Check our advice monitor on ProFarmer.com for updates to our marketing plan.
Your Pro Farmer newsletter is now available... USDA’s January crop reports contained a lot of data for traders to digest, with potential to set the price tone through winter. Aside from the bevy of USDA data, traders continue to closely monitor South American growing conditions, with Brazil mostly favorable while Argentine moisture stress is building. That trend could continue as La Nina is established, though the weak event may limit typical impacts. Sources tell us USDA soon will start testing new protocols for reopening the Mexican border for feeder cattle imports. U.S. ag trade posted another deficit in November as fiscal year 2025 is off to a sluggish start. On the economic front, China continues to battle deflationary pressures and a falling currency, casting doubts about an economic recovery. We cover all these items and much more in this week’s newsletter, which you can access here.
Bullish reaction to USDA’s January crop reports... Corn and soybean futures surged after USDA cut its crop estimates more than anticipated, reducing ending stocks more than expected. The wheat data was neutral to a little negative, but seller interest was limited by strength in corn and soybeans. Click here to view full report details.
Biden administration releases preliminary 45Z credit guidance... The Treasury Department and Internal Revenue Service issued preliminary guidance on the 45Z tax credit created by the 2022 Inflation Reduction Act, which aims to incentivize the production of clean transportation fuels, including sustainable aviation fuels (SAF). Today’s announcement was a “notice of intent to propose regulations” for 45Z, meaning some important details of interpreting the tax code will be left to the incoming Trump administration.
In the long-awaited guidance, the U.S. is moving to curb imports of used cooking oil, which have been flooding into the country, for biofuels production. The guidance would prevent foreign supplies used to make biofuels from qualifying for the tax credit. This decision is a win for U.S. farmers.
“This tax credit is essential to U.S. competitiveness and to reduce emissions in the transportation sector with more affordable, cleaner fuel,” Deputy Energy Secretary David Turk said. “The final guidance released today provides clarity and certainty to America’s world-leading biofuel industry.”
The guidance states: “Under section 45Z, a fuel must be “suitable for use” as a transportation fuel. Treasury and the IRS intend to propose that 45Z-creditable transportation fuel must itself (or when blended into a fuel mixture) have either practical or commercial fitness for use as a fuel in a highway vehicle or aircraft. The guidance clarifies that marine fuels that are otherwise suitable for use in highway vehicles or aircraft, such as marine diesel and methanol, are also 45Z eligible. Specifically, this would mean that neat SAF that is blended into a fuel mixture that has practical or commercial fitness for use as a fuel would be creditable. Additionally, natural gas alternatives such as renewable natural gas (RNG) would be suitable for use if produced in a manner such that if it were further compressed it could be used as a transportation fuel.
“Today’s guidance states that Treasury intends to propose rules for incorporating the emissions benefits from climate-smart agriculture (CSA) practices for cultivating domestic corn, soybeans, and sorghum as feedstocks for SAF and non-SAF transportation fuels. These options would be available to taxpayers after Treasury and the IRS propose regulations for the section 45Z credit, including rules for CSA, and the 45ZCF-GREET model is updated to enable calculation of the lifecycle greenhouse gas emissions rates for CSA crops, taking into account one or more CSA practices.”
USDA is currently developing voluntary technical guidelines for CSA reporting and verification. Treasury and IRS will consider those guidelines in proposing rules recognizing the benefits of CSA for purposes of the section 45Z credit.
Jobs market strengthens in December... The U.S. economy added 256,000 non-farm payrolls in December, up from the revised figure of 212,000 for November. The unemployment rate eased to 4.1%. After the strong jobs data, Fed fund futures reflected just one rate cut in 2025, expected during the second half of the year.
Russia lowers wheat export tax... Russia’s tax on wheat exports will decline to 4,245.0 rubles ($41.52) per metric ton for Jan. 15-21, down from 4,346.1 rubles the previous week. Still, the export tax has surged 368% since mid-September, as Russia’s ag ministry tries to slow shipments.
Canada plans tariff retaliation if Trump escalates trade war... Canada is preparing a sweeping list of retaliatory tariffs on U.S. goods if President-elect Donald Trump enforces his proposed 25% levy on Canadian exports. According to Bloomberg, citing sources within the Canadian government, these measures could extend far beyond the selective counter-tariffs imposed during the 2018 trade dispute under the previous U.S. administration.
Besides revisiting earlier targets like Kentucky bourbon and Florida orange juice, Canada is considering tariffs on nearly every U.S. export product. Prime Minister Justin Trudeau’s administration aims for a “dollar-for-dollar” response, though officials acknowledge this approach may not fully match U.S. tariffs in a worst-case scenario.
Key highlights:
- Canada imported $320 billion in U.S. goods in the first 11 months of 2024, nearly equaling the European Union’s $341 billion.
- A U.S. 25% tariff could reduce Canada’s GDP by up to 3.8%, with retaliatory tariffs amplifying the impact to as much as 5.6%.
- Trudeau’s government is also exploring export taxes on strategic commodities, such as oil and uranium, as a pressure tactic.
Trudeau has expressed hopes of avoiding a trade war while warning of significant consequences for U.S. exporters. However, economic analysts caution that Canada’s retaliatory actions would also harm its domestic economy.
FT: China to send high-level envoy to Trump’s inauguration... Chinese President Xi Jinping will not attend U.S. President-elect Donald Trump’s inauguration on Jan. 20, but plans to send a high-level envoy instead, the Financial Times first reported. China’s ambassador to the U.S. and other senior Beijing officials are expected to represent China at the event. This decision was communicated to Trump’s transition team following his unprecedented invitation to Xi.
The move is seen as a diplomatic gesture amid strained U.S./China relations. Trump’s invitation marks a break from tradition, as foreign leaders typically do not attend U.S. presidential inaugurations. Sending an envoy balances goodwill with maintaining diplomatic distance.
Analysts suggest this reflects strategic posturing:
- For China: Preserving diplomatic ties while avoiding perceived subordination.
- For Trump: Signaling a potential reset in U.S./China relations with an eye on future negotiations.
The identity of China’s envoy and any discussions at the inauguration will be closely monitored by global observers.
Trump prepares sweeping executive orders on immigration, federal workforce and energy... Donald Trump is planning an aggressive series of executive orders after his inauguration, including tightening border restrictions, completing unfinished portions of the border wall, initiating mass deportation mechanisms and cutting federal funding to sanctuary cities unless they comply with immigration enforcement. The Trump administration also intends to shrink the federal workforce by implementing a hiring freeze and mandating in-person work for federal employees, led by Elon Musk, head of the Department of Government Efficiency. Challenges may arise with unionized federal workers, according to sources.
In energy, Trump is set to greenlight new drilling on federal lands and issue an order halting all pending regulations proposed under President Joe Biden that have yet to be finalized.
These actions highlight Trump’s focus on regulatory rollbacks and aggressive policy shifts across key areas.