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Your Pro Farmer newsletter is now available... Brazil’s soybean crop potential is rising as rains in November allowed planting to accelerate and a strong start to early crop development. Given the drop to record lows in the real versus the dollar, Brazilian farmers are now planning to plant more safrinha corn than previously intended. Global wheat crops continue to face challenges, especially in top exporter Russia, which will cap exports during the second half of 2024-25 at a sharply reduced level to last year. There wasn’t much market response to the U.S. shutting off Mexican cattle imports after the discovery of New World Screwworm near the Guatemala border. A short-term ban on imports wouldn’t have much impact, but any longer restrictions would as the U.S. relies heavily on Mexican feeder cattle, especially given tight domestic calf supplies. On the biofuels policy front, farmers and the industry are still waiting on guidance for the new 45Z credit that will be available in 2025, though that may not come before the changeover in administrations on Jan. 20. President-elect Donald Trump is on a fast track with reforms, as he and his Cabinet want to accelerate fundamental changes via executive orders, deregulation, major congressional measures and threatened tariffs. All would have major impacts on the U.S. ag, energy, trade and economic sectors. We cover all of these items and much more in this week’s newsletter, which you can access here.
Branstad predicts possible Phase 2 deal... Terry Branstad, former U.S. Ambassador to China, told AgDay he thinks the U.S. and China will work toward a Phase 2 trade agreement. Branstad said, “I think Trump knows how to deal with [Chinese President] Xi Jinping and hopefully we can get an even better agreement next time around. That was the intent when we agreed to the Phase 1. The problem was there wasn’t the support in China to go the extra mile and do the other things too. But I know that the Trump team wanted to do that. And had he been re-elected at that time, I think they would have pursued it. Biden did nothing for four years. And so I think that we’re going to see a much more aggressive approach taken. Some people are fearful of that. I actually think it’s a good thing. I think it will lead to a more fairness and reciprocity in terms of trade.”
U.S. starts FY 2025 with an ag trade deficit... U.S. agricultural exports totaled $16.02 billion in October against imports of $18.52 billion, resulting in a monthly trade deficit of $2.49 billion to start fiscal year (FY) 2025. This marked the twelfth month of the past 13 with an ag trade deficit.
USDA forecasts ag exports in FY 2025 at $170.0 billion and imports at a record $215.5 billion. That would leave the U.S. with a record ag trade deficit of $45.5 billion, up from the current peak of $31.8 billion in FY 2024.
Pork exports stay strong... The U.S. exported 582.8 million lbs. of pork during October, the second most for the month behind 2020. Pork shipments increased 33.6 million lbs. from September and were 10 million lbs. above year-ago. Through the first 10 months of this year, pork exports totaled 5.826 billion lbs., up 252.9 million lbs. (4.5%) from the same period last year.
Beef exports totaled 241.1 million lbs. in October, up 1.5 million lbs. from September but 627,000 lbs. less than last year. Through the first 10 months of this year, beef shipments stood at 2.491 billion lbs., down 66.8 million lbs. (2.6%) from the same period last year.
U.S. issues mandate on H5N1 testing of raw milk... The U.S. issued a federal order on Friday mandating the national milk supply be tested for H5N1, USDA Secretary Tom Vilsack said, as authorities seek to grapple with rapid spread of the virus among dairy herds. Testing will begin Dec. 16. The order requires farms and processors to make raw milk available for sampling, and farm owners whose animals test positive for the virus to tell USDA about animal movements and other information.
Both federal orders will remain in effect indefinitely, Vilsack said, adding that the testing plan was developed with industry groups, state officials and veterinarians.
USDA first announced it would begin national milk testing in October after a push from industry and veterinary groups for stronger surveillance of the virus, but had not detailed the extent of the program or how it would be implemented.
The testing plan, which will involve monthly or weekly sample collection from bulk milk tanks and dairy processors, will be rolled out first in California, Colorado, Michigan, Mississippi, Pennsylvania and Oregon, Vilsack said. The latter three states have not reported H5N1 infections in dairy cattle.
Stronger jobs growth in November... The U.S. economy added 227,000 non-farm payrolls in November, up sharply from the October figure that was suppressed by hurricanes and labor strikes. The unemployment rate ticked up to 4.2%. Economists indicate the jobs data did not give the Fed a reason to pause its monetary policy easing later this month, though policymakers are likely to be relatively cautious with bond market participants betting most heavily on a 25-basis-point cut.
Time is running out, but Boozman says passing the FARM Act is a priority... In an interview with Farm Journal’s Tyne Morgan, Sen. John Boozman (R-Ark.) emphasized the urgency of passing the Farm Assistance and Revenue Mitigation (FARM) Act to address the financial challenges facing U.S. farmers. Boozman, the ranking member of the Senate Ag Committee who will lead the panel in the next Congress, highlighted the devastating economic conditions in farm country and underscored the need for immediate support to stabilize the sector. Boozman painted a grim picture of the challenges farmers face, citing consecutive years of negative cash flow for many producers. “For some producers, this is the second or third consecutive year of negative cash flow,” Boozman said. “This means many farm families are ending 2024 in the red... facing the reality of being the generation to have lost the family farm due to extreme market conditions beyond their control.”
Lower commodity prices, rising input costs and the absence of a modernized farm bill have created tight margins, particularly for row crop farmers. Boozman stressed that without updated risk management tools, many farmers may struggle to secure the financing needed for 2025.
If passed, the FARM Act could be included in the continuing resolution (CR). Payments, based on a specific calculation tied to costs and returns, may provide farmers with the following per-acre assistance:
- Corn: $101
- Soybeans: $53
- Wheat: $73
- Cotton: $195
- Rice: $84
Payment estimates are subject to change based on updated WASDE reports.
As efforts to pass the FARM Act continue, Boozman acknowledged the challenges of securing bipartisan support, noting cost as a major hurdle. He praised colleagues like Sens. John Hoeven (R-N.D.) and Cindy Hyde-Smith (R-Miss.) for their commitment to the cause.
Additionally, Boozman expressed optimism about working with Brooke Rollins, President-elect Donald Trump’s pick for Secretary of Agriculture. He emphasized the importance of her close relationship with the president and her potential to influence policy.
Boozman concluded with a call for action: “We simply have to come up with a package that helps [farmers] get through this year...It’s not only farmers telling us this but also economists, lenders, and everyone involved in agriculture.”
GOP strategy shifts: Arrington pushes for comprehensive reconciliation bill... House Budget Committee Chair Rep. Jodey Arrington (R-Texas) is advocating for an expansive first reconciliation package in the upcoming Congress, emphasizing the importance of securing broader support amid a narrow House majority. Arrington argues that including multiple GOP priorities, such as tax changes, could strengthen consensus across the House and Senate. This approach contrasts with Senate Republicans’ preference for a more focused bill targeting the southern border, energy and defense spending, reflecting differing strategic visions within the party.
GOP divided over spending as Musk, Ramaswamy step in... Hardline conservatives are urging Elon Musk and Vivek Ramaswamy, leaders of the Department of Government Efficiency (DOGE), to highlight wasteful appropriations, while moderate Republicans push back, emphasizing mandatory spending as the main driver of federal debt. During a tense meeting with lawmakers, Musk and Ramaswamy listened to competing GOP strategies, including a controversial “naughty and nice” list of lawmakers based on fiscal performance. While some like Rep. Chip Roy (R-Texas) advocate for exposing appropriators, others, such as Rep. David Joyce (R-Ohio), argue discretionary funds have already been restrained. The duo’s influence may shape public awareness of fiscal reforms, including Social Security sustainability and the contentious use of the Impoundment Control Act for spending cuts. Lawmakers remain divided on whether these efforts will unify or further fragment the GOP’s fiscal priorities.
Trans Mountain Pipeline expansion key to shield Canada from U.S. tariffs... The expansion of Canada’s Trans Mountain pipeline could play a pivotal role in mitigating the potential impacts of tariffs threatened by President-elect Donald Trump on imports from Canada and Mexico. The $24 billion project adds nearly 600,000 barrels per day (bpd) of shipping capacity for Canadian crude, crucial as energy products account for about one-third of Canada’s exports to the U.S.
Tariffs would not apply to crude transshipped through the U.S. to other destinations, hinting they may serve more as leverage in negotiations than as enforceable trade measures. With an export terminal in Vancouver capable of handling 630,000 bpd — around 16% of total Canadian oil exports — the pipeline facilitates bypassing the U.S. market to avoid tariffs. However, cost overruns have limited spot shipments, leaving the pipeline underutilized. Government projections suggest full capacity will not be reached until 2028. U.S. refiners, especially in the Midwest and on the West Coast, rely heavily on Canadian crude, making them vulnerable to tariff impacts.
Of note: Canadian wheat to Mexico transshipped through the U.S. would also not be impacted by any tariffs.
WH Group shareholders approve Smithfield Foods spinoff... Shareholders of WH Group overwhelmingly approved the spinoff of Smithfield Foods into a publicly listed U.S. company, with 99.4% voting in favor. Initially proposed in July and formally detailed in November, the spinoff values Smithfield at least at its net asset value, estimated at $5.38 billion as of September. The listing is planned for either the New York Stock Exchange or Nasdaq, though WH Group has not disclosed further specifics.