplies
     • Cash cattle trade steady/weaker
     • Cash hog index posts new low for the year

— China snubbed Wagner arms request, says U.S. intelligence leak. Classified document suggests Beijing did not respond to Russian paramilitary group’s request for weapons in early 2023.

— Russia accidentally bombed one of its own cities. A Su-34 military jet fired on the city of Belgorod north of the Ukrainian border, the Russian defense ministry said. That left a massive crater, damaging homes and cars.

— Brussels will impose emergency curbs on grain imports from Ukraine to five EU member states, bowing to pressure from Poland, Hungary and others to dramatically reverse its support for the war-torn country’s agriculture exports. The Financial Times’ Brussels bureau chief unpacks how this highly unusual move jars with support for Ukraine’s EU membership, while those hoping for more blockbuster sanctions against Russia are likely to be disappointed.

— Hungary’s feed makers oppose ban on Ukraine imports. The Hungarian Grain and Feed Association said it opposed the government’s ban on grain and oilseed imports from Ukraine, saying the restrictions “will cause significant difficulties” to feed makers and industrial users in Hungary. According to the association, the ban means they will lose access to the “closest and therefore most economical source of raw material” for their industry.

— Romania will not ban Ukraine grain imports as it awaits EU actions. Romania will not unilaterally ban the import of Ukrainian grain and will wait for the European Commission to enforce measures to help its farmers, Agriculture Minister Petre Daea said. Romania and Ukraine will consult weekly on expected grain volumes, seeking to limit imports, Daea said after meeting with Ukraine’s Ag Minister Mykola Solsky in Bucharest.

— A group of conservative lawmakers criticized funding for Ukraine, saying U.S. aid “threatens further escalation” with Russia. The letter (link) to President Biden was signed by 19 Republicans including Sens. Mike Lee (Utah), Rand Paul (Ky.), and J.D. Vance (Ohio), plus 16 House members. “While the pace of our aid would suggest otherwise, the U.S. is in no position to expend $113 billion reinforcing a foreign military as our own military atrophies,” the letter says.

     House Republican appropriators have taken a different approach. Rep. Robert Aderholt (R-Ala.) said support for Ukraine could help bolster defense spending, even as Republicans broadly look to cut discretionary spending.
 

— Behind-closed doors farm bill debate returns to planted vs base acres for program payments. Here we go again. Some farmers and at least one farm-state lawmaker want to move back to payments based on planted and not base acres. While some say that would be a stealth way of getting more payments, others say it is not the case as noted below. Meanwhile, it would raise big red flags relative to well expected WTO challenges, however long they take to unfold. Any such move would resurrect ideas that U.S. farm program payments distort plantings for some crops, an argument that led to the switch to base acres in the first place. It would boost Title 1 forecast payments in the coming farm bill debate, at least for some crops.

     One analyst notes: “It wouldn’t necessarily give some farmers more payments. It may give them less. If you move a wheat-based farm to a soy-based farm, for example, you move the producer further not closer to a payment because there is a greater divide between soy market prices and reference prices. And it isn’t just one crop or region that gains or loses. There are winners and losers within each county, state, and crop.”

     Also, according to a contact: “This is all budget driven. They are seeking to save money here to spend there. They should follow the soy letter and just seek funding rather than open up that can of worms.”

     Upshot: While some wonder if this idea is being pushed by a Democratic lawmaker, others say it comes from a GOP populist senator. Hmmm. Meanwhile, a likely 11th-hour push in the farm bill debate may come from those wanting a mandatory base acreage update.

— House Republicans plan to vote next Wednesday or Thursday on debt-limit plan. Leaders are still wooing conservatives who want the measure to require stricter work requirements, among other issues. But some lawmakers in the Midwest are hesitating due to the plants clawing back of some biofuel incentives, including for Sustainable Aviation Fuel.

     Conservatives said yesterday they’re discussing a push to require 30 hours, rather than 20, of work per week for people under some welfare programs. “There are multiple discussions,” House Freedom Caucus Chairman Scott Perry (R-Pa.) told reporters yesterday. “Work requirements is not the only one.” He added, “There are things that have been agreed upon and are not yet rectified.” Rep. Matt Gaetz (R-Fla.) told reporters he’s not sure if he’ll support the bill, as he seeks a 30-hour work requirement. The Supplemental Nutrition Assistance Program (SNAP) currently has a 20-hour-per-week work requirement for able-bodied adults, which the Republican bill would apply to those age 18-55, rather than the current range of 18-49. The bill similarly would set an 80-hour-per-month work requirement for able-bodied adults relying on Medicaid. While conservatives have raised a 30-hour-per-week requirement for at least some of those programs, members generally said talks are positive.

     Even if the House plan wins the vote, it has no chance in the Senate. “This MAGA wish list has no chance of moving forward in the Senate, and it doesn’t move us any closer to where we were yesterday to avoiding default,” Senate Majority Leader Chuck Schumer (D-N.Y.) said. He denounced its plan to make deep cuts to some domestic programs and impose tougher work requirements for anti-poverty programs.

— Shopping for insurance against a debt-ceiling debacle? As the U.S. government nears yet another debt-ceiling crisis, an obscure Wall Street instrument is gaining attention for the first time in 10 years. It is basically an insurance contract known as a credit-default swap, whose price is commonly interpreted as the probability the U.S. will default on its Treasury debt. The Wall Street Journal took a look (link) at what the numbers are telling us, and why quirks in the market might distort the probability of Treasury’s defaulting on U.S. government debt.

— Highlights of 2008 Farm Bill. The Food, Conservation, and Energy Act of 2008, commonly known as the 2008 Farm Bill, was initially vetoed by President George W. Bush. However, Congress overrode the presidential veto with a two-thirds majority vote in both the House of Representatives and the Senate. This resulted in the 2008 Farm Bill becoming law on June 18, 2008, despite the president's objections. Highlights:

• Nutrition Programs: The 2008 Farm Bill allocated significant resources to improve and expand nutrition assistance programs like the Supplemental Nutrition Assistance Program (SNAP), formerly known as Food Stamps, and The Emergency Food Assistance Program (TEFAP). The bill also increased support for fresh fruits and vegetables in schools and low-income communities. The legislation increased funding for SNAP by $4 billion over the previous five-year period.
• Commodity Programs: The bill continued to support traditional commodity programs, including Direct Payments, Counter-Cyclical Payments, and the Marketing Assistance Loan program. It also established the Average Crop Revenue Election (ACRE) program, which provided an alternative safety net based on state-level revenue targets.
• Reduced subsidies for commodity crops: The 2008 Farm Bill reduced subsidies for commodity crops by $23 billion over the previous five-year period. This reduction was intended to make the agricultural sector more market-oriented and to reduce the federal budget deficit.
• Crop Insurance and Disaster Assistance: The 2008 Farm Bill improved crop insurance programs and created a new disaster assistance program called the Supplemental Revenue Assistance Payments (SURE) program to help farmers affected by natural disasters.
• Conservation Programs: The bill expanded funding for conservation programs, such as the Environmental Quality Incentives Program (EQIP), the Conservation Stewardship Program (CSP), and the Wetlands Reserve Program (WRP). These programs aimed to provide financial and technical assistance to farmers and landowners to promote environmentally friendly agricultural practices. The bill increased funding for conservation programs by $10 billion over the previous five-year period.
• Energy Provisions: The bill aimed to promote the development of biofuels and other renewable energy sources in agriculture. It increased funding for the Rural Energy for America Program (REAP) and created the Biomass Crop Assistance Program (BCAP) to support the production of biomass feedstocks for bioenergy and biobased products.
• Specialty Crops: The 2008 Farm Bill recognized the importance of specialty crops (fruits, vegetables, tree nuts, etc.) and provided increased funding for research, pest and disease management, and market promotion for these crops.
• Organic Agriculture: The bill supported organic agriculture through increased funding for the National Organic Program (NOP), the Organic Certification Cost Share Program, and organic research and extension initiatives.
• Beginning Farmers and Ranchers: The legislation provided resources and programs to support beginning farmers and ranchers, such as the Beginning Farmer and Rancher Development Program (BFRDP) and the Individual Development Account (IDA) program.
• Rural Development: The 2008 Farm Bill allocated resources for rural development programs, including broadband infrastructure, rural business development, and value-added producer grants.
• International Trade and Food Aid: The bill addressed international trade and food aid by funding programs like the Food for Peace (PL 480) program and the McGovern-Dole International Food for Education and Child Nutrition Program.

— GOP senator vows to block all Energy Department nominations. Sen. Josh Hawley (R-Mo.) told Energy Secretary Jennifer Granholm Thursday he would block “every nominee, every piece of legislation” related to her agency until he gets answers from her department about radioactive waste contamination at an elementary school in his state.  

— Seagate to pay $300 million for violating export restrictions on China’s Huawei. The penalty comes after a group of Senate Republicans in 2021 alleged the data-storage equipment provider continued to sell hard drives to Huawei despite national-security restrictions.

— Chinese imports from U.S. jump for soybeans, slump for corn. China imported 4.83 MMT of soybeans from the U.S. during March, up 43.3% from last year. That was 71.5% of China’s total soybean imports for the month, while Brazil shipped it only 1.67 MMT due to harvest delays. China’s corn imports from the U.S. totaled 494,903 MT last month, down 52% from March 2022.

— U.S. lawmakers want to toughen the bars against imports from China’s Xinjiang region. Members of Congress say possible “loopholes” might be allowing goods from a largely proscribed region of China to enter the U.S. even as items are being halted at the border. The Wall Street Journal reports (link) that U.S. Customs and Border Protection says it has stopped nearly $1.1 billion in goods with possible links to Xinjiang since an anti-forced labor law blocking many imports went into force last year. To some lawmakers, that suggests companies are still trying to ship prohibited goods from the region. The law has raised the profile of trade compliance in supply chains, and companies still appear to be figuring it out. Customs data shows the agency has denied entry to 490 of 3,588 shipments stopped for inspection, while 1,778 are still under review, and the rest have been released into the U.S.

— Yellen: Security comes before economy in U.S./China relationship, but… Treasury Secretary Janet Yellen said protecting national security would be the U.S. priority in its relationship with China even if it slows economic growth, taking a hawkish stance as she pushed for more collaboration with Beijing. Yellen on Thursday laid out the Biden administration’s vision for its economic relationship with China. She said the U.S. will curb ties in certain areas but isn’t trying to prevent China’s economic advancement. "These national security actions are not designed for us to gain a competitive economic advantage, or stifle China's economic and technological modernization. The United States will assert ourselves when our vital interests are at stake, but we do not seek to 'decouple' our economy from China's,” Yellen stressed.

     Key Yellen quote: “A full separation of our economies would be disastrous for both countries.”

     A similar message was delivered by U.S. Trade Representative Katherine Tai at an event in Japan, telling a news conference that the U.S. intention is not to decouple from China. Such an action is "not a goal or achievable," Tai said, according to the Associated Press. While not indicating if there were any plans for Tai to travel to China, the report noted she stated she was "completely open to engaging with my counterparts in Beijing.

— President Biden aims to sign an executive order in the coming weeks that will limit investment in key parts of China’s economy by American businesses. The administration, which has been debating the measure for almost two years, is likely to be signed around the time of the next Group of Seven summit on May 19 in Japan, which will ramp up pressure on the other members to support the action. Link to details via Bloomberg.

     Market impact: China’s chip stocks slid Friday as investors took profit while assessing the impact of rising geopolitical tensions with the U.S.

— The West has too little to offer leaders like Lula, says an opinion item in the Financial Times (link). Chinese trade and investment in Brazil exerts a pull on the country’s geopolitical alignment.

— $846 million grant program begins today. The Transportation Department’s discretionary grant program, which starts today, will make as much as $848 million available for projects designed to protect transportation infrastructure, such as highways, passenger rail, or ports from extreme weather and climate change. The Biden administration wants to make transportation more resilient to climate change as recent flooding and drought underscore infrastructure challenges across the U.S.

     More info: Shailen Bhatt, head of the Federal Highway Administration, said the agency would look whether applicants seek to protect “vulnerable populations” and if local communities are involved. “Every community in America knows the impacts of climate change and extreme weather, whether that means record rainfall in California, flooding up and down the Mississippi River; hurricanes venturing as far south as Puerto Rico and as far north as Delaware; or wildfires not limited to a defined season and becoming instead a constant threat to more and more Americans,” Bhatt said in a statement.

     The program’s funding comes from the 2021 bipartisan infrastructure law.

— SPR restock could start in third quarter. The Biden administration could start restocking the Strategic Petroleum Reserve (SPR) in the third quarter of this year if prices are “in the right place,” according to Amos Hochstein, special presidential coordinator for global infrastructure and energy security. “I think as we get into the early fall, if prices are in the right place, we are still 100% committed to replenishing the SPR over a period of time,” he said at a Bloomberg event in Dublin.

     Besides price, Hochstein said that maintenance at the SPR sites with the reserve only half full and how the administration manages a sale of 26 million barrels of SPR crude mandated by law will also be key on the issue. “We cannot release and purchase, repurchase at the same time,” he said.

     Hochstein added there needs to be more energy infrastructure put in place, but the administration faces a balance of transitioning to clean energy and expanding current infrastructure to meet fossil fuel needs created by the impacts of Russia’s invasion of Ukraine.

     Price was not right. Recall that the initial administration plan to start restocking the SPR ended with the administration making no purchases under the effort, citing offers being too high.

— Automakers are scrambling for battery materials as they go all in on the electric age, which will require them to have a steady and consistent supply to power their vehicles. Ford recently confirmed plans to invest $3.5 billion in a lithium iron phosphate battery plant with the aid of Chinese battery giant CATL. Meanwhile, rival General Motors is still looking for a partner for its latest factory, while the U.S. just inked a deal with Japan for critical EV metals. Other suppliers and countries are taking notice of the market dynamics, which will define the remaking of the auto sector as it retires the internal combustion engine.

     Meanwhile, Chile's President Gabriel Boric said he would nationalize the lithium industry of the country, which is the world's second-largest producer of the key EV material and holds the globe's largest reserves. "This is an opportunity for economic growth that will be difficult to beat in the short term," he announced in a televised address. "Today we present a national lithium strategy that's technically solid and ambitious, with a Chile that distributes wealth we all generate in a more just way."

— New Zealand completes final export of live animals. Livestock exports by New Zealand have formally come to an end, New Zealand’s Agriculture Minister Damien O’Connor announced, finalizing a ban the country put in motion in 2021 based on animal welfare concerns. The country provided a two-year transition period for the end of the shipments. "Our position on the map means that the journey to northern hemisphere markets will always be a long one and this brings unavoidable animal welfare challenges," O’Connor said in a statement.

     Live animal exports totaled around NZ$524 million ($322.8 million) in 2022.

— Vaccine maker Moderna and computing giant IBM are teaming up to explore how quantum computing and artificial intelligence can develop future mRNA medicines, as digital tech promises to accelerate scientific research and transform healthcare.

— Is the Republican presidential contest over before it even began? Amy Walter of the Cook Political Report with Amy Walter is not so convinced. She writes: “Florida Gov. Ron DeSantis, flying high in the wake of a successful 2022 reelection campaign, has squandered that momentum and is now languishing far behind Trump in buzz and the polls. He’s flubbed on foreign policy and has been outmaneuvered by Disney. Meanwhile, Trump has effectively undercut DeSantis’ MAGA bonafides with attacks on the governor’s support for Paul Ryan-era entitlement reforms while a member of Congress.  ’m not convinced that we should assume this race is over. Trump is the favorite for the nomination. But it is not a given.” Some of her reasons:

• “There’s always a risk in holding the frontrunner mantle this early in a campaign cycle.”
• “The real test of a candidate’s strength, however, isn’t whether they can fly above the trouble, but whether they can come back from getting knocked down.”
• “Polling suggests that the pathway to victory for a candidate not named Trump is to win over the significant group of voters who like Trump but are also open to an alternative.”
   

     Walter also recalls this from the Washington Post’s Olivier Knox who said, “It’s still an open question whether GOP primary voters will truly want to move on from Trump. If they don’t, it may not matter much what DeSantis does.”

     Note this poll from the Wall Street Journal:

— Cotton AWP rises. The Adjusted World Price (AWP) for cotton moved up to 70.82 cents per pound, effective today (April 21), up from 70.05 cents per pound the prior week and the second week back above 70 cents per pound. There have not been any AWP-related Loan Deficiency Payments (LDPs) since the week of October 9, 2020 when a 52-cent LDP was available.

— California appeals glyphosate decision. Attorneys representing the state asked a U.S. appeals court in San Francisco to overturn a 2020 district court ruling that barred cancer warning labels on glyphosate containers. Link for details.

— A gold heist at Canada’s biggest airport is being investigated by police. Robbers may have netted more than C$20 million ($14.8 million) in gold and other valuables at Pearson International, through which gold often transits.

— The family of Formula 1 legend Michael Schumacher is planning to take legal action against a German magazine for publishing an AI-generated “interview” with the star, who has been out of the public eye since a skiing accident nearly a decade ago, the latest lawsuit in a growing wave of litigation involving artificial intelligence.

— SpaceX's Starship, the most powerful rocket ever built, exploded midair shortly after it launched on Thursday from Texas. No injuries or property damages were reported following the explosion of the unmanned rocket, the FAA said. CEO Elon Musk congratulated the company and said the team "learned a lot" from the "rapid unscheduled disassembly." Preparations are now underway for the company's next test launch, which Musk said will happen in a few months.

— Drones and mosquitoes. From Forbes (link): As a local mosquito control expert, Kiera Lucas is tasked with studying and abating the pesky insect in Collier County, west of Miami. To do that, she often uses drones, as do many of her colleagues nationwide. But now, due to Florida’s recent state-level rule change banning public use of all non-approved drones – she may have to spend far more money by putting up a helicopter to examine mosquito habitats instead of a drone. “Or, we would have to send a person into a dangerous habitat where there would be things like snakes or alligators,” says Lucas. Before Florida’s rule change, the Collier Mosquito Control District had a fleet of eight mosquito-fighting drones. Of those, five are made by China-based DJI, the world’s largest and most popular drone manufacturer. Florida’s government agencies are no longer allowed to operate drones made in “countries of concern,” notably China and Iran.

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