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Soybean producers: Extend 2024-crop sales... March soybean futures have rallied more than $1.00 from the December low to challenge the early November highs. While we feel soybeans are undervalued compared to corn and funds could cover more short positions, the rally must be rewarded. We advise soybean hedgers and cash-only marketers to sell another 10% of 2024-crop production in the cash market to get to 40% priced. Our next upside sales target is the $10.75 to $11.00 range in futures.
USDA’s interim rule more flexible for climate-smart ag crops for biofuels use... USDA published an interim rule establishing guidelines for quantifying, reporting and verifying the greenhouse gas (GHG) emissions associated with the production of biofuel feedstock commodity crops grown in the United States. The rule establishes a framework to connect climate-smart agriculture (CSA) practices applied in the production of feedstock crops with reductions in the carbon footprint of biofuels. The rule includes three feedstock crops: corn, soybeans and sorghum. It also covers CSA practices that could reduce GHG emissions or sequester carbon, including reduced till and no-till; cover cropping; and nutrient management practices, such as the use of nitrification inhibitors. Importantly, the interim rule allows for adoption of CSA practices both individually or in combination. This means that participating farmers would have the flexibility to adopt the CSA practices that make sense for their operation, while still being able to produce feedstocks with reduced carbon intensities under the rule.
USDA says establishing quantification and verification standards for climate-smart practices helps to ensure the net GHG emissions reductions from these practices are real, thereby improving credibility and confidence, which could facilitate market opportunities for U.S. farmers growing biofuel feedstocks. In addition to reducing GHG emissions and increasing carbon sequestration, CSA practices can also generate additional environmental benefits, including improved water quality and soil health.
Highlights:
- Farmers can choose one or more of the CSA actions — no-till or reduced-till, cover crops, and nutrient management. Unlike prior rules, farmers no longer have to use all three on the same field at the same time.
- Corn, soybeans and sorghum are the crops specified as was noted in 45Z guidance.
- USDA will release a beta version of what is called the USDA Feedstock Carbon Intensity Calculator (USDA FD-CIC) to facilitate the farm-level, crop-specific reductions.
- There will be a final version established and results via the beta version should be viewed as preliminary.
- 60-day comment period on the interim final rule.
- Key will be the chain of custody and traceability and recordkeeping requirements.
NOPA December data crushes previous record... Members of the National Oilseed Processors Association (NOPA) crushed 206.6 million bu. of soybeans during December, topping the previous record of 200 million bu. in October. Crush increased 13.4 million bu. (6.9%) from November and 11.3 million bu. (5.8%) from December 2023. NOPA data implies a full December soybean crush of 216 million bushels.
Our forecast for 2024-25 soybean crush is 2.425 billion bu., 15 million bu. above USDA’s projection.
NOPA soyoil stocks totaled 1.236 billion lbs. at the end of December, up 151.8 million lbs. from November but 17 million lbs. below expectations amid continued strong domestic use for biofuels and exports.
U.S. consumer prices post largest gain in nine months... The consumer price index (CPI) rose 0.4% last month, the largest monthly gain since March. On an annual basis, CPI rose 2.9%, the most since July. Consumer prices increased 2.9% in 2024, slowing from 4.1% in 2023.
Core CPI, excluding food and energy costs, increased 0.2% on a monthly basis and 3.2% from year-ago – both easing 0.1%.
Food inflation increased 2.5% from year-ago in December, with grocery prices up 1.8% and restaurant prices up 3.6%.
Bottom line: This data supports the Federal Reserve’s cautious stance on further interest rate cuts, aligning with its narrative that while inflation is easing, it remains sufficiently elevated to justify a pause for now.
Trump announces plan for “External Revenue Service” to collect tariffs and duties... President-elect Donald Trump unveiled plans to establish the “External Revenue Service” (ERS), a federal agency designed to collect tariffs, duties and other revenue from foreign sources, akin to IRS’s role in domestic tax collection. Functions may duplicate existing agencies like U.S. Customs and Border Protection. The announcement, made Tuesday on Truth Social, outlines a strategy aimed at shifting the financial burden of trade from American taxpayers to foreign nations.
ERS seeks to redirect trade-related costs to foreign entities, emphasizing “fair contributions” from U.S. trade partners. The agency is slated to begin operations on Jan. 20, coinciding with Trump’s inauguration. Congressional approval will be required to establish a new federal agency.
This proposal reflects Trump’s commitment to imposing significant tariffs on major trade partners and utilizing these revenues as an alternative to income taxes. However, the plan’s feasibility and economic impact remain contested.
House Ag Committee undergoing significant changes... The House Ag Committee includes 15 returning Democrats and will be led by Rep. Angie Craig (D-Minn.) as the new ranking member. New members: Rep. Shri Thanedar (D-Mich.), the sole non-freshman among the new additions. Freshmen members include Reps. Adam Gray (Calif.), Kristen McDonald Rivet (Mich.), Shomari Figures (Ala.), Eugene Vindman (Va.), Josh Riley (N.Y.), John Mannion (N.Y.) and April McClain Delaney (Md.).
Departures: Seven senior Democrats were not included in the preliminary roster: Reps. Marie Gluesenkamp Perez (Wash.), Jasmine Crockett (Texas), Greg Casar (Texas), Chellie Pingree (Maine), Salud Carbajal (Calif.), Darren Soto (Fla.), and Sanford Bishop (Ga.).
Open seats: Two spots remain available for members who obtain waivers to join the committee.
Wright’s vision for U.S. energy expansion... Chris Wright, Donald Trump’s pick for Energy Secretary, emphasized the need to “unleash” American energy production in testimony before the Senate. Wright, founder of Liberty Energy Inc., advocates for expanding nuclear power, liquified natural gas (LNG) and fossil fuels, while criticizing climate change policies and renewable energy subsidies.
He has assailed subsidies for wind and solar power and said fossil fuels were crucial for spreading prosperity and lifting people from poverty. He has called the threat posed by climate change exaggerated. “There is no climate crisis. And we are not in the midst of an energy transition either,” Wright said in a video posted on his LinkedIn page. “Life on earth is simply impossible without carbon dioxide — hence the term carbon pollution is outrageous.”
Wright’s focus includes innovation, energy dominance and leveraging U.S. energy resources as a strategic national asset. His remarks highlight a shift toward traditional energy under Trump, contrasting sharply with the previous administration’s renewable energy priorities.
Bottom line: If confirmed as expected, Wright will oversee a vast department responsible for nuclear security, energy innovation and LNG export projects, and play a central role in advancing Trump’s energy agenda.
Of note: Sen. Ron Wyden (D-Ore.), who met with Wright, said the Liberty Energy CEO “did not seem to know anything” about the clean energy tax credits from the Inflation Reduction Act. “He wasn’t up on it at all,” Wyden said.
EPA draft highlights health risks of PFAS-contaminated sewage sludge in agriculture... On Tuesday, EPA released a draft risk assessment addressing the health risks of using PFAS-contaminated sewage sludge as fertilizer on farms. Key findings:
- Health risks: Farmers and consumers of products from contaminated land face significant health concerns, including elevated cancer risks that exceed EPA’s acceptable thresholds by “several orders of magnitude.”
- Exposure pathways: High-risk exposure routes include consuming milk from pasture-raised cows, fish from contaminated lakes and beef or eggs from affected animals.
- Hot spots: While the general food supply isn’t significantly affected, specific farming operations in contaminated regions are at heightened risk.
Implications and future actions:
- Regulatory framework: Findings will inform potential regulations under the Clean Water Act.
- Risk reduction: Lowering PFAS levels in biosolids or reducing application on agricultural land can mitigate risks.
- Collaboration: EPA highlights the need for partnerships with affected farmers and federal agencies for effective risk management.
U.S. bans use of Red No.3 dye in food, medicines... The Food and Drug Administration banned the use of a synthetic food dye that gives some candies, cakes and certain oral medications a cherry-red color, following evidence that the dye causes cancer in laboratory rats. Manufacturers who use Red No. 3 in food have until Jan. 15, 2027, to reformulate their products and ingested drugs makers have until Jan. 18, 2028, to comply with the ban.
Despite the ban, FDA said studies in other animals and in humans did not show these effects and that available evidence does not support claims the dye’s use in food and oral drugs puts people at risk.