Looks Like EPA Will Announce RFS Mandates… Critics Pounce; SBO Down the Limit

Biden labels Xi a dictator, triggering angry response from China

Federal Reserve Chair Jerome Powell testifies to House Financial Affairs Committee and above we note some of his comments via prepared testimony.

Senate Banking Committee hearing today is on the nomination of Adrian Kugler to Fed Board, also on Philip Jefferson’s appointment as Vice Chair and a second term for Lisa Cook

Biden’s ‘dictator’ label for Xi angers China. During a fundraising event in California, President Biden referred to Chinese President Xi Jinping as a dictator. The comment followed U.S. Secretary of State Antony Blinken’s Beijing meeting with Xi, which aimed to ease tensions between the two superpowers. Biden’s remark came in the context of discussing an alleged Chinese spy balloon, which the U.S. shot down and claimed to be part of a Chinese intelligence collection program. China firmly opposes the comments, considering them absurd, irresponsible, and politically provocative.

The Panama Canal is going through its driest spell in more than a century, and an extended lack of rainfall could saddle global supply chains with delays and higher fees to move cargo. The government agency that manages the artificial waterway implemented travel restrictions in May to avoid ships running aground, and since then some large vessels have had to reduce container loads by roughly one-quarter. More in Markets section.

EPA gives RFS insides a market break as SBO futures crashed following traditional leaks of mandated amounts. Details and analysis in Energy section.

A drought-fueled grain market rally is missing one ingredient in some places to label it a for-real weather market: much higher temperatures.

President Biden is planning a state dinner for Indian Prime Minister Narendra Modi. We have an update on their meeting below.

Economists at the New York Fed wanted to know how remote work affected productivity. The case study: call-center workers. Details in Markets section.

This just in… Kremlin maintains ‘no grounds’ to extend Black Sea grain initiative. We are back to the no-extension cycle. Will it prove true this time? See Russia & Ukraine section.

China, already the top importer of corn and soybeans, is poised to overtake Egypt and Turkey as the biggest buyer of wheat in the year through June. More in China section.

Getting ready for today’s Farm Country Update: 2023 Farm Bill: Influence, Impacts and Odds of Success. In the Policy section we have a link to register plus a link to a handy CBO PowerPoint presentation on the farm bill.

Florida tomato growers have requested the Commerce Department to terminate a 2019 agreement that suspended antidumping duties on tomatoes imported from Mexico. More in Trade Policy section.

Next wave in ESG battle takes shape in Congress. Republicans in the House, led by Rep. Andy Barr (R-Ky.), are preparing to launch a new offensive against environmental, social, and governance (ESG) investing. More in Congress section.

More scrutiny of land purchases by foreigners proposed. Details in Congress section.

National student test scores are plunging. Scores dropped nine points in math and four in reading between fall 2019 and last year, according to new data from a test known as the nation’s report card. It was the biggest drop in math in 50 years. Scores began to decline after 2012 but fell faster after the pandemic began. Experts partly blamed an ongoing mental health crisis.

Hunter Biden, son of President Joe Biden, has reached a deal with the Department of Justice, pleading guilty to two misdemeanor tax charges. He will also enter a diversion program for illegal possession of a firearm. The agreement requires Biden to admit he failed to pay over $100,000 in taxes on an income of at least $1.5 million from 2017-2018. Although this deal is expected to help Biden avoid jail time, Congressional Republicans promise to continue investigating his business activities.

Equities today: Global stock markets were mostly lower overnight. U.S. Dow is currently down around 125 points. In Asia, Japan +0.6%. Hong Kong -2%. China -1.3%. India +0.3%. In Europe, at midday, London -0.1%. Paris -0.2%. Frankfurt flat.

U.S. equities yesterday: The Dow ended down 245.25 points, 0.72%, at 34,053.87. The Nasdaq declined 22.28 points, 0.16%, at 13,667.29. The S&P 500 was down 20.88 points, 0.47%, at 4,388.71.

The S&P 500 is up 14% this year, trading at about 19 times projected earnings over the next 12 months, according to FactSet. That is up from a multiple of roughly 17 at the beginning of the year and higher than the five-year average of 18.6. Market participants often use the ratio of price to earnings as a gauge for whether stocks appear cheap or expensive.

FedEx shares dropped almost 3% overnight after a profit warning. The shipping firm, which is slashing costs to protect profits as demand wanes, said ongoing “demand challenges” prompted its plans to ground 29 more aircraft in the fiscal year that started on June 1. Of note: Some analysts closely monitor the fate of FedEx as a signal for a possible recession.

Agriculture markets yesterday:

• Corn: July corn futures rallied 3 1/2 cents to close at $6.43 3/4, while December futures closed unchanged at $5.97 1/2.
• Soy complex: July soybeans rose 10 3/4 cents to $14.77 1/4, the highest close since April 19, while November futures rose a 1/2 cent to $13.42 3/4. July meal fell $3.60 to $412.80, while July soyoil closed at 59.63 cents, a modest 6-point loss.
• Wheat: July SRW futures rose 7 3/4 cents to $6.95 ¾, ending near the session high. July HRW futures fell 6 cents to $8.36, marking a mid-range close, while July spring wheat fell 4 1/2 cents to $8.49.
• Cotton: December cotton rose 60 points to 80.70 cents, after trading as high as 81.20 cents.
• Cattle: Expiring June live cattle futures slid $1.225 to $177.125 at Tuesday’s close, while most-active August futures dropped $2.025 to $169.70. August feeder futures dove $2.775 to $232.15.
• Hogs: Nearby July lean hog futures surged $3.00 to $95.85 Tuesday, while most-active August gained $2.525 to $93.20.
  

Ag markets today: Plunging crop condition ratings and dryness concerns fueled strong gains in corn, soybean and spring wheat futures overnight. Winter wheat futures actively followed to the upside. As of 7:30 a.m. ET, corn futures were trading 14 to 19 cents higher, soybeans were 15 to 22 cents higher, winter wheat futures were 16 to 18 cents higher and spring wheat was 12 to 14 cents higher. Front-month crude oil futures and the U.S. dollar index were near unchanged.

Market quotes of note:

• Only rarely should investors care about what the Fed says or even what it does at its meetings, says the Wall Street Journal’s James Mackintosh. What really matters for long-run returns, he says, is getting the direction of travel right, and that comes from the economy. Markets are well along in pricing an economy with lower but fairly sticky inflation, higher-for-longer rates and continued growth. Stocks are up, Treasury yields are broadly stable at what used to count as a high level, and risk premiums on junk bonds are falling fast. Mackintosh writes (link) that these all point in the same direction, and it’s a bullish one.
  
• Grain trader and analyst Richard Crow on corn and soybean crop outlook: “The crop condition report was far worse than any expectation. With corn down 6 and beans down 5, people questioned if another 2012 is headed our way. The big surprise was Iowa being down 10 in corn after the weekend rains. Rain is needed to head off significant losses. In comparison to 2012, July was an extremely hot month. This crop can take no heat. A hot July will be bad.”
  
• Warning: “If you are a CEO and not working on digitizing your business, your business will begin dying in the not-too-distant future.” — Kevin P. Hourican, CEO of Sysco.
  

On tap today:

• Fed Speak: Powell (10:00 a.m. ET), Cook (10:00 a.m. ET), Jefferson (10:00 a.m. ET), Goolsbee (12:25 p.m. ET), Mester (E: 4:00 p.m. ET).

President Biden is planning a state dinner for Indian Prime Minister Narendra Modi, with talks focusing on economic and security ties and countering China. Modi’s visit has garnered attention from the business sector, as India is one of the fastest-growing major economies. Elon Musk, CEO of Tesla and SpaceX, met with Modi and praised India’s potential, expressing interest in expanding Tesla’s presence in the country.

Despite certain challenges, India has experienced considerable growth, benefiting from cheap Russian oil and maintaining strong ties with the West and Russia. As a high-growth, low-inflation economy, India has attracted investors and multinational companies, with a robust IPO market fueled by a vibrant entrepreneurial scene.

However, questions arise about India’s handling of certain issues. Twitter’s co-founder, Jack Dorsey, accused the Indian government of pressuring the platform, which the government has denied. Reports suggesting issues with Apple’s product manufacturing in India, and accusations by Hindenburg Research against Adani Group, a large Indian conglomerate, also warrant scrutiny.

PM Modi’s popularity remains strong in India, partly due to his control over the flow of information through the media in the country.

The Education Department announced that borrowers will need to resume student loan payments starting October, after over three years of suspended payments. Approximately 10% of the U.S. adult population had loans in forbearance, and now, analysts estimate that borrowers will collectively pay $5-$10 billion per month towards their student loans. This could significantly impact consumer spending and retailers, considering Americans spend about $35 billion per month on clothing and department stores.

U.K. inflation rate above forecasts. British inflation rate held at 8.7% in May, unchanged from April’s 13-month low but above forecasts of 8.4%. The rate remained also significantly higher than the Bank of England’s target of 2%, adding to concerns about its stickiness and placing additional pressure on policymakers to maintain the bank’s ongoing tightening campaign. The core CPI rose at a faster 7.1%, the most since March 1992.

The biggest contribution to price increases between April and May came from recreation and culture, notably admission fees to live-music events and computer-games prices.

Government bond yields in Europe marched higher after the hotter-than-expected inflation print for the U.K.

Economists at the New York Fed wanted to know how remote work affected productivity. The case study: call-center workers. The result: “We find that working remotely reduces call-center workers’ productivity. Once everyone was working remotely due to Covid-19, on-site workers’ productivity advantage over already-remote workers decreased, thereby narrowing the productivity gap.... [R]emote workers were less likely to be promoted than their on-site peers before the pandemic. Thus, remote work may not only reduce workers’ productivity in the short to medium term but also stunt workers’ development and career trajectories in the long run,” the New York Fed’s Natalia Emanuel and University of Iowa’s Emma Harrington write at Liberty Street Economics. Link.

Market perspectives:

• Outside markets: The U.S. dollar index was slightly, despite mild gains in the euro and yen against the U.S. currency. The yield on the 10-year U.S. Treasury note was firmer, trading around 3.75%, with a mixed tone in global government bond yields. Crude oil futures are weaker as traders are concerned over potential sluggish Chinese demand. U.S. crude was trading around $71.10 per barrel while Brent was around $75.80 per barrel. Gold and silver futures were under mild pressure ahead of US market action, with gold around $1,945 per troy ounce and silver around $23.12 per troy ounce.

• Chinese yuan hits near 7-month low. The offshore yuan has weakened to 7.2 per dollar, reaching a seven-month low, as investors are disappointed by the lack of aggressive policy measures to support China’s economic growth. Major banks have downgraded their 2023 GDP growth forecasts for the country in response to weaker economic data. The People’s Bank of China also set a softer-than-expected fixing for the currency, signaling that Chinese authorities may be comfortable with the depreciation due to the slowing economy. Furthermore, the central bank’s recent lowering of key lending rates has not been enough to spur post-pandemic recovery, increasing speculation about potential further policy easing.

• Texas’s power grid operator urged residents to reduce their electricity use yesterday due to a heat wave that has baked the South and caused power outages in several states. Temperatures across Texas will be running 10 to 15 degrees above normal for at least the next seven days. “The highest heat indices are forecast across South Texas, where it could feel as hot as 120 degrees,” the Weather Prediction Center said. Several daily heat records were broken across the state, including in Laredo, which hit 115 degrees, San Angelo, which reached 111 degrees, and Del Rio, which hit 109 degrees.

• How the Panama Canal is adapting to the worst drought in a century. The Panama Canal is experiencing its driest period in over a century, and the resulting lack of rainfall could lead to delays and higher fees in global supply chains, the Wall Street Journal reports (link). Due to low water levels, the government has imposed travel restrictions, forcing some large vessels to reduce container loads by about one-quarter. More stringent restrictions are in effect until mid-July. Water levels in Gatún Lake, which is located at the center of the canal and essential for its operations, could hit record lows with climate event El Niño contributing to higher temperatures and less rain.

The Panama Canal heavily relies on rainfall for its water supply, with over 50 million gallons of water lost to the sea every time a ship moves through the locks. This water is replenished from a reservoir when it rains, but inadequate rain can lead to ships avoiding the passage. The Panama Canal Authority has spent years preparing for extreme weather events to ensure the canal remains a vital trade route.

Impacts: As shipowners and charterers adjust their operations to meet the lighter-load requirements, disruptions in the canal’s operations would impact exporters and importers across the globe. The Panama Canal connects the Atlantic and Pacific oceans, handling about one-third of Asia-to-Americas seaborne trade.

The Panama Canal Authority is working on finding new sources of water to store in its lakes, and has enlisted the help of the U.S. Army Corps of Engineers to divert additional rivers into the waterway. More frequent extreme weather events pose challenges not only for the Panama Canal’s operations but also for supplying water to about 2.5 million people in the country.

• Ag trade: Taiwan purchased 65,000 MT of corn expected to be sourced from Brazil. Thailand purchased 55,000 MT of feed wheat expected to be sourced from the Black Sea region or Australia.

• NWS weather outlook: Severe weather and Excessive Rainfall possible over parts of the Great Plains, Lower Mississippi Valley and Southeast... ...Record breaking heat wave persists in Texas.

Items in Pro Farmer’s First Thing Today include:

• Grains sharply higher overnight
• Corn, soybean and spring wheat CCI ratings plunge
• Lower cash cattle expectations
• Cash hogs rise, pork cutout weakens

— Ukraine’s president, Volodymyr Zelenskyy, appealed to donors at the Ukraine Recovery Conference in London for funds to help rebuild his country. In a virtual address Mr Zelensky said that “every new day of Russian aggression brings new ruins”. Britain announced a $3 billion pledge of World Bank loan guarantees.

Meanwhile, Russia claimed that it had intercepted three Ukrainian drones targeting a military facility outside its capital, Moscow. Ukraine did not comment.

— Kremlin maintains ‘no grounds’ to extend Black Sea grain initiative. The Kremlin stands by its position that there are “no grounds” for extending the Black Sea Grain Initiative. Spokesman Dmitry Peskov says the U.N. is failing to exert the necessary influence on Western countries to support Russia’s part of the agreement. Russia seeks the removal of Western sanctions that it claims are hindering its exports of agricultural products and fertilizers. The future of the Initiative remains uncertain as conflicting interests persist.

— In Ukraine, pilots are urgently requesting U.S.-made F-16s to help them counter Russia’s fighter jets as they continue to face significant difficulties due to their outdated aircraft. The Ukrainian forces are using Soviet-era Su-25s, which were first introduced in the 1980s, and they don’t compare to Russia’s advanced Su-35s equipped with superior radar and long-range missiles. Consequently, Russian aircraft maintain air superiority in the region, hindering Ukraine’s ground forces from advancing. A Su-25 pilot noted that they experience significant losses due to these Russian interceptors. The Ukrainian military has recorded 35 recent clashes with Russian forces in eastern Ukraine, with concentrated activity around Lyman, Bakhmut, Avdiivka, and Marinka in the Donetsk region.

— ERP Phase 2 payment continue to edge higher. USDA’s Farm Service Agency has now paid out $1.496 million to 788 producers under Phase 2 of the Emergency Relief Program (ERP). The total includes $557,066 in revenue payments for other crops and $557,351 in revenue payments for specialty and high-value crops.

Payments under Phase 1 of ERP remained essentially unchanged and the two Coronavirus Food Assistance Program (CFAP) efforts were paused due to the Fiscal Responsibility Act.

— Getting ready for today’s Farm Country Update: 2023 Farm Bill: Influence, Impacts and Odds of Success. Link to sign up for the event.

Link to a farm bill PowerPoint presentation (pdf) by the Congressional Budget Office.

— A Senate Banking Committee hearing today will consider the nominations of Governor Philip Jefferson, selected by President Joe Biden to be elevated to vice chair, Governor Lisa Cook, nominated to a new 14-year term, AND Adriana Kugler, nominated by Biden to fill a vacancy left by the departure of Lael Brainard earlier this year to the Board of Governors.

— President Joe Biden referred to Xi Jinping, his Chinese counterpart, as a “dictator”. During a fundraiser in California, Biden remarked that Xi had not known that the Chinese balloon shot down earlier this year was carrying “spy equipment.” That, the president added, was a “great embarrassment for dictators.” A Chinese spokesperson called Biden’s comments “extremely absurd and irresponsible.”

Of note: CNBC’s new documentary, “China’s Corporate Spy War,” premieres at 10 p.m. ET today.

— China watcher Trivium China sizes up Xi and his leadership team. Chinese leadership under Xi Jinping feels threatened by the global pandemic and aggressive U.S. actions, says Trivium China. This sense of threat is influencing policy in several ways, it says, both domestically and internationally.

Domestically, China is pushing for self-sufficiency in technology, with the creation of the Central Commission for Science and Technology (CCST) and an emphasis on building a “new innovation system.”

Internationally, their sense of threat is driving more proactive foreign policy, with efforts made to improve relations with U.S. allies, particularly in Europe, and engage with developing countries.

The China analysis firm adds that China is also trying to create a more favorable global environment through new frameworks like the Global Security Initiative, Global Development Initiative, and Global Civilization Initiative.

Bottom line according to Trivium China: It remains uncertain whether these initiatives will be successful. “What is clear is that a sense of crisis in Beijing will continue to shape Chinese priorities and drive their pursuit of these objectives in the near future.”

— China, already the top importer of corn and soybeans, is poised to overtake Egypt and Turkey as the biggest buyer of wheat in the year through June, Chinese and U.S. official data show. Purchases exceeded 12 million tons in the first 11 months of the marketing year, which runs through June. More than half of those cargoes were supplied by Australia. Link to Bloomberg for details.

— China unveils $72 billion tax break for EVs, other green cars. China unveiled a 520 billion yuan ($72.3 billion) package of tax breaks over four years for electric vehicles (EVs) and other green cars, its biggest yet for the industry as it seeks to boost slower auto sales growth. New energy vehicles (NEVs) purchased in 2024 and 2025 will be exempted from purchase tax amounting to as much as 30,000 yuan ($4,170) per vehicle. The exemption will be halved and capped at 15,000 yuan for purchases made in 2026 and 2027, the ministry of finance said. The new package extends the current NEV purchase tax exemption, which expires at the end of 2023. NEVs include all-battery EVs, plug-in petrol-electric hybrids and hydrogen fuel-cell vehicles.

— Analysts: China isn’t buying Biden’s balancing act. Robbie Gramer, a diplomacy and national security reporter at Foreign Policy, and Christina Lu, a reporter at Foreign Policy, comments (link) on U.S. Secretary of State Antony Blinken’s recent trip to Beijing. They write that Blinken experienced a frosty reception during his recent visit to China, highlighting the challenges the Biden administration faces in its efforts to ease tensions with the country. China’s response, they note, can be partly attributed to the U.S. hardening its approach by supporting Taiwan, creating a new anti-China security architecture, and announcing new trade restrictions and sanctions. Although Blinken achieved some minor victories during his trip, such as setting up a joint working group on the fentanyl drug crisis, the analysts say he failed to address significant concerns like arbitrarily detained Americans in China or re-establishing military channels of communication. They conclude: The success of Blinken’s visit will depend on whether China continues to engage in high-level talks with the U.S. in the future.

— India has given the green light for limited exports of wheat and broken rice in the 2023-24 financial year (April/March). The Indian government has approved broken rice exports to three countries: Indonesia, Senegal, and Gambia. Meanwhile, Nepal will receive wheat exports. To obtain the allocated quota, exporters must compete in a bidding process. This decision follows a ban on exports of wheat and broken rice in 2022 to control domestic prices. However, the exact tonnage of the exports remains unclear based on current reports.

— Florida tomato growers have requested the Commerce Department to terminate a 2019 agreement that suspended antidumping duties on tomatoes imported from Mexico. The Florida Tomato Exchange (FTE), representing domestic producers, claims the agreement has failed to curb imports from Mexico. They argue that antidumping duties should be imposed due to the continued violation of the agreement by Mexican growers.

The 2019 agreement introduced new rules on pricing and inspections but did not halt the increase in Mexican tomato imports, according to the FTE. Despite multiple suspension agreements, FTE states that the domestic share of the U.S. tomato market has dropped from 80% in 1994 to 30% today.

The Fresh Produce Association of the Americas (FPAA), which represents tomato importers, rejects FTE’s claims and argues that their request is an effort to avoid innovation and compete against Mexico’s vine-ripened tomatoes. FPAA suggests that the FTE’s push for duties is aimed at creating a monopoly over the U.S. tomato market and may result in higher prices for consumers.

— RFS announcement could come today. Expectations are that EPA will officially announce Renewable Fuel Standard (RFS) mandates (RVOs) for 2023, 2024 and 2025 sometime today, as the Office of Management and Budget (OMB) late Tuesday indicated that it had finished its review of EPA’s final rule on Friday (June 16), setting the stage for an announcement today, the deadline for the agency to sign the final rule. EPA has typically announced rules shortly after the review by OMB.

EPA reportedly plans to boost overall biofuel blending levels, but the finalized volumes include just 15 billion gallons of conventional biofuels like corn-based ethanol in all three years, plus a 250-million-gallon supplemental amount for 2023, Reuters reported.

Bloomberg reports that EPA in 2023 will require the use of 2.82 billion gallons of biomass-based diesel, generally made from soybean and canola oil — just a 2.2% increase over the 2.76 billion gallons mandated last year, but no increase from the level proposed in December. For 2024, indications are the agency will increase the level to 3.04 billion gallons (2.89 billion gallons proposed in December) and 3.35 billion gallons in 2025 (2.95 bil. gallons proposed).

For advanced biofuels, the level for 2023 would be at 5.94 billion gallons (5.82 billion proposed), at 6.54 billion gallons in 2024 (5.82 billion proposed) and 7.33 billion gallons (7.43 billion proposed) in 2025.

Reports say cellulosic biofuel would also see a slight increase to 840 million gallons in 2023 versus 720 million gallons proposed, while the level for 2024 would be at 1.09 billion gallons and 1.38 billion gallons for 2025. The agency had proposed 1.42 billion gallons for 2024 and 2.13 billion gallons for 2025.

Total biofuel levels would be 20.94 billion gallons versus 20.82 billion in 2023, according to reports, while the level for 2024 would be 21.54 billion gallons (21.87 billion proposed) and 22.33 billion in 2025 (22.68 billion gallons proposed). EPA is including the supplemental 250 million gallons for conventional ethanol for 2023, but now is no longer indicating that 15.25 billion gallons would be appropriate for 2023, 2024 and 2025.

EPA is planning to step up the government’s policing of biofuel compliance credits, following long-running complaints of wild price swings and manipulation in eRINS, but the final rule will not include a pathway for electric vehicle manufacturers to generate eRINs. EPA also is set to lay out plans to collaborate more closely with CFTC and FTC on the matter as part of its RFS plan.

The final rule will not likely be published in the Federal Register for several weeks.

Bottom line: This fits EPA’s history of making slight adjustments to final levels compared with their proposed marks. It also fits with the RFS mandates being leaked, which gives some industry stakeholders an unfair market advantage for a brief time. EPA apparently has no market sense relative to how some industry stakeholders and others given early briefings on the coming RFS mandates can take market advantage of the information.

Reaction. The biomass-based requirements are well below the increase sought by producers, who warned the White House that recent surges in U.S. production warrant much higher targets and that multi-billion-dollar investments in renewable diesel capacity hang in the balance. The EPA failed to fully consider data “demonstrating an upward trajectory for biodiesel, renewable diesel and sustainable fats and oils,” Kurt Kovarik, vice president of federal affairs for the Clean Fuels Alliance America, said in response to the reported targets. Clean Fuels criticized the EPA’s decisions for not supporting the industry’s goals and not considering the rapid growth in US biodiesel, renewable diesel, and sustainable aviation fuel production. The EPA’s final rule increases RFS volumes for these fuels by only 590 million gallons over the three-year period, despite data from the first half of 2023 showing a significant increase in qualifying biomass-based diesel production compared to the same period in 2022. “If the reports are accurate, EPA’s decision to lower its ambitions for conventional biofuels runs counter to the direction set by Congress and will needlessly slow progress toward this administration’s climate goals,” said Emily Skor, chief executive officer of the Growth Energy ethanol advocacy group.

Market reaction: Soybean oil was limit down overnight. Meanwhile, Darling Ingredients Inc., which through its Diamond Green Diesel partnership with Valero Energy Corp. is the top U.S. producer of renewable diesel, tumbled as much as 8.1%, the stock’s biggest intra-day decline in more than three months. Valero fell as much as 3.4% while ethanol maker Green Plains Inc. pulled back 3.2%. Archer-Daniels-Midland Co. and Bunge Ltd. also retreated.

Some refiners argued the ethanol requirements were still too high. Chet Thompson, president of the American Fuel and Petrochemical Manufacturers Association, said in response to reports of the quotas that the EPA is failing to take advantage of its flexibility under federal law to modernize the Renewable Fuel Standard program and provide greater climate benefits. “Setting unachievable conventional biofuel targets is a missed opportunity,” he said.

Upshot: Main reason for why EPA went light on biodiesel and renewable diesel mandates: The food-vs-fuel debate was highly discussed within EPA, sources advise.

— Ford CEO Jim Farley said his team was quick to jump at the chance to join EV-making rival Tesla’s extensive charging network. “I have no problem being opportunistic when it comes to advantaging my customers,” Farley told CNBC’s Jim Cramer on Tuesday’s edition of “Mad Money.” Yet the Ford chief also had a little fun at the expense of Tesla’s planned Cybertruck, which he called a product for “Silicon Valley people.” “It’s like a cool high-end product parked in front of a hotel,” Farley said. “But I don’t make trucks like that. I make trucks for real people who do real work, and that’s a different kind of truck.”

Of note: Texas will be the first U.S. state to mandate Tesla’s electric vehicle charging system, in a huge win for CEO Elon Musk who is working towards making the connector the industry standard. Experts believe the decision could push other states to adopt the system. In addition, Tesla is poised to benefit from China’s $72-billion tax break for EVs, while Musk hinted at launching Tesla in another major Asian market.

— Argentina started filling its new natural gas pipeline, marking a big infrastructure feat and political victory that stands to save the country billions of dollars from energy imports amid an economic crisis. The Nestor Kirchner pipeline spans 356 miles from Patagonia to eastern cities and industrial centers. It is expected to save Argentina $1.7 billion in gas imports this year and $4 billion next year.

Economy Minister Sergio Massa, who might run for president in this year’s election, considers this project a major opportunity to address Argentina’s economic issues. The country is grappling with 114% annual inflation, an expected recession, and concerns about a peso devaluation due to a shortage of U.S. dollars at the central bank.

— CNN poll: Trump’s GOP support appears to soften post-indictment, but he holds lead in primary field. A new CNN poll conducted by SSRS indicates that former President Donald Trump’s support has softened following his indictment and arrest on federal charges. His lead in the GOP field has declined, his favorability rating among Republican-aligned voters has dipped from 77% in May to 67% now, and the share of those who would not support him under any circumstances has increased from 16% to 23%. Despite this, most GOP voters are not backing any specific Trump rival or calling for Trump to exit the race.

Only 26% of Republican-leaning voters think Trump should end his campaign. A majority of Republican-aligned voters say that the indictment does not matter much to them, and most prefer that other candidates remain quiet on the issue.

Overall, 47% of Republicans and Republican-leaning registered voters support Trump as the first choice for the party’s nomination, down from 53% in May. Florida Gov. Ron DeSantis comes in second with 26% support. The poll was conducted between June 13-17 among 1,350 adults, including 561 Republicans and Republican-leaning independents who are registered to vote.

— Next wave in ESG battle takes shape in Congress. Republicans in the House, led by Rep. Andy Barr (R-Ky.), are preparing to launch a new offensive against environmental, social, and governance (ESG) investing. Barr is set to introduce a bill aimed at limiting investments in ESG funds, which critics have labeled “woke.” Proponents of ESG argue the approach enables investors to both make money and contribute to social good. However, Republican critics and conservative Democrats argue that investment funds should prioritize maximizing returns. Barr believes ESG investing has a negative impact on capital markets, leading retail investors to lower-performing, less-diversified, and higher-fee funds. The proposed bill may be part of a broader House GOP effort to target ESG investing in July.

— Senate Republicans on the Appropriations Committee have yet to signal their position on funding levels for the fiscal year 2024 spending measures. Members, including Ranking Member Susan Collins (R-Maine) and panel member John Kennedy (R-La.), have stated they have not seen the final spending marks from the Democratic majority and have not committed to a stance in the committee markup process. Senate Appropriations Committee Chair Patty Murray (D-Wash.) reveals that the funding levels will essentially match those in the debt limit package, unlike the House spending bills, which are being marked up at lower levels. The House versions, however, are unlikely to receive enough support to pass in the Senate.

— House Ag pane leaders announce bipartisan working group tackling agriculture workforce challenges. House Ag Chair “GT” Thompson (R-Pa.) and Ranking Member David Scott (D-Ga.) announced the formation of the bipartisan Agricultural Labor Working Group to address workforce challenges faced by the nation’s agricultural producers. The working group, co-chaired by Congressmen Rick Crawford (D-Ark.) and Don Davis (D-N.C.), will focus on gathering input from stakeholders, employers, and workers, particularly concerning the H-2A visa program for nonimmigrant agricultural workers. They will produce an interim report detailing the program’s shortcomings and its impact on food security, followed by a final report with recommendations to rectify the issues. Both Crawford and Davis express their commitment to working together to find bipartisan solutions to the labor shortage in the agriculture industry. The final report will offer potential solutions that can be used in future legislative efforts.

— More scrutiny of land purchases by foreigners proposed. USDA and the FDA would become members of a powerful U.S. committee that rules on the national security implications of foreign ownership of U.S. assets under a bipartisan Senate bill unveiled on Tuesday. The legislation would also empower the Committee on Foreign Investment in the United States (CFIUS), led by the Treasury, to consider retroactive divestment of real estate owned by foreign entities.

What proponents say. Sponsors Debbie Stabenow (D-Mich.), chairwoman of the Senate Agriculture Committee, and Sen. Joni Ernst (R-Iowa), said their bill would strengthen U.S. oversight of foreign ownership of U.S. agricultural land. Two House committees voted last week to block or heavily tax farmland purchases by foreign adversaries such as China, Russia, North Korea and Iran. “This bill safeguards our nation’s farmland and food supply by overhauling the system for federal oversight of foreign land ownership,” said Stabenow. Ernst said the legislation would “combat our foreign adversaries, especially the Chinese Communist Party’s malign actions in our own backyard.”

Foreign entities own 40.8 million acres of U.S. agricultural land, or 3.1 % of the privately owned land in the nation, according to USDA data. Half of the foreign-owned land is forests. Canada accounts for one third of the foreign-owned land. Lawmakers often worry about purchases by China, which owned 347,000 acres at latest count.

Details: Under the bill, the USDA and the FDA would become members of CFIUS, now limited to seven federal departments and the White House, and CFIUS’s powers would be expanded to better consider agricultural needs when it decides if a purchase would create national security risks. It also would require CFIUS to consider retroactive divestment of real estate and require it to review all agricultural land purchases in the past three years that exceeded 320 acres or $5 million.

— Math and reading scores for 13-year-olds in the U.S. have hit the lowest levels in decades, with a sharp drop since the pandemic began. The last time that math performance on the federal exam was this low for 13-year-olds was in 1990, and for reading, in 2004.

— Hunter Biden, President Joe Biden’s son, has reached a plea agreement for misdemeanor tax charges, which may prevent prison time and affect the potential political impact of the case during his father’s re-election campaign. The deal with federal prosecutors concludes a years-long investigation led by U.S. attorney David Weiss, who was appointed by former President Trump. Weiss’s office has agreed to recommend a sentence of probation as part of the plea agreement.

Hunter Biden will plead guilty to two counts of willful failure to pay federal income tax and faces a maximum sentence of one year in prison on each count. However, tax prosecutions for misdemeanor offenses, without other charges, rarely lead to prison time. The investigation initially focused on his foreign business dealings but has shifted to focus on his taxes and a false claim on a form to purchase a gun. The firearms charge will be handled through a pretrial diversion agreement — a discretionary option available to U.S. attorneys to “divert certain offenders from traditional criminal justice processing into alternative systems of supervision and services,” according to the Department of Justice website.

Details: Biden was charged with violating a provision of 18 U.S. Code § 922 that prohibits anyone “who is an unlawful user of or addicted to any controlled substance” from possessing a firearm, a charge that carries a maximum penalty of 10 years in prison, a fine or both—but the charge will be cleared from his record following diversion program that will require him to remain drug-free for two years and commit to never owning a firearm again, according to the New York Times. He also agreed to plead guilty to two violations of 26 U.S. Code § 7203 for failing to pay more than $100,000 in taxes on time for income in excess of $1.5 million in both 2017 and 2018—the charges carry up to a year in prison, a $25,000 fine or both, though people familiar with the deal told the Washington Post prosecutors will recommend two years of probation. Legal experts said first-time offenders are rarely prosecuted for both the gun and tax charges Biden faces.

A judge has to sign off on the agreement.

— Today is the summer solstice, and the longest day of the year. It’s the official start of summer. The sun will rise and set at its northernmost points on the horizon. After today, we’ll slowly start to lose daylight. How much daylight will you have? It depends on where you live. Seattle will get nearly 16 hours of sun today. Miami will get just under 14 hours. Most U.S. cities will fall between the two.

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