Growth Energy sues EPA over ‘alternative’ approach to small refinery RFS compliance
In Today’s Digital Newspaper |
The search is on for survivors after a Russian missile attack on a mall in Central Ukraine. Ukrainian President Volodymyr Zelenskyy, in a virtual address to a meeting in Germany of the G7 leaders, made clear he wants to shorten the war, according to U.S. national security adviser Jake Sullivan.
Group of 7 leaders agree to seek price caps on Russian oil. As Russia’s revenue from oil remains high, officials from the G7 agreed to the temporary move to slow down President Vladimir Putin’s war machine. The group will also pledge to spend $4.5 billion this year to counter global food shortages caused by the invasion of Ukraine.
President Biden is traveling to Madrid for the annual NATO summit, after attending a G7 meeting in Germany that concluded with a focus on China and vows of fresh measures to increase economic pressure on Moscow over its war in Ukraine.
The Wall Street Journal is hosting the Global Food Forum, as the food industry, emerging from two years of pandemic disruptions, reckons with the impacts of the Russia-Ukraine crisis. USDA Secretary Tom Vilsack on Monday discussed ways to ease global food strains and make the U.S. system more resilient. Today the confab will hear from executives at Mondelēz, Kraft Heinz, Cargill, Tyson, Whole Foods and Grubhub, as well as investors, researchers and policy makers.
Shanghai is emerging from a monthslong Covid-induced lockdown, but concerns about potential outbreaks and further lockdowns are keeping many companies closed. Meanwhile, China announced that it is cutting in half the amount of time visitors will have to spend in quarantine on arrival.
A Taiwan-based company said it plans to build a $5 billion factory in Texas to make silicon wafers used in semiconductors, but the deal hinges on financial incentives bogged down in Congress.
Biden’s nominee to lead the U.S. Immigration and Customs Enforcement, which hasn’t had a Senate-confirmed leader in five years, is withdrawing from consideration for the post. Harris County, Texas, Sheriff Ed Gonzalez announced he would withdraw his amid procedural delays and questions about his background that arose just as the Senate was poised to confirm him.
Senior U.S. and Taiwanese officials held inaugural talks about developing an “ambitious roadmap for negotiations” to deepen economic and trade ties, a move likely to exacerbate tensions between Washington and Beijing.
Growth Energy is challenging an alternative compliance approach for refineries to meet their obligations under the Renewable Fuel Standard (RFS) which it says excuses refiners from having to comply with their blending obligations under the law.
Siemens is reportedly close to taking a stake in Volkswagen’s electric vehicle charging business.
When roughly 300,000 New York City residents left during the early part of the pandemic, officials described the exodus as a once-in-a-century shock to the city’s population. The top 1% of earners, who make more than $804,000 a year, contributed 41% of the city’s personal income taxes in 2019. About one-third of the people who left moved from Manhattan, and had an average income of $214,300. No other large American county had a similar exodus of wealth.
July 4 cookouts will cost $10 more this year. The average cost of a summer cookout for 10 people is now $69.68, up about 17% or $10 compared to last year, according to a new survey from the American Farm Bureau Federation.
Crop developer Bioceres said on Monday that the FDA has determined during consultations that its HB4 wheat variety, genetically modified for drought- and herbicide-tolerance, was safe to eat.
New Covid vaccines targeting variants are being weighed by the FDA for a fall booster campaign.
At least 46 people, believed to be migrants being smuggled into the U.S., were found dead in a tractor trailer in San Antonio, Texas. Officials suggested extreme heat had contributed to the deaths of the migrants, who are believed to have crossed into the country from Mexico. Texas Gov. Greg Abbott sought to blame the Biden administration’s open border policy for the deaths.
MARKET FOCUS |
Equities today: China announced that it is cutting in half the amount of time visitors will have to spend in quarantine on arrival. Separately, President Xi Jinping will leave the mainland for the first time since January 2020 this week when he visits Hong Kong. Markets have reacted very positively to the signs of an easing of some of the draconian measures. European stocks extended opening gains with several indexes climbing over 1%. U.S. stock indexes are pointed toward firmer openings. In Asia, Japan +0.7%. Hong Kong +0.9%. China +0.9%. India flat. In Europe, at midday, London +1.2%. Paris +1.2%. Frankfurt +0.8%.
U.S. equities yesterday: The Dow fell 62.42 points, 0.20%, at 31,438.26. The Nasdaq declined 83.07 points, 0.72%, at 11,524.55. The S&P 500 was down 11.63 points, 0.30%, at 3,900.11.
Agriculture markets yesterday:
- Corn: December corn futures fell 21 cents to $6.53, the new-crop contract’s lowest settlement since March 29.
- Soy complex: November soybeans rose 8 1/2 cents to $14.32 3/4, while July futures surged 19 3/4 cents to $16.30 1/2. July soymeal rallied $10.10 to $447.20 per ton, the highest close in over two months. July soyoil rose 107 points to 70.82 cents per pound.
- Wheat: September SRW wheat fell 19 cents to $9.17 1/2 and September HRW wheat fell 23 1/4 cents to $9.75, both near four-month lowest. September spring wheat fell 26 cents $10.44 1/2.
- Cotton: December cotton plummeted the 400-point daily trading limit to 94.05 cents per pound, the contract’s lowest closing price since Jan. 6.
- Cattle: August live cattle rose 10 cents to $133.475. August feeder cattle rose $1.625 at $174.125
- Hogs: July lean hog futures fell 75 cents to $110.175. August hogs fell $1.90 to $104.875. The CME lean hog index was up 22 cents at $110.91, the highest since last August and up over $11 from mid-May.
Ag markets today: Corn and wheat futures posted strong gains on corrective buying overnight, while soybeans sharply extended Monday’s gains. As of 7:30 a.m. ET, corn futures were trading 9 to 10 cents higher, soybeans were 14 to 18 cents higher, SRW wheat was 20-plus cents higher, HRW wheat was 12 to 13 cents higher and HRS wheat was 2 to 3 cents higher. Front-month U.S. crude oil futures were around $1.75 higher and the U.S. dollar index was posting modest gains this morning.
Technical viewpoints from Jim Wyckoff:
Gold
On tap today:
• U.S. advance economic indicators for May are out at 8:30 a.m. ET.
• S&P CoreLogic Case-Shiller 20-City Home Price Index for April is expected to rise 21.5% from one year earlier. (9 a.m. ET)
• Conference Board’s consumer confidence index is expected to fall to 100 in June from 106.4 one month earlier. (10 a.m. ET)
• Richmond Fed’s manufacturing survey is expected to improve to minus 5 in June from minus 9 one month earlier. (10 a.m. ET)
• President Joe Biden is scheduled to meet with German Chancellor Olaf Scholz, President Emmanuel Macron of France, and U.K. Prime Minister Boris Johnson on the margins of the G7 in Germany, and later give remarks in the final session of the summit. In the afternoon, Biden will travel to Madrid, Spain to participate in the NATO summit. He will hold a bilateral meeting with President Pedro Sánchez of Spain, and later meet King Felipe VI of Spain. In the evening, Biden will attend a dinner hosted for NATO heads of state and international organizations.
The pending home sales index, an indicator of home sales based on contract signings, rose 0.7% on the month to 99.9, the National Association of Realtors said. “The economy is bending rather than breaking under the impact of higher interest rates,” said Michael Pearce, senior U.S. economist at Capital Economics.
Another sign of inflation at the pump… bigger credit-card holds. Gas stations are putting bigger holds of up to $175 on customers’ cards when they swipe. When drivers insert a credit or debit card at the pump, the gas station doesn’t know how much fuel they will buy and it places a hold on the account for an amount set by the gas station. Merchants authorize the payment networks to lift the hold once the final total of the payment is determined, though the holds can take hours and sometimes longer to settle — raising risks of overdraft penalties for debit-card users and eating into credit limits during the holds. Visa and Mastercard raised the limit for gas station holds to $175 from $125 earlier this year. The holds are set based on the largest allowed gas transactions. As gas prices rose, $125 was no longer enough for customers with larger vehicles to fill up their tanks on a single transaction.
European Central Bank leader Christine Lagarde is trying to tamp down concerns about a potential recession this year in the eurozone. “We have markedly revised down our forecasts for growth in the next two years,” she said Tuesday. “But we are still expecting positive growth rates due to the domestic buffers against the loss of growth momentum.” Lagarde also said the central bank would raise rates faster, if needed, to curtail inflation.
Larry Summers nailed inflation. But is he right on what comes next? The Wall Street Journal takes a look at the topic (link).
New York City relies heavily on its wealthiest residents to support schools, law enforcement and other public services. The outflow of about 300,000 residents was the biggest in the city’s records, the New York Times reports (link), and it will have long-term effects. The top 1% of the city’s earners, who make more than $804,000 a year, contributed 41% of New York City’s personal income taxes in 2019.
Market perspectives:
• Outside markets: The U.S. dollar index is slightly higher in early U.S. trading. Treasuries drifted lower with the 10-year benchmark yield near 3.23%. Crude futures extended gains with WTI rising over 1% to trade back above $111. Bitcoin popped higher back above $21,000. Gold and silver are seeing mild gains, with gold around $1,826 per troy ounce and silver around $21.23 per troy ounce.
• Price of a barrel of oil fell to nearly $100 on June 22, but has climbed around 10% over the past week and is up 50% YTD. Early Tuesday, WTI crude futures reached as high as $111.63/bbl, with the market still on edge over supply disruptions that could exacerbate the delicate energy landscape. Meanwhile, there are signals that Libya could face limited supply amid a worsening political crisis, the possibility that Ecuador could halt some output due to anti-government unrest, and confirmation from the UAE and the Saudis that they are near maximum production capacity.
• The 71st annual edition of the bp Statistical Review of World Energy was released today (link). Key findings from the 2022 edition include:
- In 2021, energy consumption increased by almost 6%, more than reversing the sharp fall in 2020 as much of the world locked down.
- Renewable energy, led by wind and solar power, continued to grow strongly in 2021 and now accounts for 13% of total power generation.
- Overall global emissions rose 5.7% in 2021, registering close to 2019 levels.
- Renewable generation (excluding hydro) increased by almost 17% in 2021 and accounted for over half of the increase in global power generation over the past two years.
- Global gas demand grew 5.3%, increasing above pre-pandemic 2019 levels.
- Oil consumption increased by 5.3 million barrels per day.
• Egypt has returned for some wheat, SRW is near being competitive, but Romania and EU are likely to do the business, says grain trader and analyst Richard Crow. Of interest will be how Russian wheat is offered, he adds, noting rumors Russia has defaulted on up to 600,000 tons of FOB wheat sales by not accepting the boat nominations.
• As a devastating and historic drought from Illinois to Texas to California grinds on, sophisticated mapping and data projection bring more bad news: America’s agriculture heartlands are among the places that are experiencing the highest temperature increases. Link for details.
• NWS weather: Locally heavy rain possible across the Southeast, Gulf Coast, and Southwest over the next few days... ...Isolated severe thunderstorms possible across parts of Montana and the Upper Midwest today and into the northern Plains on Wednesday... ...Well above average temperatures forecast across the northern/central Plains on Wednesday while increasing heat and humidity gradually spreads eastward for the second half of the week
Items in Pro Farmer’s First Thing Today include:
• Corn and wheat rebound, soybeans see followthrough buying overnight
• Corn, soybean and spring wheat CCI ratings fall
• G7 to toughen stance on China market abuse
• Another Chinese official vows timely policy measures to support economy (details below)
• Malaysia urges palm oil mills to resume production despite price drop
• Widely varied cash cattle trade expected again this week
• Cash hog index maintains upward trajectory
RUSSIA/UKRAINE |
— Summary: White House officials are losing confidence that Ukraine will ever be able to take back all of the land it has lost to Russia over the past four months of war, U.S. officials told CNN, even with the more sophisticated weaponry the U.S. and its allies plan to send. The officials stressed this more pessimistic assessment does not mean the U.S. plans to pressure Ukraine into making any formal territorial concessions to Russia to end the war. There is hope that Ukrainian forces will be able to take back significant chunks of territory in a likely counteroffensive later this year. Meanwhile, Ukraine requested a meeting of the U.N. Security Council today to discuss the Russian strike on a shopping mall. Ukrainian President Volodymyr Zelenskyy called the attack “one of the most defiant terrorist acts in European history.” Russia’s defense ministry claimed that a fire in the building was sparked by its strike on a weapons depot nearby.
- Russian President Vladimir Putin is leaving Russia for the first time since the Ukrainian invasion. The Kremlin announced a visit to Tajikistan planned on Tuesday. He will later visit Turkmenistan for a summit of Caspian Sea nations, his spokesman said. The Russian president’s last time outside the country was in early February when he visited Beijing for talks with Chinese counterpart Xi Jinping during the Winter Olympics. Putin has accepted an invitation to attend the G20 summit in Indonesia in November but the Kremlin hasn’t said if he will go in person or participate online.
- Western leaders are attempting to find new ways to curb soaring energy costs, especially given the fears of an oncoming recession. The latest idea being pitched is caps on the price of Russian oil and gas, though obstacles remain. How caps would work: Details are still being discussed, but the plan aims to cap prices at a level close to the cost of Russian production — thereby denting Moscow’s finances but still ensuring critical energy flows. To accomplish this, Europe would restrict the availability of transport and insurance services to shippers which only agree to observe the price ceiling (~95% of the world’s oil tanker fleet is covered by the International Group of P&I Clubs in London and companies based in continental Europe). Another proposal would apply similar caps on Russian gas prices or limit the usage of U.S. financial services that could also benefit the scheme. Complicating the matter is the fact that EU just agreed to a phased-in ban on seaborne Russian oil shipments, while temporarily allowing crude deliveries via pipeline. Any new agreement would require the bloc to reopen the legal text of its latest sanctions package, which had to overcome significant hurdles and took weeks to approve. Big buyers of Russian crude, like China and India, could also settle for a lower standard of Russian insurance on their oil shipments, while Vladimir Putin may sharply cut supplies if he felt Russia was being threatened (he already turned off some natural gas taps heading to the EU).
— Market impacts:
- USDA Secretary Tom Vilsack called for Ukrainian ports in the Black Sea to be opened to ship grain out of the embattled country, to help relieve a global food crunch. Trading needs to resume from the ports in the Black Sea that have been damaged or disrupted by Russia’s invasion, Vilsack said, freeing up storage space for the coming harvest in Ukraine. He said the U.S. also needs to look for ways for it to increase its own crop production to help make up the gap in global grain supplies. “The world needs Ukrainian grain,” Vilsack said.
- Canada will contribute $50 million to prevent Ukrainian grain from going to waste, with most of the money paying for so-called mobile silos for storing grain. Link for details.
- Fertilizer production could see another negative impact. Slowing delivery of Russian natural gas in Europe is starting to reach into industrial supply chains. The dwindling gas supplies are proving a threat to chemical giant BASF’s vast manufacturing hub in Germany, the Wall Street Journal reports (link), raising alarms at the world’s largest integrated chemical complex and beyond. Because BASF and other chemicals companies sit at the beginning of most industrial supply chains, a disruption in operations would reverberate beyond the sector. Experts say it would threaten Europe’s economy at a time of high inflation and slowing growth. Of note: BASF’s ammonia is a key ingredient in fertilizers. Chemicals companies are more vulnerable than other industrial players because natural gas is critical for most of their processes. Some 60% of the gas BASF consumes in Europe is used for power and steam generation. The other 40% goes to raw material for its products.
PERSONNEL |
— Biden pick to lead ICE withdraws after domestic violence allegation. Sheriff Ed Gonzalez announced Monday that he withdrew from consideration to be director of U.S. Immigration and Customs Enforcement, after his confirmation stalled amid questions from a Republican senator about a domestic violence allegation.
CHINA UPDATE |
— China halved its mandatory quarantine period for inbound travelers from 14 days to seven, the biggest shift yet in the country’s covid-19 policy. On Monday both Beijing and Shanghai recorded no new locally transmitted covid cases for the first time since February. Meanwhile in Hong Kong, where cases are rising, officials stepped up testing ahead of a reported visit by Xi Jinping, China’s president, to commemorate 25 years of Chinese rule.
— China is building a yuan currency reserve to compete with the dollar. The People’s Bank of China announced it would team up with Indonesia, Malaysia, Hong Kong, and Chile to help prop up other economies facing volatility. Each will contribute about $2.2 billion worth of yuan.
— Another Chinese official vows timely policy measures to support economy. China will roll out monetary policy tools in a timely manner to cope with economic headwinds such as a slumping property market, weak consumer spending and Covid. Beijing will implement its existing support measures while improving its policy toolbox, Ou Hong, deputy secretary general at the National Development and Reform Commission said. He acknowledged that Covid-19 outbreaks and the Ukraine crisis have threatened to undercut economic growth and driven up unemployment and inflation. The highest priorities are to safeguard food and energy security and stabilize industrial supply chains. The comments follow those from the head of the People’s Bank of China (PBOC) on Monday saying China’s monetary policy will remain accommodative to support economic recovery.
TRADE POLICY |
— U.S./Taiwan trade talks. Senior U.S. and Taiwanese officials held inaugural talks about developing an “ambitious roadmap for negotiations” to deepen economic and trade ties, a move likely to exacerbate tensions between Washington and Beijing. Deputy U.S. Trade Representative Sarah Bianchi and Taiwan Minister-Without-Portfolio John Deng are laying the groundwork to advance “mutual trade priorities” through potential agreements in areas such as regulatory practices, agriculture, anti-corruption and non-market policies and practices, the Office of the USTR said in an emailed statement Monday.
— Politico: U.S. resisting reopening U.S./Colombia FTA. Not only is the Biden administration going very slow on inking new trade accords, it also doesn’t want to alter prior ones. The U.S. is willing to talk trade issues with the new government of Colombia, but a senior administration official told Politico any such discussions would hopefully avoid reopening the U.S./Colombia free trade agreement (FTA). “We want to start a conversation to say: How can we build on [the existing FTA] without reopening and going through very painful and challenging negotiations that for us have a huge congressional equity?” the senior official said. “What can we do in the context of executive authority to make sure we’re addressing some of those social challenges that Petro wants to address?”
ENERGY & CLIMATE CHANGE |
— Growth Energy files another suit, this time over EPA’s approach to small refinery RFS compliance. The biofuel lobbying group is challenging an alternative compliance approach for refineries to meet their obligations under the Renewable Fuel Standard (RFS) which it says excuses refiners from having to comply with their blending obligations under the law. Recall that in April, EPA denied small refinery exemptions for 31 facilities “but declined to hold affected refiners accountable for meeting any blending obligations for that year,” Growth Energy said in a release. “Instead, EPA crafted a novel ‘alternative compliance’ approach that excused these refiners from ever having to comply with their 2018 blending obligations.”
Details: Growth Energy said in June, “EPA reaffirmed this approach when it excused [three] additional refiners whose petitions for 2016 and 2017 SREs it denied for the first time. EPA’s ‘alternative’ approach to RFS compliance provides no actual alternatives for refineries to meet their biofuel blending obligations.” The group filed its petition concerning the 2016-18 compliance years in the U.S. Court of Appeals for the District of Columbia Circuit. Growth Energy has been successful in its prior court challenges relative to the RFS, including the case that prompted EPA to revisit the 2018 SREs by a specific date and got EPA to commit to announcing the final 2020, 2021 and 2022 RFS levels by June 3 and another that got the agency to commit to releasing its proposed 2023 RFS levels by Sept. 16.
— Volkswagen is close to selling a minority stake in its U.S. electric-vehicle charge business to Siemens, a deal that would value the network at more than $2 billion. The additional funding would boost the plan to more than double the number of charging stations that Volkswagen’s Electrify America operates in the U.S. and Canada to 1,800 by 2026. The deal would be complementary for Siemens, which plans to expand its manufacturing operations in the U.S. and make more than one million EV chargers for the U.S. market over the next four years.
— Biden administration is set to kick off its first oil and gas drilling lease sales on public lands this week and will implement new rules for potential producers following a court decision that tossed out the administration’s only other onshore lease sale due to environmental reasons. The sales will include about 130,000 potential acres in Wyoming as well as other smaller plots in Montana, North Dakota, Nevada, Utah, New Mexico and Colorado. Link for details.
LIVESTOCK, FOOD & BEVERAGE INDUSTRY |
— July 4 cookouts will cost $10 more this year. The average cost of a summer cookout for 10 people is now $69.68, up about 17% or $10 compared to last year, according to a new survey from the American Farm Bureau Federation. Driving up prices: Ongoing supply chain problems tied to the pandemic, the war in Ukraine and the broader jump in inflation. The spike in ground beef prices is the biggest contributor. The survey found that two pounds of ground beef now costs $11.12, a 36% leap from last year. Two-and-a-half pounds of homemade potato salad is up 19%, while hamburger buns are 16% pricier.
CORONAVIRUS UPDATE |
— Summary:
- Global Covid-19 cases at 544,510,260 with 6,330,637 deaths.
- U.S. case count is at 87,092,384 with 1,016,208 deaths.
- Johns Hopkins University Coronavirus Resource Center says there have been 592,269,252 doses administered, 221,924,152 have been fully vaccinated, or 67.36% of the U.S. population.
— Dozens of federal workers will get another chance to prevent the Biden administration from enforcing its Covid vaccination requirement against them, a New Orleans-based federal appeals court said Monday. The Fifth Circuit granted their petition to rehear the lawsuit by the full court.
— Preparing for a fall booster-shot campaign, FDA advisers will consider whether and how Covid-19 vaccines should be updated. Their booster options include current vaccines, Omicron-targeted versions that have shown promise in clinical studies and ones that target more recent Omicron subvariants including BA. 4 and BA. 5 but haven’t been tested in people. The FDA’s staff recently expressed support for updating the vaccines to improve effectiveness against variants, but each choice has trade-offs.
POLITICS & ELECTIONS |
— Vice President Kamala Harris dismissed the notion of allowing doctors to practice abortions on federal property to bypass state restrictions imposed after the Supreme Court overturned Roe v. Wade. “It’s not right now what we are discussing,” Harris said Monday in an interview with CNN. Democratic lawmakers floated the idea of opening abortion clinics on federal lands as a way to sidestep new state restrictions on the procedure. But a White House official said the proposal, while well intentioned, risked putting women and providers in legal jeopardy in state courts.
— New York, Illinois and five other states hold primaries today, some testing progressives’ power with Democrats and others testing former President Donald Trump’s power with Republicans.
— A New York City law allowing noncitizens to vote in local elections was struck down as violating the state constitution.
— Vice President Kamala Harris said President Biden is running for re-election and she will be his running mate. She also the administration “will do everything” within its power to defend access to medication abortion.
OTHER ITEMS OF NOTE |
— White House announces public tours will resume full operating schedule on July 19 for the first time since they were suspended in 2020 because of the Covid-19 pandemic, the White House announced Monday. The tours are free to the public and can be scheduled through the office of a member of Congress.
— Developer says FDA finds GMO wheat is safe to eat. Crop developer Bioceres said on Monday (link) that the FDA has determined during consultations that its HB4 wheat variety, genetically modified for drought- and herbicide-tolerance, was safe to eat. Last year, Bioceres said it would focus on winning approval for key wheat importing nations before it put its GMO seed on the market for cultivation. U.S. wheat groups said prudent application of agricultural biotechnology could deliver benefits. “A trait such as drought tolerance in wheat could help wheat growers in increasingly arid regions be more productive and ease food security concerns,” they said in a joint statement. The National Association of Wheat Growers and export-promoter U.S. Wheat Associates previously said they would support commercialization of transgenic wheat “after thorough review and development of a commercialization plan that facilitates commercialization with minimal market disruptions.”
— At least 46 people believed to be migrants were found dead inside and near an abandoned tractor-trailer near San Antonio, Texas, on Monday, a tragedy that appears to be linked to people smuggling across the border from Mexico.
— U.S. Supreme Court ruled a high-school football coach who lost his job after praying on the field following a game had a First Amendment right to publicly exercise his faith, continuing a line of high court decisions lowering the wall between church and state.