President Biden to Address Nation While Harris Gets Aggressive in Taking on Trump

News/Markets/Policy Updates: July 24, 2024

MARKET FOCUS

• Existing-home sales in U.S. slumped to slowest paces since 2010 in June
• UPS and General Motors shares drop despite earnings reports
• Delta Air Lines under investigation by Dept. of Transportation
• Oil prices lower again Tuesday
• Bank of Japan to consider rate hike and cut bond purchases: Reuters
• Canadian National Rail lowers earnings outlook due to strike risks
• Slovakia and Hungary are facing significant challenges in their oil supply chains
• Key Bridge rebuild receives federal environmental approval
• Ag markets today
• Rising property insurance costs for farmers and ranchers
• Indonesia plans to increase palm oil in biodiesel to 40%
• HRS tour Day 1 results
• Ag trade update
• Sunday was hottest day in history by a climate tracking agency
• Long-term drought across portions of Mexico since winter of 2022-23
• NWS outlook
• Pro Farmer First Thing Today items

CONGRESS

• Menendez to resign
• House GOP pulls Energy-Water Bill amid internal opposition
• Sen. Manchin’s permitting reform bill faces hurdles

ISRAEL/HAMAS CONFLICT

• PM Benjamin Netanyahu set to address a joint meeting of Congress today

RUSSIA & UKRAINE

• China tells Ukraine peace talks premature amid war
• Russia offers $22,000 bonus to boost troop numbers in Ukraine

POLICY

• Thompson blasts Stabenow in delaying farm bill progress

CHINA

• China’s chicken feet market faces price surge due to Brazil export ban
• China aims to control dairy, beef output as weak sales hit prices

TRADE POLICY

• Malaysia reviews anti-dumping laws amid influx of cheap Chinese goods

ENERGY & CLIMATE CHANGE

• Carbon emissions from shipping industry surged
• Lawmakers urge Treasury to expedite Section 45Z Clean Fuel Tax Credit regs
• Bill introduced to extend biodiesel tax credit and prevent ‘double-dipping’
• GM to delay plans for new Buick electric vehicle, push back EV truck factory
• Elon Musk: Tesla will delay further investment in planned factory in Mexico
• EPA hands out $4.3 billion in grants for climate projects around U.S.

LIVESTOCK, NUTRITION & FOOD INDUSTRY

• Colorado ramps up H5N1 dairy testing
• How healthy is sweet corn?

POLITICS & ELECTIONS

• Biden addresses nation this evening
• Former USDA Sec. Sonny Perdue doesn’t want a repeat job if Trump wins

OTHER ITEMS OF NOTE

• Surge in crime has California voters, lawmakers weighing whether to roll back
• U.S. foreign investment watchdog reports record penalties

— Equities today: Asian and European stock indexes were mostly lower overnight. U.S. Dow opened around 200 points lower. In Asia, Japan -1.1%. Hong Kong -0.9%. China -0.5%. India -0.4%. In Europe, at midday, London -0.2%. Paris -1%. Frankfurt -0.6%.

U.S. equities yesterday: All three major indices ended with minor declines. The Dow was down 57.35 points, 0.14%, at 40,358.09. The Nasdaq slipped 10.72 points, 0.06%, at 17,997.35. The S&P 500 declined 8,67 points, 0.16%, at 5,555.74.

— UPS and General Motors shares drop despite earnings reports. UPS shares plummeted 12% after missing second-quarter expectations, marking their worst day on record. General Motors, despite beating earnings expectations, saw a 6.4% drop in shares due to delayed EV plans.

Several companies reported disappointing results after the market closed on Tuesday:

• Tesla: Reported second-quarter earnings of 52 cents per share, missing the expected 62 cents per share. This marked the second consecutive period of declining automotive sales. Despite this, Tesla beat revenue expectations with $25.50 billion, above the estimated $24.77 billion.

• Alphabet: Missed YouTube advertising revenue expectations, posting $8.66 billion versus the expected $8.93 billion. However, Alphabet exceeded overall earnings and revenue expectations with $1.89 per share (expected $1.84) and $84.74 billion in revenue (expected $84.19 billion).

— Delta Air Lines is under investigation by Dept. of Transportation over its handling of a technology glitch that has led to thousands of canceled flights. In response, Delta said in an emailed statement that it’s fully cooperating. “Across our operation, Delta teams are working tirelessly to care for and make it right for customers impacted by delays and cancellations as we work to restore the reliable, on-time service they have come to expect from Delta,” the carrier said.

— Oil prices were lower again Tuesday, falling to six-week lows pushing both benchmarks into technically oversold territory. Diesel futures also settled to their lowest in six weeks with gasoline futures closing at their lowest in five weeks. WTI traded down $1.44, -1.8%, to close at $76.96. Brent traded down $1.39, -1.7%, to close at $81.01.

— Ag markets today: Corn, soybeans and wheat traded on either side of unchanged during the overnight session. As of 7:30 a.m. ET, corn futures were trading steady to a penny higher, soybeans were 1 to 3 cents lower, SRW wheat was 1 to 2 cents higher, HRW wheat was fractionally to 2 cents lower and HRS wheat was 1 to 2 cents lower. The U.S. dollar index was marginally lower, while front-month crude oil futures are nearly $1.00 higher.

Wholesale beef prices continue to slide. Wholesale beef prices dropped 23 cents for Choice to $313.21 and $1.67 for Select to $296.66 for Select on Tuesday, extending their seasonal pullback. However, movement remained strong at 165 loads, suggesting there’s still enough retailer demand under the market to keep prices from collapsing.

Cash hog index rises again, pork cutout drops. The CME lean hog index is up 28 cents to $90.80 as of July 22, the seventh straight daily gain, the longest string of gains since early April. The pork cutout dropped $1.02 on Wednesday as all cuts except ribs and bellies declined.

— Agriculture markets yesterday:

• Corn: December corn futures closed up 2 1/4 cents at $4.17 1/4, near mid-range and hit a more-than-two-week high early on.
• Soy complex: November soybeans rose 6 3/4 cents to $10.75 1/2, marking a mid-range close, while December soymeal fell 30 cents to $319.10 after notching a two-week high early on. September soyoil fell 14 points to 46.08 cents.
• Wheat: December SRW futures fell 5 1/4 cents to $5.67 3/4 and settled nearer session lows. December HRW futures slid 4 3/4 cents to $5.83 1/4. December HRS futures fell 7 1/4 cents to $6.33.
• Cotton: December cotton tumbled 114 points to 69.48 cents, marking the lowest close since July 2022.
• Cattle: August live cattle futures surged $2.375 higher to $186.30 and settled on session highs. August feeder cattle futures jumped $2.35 to $257.75 and closed nearer session highs.
• Hogs: August lean hogs closed up $1.275 at $93.65, nearer the session high and hit a seven-week high.

— Of note:

• $73 billion: Value of freight moving between the U.S. and Mexico in May, a 6.3% increase from May 2023 and up from $72.5 billion in April, according to the Bureau of Transportation Statistics.

• “We’re not chasing volume. We had new customers coming into our networks where volume blew up.” — UPS CEO Carol Tomé.

— Existing-home sales in the U.S. slumped to one of the slowest paces since 2010 in June, as sellers wait for mortgage rates to fall further and buyers balk at stubbornly high prices. The National Association of Realtors (NAR) reported a 5.4% decrease in sales from May, bringing the seasonally adjusted annual rate (SAAR) to 3.89 million units. This figure also represents a 5.4% decline compared to June 2023. The decline in existing-home sales was observed across all major U.S. regions.

Several key factors have contributed to this downturn:
• High mortgage rates: Mortgage rates have remained elevated, with the average rate for a 30-year fixed mortgage standing at 7.30% as of late July 2024. These high rates have deterred many potential buyers, particularly first-time homebuyers, from entering the market.
• Affordability issues: Despite a slight increase in housing inventory, affordability remains a significant challenge. The median existing-home sales price in June 2024 reached a record high of $426,900, a 4.1% increase from the previous year. This price surge, coupled with high mortgage rates, has priced many buyers out of the market.
• Inventory levels: The total housing inventory at the end of June 2024 was 1.32 million units, up 3.1% from May and 23.4% from June 2023. This translates to a 4.1-month supply at the current sales pace, slightly higher than the 3.7 months reported in May. While this increase in inventory suggests a potential shift towards a more balanced market, it has not yet translated into higher sales.

Looking ahead, experts suggest that the easing of inflation could lead to a slight reduction in mortgage rates, potentially supporting a rebound in home-buying activity later in the year. However, the market remains challenging for buyers due to high prices and borrowing costs. The increase in housing inventory might eventually lead to a more balanced market, but for now, sellers continue to benefit from the tight conditions.

— Bank of Japan to consider rate hike and cut bond purchases: Reuters. The Bank of Japan (BOJ) is set to discuss a potential interest rate increase at its upcoming meeting and plans to halve bond purchases over the next few years, according to Reuters sources. The decision on raising rates will hinge on evidence of consumption recovery and sustained inflation around the BOJ’s 2% target. One source described the decision as a “close call” and a “judgement call” on timing. While BOJ members agree on the necessity of raising rates, the timing remains uncertain. The proposed plan to reduce bond purchases aims to gradually taper over one to two years to avoid yield spikes. This shift follows the BOJ’s move away from ultra-easy monetary policy in March, aligning with a global trend towards tighter monetary policies.

Market perspectives:

— Outside markets: The U.S. dollar index was weaker despite the euro and yen also being weaker against the greenback. The yield on the 10-year U.S. Treasury note was weaker, trading around 4.23%, with a mixed tone in global government bond yields. Crude oil futures moved higher ahead of U.S. gov’t inventory data due later this morning, with U.S. crude around $78 per barrel and Brent around $81.90 per barrel. Gold and silver were registering gains, with gold around $2,418 per troy ounce and silver around $29.51 per troy ounce.

— Canadian National Rail lowers earnings outlook due to strike risks. Canadian National Railway Co. (CN) reduced its 2024 earnings forecast as the threat of a strike has led some customers to divert shipments. Around 6,000 CN employees voted for job action in May and reauthorized it in June after negotiations stalled, disrupting supply chains. CEO Tracy Robinson noted that customers have been rerouting shipments to the U.S. to avoid potential disruptions, a trend expected to continue until labor issues are resolved. CN now forecasts mid-to-high single-digit earnings per share growth, down from the 10% predicted in April. This assumes no labor disruptions or further traffic diversions. The rerouting has already impacted CN’s second-quarter earnings, with revenue reported at C$4.33 billion ($3.14 billion) and adjusted earnings per share at C$1.84, both missing analyst estimates. CN shares have declined 0.7% this year, while the S&P/TSX Composite Industrials Sector Index has gained 10%. Robinson acknowledged the challenging quarter and expressed hope for a resolution of the labor issues in the coming weeks.

— Slovakia and Hungary are facing significant challenges in their oil supply chains due to recent sanctions imposed by Ukraine on the Russian oil company Lukoil. This development has led to a complex situation with potential repercussions for multiple countries in the region. On July 20, Slovakia and Hungary reported that they had stopped receiving oil from Lukoil, a key supplier, after Ukraine imposed sanctions on the company. This decision by Ukraine has effectively blocked Lukoil from using the country as a transit route for its oil shipments, even though Russian oil had continued to flow into these Central European countries via a pipeline crossing Ukraine for the past 2.5 years of the ongoing conflict. Slovakia’s economy ministry has warned that if the situation persists, they may be forced to reduce fuel exports to neighboring countries, including Ukraine itself. Fitch Ratings has identified this development as a significant credit risk for refineries in Slovakia and Hungary. Slovakia and Hungary are considering legal action. They have threatened to take Ukraine to court over the blocked oil supplies. The European Commission, the executive arm of the European Union, has stated that it does not currently see any impact on the bloc’s oil supplies.

— Indonesia plans to increase palm oil in biodiesel to 40%. Indonesia is testing a biodiesel blend with 40% palm oil (B40), up from the current 35%, aiming for implementation in 2025. The B40 mandate would raise biodiesel consumption to 16 million kiloliters from the current 13 million kiloliters. Energy ministry official Eniya Listiani Dewi expects trials to conclude by December for full implementation in 2025. The B40 fuel has been tested in a train and will be used in agricultural machinery, power plants, and the shipping industry.

The Indonesian Biofuel Producers Association (APROBI) has expressed readiness to meet the B40 mandate, but there are challenges to consider:
• More raw materials will be required, increasing CPO needs from 11 million metric tons in 2024 to 13.9 million metric tons for B40.
• The increased domestic use of palm oil for biodiesel may impact palm oil exports, depending on market valuations.
• Further studies are being conducted on the use of B40 in non-automotive sectors.

The Indonesian Biofuel Producers Association (APROBI) is prepared to meet the B40 mandate but will require more raw materials, increasing crude palm oil needs from 11 million metric tons in 2024 to 13.9 million metric tons. Reduced palm oil exports could help meet this demand, depending on which market route is more valuable.

— Key Bridge rebuild receives federal environmental approval. This approval means the new span will bypass extensive environmental analysis, speeding up its completion. The new bridge, classified as a “replacement bridge,” will have four lanes and is expected to be completed by October 2028. The rebuild will take place in the same location as the old bridge, avoiding significant community, natural, or cultural impacts. The Maryland Transportation Authority announced the approval, with Maryland Secretary of Transportation Paul Wiedefeld calling it a “major milestone.” The Federal Highway Administration granted a “categorical exclusion,” allowing the project to proceed without an in-depth environmental study due to its replacement nature. During a Senate hearing, FHWA Administrator Shailen Bhatt confirmed the expedited process for the bridge replacement, emphasizing the importance of swift completion.

— HRS tour Day 1 results. Scouts on the first day of the Wheat Quality Council’s annual HRS tour found record yield potential in southern and east-central North Dakota. Samples collected averaged 52.5 bu. per acre, up from 48.1 bu. on similar routes last year and the five-year average (excluding 2020 because the tour was canceled due to Covid) of 42.2 bu. per acre. While yields were strong, nearly all scouting groups noted some fields had been stricken by fusarium head blight, also known as scab.

— Ag trade update: Jordan tendered to buy 120,000 MT of optional origin milling wheat.

— Sunday was recorded as the hottest day in history by a climate tracking agency that has been monitoring temperatures since the mid-1900s. Approximately a hundred cities across the U.S. are experiencing their hottest start to summer on record, while southern Europe is facing triple-digit temperatures. Global average temperatures usually peak during the Northern Hemisphere summer, from late June to early August. These temperatures are influenced by natural factors like seasons, climate patterns, and solar activity. Link for details.

— Long-term drought, in large part due to lack of rain, has been ongoing across portions of Mexico since the winter of 2022-23. The increasing drought conditions have led to water scarcity and agricultural concerns and have enhanced heat waves across the region this year. Link for details.

— NWS outlook: Major to locally extreme Heat Risk will expand across the northern High Plains as heat gradually becomes less intense over the Central Valley of California and the Great Basin... ...Scattered showers and thunderstorms will extend across the southern tier states to the East Coast with heavy rain possible along the Texas coast today... ...A low pressure wave will bring a round of showers and thunderstorms across the Great Lakes today and across New England on Thursday... ...Monsoonal thunderstorms continue across the Great Basin and into the Four Corners region with threats of localized flash flooding while fire weather danger emerges over the interior Northwest.

(NWS)

Items in Pro Farmer’s First Thing Today include:
• Varied tone in grains overnight
• Eurozone business growth stalls in July

— Menendez to resign. Sen. Bob Menendez (D-N.J.), after being convicted on 16 felony counts this month in a federal courtroom in New York, intends to resign from office on Aug. 20. Menendez’s exit means New Jersey Gov. Phil Murphy (D) will appoint a successor to serve out the remainder of Menendez’s term, which expires in less than six months. Rep. Andy Kim (D-N.J.) is running for the seat in the November election and is expected to win.

— House GOP pulls Energy-Water Bill amid internal opposition. House Republican leaders withdrew the fiscal year (FY) 2025 Energy-Water spending bill from the floor due to mounting opposition from within their party. This follows the recent rejection of the FY 2025 Legislative Branch and Ag/FDA bills, raising concerns for other upcoming appropriations bills, including the FY 2025 Interior-Environment bill. The $59.2 billion Energy-Water bill faced resistance over Energy Department permitting standards and funding for a Georgia harbor project. A provision to block revisions easing environmental permits for energy storage was contentious, with some GOP members fearing it would hinder battery storage development. Additionally, the Georgia delegation opposed the bill due to insufficient funding for the Port of Savannah dredging project, crucial for accommodating larger ships. The bill matched the White House’s $34 million request but did not include additional funds sought by Georgia lawmakers. House leaders hope to bring the bill back for a vote soon, with the Interior-Environment bill also facing similar challenges.

— Sen. Manchin’s permitting reform bill faces hurdles. Sen. Joe Manchin (I-W.Va.) introduced the Energy Permitting Reform Act of 2024 alongside Sen. John Barrasso (R-Wyo.). This bipartisan bill aims to streamline the permitting process for energy projects, encompassing both renewable and fossil fuel infrastructure. However, the bill faces significant political hurdles, particularly with the upcoming elections. While the bill has garnered support from various clean energy and transmission groups, it has also faced criticism from environmental organizations for favoring fossil fuels. The Sierra Club, for instance, has expressed concerns about the bill’s provisions that benefit the fossil fuel industry. Senate Majority Leader Chuck Schumer (D-N.Y.) has also expressed skepticism about the bill’s prospects this year. The bill’s introduction late in the session and the existing political climate make its passage challenging. If it doesn’t pass this year, it might become a priority for the next Congress.

— Israeli Prime Minister Benjamin Netanyahu is set to address a joint meeting of Congress today. Several high-profile Democrats, including Senate President Pro Tempore Patty Murray and Senators Bernie Sanders and Tim Kaine, have announced plans to boycott the speech. Vice President Kamala Harris, who is now the leading Democratic presidential candidate, will not preside over the address, opting instead to continue her campaign activities in Indianapolis.

President Biden will meet with Netanyahu at the White House tomorrow. VP Kamala Harris will also meet with Netanyahu during his visit.

Meanwhile, former President Donald Trump will meet Netanyahu on Friday at Mar-a-Lago.

— China tells Ukraine peace talks premature amid war. During the first visit by Ukrainian Foreign Minister Dmytro Kuleba to China since Russia’s invasion in 2022, Chinese Foreign Minister Wang Yi stated that the time is “not yet ripe” for peace talks to end the war. Despite this, Beijing continues to promote its proposals for a resolution that would involve Russia in the negotiations. Wang highlighted that a plan developed by China and Brazil in May for resolving the conflict had garnered “extensive support” globally. China remains committed to backing a resolution “through political means.”

— Russia offers $22,000 bonus to boost troop numbers in Ukraine. The invasion, now in its third year, has seen significant losses for Russian forces. The UK Defense Ministry estimated over 70,000 Russian soldiers were killed or wounded in May and June alone. A declassified U.S. intelligence assessment indicated that Russia has lost around 87% of its active-duty ground troops and two-thirds of its tanks since the invasion began.

— Thompson blasts Stabenow in delaying farm bill progress. House Ag Committee Chairman GT Thompson (R-Pa.) is still attempting to move forward with passing a farm bill this year, despite significant challenges. Thompson on Tuesday expressed openness to “entertain” informal pre-conference negotiations with Senate Ag Committee leaders on the farm bill. This indicates a desire to make progress, even if it’s not through the traditional legislative process.

The farm bill coalition — the rural and urban alliance credited with carrying farm bills to enactment — “is a one-sided talking point,” Thompson added, continuing to push for a $53 billion increase in farm subsidies and cuts in SNAP. “I will not apologize for advancing a bill that seeks to put the farm back in the farm bill,” said Thompson. “The romanticized ‘farm bill coalition’ often talked about is a one-sided talking point.”

Key Democrat also issues a warning. Republicans would foolishly restrict USDA access to emergency funds at the same time their nominee for the White House, former president Donald Trump, might start a new trade war, said Georgia Rep. David Scott, the senior Democrat on the House Ag Committee. The Trump administration tapped the USDA fund for $23 billion in aid to farmers during the U.S./China trade war. “Bottom line, if we want to get a farm bill done this year, as these witnesses want, we have to find a different way to pay for it without locking away this important tool for five years,” said Scott. Thompson responded: “My door remains open to negotiation from any partner willing to come to the table with a serious proposal, not more red lines.” Scott said he was willing to work on bipartisan improvements to the farm bill, “But you must be open to change.”

A panel of farmers, bankers, and extension economists on Tuesday warned Thompson about expected economic headwinds facing the agricultural sector in the coming year. Link

Thompson has been critical of Senate Ag Committee Chair Debbie Stabenow’s (D-Mich.) refusal to release a full farm bill text. He stated, “I cannot reconcile nor negotiate a bipartisan 900-page bill with a partisan 90-page summary…. Unfortunately throughout this process I have been saddled with a meddling Senate Democrat and others who do not seem to appreciate the dire circumstances in farm country,” Thompson said, referring to Stabenow. This highlights the ongoing tension between the House and Senate committees. Despite Thompson’s willingness to engage in discussions, there appears to be little movement in negotiations with Stabenow. The process seems to be at an impasse.

Recall that Stabenow said in an interview last month that her team was working on pieces of bill text, but that her colleagues don’t “need bill text, that’s normally hard to read, in order to understand what my farm bill is.” She’s added she won’t hold a markup on a complete bill until there’s “bipartisan agreement” with Republicans, a significant hurdle based on recent developments, or the lack of them.

Pre-conference not preferred: While open to informal pre-conference negotiations, Thompson stressed that this is “not his preferred option.” This suggests he would still prefer to follow the traditional legislative process if possible.

The House Ag Committee’s proposal faces budget problems, including projected farm payment costs that are not fully offset. There is strong opposition to proposed reductions in spending for the Supplemental Nutrition Assistance Program (SNAP) in the House version.

Another extension likely. Given these challenges, it’s becoming increasingly likely that Congress may need to consider extending the 2018 Farm Bill again, possibly during a lame-duck session after the November elections.

— China’s chicken feet market faces price surge due to Brazil export ban due to a Newcastle virus outbreak. Brazil, supplying over 40% of China’s chicken feet imports, suspended shipments over the weekend, causing wholesale prices to jump by around 10%. This increase adds to the already rising costs, with prices up by a third since early 2022, according to a Bloomberg account (link).

Despite local production, China heavily relies on imports, purchasing around $2.3 billion worth of chicken feet last year. The growing popularity of chicken feet in hotpot and noodle restaurants, along with innovative recipes, has fueled demand. Chain outlets and semi-cooked food producers have also emerged to meet this surge.

Recent supply shocks, including bird flu outbreaks, reduced Chinese imports by 20% last year and by 25% in the first half of 2024. The Brazilian ban, affecting a key supplier, could exacerbate price hikes, especially as China faces economic downturns. Whether Brazil can quickly control the virus will be crucial, as the country accounts for 60% of China’s chicken product imports, with chicken feet making up a significant portion.

(Bloomberg)

— China aims to control dairy, beef output as weak sales hit prices. China plans to implement measures to help dairy and beef producers limit production to prevent prices from falling further, an ag ministry official said. Earlier this year, China issued regulations to reduce its breeding sow population. Prices of beef and dairy, along with pork and poultry are falling in China as shoppers, grappling with a slowing economy, scale back purchases. “The prices of beef and raw milk in the first half of the year fell by 12.1% and 12.5%, respectively, and beef cattle and dairy cow breeders are making losses,” said Wang Lejun, the ag ministry’s Chief Animal Husbandry Officer. “For beef and dairy cows, we want to guide farms to optimize and adjust the herd structure, moderately eliminate old and low-yielding cows, and better match production development with market demand,” he said.

— Malaysia reviews anti-dumping laws amid influx of cheap Chinese goods. The updated laws are expected to be presented to parliament next year. Deputy Trade Minister Liew Chin Tong emphasized the government’s commitment to protecting small- and medium-sized enterprises from unfair trade practices. From 2015 to 2023, Malaysia enforced nine anti-dumping measures against Chinese exporters. The Trade Ministry is considering collaborating with the Association of Chinese Chambers of Commerce and Industry Malaysia to study the effects of Chinese imports. However, Liew highlighted the importance of balancing trade relations, noting that China is Malaysia’s largest trading partner. Trade between the two nations increased by 5.9% to 151 billion ringgit ($29.8 billion) from January to April 2024 compared to the same period in 2023.

— Carbon emissions from the shipping industry have surged, partly due to vessels taking longer routes around South Africa to avoid Houthi militant attacks in the Red Sea. Ships emitted about 450 million tons of CO2 in the first half of 2024, a 6% increase from the previous year, according to Marine Benchmark. Container shipping rates have also risen since the Houthis began their campaign. Despite US and European efforts, maritime hostilities continue, with June experiencing the highest number of attacks on commercial ships in 2024.

(Bloomberg)

— Lawmakers urge Treasury to expedite Section 45Z Clean Fuel Tax Credit regulations. The letter from 14 senators and 36 House members to Treasury Secretary Janet Yellen highlights the urgency for the Treasury Department to issue regulations for the Section 45Z clean fuel production tax credit. This push for timely guidance aligns with the critical deadlines already established for the credit:

• Registration deadline: Producers must have applied for registration by July 15, 2024, to ensure eligibility for the credit starting Jan. 1, 2025.
• Credit effective date: The Section 45Z credit becomes effective for clean fuels produced after Dec. 31, 2024, and before Jan. 1, 2028.

Proposed deadlines from lawmakers:
• September 2024: Issuance of regulations
• November 2024: Final rule publication

This timeline would allow producers to understand the full scope of the credit and its requirements, make informed decisions about investments and production plans. As noted by industry groups, any delays in publishing guidance could “disrupt project timelines, impede capital flows, and threaten existing production and demand for low carbon renewable fuels.”

The Treasury Department and IRS have already provided some initial guidance through Notice 2024-49, which outlines registration requirements and identifies potentially eligible fuels. However, stakeholders are awaiting more comprehensive regulations that will likely address:
• Detailed eligibility criteria for fuels and production processes
• Methods for calculating emissions rates
• Specific documentation and reporting requirements

— Bill introduced to extend biodiesel tax credit and prevent ‘double-dipping’. Rep. Mike Carey (R-Ohio) introduced the Biodiesel Tax Credit Extension Act of 2024 (HR 9060), which seeks to extend the biodiesel tax credit (40A credit) through 2025. The bill excludes sustainable aviation fuel (SAF) and includes a provision preventing fuels eligible for the forthcoming 45Z Clean Fuel Production Credit from claiming the biodiesel tax credit. Currently, there is no companion legislation in the Senate. This bill is noteworthy for its potential impact on end-of-year and tax extender legislation. The bill has been referred to the House Committee on Ways and Means.

The bill has garnered support from various industry groups, including NATSO (representing travel centers and truck stops), SIGMA (fuel marketers), and the National Association of Convenience Stores (NACS). These organizations commend the bill for its role in promoting renewable fuels, reducing greenhouse gas emissions, and supporting the economy.

Biodiesel and renewable diesel can reduce emissions by up to 80% compared to petroleum-based diesel. The credit also helps lower the cost of diesel fuel for truck drivers, which can reduce shipping costs and consumer prices.

Of note: Contacts note with the 45Z credit not available for imported biodiesel, the extension of the tax credit could allow those shipments to qualify for that tax credit.

— General Motors said it would delay plans for a new Buick electric vehicle and push back the opening of an EV truck factory, the latest retrenchment by automakers that had been pushing hard into battery-powered cars. GM cited strong demand and higher profitability from its gas-powered trucks and SUVs as a reason for the delay. These vehicles continue to be more profitable compared to EVs, which are still facing high production costs. The overall market for EVs has not grown as quickly as anticipated. Many early adopters who were willing to pay a premium for EVs have already made their purchases, and the broader consumer base has shown reluctance due to higher costs and concerns over charging infrastructure.

Despite these delays, GM remains committed to its long-term vision of an all-electric future. The company plans to continue investing in EV technology and infrastructure, albeit at a more measured pace to align with market demand and production capabilities.

— Elon Musk announced Tesla will delay further investment in its planned factory in Mexico until after the 2024 U.S. presidential election. This decision is primarily driven by concerns over potential tariffs on Mexico-made goods, as proposed by Republican nominee Donald Trump. Trump has pledged to impose heavy tariffs on vehicles produced in Mexico, which creates significant political and economic uncertainty for Tesla’s investment plans.

In the meantime, Tesla will focus on increasing production at its existing facilities, including its Texas plant, where future products like the Robotaxi and the humanoid robot named Optimus will be produced. Tesla had announced plans to build a Gigafactory in Nuevo Leon, Mexico, with production expected to start in 2026. The project had already faced delays due to high-interest rates and other factors.

Meanwhile, the two largest U.S. steelmakers, Nucor and Cleveland-Cliffs, have been advocating for further trade restrictions against Mexico. They argue that Mexico is being used as a conduit for Chinese steel to enter the U.S. market, thereby circumventing U.S. trade laws and depressing domestic steel prices. U.S. steelmakers claim that Chinese steel is being routed through Mexico to avoid U.S. tariffs, undermining American steel producers and violating trade agreements. In response to these concerns, the Biden administration has introduced new tariffs on steel and aluminum products originating from Mexico. This move aims to close loopholes and enforce stricter trade regulations to protect U.S. steelworkers and industries.

— EPA handed out $4.3 billion in grants for climate projects around the U.S. As the end of Biden’s term closes in, federal agencies will be racing to push out remaining cash from the Inflation Reduction Act.

The grants will fund 25 selected projects across 30 states and one Tribe. Some notable allocations include:
• $396 million to Pennsylvania for reducing industrial greenhouse gas emissions.
• Nearly $500 million for transportation and freight decarbonization at the ports of Los Angeles and Long Beach.
• $307 million to Nebraska for “climate-smart” agriculture and energy efficiency in commercial and industrial facilities.
• Nearly $250 million to improve electric vehicle infrastructure along Interstate 95.
• $450 million to accelerate the adoption of cold-climate heat pumps and water heaters in several Northeastern states.

— Colorado ramps up H5N1 dairy testing. Colorado began requiring dairies to test milk supplies for the H5N1 virus every week, the state’s lead veterinarian told Reuters. The state’s new mandate aims to identify additional farms that could be infected and spread the disease to other dairies or poultry flocks. Colorado has confirmed infections in 47 dairy herds since the U.S. outbreak in dairy cows began in late March, with about 60% of its cases detected in the past month. A USDA epidemiological “strike team” arrived in Colorado this week to assess how the virus may be spreading among dairies.

— How healthy is sweet corn? Eating it straight off the cob is summertime bliss. Here are the nutritional benefits, plus some delicious recipes. Link to more via the New York Times.

— Former USDA Secretary Sonny Perdue has said he has no interest in returning as USDA secretary should former President Donald Trump prevail in November. “I tell everybody I would rather be married,” Perdue told Feedstuffs. He is currently chancellor of the state university system in Georgia.

— Surge in crime has California voters and lawmakers weighing whether to roll back changes to the law made a decade ago that reduced penalties for shoplifting and drug possession, the New York Times reports (link).

— U.S. foreign investment watchdog reports record penalties. The Committee on Foreign Investment in the U.S. (CFIUS) imposed more penalties in 2023 than in its entire 50-year history, reflecting heightened concern about China. The panel assessed four civil penalties last year, surpassing the two penalties issued since its inception in 1975. CFIUS which reviews foreign investments in U.S. real estate and companies for national security issues, did not disclose the entities penalized. The committee, managed by the U.S. Treasury Department, previously issued penalties in 2018 and 2019.

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