Good morning!
No overnight grain trade... There was no overnight grain trade, as markets remained closed for Christmas. Grain and livestock markets will resume trading at 8:30 a.m. CT. Chinese corn, soybean, soymeal and soyoil futures at the Dalian Commodity Exchange closed higher. The U.S. dollar index and front-month crude oil futures are both modestly firmer this morning.
Weekly export sales pushed back to Friday... Due to Wednesday’s Christmas holiday, export sales data for the week ended Dec. 19 will be published Friday morning.
Update on Section 45Z regulations... The Section 45Z Clean Fuel Production Credit, replacing the Section 40B credit for sustainable aviation fuel (SAF), is set to take effect on Jan. 1, 2025. While final regulations are pending, the U.S. Department of Treasury has committed to issuing guidance before the end of the Biden administration on Jan. 20. Treasury expects to release preliminary guidance soon, enabling renewable fuel producers to demonstrate eligibility and claim the credit for 2025 production. This guidance will provide basic requirements for compliance and claims. Producers must register by Jan. 1, 2025, to qualify. Several key aspects remain under development: Finalizing the 45Z-GREET model for tax credit calculations; addressing climate-smart agriculture practices; and clarifying the application of the GREET model to various feedstocks. The delay in finalizing comprehensive guidelines has created uncertainty within the biofuels industry, with some producers scaling back or postponing investments. Industry groups are pressing for prompt guidance to facilitate a smoother transition and enable long-term planning. While full regulations may take time, the expected guidance by Jan. 20 should establish a framework for claiming the credit, with further refinements to follow under the Trump administration.
Russia’s wheat exports to decline further in 2025-26... Russia will remain the world’s leader in wheat exports in 2024-25, though IKAR agricultural consultancy projects its share of global wheat trade will fall to 20% from 25% the previous year. IKAR projects Russia will export 41 MMT of wheat in the upcoming 2025-26 marketing year.
Indian rice export prices fall to 17-month low... Indian rice export prices extended declines to a 17-month low this week on depreciation in rupee to a record low and muted demand. India’s 5% broken parboiled variety was quoted at $439.00 to $445.00 per ton, down from the last week’s $440.00 to $446.00. Indian 5% broken white rice was quoted $446.00 to $453.00 per ton.
World Bank raises China’s GDP forecast for 2024, 2025... The World Bank raised its forecast for China’s economic growth in 2024 and 2025, but warned that subdued household and business confidence, along with headwinds in the property sector, would keep restricting growth. Thanks to the effect of recent policy easing and near-term export strength, the World Bank sees China’s GDP growth at 4.9% this year, up from its June forecast of 4.8%. Although growth for 2025 is also expected to fall to 4.5%, that is still higher than the World Bank’s earlier forecast of 4.1%. Slower household income growth and the negative wealth effect from lower home prices are expected to weigh on consumption into 2025.
China’s ‘Two Sessions’ set for March... China’s National People’s Congress (NPC) will convene its annual meeting on March 5, 2025, in Beijing, while the Chinese People’s Political Consultative Conference (CPPCC) is set to begin on March 4. Collectively known as the “Two Sessions,” these gatherings are pivotal in China’s political calendar. The NPC meeting draws significant attention as it traditionally includes the announcement of the nation’s annual GDP growth target.
China extends EU brandy antidumping probe amid trade tensions... China’s commerce ministry announced a three-month extension to its antidumping investigation into EU brandy imports, citing the complexity of the case. The probe, now set to conclude on April 5, follows preliminary findings that EU brandy imports, primarily from France, threaten China’s domestic industry. Provisional duties of nearly 40% have been imposed since October. The EU has taken the matter to the World Trade Organization. Analysts view the investigation as retaliation against France, which supported EU duties on Chinese electric vehicle imports. French brandy accounted for 99% of China’s $1.7 billion brandy imports in 2023.
China’s sow herd, hog slaughter continue to decline... China’s sow herd totaled 40.80 million head at the end of November, according to its ag ministry, down 1.9% from last year. For the first 11 months of this year, China slaughtered 296.11 million head of hogs, down 2.6% from the same period last year.
Will cattle continue to face long liquidation?... Liquidation of long positions has been a featured activity in live cattle futures since the February contract rose to the highest level since March on Dec. 16, despite strength in the cash market. With cash trade expected to be limited this week and next, and funds heavily long, there’s risk of more liquidation pressure, despite futures trading well under cash.
February hogs tracking cash index... February lean hog futures hold a modest discount to the CME lean hog index. Price action in futures is likely to remain light through the holiday period, closing tracking movement in the cash index.
Holiday demand news... Algeria purchased 630,000 MT of optional origin milling wheat.
See ‘Policy Updates’ for late-breaking morning news updates... For updates to items in “First Thing Today” or any late-breaking morning news stories, check “Policy Updates” on www.profarmer.com.
Today’s reports
- 10:00 a.m. Weekly Ethanol Production — EIA
- 2:00 p.m. Broiler Hatchery — NASS