White House Clarifies Executive Order on IRA Funds; Impact on Climate-Smart Funds

News/Markets/Policy Updates: Jan. 23, 2025

Other topics in today’s dispatch include: (1) RFK Jr’s hearing set for Jan. 29; (2) GOP tax reform debate: SALT and clean energy credits; (3) Trump to Putin: End war in Ukraine or face new sanctions and tariffs; (4) More on Xi and Putin talk following Trump’s inauguration; (5) Trump restores terrorist designation for Houthis, undoing Biden’s reversal; (6) Union Pacific reports strong Q4 2024 results; (7) Musk challenges AI funding claims following Trump’s announcement; (8) Morgan Stanley Wealth Management on 7 political trends investors should watch in 2025; (9) ADM declares force majeure along U.S. Gulf; (10) Indonesia aims for food self-sufficiency by 2026; (11) Tuberville reintroduces FARM Act to safeguard American farmland; (12) House Ag Dems announce subcommittee leadership; (13) Diesel prices surge amid Biden-Era sanctions on Russian shipping; (14) Winter deep freeze strains U.S. power grid; (15) Mexico feeder cattle/screwworm update; (16) Dimon on Trump’s tariffs: ‘Get over it’; (17) North American governments & China respond to Trump’s tariff threats; (18) U.S. ag sector braces for potential trade war impact; (19) GOP reconsiders SALT cap amid pressure from blue-state Republicans; (20) Trump’s DOT Secretary nominee advances; (21) Trade restrictions imposed on Georgia poultry due to HPAI; (22) Cargill settles turkey price-fixing lawsuit for $32.5 million; (23) Trump revokes Biden’s order to lower drug prices for Medicare; (24) Brazil says halt to soy shipments to China will have minimal impacts; (25) American firms in China fearful of U.S./China trade turmoil at 5-yr high; (26) China prods insurers to invest billions to support equities market; (27) China’s bond outflows hit highest since 2022; (28) ICE makes 308 arrests on Trump’s first day in office; (29) Justice Dept. to investigate local officials who obstruct immigration enforcement; (30) Acting Defense chief sends 1,500 troops to U.S. Southern border; (31) Congress passes bill mandating deportation of immigrants accused of crimes.

— Equities today: Asian and European shares were mixed overnight. The German DAX hit an all-time high. U.S. stock indexes are set to open mixed. In Asia, Japan +0.8%. Hong Kong -0.4%. China +0.5%. India +0.2%. In Europe, at midday, London -0.1%. Paris +0.4%. Frankfurt +0.3%.

Equities yesterday: All three major indices finished higher, with the S&P 500 just missing a record close. The Dow was up 130.92 points, 0.30%, at 44,156.73. The Nasdaq gained 252.56 points, 1.28%, at 20,000.34. The S&P 500 was up 37.13 points, 0.61%, at 6,086.37.

— Union Pacific reports strong Q4 2024 results. Union Pacific Corporation, a major U.S. railroad operator, announced impressive fourth-quarter results for 2024, demonstrating robust growth and financial performance. The company’s net income rose to $1.76 billion, or $2.91 per share, marking a 7% increase compared to the same period in the previous year when it reported $1.65 billion, or $2.71 per share. Key highlights of Union Pacific’s Q4 performance include:

• Increased profitability driven by higher grain and fertilizer shipments
• Core pricing gains contributing to improved financial results

Shares are rising 4% in premarket trading, indicating positive investor sentiment. As a bellwether for the U.S. economy, Union Pacific’s strong performance reflects positively on overall economic conditions. The company’s success can be attributed to improved revenue in its grain segments, benefiting from higher West Coast imports and a strong harvest season.

— Musk challenges AI funding claims following Trump’s announcement. Elon Musk has raised doubts about the financial viability of a $500 billion artificial intelligence infrastructure initiative announced by President Donald Trump. The initiative, backed by SoftBank’s Masayoshi Son, OpenAI’s Sam Altman, and Oracle’s Larry Ellison, promised an immediate $100 billion deployment for data centers and campuses. Musk, however, claimed on his social media platform that SoftBank has “well under $10B secured,” citing trusted sources, exposing early tensions within the White House over the project’s feasibility.

— Morgan Stanley Wealth Management: 7 political trends investors should watch in 2025. Key policy shifts are likely to shape the economy and markets, according to Key Policy Shifts Likely to Shape the Economy and Markets Monica Guerra and Daniel Kohen, Morgan Stanley Wealth Management. As a new Republican-led White House and Congress take the helm, they note 2025 promises significant changes in U.S. policies, potentially impacting the economy and financial markets. Here’s a summary of their seven major trends and investment implications:

• Individual tax provisions likely to be extended. Key tax benefits from the 2017 Tax Cuts and Jobs Act are set to expire in late 2025. A GOP-led Congress is expected to extend many provisions while adding new breaks, such as changes to SALT caps and potential tax holidays.
  Investor takeaway: Extensions could spur economic activity and benefit portfolios.
  
• Corporate tax cuts could face challenges. Further reductions in the 21% corporate tax rate are unlikely due to concerns over the federal deficit.
  Investor takeaway: Limited tax changes may disappoint markets expecting more corporate-friendly policies.
  
• Debt-ceiling debates may delay reforms. While a debt-ceiling increase is expected, debates about government debt could stall broader GOP priorities.
  Investor takeaway: Delays in reforms could create uncertainty and weigh on economic momentum.
  
• Tariff proposals add risk to certain stocks. Aggressive tariff policies targeting Chinese, Canadian, and Mexican goods may drive inflation and productivity losses.
  Investor takeaway: Sectors dependent on imports or foreign manufacturing face increased risks.
  
• Clean energy may outperform traditional energy. Despite potential challenges, rate cuts and sustained incentives could boost clean energy investments.
  Investor takeaway: Clean energy stocks may gain momentum amid favorable monetary policies.
  
• Healthcare industry faces headwinds. Policies targeting the Affordable Care Act and stricter FDA oversight may drag down healthcare sector performance.
  Investor takeaway: Pharmaceuticals and insurance companies may struggle, presenting investment risks.
  
• Restrictive immigration policies could hinder growth. Tighter immigration policies may reduce consumer spending and workforce availability, slowing GDP growth.
  Investor takeaway: Industries reliant on labor and consumption may face growth challenges.

Bottom line: Increased political uncertainty, combined with shifting policies on tariffs, immigration, and deregulation, could weigh on sectors like healthcare and energy. Investors should remain vigilant as these trends unfold and adapt their portfolios accordingly.

— Ag markets today:

Grains mildly weaker overnight. Corn, soybeans and wheat mildly favored the downside overnight in a continuation of Wednesday’s selling. As of 7:30 a.m. ET, corn futures were trading a penny lower, soybeans were 2 to 3 cents lower and wheat futures were mostly 2 to 4 cents lower. The U.S. dollar index was 190 points higher, and front-month crude oil futures are up around a quarter.

Cattle futures score all-time high. February live cattle futures settled at $200.05 on Wednesday, marking an all-time high on the continuation chart and the first time above the $200.00 level. Funds continue to pile money into long positions, despite their aggressive long stance given futures’ big discounts to the cash market.

Cash hog index rises, pork cutout drops. The CME lean hog index is up another 26 cents to $81.72 as of Jan. 21, the eighth straight daily gain. During that span, the index has risen $1.29. The pork cutout declined 65 cents on Wednesday to $90.17, as weaker prices for loins, butts, picnics and bellies more than offset gains in ribs and hams.

— Ag trade: Indonesia passed on a tender to buy 195,000 MT of feed wheat and instead purchased an unspecified amount of corn from the Asian region.

— ADM declares force majeure along U.S. Gulf. Archer-Daniels-Midland Co. halted loading of grain vessels at U.S. Gulf terminals as the region’s worst snowstorm in 130 years slams the region. The company declared force majeure in southern Louisiana with vessels struggling to navigate the weather conditions, Bloomberg reported Wednesday evening, citing a person familiar with the matter.

— Indonesia aims for food self-sufficiency by 2026. Indonesian President Prabowo Subianto aims for self-sufficiency in rice and corn by the end of this year, emphasizing the importance of food independence amid the global crisis. “We must achieve food self-sufficiency. We can reach that target by the end of 2025, or at the latest 2026, three years earlier than the initial plan,” Prabowo said. Indonesia aims to produce 32 MMT of rice this year, up from 30.41 MMT in 2024. Corn production is expected to increase to 20 MMT, exceeding domestic needs of 11 MMT.

— Agriculture markets yesterday:
• Corn: March corn fell 5 3/4 cents to $4.84 1/4, closing near the session low after trading at the highest intraday level since May 30.
• Soy complex: March soybeans fell 11 1/4 cents to $10.56, near the daily low after hitting a 3.5-month high early on. March soybean meal rose $4.80 to $315.80 and nearer the session high. March soybean oil fell 135 points to 44.42 cents, nearer the session low and hit a two-week low.
• Wheat: March SRW wheat fell 4 3/4 cents to $5.54 after carving the highest intraday level in over a month early on. March HRW wheat fell 3/4 cent to $5.74 3/4, ending near the session low.
• Cotton: March cotton fell 52 points to 67.14 cents and nearer the daily low.
• Cattle: Nearby February live cattle futures surged to fresh for-the-move highs, topping the hugely important $200.00 level before closing $3.00 higher at $200.05. Expiring January feeder futures climbed $2.65 to $277.05, while most-active March soared $5.825 to $273.075.
• Hogs: April lean hog futures climbed 57.5 cents to $87.275 and closed nearer session highs. Nearby February futures inched 27.5 cents higher to $81.475.

— Tuberville reintroduces FARM Act to safeguard American farmland; bipartisan legislation proposes adding USDA secretary to CFIUS. Sen. Tommy Tuberville (R-Ala.) and Sen. John Fetterman (D-Pa.) have reintroduced the Foreign Adversary Risk Management (FARM) Act to address rising concerns over foreign ownership of U.S. agricultural land. The legislation proposes making the U.S. Secretary of Agriculture a permanent member of the Committee on Foreign Investments in the United States (CFIUS) to ensure agriculture is prioritized in reviews of foreign investments.

Citing national security risks from adversarial nations like China, the bill aims to protect U.S. agricultural supply chains from foreign influence and designates these supply chains as critical infrastructure. The move follows USDA data showing a sharp rise in foreign-owned farmland, which reached 45 million acres by the end of 2023. Alabama, with 2.2 million acres of foreign-owned agricultural land, ranks fourth highest in the nation.

Sen. Tuberville emphasized, “Food security is national security,” while Sen. Fetterman called the addition of the Agriculture Secretary to CFIUS “common sense.” The bipartisan effort is backed by a coalition of lawmakers from both chambers.

The FARM Act also mandates reporting on foreign investments in agriculture and outlines measures to secure the industry against external threats.

— House Ag Democrats announce subcommittee leadership. House Ag panel Democrats unveiled new and returning leaders for subcommittees addressing key policy areas like conservation, nutrition, and digital assets.

Ranking member Angie Craig (D-Minn.) emphasized bipartisan cooperation in crafting a farm bill.

• Shontel Brown (D-Ohio) was named vice ranking member, with Sharice Davids (D-Kan.) succeeding her on the commodity and risk management subcommittee.
• Jill Tokuda (D-Hawaii) will head the conservation and research subcommittee, replacing Abigail Spanberger (D-Va.), who retired to run for governor.
• Don Davis (D-N.C.) takes over leadership on the digital assets and rural development subcommittee, succeeding Yadira Caraveo (D-Colo.), who lost reelection.

Andrea Salinas (D-Ore.), Jahana Hayes (D-Conn.), and Jim Costa (D-Calif.) retain their ranking member roles on forestry, nutrition, and livestock panels, respectively.’

— Oil prices dip amid tariff and geopolitical uncertainty. Oil prices fell on Wednesday as markets weighed the potential impact of U.S. President Donald Trump’s proposed tariffs on global economic growth and energy demand. Brent crude dropped 29 cents (0.4%) to $79.00 per barrel, while U.S. West Texas Intermediate (WTI) fell 39 cents (0.5%) to $75.44, marking their longest losing streaks in months. Trump’s hints at tariffs on imports from Canada, Mexico, China, and Europe, along with possible sanctions on Russia over stalled Ukraine peace talks, raised fears of reduced energy demand. Additional pressures included Trump’s pledge to halt U.S. oil imports from Venezuela and a surge in Saudi Arabia’s crude exports to an eight-month high. Meanwhile, Iran expressed willingness to engage with Western leaders at the World Economic Forum despite ongoing U.S. sanctions. Analysts anticipated a ninth consecutive weekly decline in U.S. crude stockpiles, while Winter Storm Enzo caused temporary disruptions at Texas ports.

— Diesel prices surge amid Biden-Era sanctions on Russian shipping. The benchmark diesel price used for fuel surcharges has surged to $3.715 per gallon, its highest since August. This 11.3-cent weekly increase, the largest in nearly a year, reflects a cumulative rise of 25.7 cents since early December. Driving the spike is market reaction to sanctions imposed by former President Joe Biden on Russian oil shipping, targeting key producers and over 160 tankers. Energy analysts suggest the sanctions may lead to prolonged disruptions, especially in Asian markets, with estimates of 500,000 to 1 million barrels per day of Russian crude flows impacted. As countries like China and India seek alternative supplies, experts warn the evolving situation could tighten global crude and product balances further.

Despite this recent increase, diesel prices are still lower than they were a year ago. In January 2024, the average price was $3.828 per gallon, meaning current prices are about 3% lower year-over-year. EIA wholesale diesel price forecast for 2025 is $2.39, retail is $3.66 (including taxes).

Outlook: Several factors will influence future diesel prices:

• The Trump administration’s approach to enforcing these sanctions
• The speed at which Russia can adapt its export strategies
• Global economic growth and its impact on oil demand

Of note: While the EIA had previously forecast lower diesel prices for 2025, averaging around $2.30 per gallon, these recent developments may lead to revised projections. The volatility in the market underscores the complex interplay between geopolitics and global energy markets, with implications for industries reliant on diesel fuel and consumers alike.

The impact of current diesel prices on farmers is significant, as fuel costs are a major component of agricultural production expenses. For example, University of Illinois economists estimated that fuel costs have increased dramatically enough to begin mattering in farm budgets. The elevated diesel prices contribute to the overall increase in production costs for the 2025 growing season.

— Winter deep freeze strains U.S. power grid. A historic deep freeze is straining power supplies across the eastern U.S., driving electricity demand on the PJM Interconnection LLC grid to a record 145 gigawatts, surpassing the previous winter peak set in 2015. The South, typically prepared for hurricanes and floods, is grappling with freezing temperatures and record snowfall, disrupting roads, runways, and prompting residents from Florida to Texas to seek refuge in warming centers after one of the worst snowstorms in 130 years.

— White House clarifies executive order on IRA funds. The White House Office of Management and Budget (OMB) has issued new guidance to clarify the limits on disbursing Inflation Reduction Act (IRA) funds, following President Trump’s recent executive order. This clarification comes in response to concerns raised by both Democratic and Republican lawmakers about the potential impact of a full halt to fund disbursement.

Key points of the clarification:

• Limited scope: the pause on fund disbursement only applies to programs, projects, or activities related to climate change mitigation and electric vehicle charging incentives.
• Definition of “Green New Deal” funds: The OMB memo defines these as appropriations that contradict the policies established in Section 2 of the executive order.
• Agency discretion: Agency heads retain the authority to disburse funds as necessary, after consulting with the OMB.

This clarification aims to address concerns about the potential economic impact of a complete halt to IRA fund disbursement, particularly in red states and districts. It also highlights the ongoing debate surrounding climate policies and their implementation.

— Biden’s climate-smart agriculture program halted... for now. The Trump administration has implemented a freeze on climate funding, affecting a key Biden initiative aimed at making the food system more environmentally friendly. The Partnerships for Climate-Smart Commodities program, which received $3.1 billion in funding from USDA, is among the first programs impacted by this freeze. This initiative involved contracts with numerous companies and nonprofit organizations to develop these climate-friendly agricultural practices.

The program’s funding came from the Commodity Credit Corporation (CCC), which USDA typically uses for various purposes including buying farm commodities and providing disaster relief. Notably, Trump had previously used CCC funds during his first term to support farmers affected by high tariffs.

Of note: A temporary suspension has been placed on all grant-related actions, including those for the Climate-Smart Commodities program. The pause affects new contracts and contract amendments. Existing contracts and their funding disbursements appear to be unaffected at this time. Further clarification expected in the coming days.

The effort to claw back these funds may face significant obstacles:

• Many projects have already received funding or have signed agreements.
• Legal challenges are possible from groups that were promised funding but haven’t received it yet.
• Small businesses and farmers who were counting on these funds may be particularly affected.

— Mexico feeder cattle/screwworm update. As of Jan. 23, the import of live cattle from Mexico to the U.S. remains suspended due to the detection of New World screwworm (NWS) in southern Mexico. The ban, implemented on Nov. 22, 2024, is still in effect with no definite date set for its lifting. Key points regarding the current situation:

• Ongoing protocol development: USDA’s Animal and Plant Health Inspection Service (APHIS) is currently working on protocols for the importation of cattle from Mexico. However, these protocols are still in progress, and no resumption date has been announced. A letter (link) sent by former USDA Secretary Tom Vilsack to Mexico’s Secretary of Agriculture Julio Antonio Berdeguê acknowledges the progress made in reopening cattle trade between the two countries, but says more action is needed to resume trade.
• Equine imports to resume: While cattle imports remain suspended, APHIS has announced that equine imports from Mexico resumed on Jan. 21, with additional mitigations to guard against the introduction of NWS.
• Economic impact: The suspension of cattle imports from Mexico is affecting the U.S. beef industry. Approximately 3% of U.S. cattle come from Mexico, with about two-thirds of these imports remaining in Texas, New Mexico, or Oklahoma.
• Price implications: The ban on Mexican cattle imports has contributed to an increase in cow prices. Feeder steer prices are forecast to rise by 8% in 2025, which could potentially lead to higher beef prices for consumers if the import restrictions continue.
• Ongoing surveillance: APHIS is working closely with Mexican and Central American partners to monitor and control the NWS infestation. The agency is also urging livestock producers along the U.S. southern border to monitor their animals for signs of screwworm.
• Outlook: While there is no set date for resuming cattle imports, the timeline remains uncertain, and APHIS emphasizes that it will only approve measures once it is confident that the threat of NWS crossing the border has been mitigated.

— Dimon on Trump’s tariffs: ‘Get over it.’ JPMorgan Chase CEO Jamie Dimon addressed concerns over President Trump’s proposed tariffs on Canada, Mexico, China, and the EU during the World Economic Forum in Davos, Switzerland. Dimon defended the tariffs as an economic tool, stating they could protect U.S. national security, even if they lead to higher inflation. “National security trumps a little bit more inflation,” Dimon remarked, emphasizing that tariffs could bring countries to the negotiating table and address unfair trade practices.

Goldman Sachs CEO David Solomon also weighed in, suggesting that rebalancing trade agreements could benefit U.S. growth if managed thoughtfully, while cautioning against hasty actions.

Trump’s threatened tariffs — ranging from 10% on Chinese goods to 25% on imports from Canada and Mexico — are expected to raise consumer prices but are described by Trump as necessary for achieving trade fairness.

— North American governments and China respond to Trump’s tariff threats. Canada and Mexico are taking swift action to address concerns raised by President Trump’s recent tariff threats. Both nations are implementing measures to tackle issues related to migration and drug trafficking, aiming to prevent potential economic repercussions.

Mexican initiatives. Mexico has intensified its efforts to deter migration and increase seizures of illicit opioids. These actions demonstrate the country’s commitment to addressing Trump’s concerns about border security and drug trafficking.

Canadian border security. Canada has bolstered its border patrol resources, deploying two new Blackhawk helicopters and purchasing 60 U.S.-made drones for border surveillance. The country’s immigration department reports an 86% decrease in irregular migrant crossings over the past two months, attributed to stricter visa regulations.

U.S./Mexico border crossings. Illegal crossings at the U.S./Mexico border have reached a four-year low, indicating the effectiveness of recent measures implemented by both countries.

China’s response. Beijing has expressed willingness to engage the Trump administration. While it’s unclear if China has taken new steps in response to Trump’s tariff threats, the Chinese government has previously made commitments to stem fentanyl exports and cooperate with the U.S. on narcotics issues. China’s Foreign Ministry spokesperson, Mao Ning, expressed willingness to communicate with the U.S. to expand cooperation and manage differences. Also, Wang Huiyao, president of the Center for China and Globalization and an adviser to the Chinese government, says Beijing has avenues to reach a compromise on some of the issues that Trump has raised. For example, China could offer to buy more American agricultural products.

Of note: “Trump loves esteem, and China is clearly showing him the esteem that he wants,” said Xin Qiang, a professor of international relations at Fudan University in Shanghai.

— U.S. ag sector braces for potential trade war impact. U.S. farmers are again facing potential economic fallout as President Trump threatens new tariffs. The ag sector, particularly grains and pork, is expected to be significantly affected if these tariffs are implemented, the Wall Street Journal reports (link). China, the world’s largest agricultural importer and a key customer for U.S. grains and meat, along with other threatened nations, may reduce purchases of U.S. goods. This situation echoes the previous trade tensions during Trump’s first administration, which led to a sharp decline in soybean prices and necessitated federal aid for farmers. Futures traders in Chicago are anticipating price drops for these commodities if the tariffs come into effect.

— GOP reconsiders SALT cap amid pressure from blue-state Republicans. House Republicans are negotiating a potential increase to the $10,000 cap on state and local tax (SALT) deductions, a limit introduced during the Trump administration eight years ago. New York Republicans are in talks with the Trump administration to raise the cap, aiming to provide relief for constituents in high-tax states. Lawmakers expect to finalize a new cap figure as early as February. Republicans from blue states like New York, California, and New Jersey, where residents face higher incomes, property values, and taxes, have threatened to block the bill unless the SALT deduction is expanded. The 2017 SALT cap was seen as targeting Democratic-leaning states.

— Trump’s DOT Secretary nominee advances. Sean Duffy, President Donald Trump’s nominee for transportation secretary, has moved one step closer to confirmation. The Senate Commerce, Science, and Transportation Committee unanimously approved Duffy’s nomination on Wednesday. This approval paves the way for a full Senate floor vote, although the date for this vote has not yet been scheduled. Duffy, a former Republican congressman from Wisconsin, appeared before the committee on Jan. 15 for his confirmation hearing. During this hearing, he outlined his priorities, which include streamlining infrastructure projects and working to restore confidence in Boeing following recent investigations and high-profile crashes.

Besides Duffy’s advancement, the White House has put forward more nominees for key positions. These include Steven Bradbury for the role of deputy transportation secretary and David Fotouhi for deputy administrator at the Environmental Protection Agency (EPA).

Meanwhile, the Senate Environment and Public Works Committee will vote today on whether to advance Lee Zeldin’s nomination for EPA administrator to the full Senate.

— Trade restrictions imposed on Georgia poultry due to HPAI. The confirmation of highly pathogenic avian influenza (HPAI) in a commercial poultry operation in Georgia has led to trade restrictions on U.S. poultry. Taiwan, Mexico, Uruguay, Iraq, and Benin have halted imports from the state, according to the USDA’s Food Safety and Inspection Service (FSIS). However, South Korea and Japan have not implemented any restrictions related to this HPAI outbreak.

— Cargill settles turkey price-fixing lawsuit for $32.5 million. Cargill will pay $32.5 million into an escrow account for the benefit of the settlement class. Cargill controls about 20-21% of the U.S. turkey market. The settlement is subject to court approval. Filed in 2019, the lawsuit accused major turkey producers of conspiring to fix, maintain, and inflate turkey prices in the U.S. through the exchange of sensitive information. Other named companies include Butterball, Perdue Farms, and Hormel Foods. The alleged activities occurred between 2010 and 2017.

Tyson Foods settled for $4.62 million in 2021. Tyson Foods holds about 4-5% of the U.S. turkey market.

Cargill denies any wrongdoing and claims the settlement is to avoid litigation risks. The company has agreed to assist plaintiffs in their claims against non-settling defendants.

This case is part of a wider series of antitrust lawsuits in the meat industry, including chicken and beef price-fixing allegations. The combined settlements from Cargill and Tyson total $37.125 million, equating to roughly $1 million per percentage point of market share.

— Trump revokes Biden’s order to lower drug prices for Medicare. President Donald Trump has rescinded Executive Order 14087, a Biden-era directive aimed at reducing prescription drug costs for Medicare and Medicaid enrollees. The order sought to establish a $2 monthly copay for select medications, targeting drugs for conditions like diabetes, high cholesterol, and thyroid issues. The Biden administration initially introduced the measure to address the high cost of prescription drugs in the U.S., where Americans pay significantly more than their counterparts in other countries. Nearly 25% of Americans on prescription medication struggle with affordability, often resorting to skipped doses or rationing medication.

Trump justified the rollback, labeling Biden’s policies as inflationary and radical, and hinted at further changes to Medicare and Medicaid. However, existing laws under the Inflation Reduction Act, which allow Medicare to negotiate drug prices, remain in effect. The future of these negotiations, including recently expanded efforts to reduce costs for drugs like Ozempic and Wegovy, is uncertain under Trump’s administration.

— Brazil says halt to soy shipments to China will have minimal impacts. China has stopped receiving Brazilian soybean shipments from five firms after cargoes did not meet plant health requirements, according to a statement from the Brazilian government, confirming what we reported on Wednesday. Brazil’s ag ministry said only a small volume of soybeans were affected and the impact on the country’s exports was minimal. “The companies’ units were suspended, but other units of the same companies can continue exporting,” said Luis Rua, the Ministry of Agriculture’s secretary of commerce and international relations.

— American firms in China fearful of U.S./China trade turmoil at 5-yr high. The annual survey by the American Chamber of Commerce in China showed 51% of respondents were concerned about a future deterioration in the U.S./China relationship. Geopolitical tensions, policy uncertainties and trade disputes were major concerns of U.S. businesses in China, the survey noted. The survey of 368 member companies was completed between October and November last year, partly after Donald Trump won the presidential election on Nov. 5. Almost half the respondents still ranked China as a top three global investment priority, around the same level as the previous survey. However, the proportion of companies that no longer listed China as a preferred investment destination rose three percentage points to 21% – more than double pre-pandemic levels. About a third of businesses reported unfair treatment in China compared with local firms, particularly in relation to market access and public procurement, around the same level as the previous annual survey.

— China prods insurers to invest billions to support equities market. China announced plans to channel hundreds of billions of yuan of investment from state-owned insurers into shares as part of the government’s latest efforts to support a struggling stock market. The new measures, spanning higher investments by insurers and mutual funds, lower fees and other corporate reform initiatives, are also the latest in a slew of steps authorities have taken since last September to revive the stock market. Regulators will encourage big state insurers to invest 30% of new annual premiums in A-shares, and encourage mutual funds to increase their A-share holdings’ tradable market value by at least 10% annually over the next three years. These measures will channel “several hundred billion” into onshore stocks every year and consolidate the positive trend of the capital market. The plan also involves guiding mutual fund managers to increase investments in their own equity products, cut fund sales fees and promote the development of exchange-traded fund products.

— China’s bond outflows hit highest since 2022. Chinese sovereign bonds’ falling yields are driving onshore investors to actively hunt for overseas alternatives with higher returns. Capital outflows from mainland China via its Southbound Bond Connect program totaled nearly 52 billion yuan ($7.1 billion) in December, the highest since August 2022, according to Bloomberg-compiled data. The program allows mainland investors to invest in the Hong Kong bond market. A bond bull run in China last year drove the yields to record-low levels, making dollar bonds and Dim Sum bonds attractive to Chinese investors looking for higher yields. Yields in the nation’s benchmark 10-year bonds have plunged over 30 basis points to around 1.65% since the beginning of December, dragged by poor domestic consumption and expectations for more monetary easing to boost the sluggish economy. China’s yield discount to the U.S. also widened to a record earlier this month, amplifying the allure of foreign assets.

— ICE makes 308 arrests on Trump’s first day in office: Border Czar Tom Homan. On President Trump’s first full day back in office, Immigration and Customs Enforcement (ICE) arrested 308 illegal migrants, some with charges of murder and child rape, according to Border Czar Tom Homan. These arrests targeted individuals deemed threats to public safety, with Homan stating that an estimated 700,000 such individuals remain in the U.S. Homan, speaking Wednesday, affirmed ICE’s commitment to its duties and announced plans to reinstate immigration raids, including in sanctuary cities. He emphasized that federal authorities would continue pursuing offenders, even without local cooperation, by apprehending them after their release from jail or in neighborhoods.

Key details:

• The arrests are part of broader efforts to address public safety threats posed by illegal migrants.
• Migrants have reportedly been deported back to Mexico through border points like El Chaparral in Tijuana.

— Justice Dept. to investigate local officials who obstruct immigration enforcement. The Justice Dept. issued a directive to prosecute state and city officials who refuse to comply with federal immigration enforcement, reigniting debates over “sanctuary” policies. A memo from the department asserts that local officials must cooperate under the Constitution’s Supremacy Clause or face criminal and civil penalties. The memo, tied to President Trump’s immigration agenda, includes measures to investigate local law enforcement officials who fail to enforce federal immigration orders. It cites issues like gang activity and the fentanyl crisis to justify planned federal raids in cities such as Chicago. Legal experts suggest challenges may arise, referencing the 1997 Printz v. United States ruling.

— Acting Defense chief sends 1,500 troops to U.S. Southern border. The acting Defense Secretary, Robert Salesses, announced the deployment of 1,500 additional troops to the U.S. southern border following President Donald Trump’s national emergency declaration. The troops will assist in enforcement efforts, including deportation flights for over 5,000 detainees and the construction of border barriers. Defense officials noted that the detainees were apprehended during the Biden administration and that it remains unclear which countries will accept them. The deployment includes ground forces, helicopters, and intelligence analysts, marking a significant expansion of the military’s role in border security.

Of note: The Washington Post reports that Trump plans to send in 10,000 U.S. troops and summarily detain and deport any illegal border crossers.

Salesses, who took office Monday, is serving as acting secretary pending Senate confirmation of Trump’s Defense Secretary nominee, Pete Hegseth.

— Congress passes bill mandating deportation of immigrants accused of crimes. The House approved the Laken Riley Act, requiring the detention and deportation of unauthorized migrants charged with specific crimes. Passing with a 263-156 vote, the bill is set for President Trump’s signature, signaling a significant escalation in immigration enforcement under his administration. The legislation, named for a Georgia nursing student killed by an undocumented migrant, mandates detention for migrants accused of crimes such as burglary, theft, assault on police officers, or offenses causing serious harm. It also allows state attorneys general to sue federal officials if harm results from crimes committed by migrants.

Support for the bill highlights a growing bipartisan shift toward stricter immigration policies, though it has sparked intense debate. Critics argue the measure undermines due process and targets migrants unjustly, while supporters claim it prioritizes public safety. This law marks the first of several immigration-related measures Republicans aim to enact during Trump’s second term.

— NWS outlook: Very Cold Winter temperatures continue from the Rockies to the East Coast with a slow warm up anticipated heading into the weekend.... ...Periods of lake-effect snow expected downwind of the Great Lakes with some moderate accumulations possible... ...There is a Critical Risk of fire weather over parts of Southern California Thursday.

(NWS)

24: USDA Food Price Outlook
26: AFC and NFC football championships
27: First day IRS will begin accepting 2024 federal tax returns
28: Florida’s 1st and 6th special primaries
28-29: Federal Open Market Committee meets
31: Employers and financial institutions should send out W-2 and 1099 tax forms
31: USDA Cattle

Economic aid for farmers | Disaster aid for farmers | Farm Bureau summary of aid/disaster/farm bill extension | 45Z tax incentive program | Poultry and swine line speeds | U.S./China Phase 1 agreement | WASDE | Crop Production | USDA weekly reports | Crop Progress | Food prices | Farm income | Export Sales weekly | ERP dashboard | RFS | IRA: Biofuels | IRA: Ag | SCOTUS on WOTUS | SCOTUS on Prop 12 pork | Gov’t payments to farmers by program | Farmer working capital | USDA Ag Outlook Forum |