EPA's Regan, USDA Sec. Vilsack to Hold Roundtable with Ag Producers Today in Iowa

Posted on 05/04/2021 7:50 AM

Biden after pressure from Democrats announces boost in refugees

 


In Today’s Digital Newspaper


 

Market Focus:
• Fed officials talk and talk and talk
Treasury lifts quarterly borrowing estimate to $463 billion

Smaller banks trounce biggest banks on loans
Social Security sees slowdown in retiree rolls amid covid deaths
Red-hot demand for lumber & plywood sending prices for finished wood soaring
• Ag demand update
• Rally continues for corn, beans and wheat

Modest changes in winter wheat CCI ratings

Cordonnier: Risk is to the downside on Brazil’s safrinha corn crop

Ethanol to bear the brunt of this year’s smaller Brazil sugarcane crop

Solid rise in Indonesian palm oil production expected
• Choice beef 70 cents away from the $300 per cwt. mark

• Summer lean hog futures surge to kick off the week

 

Policy Focus:
• Biden raises refugee admissions cap to 62,500

• WHIP+ update

• CFAP payments continue to edge higher
• Vilsack and Regan holding roundtable with ag producers in Iowa today

 

Biden Administration Personnel

Senior Fed official in line to lead top U.S. banking regulator
Federal student aid appointment

 

Trade Policy:
• USTR Tai meets with dairy officials
• EU/India trade ties

 

Energy & Climate Change:

• EPA asks court to invalidate three SREs given to Sinclair Oil
France’s climate law
Food and Agriculture Climate Alliance released general recommendations
EPA proposed rules to curb use of greenhouse gases in air conditioners, refrigerators


Food & Beverage Industry Update:
• Seaboard Foods seeks lengthy delay in reducing speeds for hog kill lines


Coronavirus Update:
FDA preparing to authorize use of vaccine in adolescents 12 to 15 years old
• European Commission proposes easing Covid restrictions

 

Politics & Elections:
• Biden infrastructure proposal will get zero GOP votes: McConnell

Amazon’s push for contract might have violated antitrust laws

Schumer mulls linking immigration reform to infrastructure package

Other Items of Note:
• Former Trump EPA, Interior chiefs land new roles
• Bill and Melinda Gates are divorcing after 27 years of marriage
• Belgium has made a territorial gain over its neighbor a

 


MARKET FOCUS


 

Equities today: Global stock markets were mostly flat overnight. U.S. stock indexes are pointed toward narrowly mixed openings. Asian equities were mostly higher with attention on earnings and economic data. The Hang Seng Index was up 199.60 points, 0.70%, at 28,557.14. Seoul’s KOSPI was up 20.17 points, 0.64%, at 3,147.37. Markets in mainland China and Japan were closed for a holiday.  European equity markets have turned mixed in early trading after initial gins. The Stoxx 600 was down 0.3% in early action with most other markets seeing losses of up to 1%. Only the FTSE and Spain markets were in positive territory.
 

     U.S. equities yesterday: The Dow gained 238.38 points, 0.70%, at 34,113.23. The Nasdaq declined 67.56 points, 0.48%, at 13,895.12. The S&P 500 moved up 11.49 points, 0.27%, at 4,192.66.

 

On tap today:

 

     • The Wall Street Journal is hosting its CEO Council summit today with top executives, administration officials and policy experts. The list includes Treasury Sec. Janet Yellen, JPMorgan Chase & Co. CEO Jamie Dimon and heads of Zoom, Shell, BioNTech and Merck.

     • U.S. trade deficit is expected to widen to $74.8 billion in March from $71.08 billion a month earlier. (8:30 a.m. ET)

     • U.S. factory orders for March are expected to rise 1.3% from the prior month. (10 a.m. ET)

     • Federal Reserve speakers: Dallas's Robert Kaplan to the North Texas Commercial Association of Realtors and Real Estate Professionals at 1 p.m. ET, and Minneapolis's Neel Kashkari and San Francisco's Mary Daly to the Economic Club of Minnesota at 1 p.m. ET.

 

Federal Reserve Chair Jerome Powell said that while the U.S. economic recovery is “making real progress,” those gains have been uneven following a downturn that cut hard along race and income lines. “The economic outlook here in the United States has clearly brightened,” Powell said yesterday in remarks before the National Community Reinvestment Coalition. Still, “it’s been slower for those in lower paid jobs,” he said.

 

Fed plans still appear intact despite some shifts in views. Fed Chairman Jerome Powell Monday offered little fresh guidance on Fed policy or the U.S. economy, but did say that while the U.S. economy is “not out of the woods yet,” he did note “we are now making real progress.” That appears to be a slightly more favorable view of the U.S. economy than his remarks following last week’s Federal Open Market Committee (FOMC) meeting.

 

     As for the comments from Dallas Fed President Robert Kaplan April 30 that it was time to talk about reducing the Fed’s bond purchases, Powell only offered a comment that the U.S. central bank will get better answers on the economic situation with “diverse views” at the table.

 

     New York Fed President John Williams said at a separate event Monday that the U.S. central bank needs to continue to support the economy despite rising inflation as the U.S. economy is still not close to a full recovery. Other Fed officials echoed that view in Monday remarks. Powell’s comment, even if not a direct response to Kaplan’s remarks, should be fully expected. Powell has often talked up the importance of the Fed considering all views when it makes its monetary policy decisions and there would appear to be no reason for him to shift from that view now.

 

Treasury lifts quarterly borrowing estimate to $463 billion. The Treasury more than quadrupled its borrowing estimate for the quarter through June, and expects to need some $1.3 trillion over the second half of the fiscal year to help pay for a raft of fresh pandemic-relief spending. The Treasury’s projections, released in Washington yesterday, incorporated the impact of Biden’s $1.9 trillion pandemic-relief bill, enacted in March. In a February outlook, the Treasury left out any guess on such spending.

 

     Treasury

 

Smaller banks trounce biggest banks on loans. U.S. bank loans continued their pandemic-era fall last month, dropping to another record low relative to banks’ capacity to lend. The 25 biggest U.S. banks led the way in cutting credit. Bank loans and leases fell by $489 billion, or 5%, in the year through April 21, Federal Reserve data show. They declined by $435 billion, or 7%, at the 25 largest banks. At the other roughly 5,000 banks, loans dropped by about $55 billion, or 1%. U.S. banks’ total assets stood at $21.3 trillion as of April 21, according to the Fed’s latest weekly survey. The 25 biggest banks are responsible for 58% of that, or $12.2 trillion.

 

Social Security sees slowdown in retiree rolls amid covid deaths. The rate of growth in retired Americans who collect Social Security has slowed down sharply, and the drop may be due in part to the disproportionate number of deaths from Covid-19 among the elderly. The number of people who received retirement benefits from the Social Security Administration rose 900,000 to 46.4 million in March, the smallest year-over-year gain since April 2009. While the Office of the Chief Actuary at the government agency said it is still too early to assess the impact from C ovid-19, the year-over-year change appears to reflect excess deaths. About 447,000 people who died from the virus were 65 or older, according to data from the Centers for Disease Control and Prevention, or about 80% of total deaths.

 

     Social Security

 

Market perspectives:

 

     • Outside markets: The U.S. dollar index is higher. Nymex crude oil prices are higher, reaching a six-week high, and  are trading around $65.60 a barrel. Meantime, the yield on the benchmark 10-year U.S. Treasury note is presently fetching around 1.621%. For perspective, the German 10-year bund is yielding -0.192% and the U.K. gilt is at 0.837%. Gold and silver futures were under pressure ahead of the US trading start, with gold trading around $1,782 per troy ounce and silver around $26.94 per troy ounce.


     • Crude oil futures have gained on talk of economic reopening efforts, spurring expectations for improved oil demand. U.S. crude is trading around $65.65 per barrel and Brent around $68.80 per barrel. Crude prices were firmer in Asian action, with U.S. crude up five cents at $64.54 per barrel and Brent up five cents at $67.61 per barrel.

 

     • Red-hot demand for lumber and plywood is sending prices for finished wood to new heights, the Wall Street Journal reports (link), as the pace of new construction outstrips U.S. wood output. Lumber futures delivery later this month ended Monday at a record $1,575.60 per thousand board feet, quadruple the usual price. Mill owners cut production at the start of the pandemic, shutting down about 40% of North American capacity. Now, companies like Weyerhaeuser and Canfor are benefitting from a glut of cheap domestic pine trees and fierce competition for building products among home buyers and do-it-yourselfers. Mill operators say orders are stacked up into June. Surging prices haven’t dampened demand for finished wood, and builders and retailers including Lowe’s are passing the higher costs on to home buyers and shoppers.

 

        Lumber

 

    Ag demand: South Korea’s Korea Feed Association bought around 65,000 MT of corn to be sourced from global origins. The country’s state-backed Agro-Fisheries & Food Trade Corp. issued an international tender to buy around 134,994 MT of rice with around 22,222 MT sought from the U.S., around 50,000 MT from China and the remainder from Vietnam and Australia.

 

Items in Pro Farmer's First Thing Today include:

     • Rally continues for corn, beans and wheat
     • Modest changes in winter wheat CCI ratings

     • Cordonnier: Risk is to the downside on Brazil’s safrinha corn crop

     • Ethanol to bear the brunt of this year’s smaller Brazil sugarcane crop

     • Solid rise in Indonesian palm oil production expected
     • Choice beef 70 cents away from the $300 per cwt. mark

     • Summer lean hog futures surge to kick off the week

 


POLICY FOCUS


 

— Responding to Democratic criticism, Biden lifts refugee cap to 62,500. President Joe Biden said Monday he would raise the refugee admissions cap for the current fiscal year to 62,500, revising an earlier announcement that would have maintained historically low Trump-era levels. “It is important to take this action today to remove any lingering doubt in the minds of refugees around the world who have suffered so much, and who are anxiously waiting for their new lives to begin,” he said in a statement.

 

     Biden said he aims to raise the admissions cap to 125,000 for fiscal 2022, his first full year in office.

 

     The revised figure reflects the refugee admissions number Biden had promised during his campaign and early presidency. After a delay in officially signing the paperwork for raising the cap, Biden surprised Democratic lawmakers and refugee activists on April 16 when he announced he would keep the cap at the previous level of 15,000 admissions. He backtracked hours later after condemnation.

 

     However, the White House warned that the U.S. would likely resettle fewer than 62,500 refugees during the five remaining months of fiscal 2021. The administration argued the Trump administration had dismantled the refugee resettlement infrastructure too deeply to repair in one year.

 

— WHIP+ update. An announcement regarding the second half of eligible 2019-crop WHIP+ payments will likely be made the second half this month, including the percentage of the remaining 50%, usually reliable contacts signal. The program’s operation has been roundly criticized by farmers and farm-state lawmakers to such an extent that some say an effort will made to modify the program legislatively, with a goal of making it simpler to administer.

 

— CFAP payments continue to edge higher. Payments approved under the Coronavirus Food Assistance Program 2 (CFAP 2) are now at $13.55 billion as of May 2, up from $13.5 billion the prior week.  Acreage-based payments are at $6.25 billion, with $3.48 billion for livestock, $2.61 billion for sales commodities, $1.21 billion for dairy, and $57.94 billion for eggs/broilers.

 

     CFAP 1 payments are at $10.57 billion ($10.56 billion the prior week).

 

     It is still not clear what level of payments under the CFAP Additional Assistance (CFAP-AA) effort have been made as USDA only has said that they are processing payments for certain applications filed under that effort.

 

— USDA Sec. Vilsack and EPA Administrator Michael Regan are holding a roundtable with ag producers in Iowa today. Regan will tour an ethanol plant and hold the roundtable with Vilsack. Regan will talk about the future of the Dico Superfund site in downtown Des Moines. He will also tour the Des Moines Metropolitan Wastewater Reclamation Authority plant before joining Des Moines Mayor Frank Cownie and Kayla Lyons, director of the Iowa Department of Natural Resources, for a news conference about the next steps in redeveloping the site.

 

     Iowa ethanol leaders will likely want to talk with Regan about setting the Renewable Fuel Standard requirements for this year. The mandate outlines how many gallons of ethanol and biodiesel must be blended into the nation's fuel supply. EPA was supposed to set the requirements late last year.

 

     Meanwhile, Vilsack will speak at the online Chicago Council on Global Affairs Global Food Security Symposium on Wednesday, May 11. The symposium will focus on the lead-up to the United Nations Food Systems Summit to be held in New York in September in conjunction with the UN General Assembly.
 


BIDEN ADMINISTRATION PERSONNEL


 

— Senior Fed official in line to lead top U.S. banking regulator. Treasury Sec. Janet Yellen is expected to name Michael Hsu as acting chief of the Office of the Comptroller of the Currency (OCC). Hsu is currently associate director of the Fed’s bank supervision and regulation division. Blake Paulson, the current acting chief of the OCC, was installed by Steven Mnuchin, the former U.S. Treasury secretary, on Jan. 14, less than a week before he left office.

 

— Federal student aid appointment. The Biden administration appointed Richard Cordray, the first chief of the Consumer Financial Protection Bureau, as its head of federal student aid
 


TRADE POLICY


 

— USTR Tai meets with dairy officials. In a meeting Monday with U.S. Trade Representative (USTR) Katherine Tai, Jim Mulhern, President and CEO of the National Milk Producers Federation, and NMPF’s Chairman Randy Mooney offered to closely collaborate with Tai and the entire Biden Administration on trade to strengthen the health of the U.S. dairy industry to allow for further expansion of dairy-reliant jobs across the country. In the meeting with Ambassador Tai, Mulhern emphasized the need for new market opportunities, noting in particular the importance of enforcement of existing trade agreements such as ensuring Canada meets its trade obligations; countering European Union attempts to misuse common food names through inappropriate geographical indication rules; engaging with Mexico to ensure a normal flow of trade; and concluding new market expanding trade agreements.

 

— EU/India trade ties. The European Union and India will restart talks on a trade deal in a bid to strengthen economic ties as both economies face a pandemic-induced downturn. In a call on Monday, European Commission President Ursula von der Leyen and Indian Prime Minister Narendra Modi discussed the resumption of negotiations — halted since 2013 — which are expected to be announced on Saturday. The talks had previously stalled due to tariff and free-movement disagreements. “There is clear momentum to strengthen our strategic relations on trade, digital, climate change & multilateralism,” von der Leyen tweeted after the call.

 


ENERGY & CLIMATE CHANGE


 

— EPA asks court to invalidate three SREs given to Sinclair Oil. EPA has petitioned the Tenth U.S. Circuit Court of Appeals to invalidate three small refinery exemptions (SREs) given to Sinclair Oil late in the Trump administration. The three SREs — two for the 2019 compliance year and one for the 2018 compliance year — were granted by the Trump administration, but EPA said in the Friday (April 30) court filing that the SREs were “outside the scope of the EPA's statutory authority,” and that there was “substantial uncertainty” that EPA had conducted any analysis on the legal question of whether the refineries were eligible to receive the exemptions.

 

     The court filing also pointed out that Sinclair has already retired the Renewable Identification Numbers (RINs) — biofuel blending credits — relative to the two compliance years covered by the SRE.

 

     EPA said in its court filing that by vacating the SREs, the court would help to ensure stability in the RIN market “by ensuring that the RINs that Sinclair already retired to demonstrate its small refineries’ compliance with their 2018 and 2019 compliance obligations remain retired.”

 

     Not surprisingly, the Renewable Fuels Association (RFA) said in a statement that they welcomed the EPA move. RFA CEO and President Geoff Cooper said his group “strongly support[s] EPA’s request for vacatur and remand of these three midnight-hour exemptions that were handed out to Sinclair in the waning moments of the Trump administration.”

 

— France’s climate law. The French parliament is set to approve a new climate change law today, as President Emmanuel Macron seeks to bolster his environmental credentials ahead of presidential elections in 2022. The law’s provisions include a ban on domestic flights when the same journey can be made by train in less than two and a half hours; it also introduces “ecocide” as a crime to punish polluters. Environmental groups have criticized the law for not going far enough, with Macron’s own environmental advisory council saying it would “have a potentially limited impact.”

 

— Food and Agriculture Climate Alliance (FACA) calls on USDA to launch pilot projects to explore creating a carbon bank, an idea not popular with Republicans on Capitol Hill. The group released recommendations (link) for how USDA should think about a potential carbon bank. But the report comes after several GOP lawmakers have made clear they prefer a private industry approach rather than getting USDA and the gov’t involved in creating a carbon bank. Initial reviews of the alliance recommendations were that they reflected a committee approach that lacked specifics.

 

      One of the FACA members is the American Farm Bureau Federation (AFBF), and its leader Zippy Duvall indicated when the group announced their recommendations Monday that he was still not totally on board with the concept. There also remains a question on whether or not USDA has the authority under the Commodity Credit Corporation (CCC) to create and/or operate a carbon bank.

 

— EPA proposed new rules to curb the use of greenhouse gases in air conditioners and refrigerators. The move could cut the equivalent of nearly three years of U.S. power-sector emissions by 2050.

 


FOOD & BEVERAGE INDUSTRY


 

— Seaboard Foods seeks lengthy delay in reducing speeds for hog kill lines. Seaboard Foods has filed a notice in court to delay reducing their line speeds in kill operations at their Guymon, Oklahoma, facility which they implemented faster line speeds after the Trump administration in 2019 cleared the activity. A Minnesota court ruling rejected the Trump rule but gave 90 days for adjustments to be made. Seaboard said in court documents that they need more than 10 months to slow their line speeds to deal with the backlog of animals the action will create. The United Food and Commercial Workers Union challenged the Trump rule, arguing it was creating unsafe conditions for workers. The Biden administration also withdrew a proposed rule from the Trump administration that would have allowed for faster line speeds at poultry plants.

 


CORONAVIRUS UPDATE


 

Summary: Global cases of Covid-19 are at 153,577,850 with 3,214,522 deaths, according to data compiled by the Center for Systems Science and Engineering at Johns Hopkins University. The U.S. case count is at 32,471,768 with 577,523 deaths. The Johns Hopkins University Coronavirus Resource Center said that there have been 246,780,203 doses administered, 97,186,548 have been fully vaccinated, or 29.6% of the U.S. population.

 

— FDA is preparing to authorize use of the Pfizer-BioNTech coronavirus vaccine in adolescents 12 to 15 years old by early next week, the New York Times reported.

 

— European Commission proposes easing Covid restrictions. The European Commission Monday proposed allowing entry into the European Union (EU) by people from countries “with a good epidemiological situation” and those that have received the last recommended dose of an EU-authorized Covid vaccine. The Commission also proposed raising the threshold relative to the numbers of new Covid cases used to determine the list of countries where travel should be permitted from. However, the Commission also proposed a new “emergency brake” mechanism to allow EU countries to act quickly and “temporarily limit” travel from affected countries. So far, travelers from seven countries are permitted to travel to the EU regardless of their vaccination status. Plus, the Commission is recommending an increase in the threshold of Covid cases which they said would allow expansion of the list of countries where non-essential travel is allowed from. The European Council is to take up the plan today and it will be discussed at a meeting of EU Ambassadors May 5.


 


POLITICS & ELECTIONS



— Biden infrastructure proposal will get zero GOP votes: McConnell. Senate Minority Leader Mitch McConnell (R-Ky.) said on Monday that he expected no Republicans would support President Biden's sweeping infrastructure,, child care and tax package, indicating Senate Republicans are open to a roughly $600 billion proposal. “I think it's worth talking about, but I don't think there will be any Republican support — none, zero — for the $4.1 trillion grab bag which has infrastructure in it but a whole lot of other stuff,” McConnell said in a press conference in Kentucky, referring to Biden’s $2.25 trillion jobs package and $1.8 trillion families blueprint. To pass the entirety of their plan, Democrats would need to pass it using budget reconciliation and with a simple majority. Senate Republicans have laid out a $568 billion package, with Biden continuing to meet with Sen. Shelley Moore Capito (R-W.Va.), the architect of the GOP offer.

 

— Schumer mulls linking immigration reform to infrastructure package. Senate Majority Leader Charles Schumer (D-N.Y.) is readying a Plan B to push immigration changes unilaterally. Proponents are increasingly worried that Democrats may squander a rare opportunity to legalize broad swaths of the undocumented population while their party controls both chambers of Congress and the White House. Link to details via the New York Times.

 

— Amazon’s pursuit of a major government cloud-computing contract might have violated antitrust laws and federal conflict-of-interest laws, said two Republican lawmakers who are pressing the attorney general to investigate. Amazon was one of several technology companies that competed for the Department of Defense’s 10-year, $10 billion cloud-computing contract, but ultimately lost to rival Microsoft. Amazon didn’t immediately respond to requests for comment late Monday. The company previously has said its cloud subsidiary received no preferential treatment.
 


OTHER ITEMS OF NOTE    


 

— Former Trump EPA, Interior chiefs land new roles. Two former Trump administration officials — EPA Administrator Andrew Wheeler and Interior Secretary David Bernhardt — have found positions after leaving their political jobs.

 

     Wheeler will join the Heritage Foundation as a visiting fellow to “advise the Heritage team on the economic and environmental impact of energy, climate change, and environmental regulations,” the conservative think tank said in announcing the move. “Andrew Wheeler will be a tremendous addition to The Heritage Foundation,” said Heritage President Kay C. James. “Andrew brings decades of experience in environment and public works policy having served as a dedicated EPA employee under both President George HW Bush and President Bill Clinton and as a Cabinet member for President Donald Trump. His service on Capitol Hill as well as in the private sector will help bolster our team’s expertise on a range of important policy issues. Andrew has proven in his career a commitment to protecting America’s natural resources while rejecting aggressive government regulation.”

 

     Meanwhile, Bernhardt rejoined his former firm Brownstein Hyatt Farber Schreck on a part-time basis Monday as special counsel, the firm said. “We have done a pretty extensive strategic planning process, and we think we are legitimately the preeminent natural resources firm in the market,” Brownstein managing partner Rich Benenson said in an interview with the National Law Journal. “Bringing David back further solidifies our position as the go-to natural resources firm.”

 

— Bill and Melinda Gates are divorcing after 27 years of marriage, raising questions about the fate of their vast fortune. Their split could yield the biggest divorce settlement on record, according to Forbes’s calculations, surpassing the $35 billion breakup of Amazon’s Jeff Bezos and MacKenzie Scott. Gates is the fourth-richest person in the world, according to Forbes, with wealth estimated at $124 billion. The family is the largest owner of farmland in the U.S. His personal investment firm, Cascade Investment, owns big stakes in assets like the Four Seasons, the Canadian National Railway and the AutoNation chain of car dealerships.     The Gateses are believed to have a prenuptial agreement, but its details aren’t publicly known. The divorce petition notes that there is a separation contract in place.

 

     What will happen to the Gates Foundation? The $50 billion nonprofit is one of the biggest philanthropies in the world, giving away about $5 billion each year to causes like global public health and childhood education. For now, the foundation says little will change in how it is run day to day. “Together they have assured me of their continued commitment to the foundation that they have worked so hard to build together,” the foundation’s chief executive, Mark Suzman, told employees in an email.

 

— Belgium has made a territorial gain over its neighbor after a local farmer moved a centuries-old stone marker delineating the Franco-Belgian border. The farmer, from the Walloon municipality of Erquelinnes, moved the boundary stone roughly two meters to give his tractor easier passage, thereby breaking the Treaty of Kortrijk signed in 1820. After good-natured talks with his French counterpart in the neighboring town of Bousignies-sur-Roc, Erquelinnes Mayor David Lavaux has attempted to head off a diplomatic incident by asking the farmer to put the stone back where he found it. “He enlarged Belgium, he reduced France; it wasn’t a good idea. But I was happy that my town got bigger,” Lavaux joked.

 


 

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