News/Markets/Policy Updates: Dec. 5, 2024
— Political crisis in France: PM ousted in no-confidence vote. France faces a deepening political crisis as far-right and leftist parties united to oust Prime Minister Michel Barnier in a no-confidence vote over a budget dispute. This marks the first such successful vote since 1962, coming just months after President Emmanuel Macron’s snap elections. Opposition parties, including Marine Le Pen’s far-right faction, are now targeting Macron, with claims that his mandate is faltering. Some analysts suggest the opposition aims to create instability to undermine the government further. Markets are holding steady for now. — OPEC+ delayed the revival of its oil production by three months, a delegate said, the third time it’s deferred the move while crude prices struggle amid a looming surplus. This delay affects a series of supply increases that were originally scheduled to begin with an initial hike of 180,000 barrels per day in January 2025. According to a delegate, the group will now start the production increase in April 2025, with a slower unwinding of the cuts that is expected to finish in September 2026. This decision reflects OPEC+'s ongoing efforts to manage global oil supply and support crude prices. However, even with this delay, some increase in oil production is still expected:• UAE production increase: The United Arab Emirates has been granted permission to gradually ramp up an additional 300,000 barrels per day of production over the course of 2025.• Kazakhstan’s expansion: The country’s major expansion of the Tengiz oil field may present a challenge to OPEC+'s efforts to maintain market balance. — Court overturns USDA rule on GE crops; APHIS responds. USDA’s Animal and Plant Health Inspection Service (APHIS) acknowledged a U.S. District Court ruling that vacates its May 2020 final rule on genetically engineered (GE) organisms. APHIS confirmed that permits and reviews issued before Dec. 2, 2024, remain valid. The agency is evaluating next steps and plans to update stakeholders soon, referencing recent modifications related to GE organism movement announced on Nov. 13. — A look at Trump’s top nominees so far (source: Axios Visuals) — Trump taps Navarro for senior counselor for trade and manufacturing. Peter Navarro will take on a senior role in Donald Trump’s second administration, the president-elect announced. He will serve as senior counselor for trade and manufacturing, a position Trump highlighted as central to his “Buy American, Hire American” agenda during his first term. Navarro recently served four months in prison for refusing to co-operate with the Jan. 6 investigation. In his announcement, Trump called Navarro’s treatment by the “Deep State” unjust and praised his work on trade policy, promising more decisive actions in his next term. — Trump picks Kelly Loeffler to lead Small Business Administration (SBA). “Kelly will bring her experience in business and Washington to reduce red tape, and unleash opportunity for our Small Businesses to grow, innovate, and thrive. She will focus on ensuring that SBA is accountable to Taxpayers by cracking down on waste, fraud, and regulatory overreach,” Trump posted on Truth Social, also noting that she’s co-chairing his inauguration. Loeffler is a businesswoman and former GOP U.S. Senator from Georgia. She served in the Senate from 2020 to 2021 after being appointed to fill a vacancy. She has a background in business, having worked for companies like Intercontinental Exchange and Bakkt. Loeffler holds a bachelor’s degree in business administration from the University of Illinois and an MBA from DePaul University. She was considered the wealthiest member of Congress during her tenure, with an estimated net worth of over $1 billion combined with her husband, the CEO of Intercontinental Exchange, — Trump taps crypto-friendly leader for SEC. President-elect Donald Trump has appointed Paul Atkins, a conservative lawyer and former SEC commissioner, to lead the Securities and Exchange Commission. Known for his skepticism of heavy regulation, Atkins is expected to adopt a crypto-friendly stance, a sharp departure from the Biden administration’s aggressive oversight, which included lawsuits against major crypto exchanges. Trump’s move aligns with his campaign promise to support the crypto industry. His endorsement has also energized the memecoin market. — Some other nominees Trump announced on Wednesday (source: Axios): — Nationwide injunction halts Corporate Transparency Act enforcement. The U.S. District Court for the Eastern District of Texas has issued a nationwide preliminary injunction blocking enforcement of the Corporate Transparency Act (CTA), set to take effect Jan. 1, 2025. The law mandates certain small businesses to disclose beneficial ownership information to the Treasury Department’s Financial Crimes Enforcement Network (FinCEN), with penalties for non-compliance including daily fines and prison time. In Texas Top Cop Shop Inc. v. Garland, the court found the CTA’s reporting requirements likely unconstitutional and harmful to businesses. The government is expected to appeal the decision to the U.S. Court of Appeals for the Fifth Circuit. Similar rulings and ongoing challenges in other federal courts underscore the contentious legal landscape surrounding the CTA. Organizations like the NCBA have advocated against the law, urging cattle producers and small businesses to prepare while continuing efforts to repeal or delay enforcement. Businesses are advised to consult legal and financial professionals regarding potential compliance obligations. — CBO projects economic impact of expiring Trump tax cuts. The Congressional Budget Office (CBO) released projections detailing the economic impact of key provisions from the 2017 Trump tax cuts set to expire at the end of 2025 (link), alongside the phase-out of full expensing for equipment and machinery (link). Of note: OMB Director Phillip Swagel noted in a blog post (link) that unexpectedly high federal revenue since the tax cuts has been driven by inflation, new tariffs, and increased economic activity. In Congress, House Ways and Means Committee Chair Jason Smith (R-Mo.) supports Senate Finance Committee Chair Mike Crapo’s (R-Idaho) stance to treat extending these tax cuts as cost-free when calculating the cost of a tax bill, citing current law as justification. Any new tax cuts would be scored differently, with some wants to have budget offsets for any such additional tax cuts. — Upcoming CBO report release schedule. The Congressional Budget Office (CBO) has announced key upcoming reports on the federal budget and economic outlook: Of note: CBO last published its economic and budget projections in June 2024 and demographic projections in January 2024. — Biden administration secures long-term telework for SSA employees. The Biden administration has solidified telework policies for federal employees in the Social Security Administration (SSA) through a new agreement with the American Federation of Government Employees (AFGE), representing 42,000 workers. Key provisions include hybrid work arrangements, with in-office requirements ranging from two to five days per week, locked in until 2029. While supporters argue this move will improve staffing and service capabilities, critics like Rep. Jason Smith (R-Mo.) and Rep. James Comer (R-Ky.) express concerns about its impact on face-to-face services for seniors. This policy sets the stage for future debates over federal workforce management as the incoming Trump administration signals potential changes. Of note: The incoming Trump administration could potentially alter the Biden administration’s actions regarding telework guarantees for federal workers, but doing so would face legal, contractual, and procedural hurdles. However, broader workforce changes under Schedule F could indirectly impact these policies over time. |
| MARKET FOCUS |
— Equities today: Asian and European stock markets were mixed overnight. U.S. stock indexes are pointed toward slightly lower openings. In Asia, Japan +0.3%. Hong Kong -0.9%. China +0.1%. India +1%. In Europe, at midday, London flat. Paris +0.3%. Frankfurt +0.6%.
U.S. equities yesterday: All three major indices finished with sizable gains on Wednesday, propelling them all to record finishes with the Dow atop the 45,000 mark for the first time. The Dow gained 308.51 points, 0.69%, at 45,014.04. The Nasdaq moved up 254.21 points, 1.30%, at 19,735.12. The S&P 500 added 36.61 points, 0.61%, at 6,086.49.
— Disney boosts dividend 33% after streaming business profitability. Walt Disney Co. announced a 33% increase in its annual dividend to $1 per share, reflecting the success of its two-year turnaround strategy. The payout will be distributed in two installments of 50 cents each, set for January and July 2025. This follows Disney’s fiscal 2024 dividend of 75 cents per share and marks the company’s ongoing recovery since suspending dividends during the pandemic in 2020. CEO Bob Iger highlighted the company’s renewed strength and future investments, aligning with Disney’s positive earnings forecast and a profitable streaming business.
— Oil prices declined Wednesday ahead of OPEC+ decision. Oil futures fell sharply on Wednesday as markets anticipated the OPEC+ decision on production cuts. Brent crude dropped $1.31 (1.78%) to $72.31 per barrel, while WTI crude declined $1.40 (2%) to $68.54. This follows a 2.5% gain in Brent on Tuesday. As previously noted, OPEC+ delayed the revival of its oil production by three months, a delegate said, the third time it’s deferred the move while crude prices struggle amid a looming surplus.
— Ag markets today: Soybeans and wheat are firmer this morning, while corn is trading near its overnight highs. As of 7:30 a.m. ET, corn futures were trading fractionally lower, soybeans were fractionally higher, winter wheat markets were mostly 4 cents higher and spring wheat was 5 to 7 cents higher. The U.S. dollar index was down around 180 points, and front-month crude oil futures were modestly firmer this morning.
Feedlots are pricing cattle higher this week, while packers are in no hurry to actively bid for supplies given negative margins and recent strong purchases. It appears active cash cattle trade will likely be pushed to Friday, with cash sources split on the eventual direction of this week’s trade.
The CME lean hog index is up a penny to $84.01 as of Dec. 3, pausing the three-week price slide. The pork cutout slipped a penny to $89.60 on Wednesday. Seasonally, the cash index and pork cutout could face more pressure, though slaughter numbers have been running well under levels implied by USDA’s September Hogs & Pigs Report, limiting normal fourth-quarter price weakness.
— Agriculture markets yesterday:
• Corn: March corn fell 2 1/4 cents to $4.30, ending near the session low and below the 40-day moving average.
• Soy complex: January soybeans fell 8 cents to $9.83 3/4, nearer the daily low mid-range. January soybean meal rose $1.50 to $291.90 and near the session high. January soybean oil fell 72 points to 41.42 cents and nearer the session low.
• Wheat: March SRW wheat rose 3/4 cent to $5.48 1/4, while March HRW futures rose 3/4 cent to $5.42 1/2, each closing near the session high. March HRS wheat closed down 1/2 cent to $5.89 1/2.
• Cotton: March cotton fell 2 points to 71.25 cents and near mid-range.
• Cattle: Wholesale weakness undercut cattle futures Wednesday. Expiring December live cattle slid 10 cents to $188.375, while most-active February fell 75 cents to $188.325. January feeder futures dove $2.35 to $256.95.
• Hogs: February lean hog futures sank $1.50 to $86.35 and settled nearer session lows, while nearby December futures fell 75 cents to $82.50.
— Quotes of note:
• Jay Powell: “The U.S. federal budget is on an unsustainable path. The debt is not at an unsustainable level, but the path is unsustainable.”
• Fed’s Powell: “The economy is strong, and it’s stronger than we thought it was going to be in September.”
• Trend is your friend. “Sometimes consensus trades are fundamentally right and, when they are, it is usually best to go along rather than fight the tape. We know from our own numerous conversations with non-U.S. investors and other research providers that international interest in U.S. stocks is still growing at a strong pace.” — Nicholas Colas Co-founder, DataTrek Research.
• Bad news for equity bears. “The consistency of the rally is demoralizing to bears, creating a ‘virtuous circle’ where buying drives further buying,” said Mark Hackett at Nationwide. “There are questions of sustainability into 2025 given elevated expectations and valuations, but that is unlikely to derail the near-term momentum.”
• Former Fed economist Claudia Sahm likened the current job market to the Twilight Zone, in reference to the 1960s-era science fiction TV show where reality isn’t what it seems. She said she could understand the lack of hiring if this were Europe, but not in the U.S., where economic backdrop is “really good… What are they doing, why aren’t they hiring more?” she asked.
— Federal Reserve Chair Jerome Powell made notable remarks on Wednesday at the DealBook Summit, addressing various topics including cryptocurrency, the U.S. economy, inflation, and the Federal Reserve’s independence.
Bitcoin and cryptocurrency. Powell described Bitcoin as a speculative asset comparable to gold, emphasizing that it is “virtual and digital” rather than a competitor to the U.S. dollar. He noted that Bitcoin is not widely used as a payment method or a reliable store of value due to its volatility. He dismissed the idea of a national Bitcoin reserve and reiterated the Federal Reserve’s commitment to maintaining a “safe and sound” banking system. Powell also clarified that regulating the cryptocurrency industry is not within the Fed’s responsibilities.
U.S. economy. Powell highlighted the robust state of the U.S. economy, which is growing at approximately 2.5% annually with inflation decreasing from over 7% to around 2.3%. Unemployment remains stable, contributing to economic resilience. He attributed this economic strength to stable growth and improving productivity, which have helped avoid a severe recession despite prior aggressive interest rate hikes.
Interest rates and inflation. Powell indicated that while inflation has moderated, it remains slightly higher than expected. This has led the Federal Reserve to adopt a cautious approach toward further interest rate cuts. He suggested that the Fed has room to be prudent in its monetary policy decisions due to the economy’s strong performance, but he refrained from confirming whether additional rate cuts would occur at the upcoming December meeting.
Federal Reserve independence. Addressing concerns about potential challenges to the Fed’s independence under a new Trump administration, Powell expressed confidence in maintaining autonomy. Will the president-elect go after the central bank’s independence? No, Powell said emphatically. The Fed, he said, was created by Congress and its autonomy is “the law of the land… There is very, very broad support for that set of ideas in Congress in both political parties, on both sides of the Hill, and that’s what really matters,” he said. He emphasized that Congress established the Fed as an independent institution to serve the public interest rather than political agendas. Powell dismissed speculation about efforts to diminish his authority or create a “shadow chair” role at the Fed. He reaffirmed his intention to complete his term as chair, which ends in May 2026.
Potential economic risks. Powell acknowledged uncertainties surrounding President-elect Trump’s proposed tariffs on major trading partners, which could drive inflation higher. This might complicate the Fed’s efforts to reduce rates or even force it to consider rate hikes again. Despite these risks, Powell remained optimistic about fostering a collaborative relationship with the incoming administration and Treasury Secretary nominee.
Bottom line: Powell’s remarks underscored his confidence in the U.S. economy’s strength while signaling caution in monetary policy amidst persistent inflation and geopolitical uncertainties. His comments also reinforced his commitment to safeguarding the Federal Reserve’s independence in an evolving political landscape.
Market perspectives:
— Outside markets: The U.S. dollar index was lower, with the euro and British pound stronger against the greenback. The yield on the 10-year U.S. Treasury note rose, trading around 4.21%, with a mixed-to-positive tone in global government bond yields. Crude oil futures were higher after being under pressure earlier, with U.S. crude around $68.65 per barrel and Brent around $72.40 per barrel. Gold and silver futures were down, with gold around $2,675 per troy ounce and silver around $31.88 per troy ounce.
— Bitcoin breaks $100,000 on optimism over Trump’s pro-crypto agenda. Bitcoin surged past $100,000 for the first time, climbing as much as 6.1% to $103,801, after President-elect Donald Trump’s announcement of Paul Atkins as the new SEC Chair. Atkins, a crypto proponent, signaled a potential regulatory shift favoring digital assets. The move aligns with Trump’s broader plans to support the crypto sector, including the controversial idea of a strategic national Bitcoin reserve.
Of note: MicroStrategy is climbing about 6% in premarket trading. Co-founder Michael Saylor has used borrowed money to accumulate Bitcoin now worth around $40 billion.
— Chinese officials have recently announced the discovery of what they claim to be a “super-giant” gold deposit located in the Wangu goldfield of Hunan province. This deposit is estimated to contain over 1,100 metric tons of gold, potentially making it the largest known gold reserve in the world. The Geological Bureau of Hunan Province reported that geologists have already identified more than 40 gold veins containing approximately 330 metric tons of gold at depths of around 2,000 meters (about 6,600 feet) below the surface. Advanced 3D geological modeling suggests that the total deposit could extend to depths of 3,000 meters (approximately 9,800 feet) and is valued at around $83 billion.
The ore quality is notably high, with estimates indicating up to 138 grams of gold per metric ton, which is considered favorable compared to many other global deposits.
China is already the world’s largest producer of gold, accounting for about 10% of global output as of 2023. However, it consumes approximately three times more gold than it produces, leading to heavy reliance on imports from countries like Australia and South Africa. This new discovery could help alleviate some of that dependence but would only meet domestic needs for about 1.4 years based on current consumption rates.
The announcement has had immediate effects on global gold prices, which surged to around $2,700 per ounce, nearing record highs. This spike reflects heightened interest and speculation in the market regarding future gold supply dynamics.
Despite the excitement surrounding this discovery, some experts express caution. The World Gold Council has suggested that while the initial figures sound promising, they may be overly optimistic without further verification through extensive drilling and analysis. They emphasize that deposits at such depths are rare and complex to develop.
— USDA daily export sale:
• 136,000 MT soybeans to China, 2024-25 marketing year.
— Ag trade update: Japan purchased 111,405 MT of milling wheat via its weekly tender, including 56,945 MT U.S., 22,190 MT Canadian and 32,270 MT Australian.
— Winter weather volatility sparks energy and food market risks. A complex winter weather forecast is creating turbulence in energy and commodity markets, with natural gas and wheat prices already experiencing significant swings. Shifting climate patterns, geopolitical tensions, and drought risks are contributing to the uncertainty. Key factors include the weak emergence of La Niña, unpredictable oscillations in the North Atlantic and polar vortex, and extreme ocean heat driving global volatility. Energy prices in Europe and the US are climbing amid tightening supply, while drought threatens wheat crops in the US and China. The unpredictable season is poised to have broad economic and political implications, including inflationary pressures. Link to an item from Bloomberg for more information.
— NWS outlook: Heavy lake-enhanced/lake-effect snow downwind from Lakes Erie and Ontario on Thursday and Friday; Moderate to heavy snow over parts of New England on Thursday; light to moderate snow over parts of the Central Appalachians on Thursday and Friday... ...Light to moderate lake-effect snow for the Upper Peninsula of Michigan and the west coast of the Lower Peninsula on Thursday and Friday... ...Temperatures will be 10 to 20 degrees below average over parts of the Ohio Valley and the Mid-Atlantic.
Items in Pro Farmer’s First Thing Today include:
• Grains mostly firmer this morning
• Slow developing cash cattle negotiations
• Cash hog index pauses price slide
| CONGRESS |
— Six members of Congress have participated in every vote of the 118th Congress. This group includes three senators — John Thune (R-S.D.), Susan Collins (R-Maine), and Jack Reed (D-R.I.) — and three representatives — Katherine Clark (D-Mass.), Steve Womack (R-Ark.), and Bob Latta (R-Ohio).
— Nadler steps aside, paving way for Raskin’s Judiciary ranking leadership. Rep. Jerrold Nadler (D-N.Y.) announced he will no longer pursue retaining his role as Judiciary Committee ranking member, clearing the path for Rep. Jamie Raskin (D-Md.) to take the position. This shift reflects growing momentum among House Democrats to promote newer leaders over long-standing members. If confirmed, Raskin will face Judiciary Chairman Jim Jordan (R-Ohio) in a high-stakes role countering President-elect Donald Trump’s legislative agenda. Despite stepping aside, the 77-year-old Nadler has confirmed he intends to remain in Congress.
— CBC quiet re: David Scott to continue as top spot on House Ag panel. The Congressional Black Caucus (CBC) is remaining notably quiet on whether it will back Rep. David Scott (D-Ga.) to continue as the top Democrat on the House Agriculture Committee, signaling potential shifts in support within the group. As reported by Punchbowl News, this marks a significant moment for Scott, the first Black lawmaker to lead the Agriculture panel, as he faces challenges from Reps. Jim Costa (D-Calif.) and Angie Craig (D-Minn.).
Concerns over Scott’s health and capacity to fulfill the demands of the role appear to be a driving factor in the CBC’s hesitancy. Rep. Gregory Meeks (D-N.Y.) acknowledged the delicate nature of the situation, saying, “I’m voting for him, but I’m counting the numbers. The caucus is going to have its will, and we’ve got to be together… Obviously, there are concerns because that’s why somebody’s running against him.”
The CBC’s decision to host a candidate forum for Scott and his challengers is seen as a key indicator of the uncertainty surrounding his leadership. CBC Chair Steven Horsford (D-Nev.) described the forum as a “first step” in evaluating the best candidate for the position. While some members, like Rep. Jennifer McClellan (D-Va.), emphasized the need to assess all contenders, others have privately speculated that Scott may withdraw his bid in the coming weeks.
Supporters of Scott, including Reps. Emanuel Cleaver (D-Mo.) and Sanford Bishop (D-Ga.), have expressed unwavering loyalty but also noted concerns about his health. Cleaver remarked, “If I said I wasn’t concerned about his health and ability to get around, I would not be accurate and truthful… but I’m voting for him no matter what.”
The CBC has historically been a unified bloc prioritizing seniority and the elevation of Black leaders. Yet, the cautious approach to Scott’s bid underscores deeper challenges, including his absence in recent weeks due to health treatment. Allies of Scott have suggested that the pushback against him could have racial undertones, though no explicit allegations have been made.
— DOGE meeting this afternoon. Sen. Joni Ernst (R-Iowa) will host the first meeting of the Senate DOGE Caucus with Vivek Ramaswamy. Ernst reportedly sent the DOGE team “a lot of materials” they can use for Trump executive orders before Congress acts.
All House and Senate Republicans were invited to a DOGE meeting with Ramaswamy and Elon Musk at 3 p.m. ET today. Musk has suggested cutting $2 trillion from the federal budget, though specifics remain unclear. They propose using executive authority to suspend certain regulations and plan to reduce the federal workforce by identifying minimum staffing needs at agencies, potentially increasing reliance on contractors. Additional proposals include mandating a full-time return to office for federal employees, eliminating daylight savings time, and scrutinizing spending tied to Biden administration policies. Legal and logistical challenges are expected.
— The House released its activity calendar for 2025 (link).
| POLICY UPDATE |
— Dr. Joe Outlaw pushes the panic button as farmers face unprecedented financial stress amid congressional delays. Southern crop producers, like farmers nationwide, are grappling with a “cost price squeeze” caused by declining commodity prices and soaring input costs. The Agricultural and Food Policy Center (AFPC) at Texas A&M University, working with 575 top producers nationwide, reports widespread distress. Many farmers claim 2024 has been their worst financial year, with securing financing for 2025 becoming increasingly difficult.
Writing in Southern Ag Today (link), Outlaw cautions that some rely on estimated payments from the stalled FARM Act to obtain refinancing, which Outlaw says “is troublesome to say the least. Why? Neither the FARM Act nor any other disaster/economic aid has been moved forward by Congress.” Others are forced to sell land or pledge it as collateral for operating loans. Projections for 2025 indicate even greater challenges. Farmers question the viability of risking their financial health without timely disaster relief or a new farm bill from Congress.
Outlaw concludes: “Without getting into doomsday scenarios, I just ask the reader to consider the question that I keep getting asked: why should we continue to risk our financial health and continue to see our net worth evaporate when Congress can’t get their act together enough to pass much needed disaster/economic assistance that will help in the short-term or a new farm bill for the longer term?My answer to that question is one of hope more than fact, but I am very hopeful that Congress will act decisively and soon.”
| CHINA UPDATE |
— U.S. soybean sales to China continue. USDA’s Export Sales report covering the week ended Nov. 28 included activity to China for 2024-25 of net sales of 2,220 metric tons of sorghum, 669,665 metric tons of soybeans, cancellations of the of 13,000 metric tons of soyoil that were announced in the prior week, and net sales of 12,691 running bales of upland cotton. Activity for 2024 included net sales of 588 metric tons of beef and 3,360 metric tons of pork. Net sales of 3,043 metric tons of beef and 10,334 metric tons of pork were reported.
— Chinese buyers slash Canadian canola imports on fears of anti-dumping duty. Chinese importers are scaling back purchases of Canadian canola with shipments from December likely to plunge as most buyers are reluctant to sign new deals for fear that Beijing could impose retaliatory anti-dumping duties, Reuters reported. Chinese buyers have been shipping Canadian canola at a record pace since September to take delivery of cargoes contracted before Beijing unveiled an anti-dumping investigation into Canadian shipments of the oilseed, in retaliation to Ottawa’s tariffs on Chinese-made electric vehicles. China has enough canola stocks to last until February, traders said, with buyers likely to switch to other origins, including Australia, in 2025. China also has plentiful supplies of soybeans to bridge any shortfall in availability of canola.
| TRADE POLICY |
— Peru aims to triple farm exports to $30 billion by 2040. Peru is positioning itself as a global agribusiness powerhouse, with Agriculture Minister Angel Manero targeting $30 billion in agricultural exports by 2040 — nearly triple the current $12 billion. This growth hinges on tapping Asian markets, especially China, which currently accounts for just 3% of Peru’s agricultural exports compared to 65% going to the U.S. and EU. China’s newly opened $1.3 billion Chancay port, reducing travel times for perishable goods, is expected to play a pivotal role in expanding exports like blueberries, grapes, and avocados. Meanwhile, Peru plans to double its cultivated land area through irrigation projects and attract investment via extended tax breaks for agribusiness. However, domestic debates persist over raising the minimum wage, with President Dina Boluarte expected to announce an increase soon.
— EU/Mercosur trade deal gains momentum amid talks in Uruguay. European Commission President Ursula von der Leyen is in Uruguay to push for finalizing the long-delayed EU/Mercosur trade agreement. Representatives from the EU and Mercosur bloc, comprising Brazil, Argentina, Paraguay, and Uruguay, are meeting in Montevideo today (Dec. 5). While von der Leyen’s presence signals strong support, sources suggest a deal might not be signed immediately. Key backers, including Germany, emphasize the pact’s importance for access to critical minerals essential for green energy goals, despite opposition from some EU members over agricultural import concerns.
| ENERGY & CLIMATE CHANGE |
— OMB fast-tracks review of EPA cellulosic biofuel waiver proposal. The Office of Management and Budget (OMB) abruptly concluded its review on Dec. 4 of an EPA-proposed rule to partially waive the 2024 cellulosic biofuel volume requirements and extend the compliance deadline under the Renewable Fuel Standard (RFS). Submitted on Nov. 12, the review wrapped up after just two of seven scheduled stakeholder meetings occurred — one with the American Fuel and Petrochemical Manufacturers, the petitioning group, and another with Marathon Ashland Petroleum. Five other meetings, including those with biogas industry representatives, were canceled, raising concerns about the transparency and inclusivity of the process.
— Biofuel industry anxiously awaits 45Z tax credit guidance. The U.S. biofuel industry finds itself in a state of uncertainty as it awaits crucial guidance from the Treasury Department on a tax credit for sustainable aviation fuel (SAF) and other low-carbon biofuels. This delay in the 45Z program details is causing significant concern among producers and politicians alike.
Monte Shaw, executive director of the Iowa Renewable Fuels Association (IRFA), highlights the severity of the situation: “The reality is we need (the) Treasury to issue 45Z guidance immediately. Simply put, biodiesel production is in jeopardy as we speak.”
Shaw reports that fuel producers in Iowa are slowing production or even shutting down while waiting for this guidance. The lack of clear guidelines is not only affecting current production but also hindering future planning for SAF and other low-carbon projects.
The delay also impacts corn and soybean producers, who need to know the conditions under which to grow their crops to produce eligible feedstocks for low-carbon fuels. Shaw emphasizes: “Producers and the entire supply chain need rules in place in order to make crucial feedstock decisions now.”
Farmers supplying corn and soybeans for this program could potentially receive higher prices for commodities grown using sustainable practices that reduce the lifecycle greenhouse gas emissions of the fuel.
Political response. Sen. Chuck Grassley (R-Iowa) is concerned about the delay, stating on social media that it would be “disruptive” to the biofuels industry. A spokesperson for Grassley added: “The burden remains on the Biden administration to provide urgently needed guidance on the 45Z tax credit. Farmers and industry stakeholders will suffer the consequences if the Biden administration fails to do so.”
Shaw said there will be “an inevitable delay” during the transition of power if the Biden administration is unable to provide guidance before Jan. 20, which is Shaw’s biggest concern. “IRFA members were heartened when Speaker (Mike) Johnson (R-La.) noted that Republicans did not support the IRA overall, but that there were parts worth saving,” Shaw said. “IRFA members remember how the Iowa delegation united to protect 45Z and other biofuels provisions from earlier efforts at repeal, and there’s no reason to believe they wouldn’t be able to successfully defend the provisions in the future.”
| LIVESTOCK, NUTRITION & FOOD INDUSTRY |
— California bans “sell by” dates to cut food waste and save people money. California’s new food labeling law, set to take effect in 2026, bans confusing “Sell by” dates in favor of clearer labels like “Best if used by” (for quality) and “Use by” (for safety). Aimed at reducing the 6 million tons of food waste Californians generate annually, the law hopes to empower consumers with consistent labeling while benefiting the environment and saving money. Critics acknowledge implementation challenges but praise the effort to reduce confusion and curb waste. Experts recommend relying on sensory checks for spoilage and tools like the USDA FoodKeeper app for guidance.
| KEY LINKS |
WASDE | Crop Production | USDA weekly reports | Crop Progress | Food prices | Farm income | Export Sales weekly | ERP dashboard | California phase-out of gas-powered vehicles | RFS | IRA: Biofuels | IRA: Ag | | Russia/Ukraine war, lessons learned | | SCOTUS on WOTUS | SCOTUS on Prop 12 pork | New farm bill primer | | Gov’t payments to farmers by program | Farmer working capital | USDA Ag Outlook Forum |