House Clears Reconciliation Measure; Senate Will Make Big Changes
MAHA Commission report today | WOTUS | Weak 20-year bond auction rattles Treasury market | NGFA urges CFTC to reject 24/7 ag futures trading | Brazil’s meat industry seeks expanded cold storage at ports amid HPAI crisis | EPA to finalize 2026 biofuel mandate ‘very soon,’ says Zeldin | EU sets strictest deforestation checks on four nations | DOE releases responses to 100,000+ comments on 2024 LNG export study
Updates: Policy/News/Markets, May 22, 2025
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215-214-1 vote is a major victory for Speaker Mike Johnson
The legislation includes $3.8 trillion in tax cuts and cuts in growth of Medicaid and SNAP coupled with the phase out of some clean energy tax credits from the Inflation Reduction Act, and increases for reference prices in Title I of the farm bill.
The vote was 215-214-1. Every Democrat voted no. Reps. Thomas Massie (R-Ky.) and Warren Davidson (R-Ohio) were the two Republicans who voted against the legislation. HFC Chair Andy Harris (R-Md.) voted present.
Note: We issued several House reconciliation items earlier this morning:
Some key provisions:
The Congressional Budget Office said the bill will increase the budget deficit by $3.8 trillion between 2026-2034.
House Ag Chair GT Thompson (R-Pa.) said: “The One Big Beautiful Bill Act delivers on the mandate voters gave President Trump and Republicans by stopping tax hikes, reigning in spending, investing in rural America, and restoring integrity to programs like SNAP, and I look forward to working with the Senate to get it to the President’s desk.”
Leading Democrats of the House Ag Committee slammed the $300 billion in food assistance cuts included in the Republicans’ budget reconciliation bill after it was voted out of the House along party lines. “The Republicans’ budget will make America hungrier, poorer and sicker. Parents struggling to afford groceries for their families and seniors living on fixed incomes will have their food taken away if this bill becomes law,” said Ranking Member Angie Craig (D-Minn.). “At a time when grocery prices are going up and retirement accounts are going down, we must protect the basic needs programs that help people afford food and health care. As a mother and someone who needed food assistance at periods in my own childhood, I condemn this attempt to snatch food off our children’s plates to fund tax breaks for large corporations. I call on my Senate colleagues to stop this attack on working Americans that takes food away from families and threatens a full, five-year bipartisan farm bill.”
House Ag Dems released the following table:
What’s Next: The bill will head to the Senate, where significant revisions — especially to tax provisions — are expected. Senate Republicans are signaling plans to overhaul key sections, even as a potential debt ceiling crisis looms in August. If altered, the House would need to pass the revised version with its razor-thin three-seat GOP majority — and against a louder Democratic campaign.
Top flashpoints ahead:
— House Republicans made sweeping, last-minute changes to the Medicaid and health insurance provisions in their broad tax-and-spending bill, reshaping key healthcare policies as they push for final passage.
Key revisions:
These changes mark a significant rightward pivot in the health care elements of the GOP’s legislative package, reflecting deeper ideological divides as the bill moves toward a floor vote. |
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WOTUS |
— EPA and Army to host final WOTUS listening session in Utah
Public invited to share input on Clean Water Act definition amid regulatory overhaul
EPA and U.S. Army will hold their final public listening session on the definition of “waters of the United States” (WOTUS) in Salt Lake City, Utah, on Thursday, May 29. The hybrid event — offered in person and virtually — seeks feedback to help shape a forthcoming revision to the 2023 WOTUS rule.
The session follows EPA Administrator Lee Zeldin’s March 12 announcement that the agencies would revise the definition to align with the Supreme Court’s Sackett v. EPA decision, aiming to reduce permitting burdens and lower business compliance costs nationwide.
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FINANCIAL MARKETS |
— Equities today: Asian and European stock markets were lower in overnight trading. U.S. stock indexes are pointed to narrowly mixed openings. U.S. bonds and stocks stabilized following a turbulent session, as investor attention shifted to ongoing negotiations around President Donald Trump’s tax and spending bill. Treasuries edged higher across the yield curve, snapping a multi-day selloff. The 30-year yield had previously surged to its highest level since 2023. S&P 500 futures signaled a flat open after prior volatility. The dollar rose 0.2%, reflecting a cautious shift to safer assets. Bitcoin extended gains, setting new all-time highs. Oil declined amid easing geopolitical tensions and demand uncertainties. In Asia, Japan -0.8%. Hong Kong -1.2%. China -0.2%. India -0.8%. In Europe, at midday, London -0.6%. Paris -0.9%. Frankfurt -0.8%.
Equities yesterday:
— Weak 20-year bond auction rattles Treasury market
Yields climb as investor demand falters amid fiscal concerns
A $16 billion auction of newly issued 20-year U.S. Treasury bonds on Wednesday drew weak demand, pushing yields to new 2025 highs and triggering fresh anxiety in fixed-income markets.
Investors accepted a yield of 5.047%, notably higher than the 4.613% average of the past six auctions and above pre-auction levels—marking the first 20-year bond sale with a yield over 5% since October 2023. The lackluster demand reflects growing unease over U.S. fiscal policy and long-term debt sustainability.
The 20-year bond yield jumped to 5.103% post-auction, its highest level of the year, while the 30-year yield hit 5.071%, also a 2025 peak.
“The auction was weak and bond yields across the curve are at the highs of the day in response,” wrote Bleakley Financial Group CIO Peter Boockvar.
The 20-year bond has long been considered an awkward instrument in the Treasury market — less liquid and less favored than the 10- and 30-year maturities. Despite being reintroduced in 2020 under Treasury Secretary Steven Mnuchin, its structure continues to confound traders, as it often yields more than the 30-year bond—a reversal of typical maturity risk dynamics.
The poor auction arrives amid broader investor concerns: Congress is advancing a tax bill that could add $3.8 trillion to the national debt by 2034, intensifying worries over debt servicing. Just last week, Moody’s stripped long-term U.S. debt of its Aaa rating, citing bipartisan inaction on deficits.
Bottom Line: The confluence of weak auction demand, elevated yields, and political uncertainty underscores mounting pressure on the Treasury as it faces record borrowing needs.
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AG MARKETS |
— NGFA urges CFTC to reject 24/7 ag futures trading
Concerns raised over volatility, manipulation risk, and market imbalance
The National Grain and Feed Association (NGFA) is urging the Commodity Futures Trading Commission (CFTC) to reject proposals to expand agricultural futures trading to a 24/7 schedule. In a letter (link) to the agency, the group warned that continuous trading could fuel unnecessary volatility and heighten the risk of market manipulation, especially when cash markets are closed.
— Brazil’s meat industry seeks expanded cold storage at ports amid HPAI crisis
Industry response to export disruptions and cargo rejections
Brazil’s meat lobby group, ABPA — representing major global food processors such as JBS SA and BRF SA — has formally requested government authorization to increase cold storage capacity at the country’s ports. This move comes in direct response to significant trade disruptions following Brazil’s first confirmed outbreak of highly pathogenic avian influenza (HPAI) in a commercial poultry facility in Rio Grande do Sul.
The outbreak has triggered immediate trade restrictions from key importing countries. Notably, China has suspended poultry imports from Brazil for 60 days, and other nations, including Mexico and Chile, have also announced rejections of shipments in transit. These measures are based on the timing of cargo dispatch relative to the outbreak’s confirmation, with the risk of rejection varying from 14 to 28 days depending on the importing country’s veterinary authorities.
ABPA’s request to expand cold storage at ports is a mitigation strategy aimed at managing the logistical challenges posed by these sudden trade barriers. Exporters are now faced with the task of either handling returned cargoes or seeking alternative markets for products already shipped or in transit. The additional cold storage would provide temporary relief, allowing companies time to reroute or store perishable goods until trade routes stabilize, or new buyers are found.
Brazil accounts for approximately 39% of global chicken exports, making the impact of these trade disruptions particularly significant for both the domestic industry and international poultry markets. While the Brazilian government, through the Ministry of Agriculture and Livestock (MAPA), has activated national contingency plans—including containment and eradication of the outbreak—uncertainties remain regarding the duration and extent of international restrictions.
ABPA and the government emphasize that all necessary biosecurity and notification protocols are being followed, and that poultry meat and eggs remain safe for consumption. However, the industry’s ability to weather the crisis will depend in part on logistical adaptations such as expanded cold storage, as exporters navigate a rapidly evolving global trade environment.
— Agriculture markets yesterday:
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ENERGY MARKETS & POLICY |
— Oil prices dropped by more than 1% on Thursday after a report that OPEC+ is discussing a production increase for July, stoking concerns that global supply could exceed demand growth. Brent futures lost $1.05 cents, 1.6%, to $63.86 a barrel. U.S. West Texas Intermediate crude was down 98 cents, 1.6%, at $60.59.
— Oil declined Wednesday as U.S./Iran talks offset geopolitical jitters
Inventory builds and Kazakh output add to downward pressure
Oil prices declined Wednesday after Oman confirmed that a new round of nuclear talks between the U.S. and Iran would take place later this week. The announcement eased earlier gains fueled by geopolitical tensions, particularly a CNN report suggesting Israel may be preparing to target Iranian nuclear facilities. Brent crude closed at $64.91, down $0.47 (-0.7%). WTI crude settled at $61.57, down $0.46 (-0.7%)
Initial fears of disrupted Iranian oil flows — estimated at up to 500,000 barrels per day — receded as diplomatic channels reopened. Analysts note that OPEC+ could absorb such short-term shocks through production adjustments.
Additional bearish factors included a surprise 1.3-million-barrel increase in U.S. crude inventories and smaller-than-expected drawdowns in gasoline and distillate stocks. Meanwhile, Kazakhstan reported a 2% rise in oil production in May, diverging from broader OPEC+ efforts to tighten supply.
— EPA to finalize 2026 biofuel mandate ‘very soon,’ says Zeldin
Agency accelerates timeline amid industry pressure and policy backlog
Environmental Protection Agency (EPA) Administrator Lee Zeldin told senators Wednesday that a proposal setting 2026 Renewable Fuel Standard (RFS) volumes — and likely volumes for additional years — is nearing release. The proposed rule has been sent to the White House Office of Management and Budget, the final step before publication.
Pressed by Sen. Pete Ricketts (R-Neb.) on timing, Zeldin replied that the EPA is targeting a “much, much faster” timeline than summer or fall. “We’ll finalize this as quickly as we possibly can,” he said, emphasizing the administration’s push to break the logjam on overdue biofuel rulemaking.
The RFS sets annual blending mandates for conventional and advanced biofuels, directly affecting U.S. crop demand, biofuel margins, and retail fuel pricing.
Zeldin last week at a House subcommittee hearing also highlighted efforts to address a longstanding backlog of small refinery exemption (SRE) petitions, which he said were previously ignored. “None of these were getting approved at all in the last administration,” Zeldin noted. “We want to get caught up as quickly as we can.”
While the EPA has not given specific dates, the Clean Air Act requires new biofuel volumes to be finalized 14 months before the compliance year — making timely release of proposed 2027 targets essential before November.
Industry groups are divided. The American Petroleum Institute and Clean Fuels Alliance America have urged an increase in the biomass-based diesel mandate to 5.25 billion gallons next year. Others, citing a sharp early-2025 drop in biofuel output and unresolved clean fuel tax credit talks in Congress, advise caution.
Stakeholders have meetings scheduled with the Trump administration through June 9, as we detailed in Updates (link). However, the EPA could fast-track the process — as it did last year under President Biden by canceling meetings to finalize a cellulosic biofuel cut more quickly.
— DOE releases responses to 100,000+ comments on 2024 LNG export study
Feedback will guide future non-FTA LNG export decisions, but study will remain unchanged
The Department of Energy (DOE) officially released its responses to the public comments received on the Biden administration’s 2024 Liquefied Natural Gas (LNG) Export Study, titled “Energy, Economic, and Environmental Assessment of US LNG Exports.”
According to a notice published in the Federal Register (link), the DOE received over 100,000 comments from a wide range of stakeholders — including natural gas industry representatives, environmental groups, industrial users, academics, think tanks, and private citizens.
DOE confirmed it has evaluated and addressed substantive issues raised in those submissions but stated that no revisions will be made to the study itself. Instead, the original study and the public comments will be used to guide future decisions on whether LNG export applications — especially to non-Free Trade Agreement (non-FTA) countries — align with the public interest. “Both the 2024 LNG Export Study, and the comments will inform DOE's determination of the public interest,” the agency wrote.
This development comes amid heightened scrutiny of U.S. LNG policy, balancing global energy demands with domestic environmental and economic considerations.
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TRADE POLICY |
— EU sets strictest deforestation checks on four nations
Brazil, Indonesia escape top risk category under new import rules
The European Commission unveiled its final classification under the EU’s landmark anti-deforestation law, assigning the “high-risk” label — and the toughest import scrutiny — to just four countries: Belarus, Myanmar, North Korea, and Russia. Surprisingly, major deforestation-linked exporters like Brazil and Indonesia are placed in the “standard-risk” category, meaning they will face lighter compliance checks for key commodities entering the European Union.
The new law covers soy, beef, palm oil, wood, cocoa, and coffee, along with derivatives like leather, chocolate, and furniture. Under the legislation:
- High-risk countries face 9% compliance checks
- Standard-risk countries face 3% compliance checks
- Low-risk countries, such as the United States, face 1% checks
All companies must prove origin and provide verifiable proof that products weren’t sourced from land deforested after 2020. Violations may trigger fines up to 4% of EU turnover per country.
The decision reflects a balance between trade diplomacy and environmental enforcement, with the European Union favoring diplomatic caution toward major economies while maintaining regulatory pressure on outliers.
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POLITICS & ELECTIONS |
— Republican Sen. Tommy Tuberville intends to announce he is running for Alabama governor next week during the Memorial Day recess, Punchbowl News reports, citing people familiar with the lawmaker’s thinking.
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WEATHER |
— NWS outlook: Severe weather potential in Southern Plains today; cold and rainy in
the Northeast... ...Above average temperatures across southern tier states and West; below average temperatures from Northern Plains to Northeast/Mid-Atlantic.
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KEY DATES IN MAY |
23: Existing Home Sales | New Home Sales | Food Price Outlook | Cattle on Feed | Chickens & Eggs | Cold Storage
25: Indianapolis 500 | French Open
26: Memorial Day, markets & U.S gov’t offices closed
27: Durable Goods Orders | Consumer Confidence | Crop Progress
29: GDP | Outlook for U.S. Agricultural Trade
30: International Trade in Goods| Personal Income and Outlays with PCE Price Index | Consumer Sentiment | Agricultural Prices
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KEY DATES IN JUNE |
2: USDA Industrial reports — Grain Crushing, Fats & Oils; Crop Progress
3: JOLTS
4: ADP Employment
5: International Trade; weekly Export Sales
6: Employment; Livestock and Meat International Trade Data
7: Belmont Stakes
9: Wholesale Trade; U.S. Agricultural Trade Data Update; Crop Progress
11: CPI
12: PPI-FD; Crop Production, WASDE; FAS World Markets and Trade reports, World Agricultural Production; weekly Export Sales
12: U.S. Open
13: Consumer Sentiment
15: Father’s Day
15: FIFA World Cup
16: ERS Outlook Reports; Crop Progress
16: Quarterly estimated taxes due; 2024 tax returns for individuals living abroad due
17: Retail Sales; Business Inventories; Import and Export Prices; Industrial Production/Capacity Utilization; FOMC meeting begins
18: Housing Starts; FOMC (interest rates and updated economic forecasts); USDA Cost of Production Forecast; Livestock, Dairy and Poultry Outlook; Sugar and Sweeteners Outlook
19: Juneteenth Holiday — markets and government offices closed
20: Cattle on Feed; Milk Production
20: First day of summer
23: Existing Home Sales; Chickens and Eggs; Crop Progress
24: Consumer Confidence
25: New Home Sales; Food Price Outlook; Cold Storage
26: Durable Goods; International Trade in Goods; GDP; Pending Home Sales Index; weekly Export Sales; Hogs and Pigs
27: Personal Income and Expenditures, incl PCE Price Index; Consumer Sentiment; Agricultural Prices
30: Acreage; Grain Stocks; Rice Stocks; Crop Progress
30: Wimbledon (tennis)