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Your Pro Farmer newsletter is now available... The outgoing Biden administration released preliminary details on the clean fuel 45Z tax credit program, which will offer more flexibility for corn, soybeans and sorghum to qualify as eligible feedstocks. However, the incoming Trump administration will have the final say on critical loose ends and there is still a lot of uncertainty. Brazil’s soybean crop will be record-large this year, though rains in central production areas are delaying early harvest efforts and could cause quality concerns if they persist. Meanwhile, far southern Brazil and especially Argentina is dry, stressing corn and soybean crops. USDA’s January crop reports triggered a bullish price response early last week, which encouraged us to increase 2024-crop corn and soybean sales. We cover all of these items and much more in this week’s newsletter, which you can access here.
MLK Jr. Day schedule... All markets and government offices are closed Monday, Jan. 20, for Martin Luther King Jr. Day. There will be no Pro Farmer updates on Monday. Grain markets resume trading with the overnight session at 7:00 p.m. CT on Monday. Livestock markets reopen at 8:30 a.m. CT. on Tuesday, Jan. 21.
Xi and Trump discuss trade, TikTok in phone call... Chinese President Xi Jinping and U.S. President-elect Donald Trump held a phone call on Friday, described by Trump as “a very good one for both China and the U.S.A.” The two leaders discussed trade, fentanyl, TikTok, and other pressing issues, with Trump expressing optimism about making the world “more peaceful and safe.”
While Chinese state media provided limited details, Trump posted on Truth Social about their shared commitment to global stability. Notably, the call comes amid heightened tensions over tariffs, the opioid crisis and the pending removal of TikTok from app stores.
Trump also invited Xi to his inauguration on Monday, but China will instead send Vice President Han Zheng.
Meanwhile, Beijing’s Foreign Ministry emphasized the importance of cooperation and managing differences with the new U.S. administration. However, tensions are expected to rise as Trump has appointed critics of China, such as Sen. Marco Rubio as Secretary of State, signaling a potentially confrontational stance.
In a related matter, the U.S. Supreme Court has upheld a divest-or-ban law targeting China-owned TikTok, leaving the video app potentially facing a blackout for its 170 million U.S. users on Sunday.
Bessent would press China to resume ag purchases per Phase 1 agreement... Treasury Secretary nominee Scott Bessent testified before the Senate Finance Committee, elaborating on Trump administration priorities, including taxes, tariffs, and sanctions. Key takeaways:
- China’s agricultural import commitments. Bessent emphasized that China has not fulfilled its obligations for agricultural commodity purchases as agreed upon in the Phase I deal. China’s ag purchases from the U.S. have declined significantly, with 2024 purchases dropping 16% compared to the previous year. He would press China to resume its agricultural purchases as per the agreement and proposed discussing a potential “catch-up provision” with President Trump to compensate for the shortfall in Chinese purchases over the past four years.
- Tariffs: Bessent outlined using tariffs to counter unfair trade, generate revenue and gain leverage in negotiations, such as pressuring Mexico on fentanyl issues. He showed interest in carbon-tied tariffs as a potential policy. The full cost of tariffs will not be passed on to consumers, Bessent said, citing the history of tariffs and academic theory.
- Taxes and spending: Bessent called extending the 2017 Republican tax cuts “the single-most important economic issue of the day.” He emphasized making Trump’s tax cuts permanent and introducing “pro-growth” tax relief for manufacturers, workers and seniors. Bessent warned the U.S. faces an economic crisis that will hammer middle- and working-class people if the 2017 Republican tax cuts aren’t extended before they expire.
Zeldin comments on year-round E15, RFS, WOTUS and acknowledges climate change is real... EPA Administrator nominee Lee Zeldin stated that while he couldn’t prejudge the outcomes of any processes, he acknowledged the importance of year-round E15. Despite this non-committal response, leaders of ethanol industry groups, including the American Coalition for Ethanol and Growth Energy, expressed appreciation for Zeldin’s commitment to doing his part to ensure nationwide availability of year-round E15.
Zeldin’s stance on ethanol has been a point of interest, given his previous opposition to ethanol usage mandates during his time in Congress. Zeldin expressed his commitment to implementing the Renewable Fuel Standard (RFS) as written by Congress. He acknowledged his views on ethanol usage mandates have evolved since his time in Congress. He explained that his perspective has changed due to conversations he’s had with farmers, producers, and others in the industry. Zeldin emphasized that he now has a better understanding of the importance of ethanol to rural economies and energy security.
He expressed strong criticism of the Biden administration’s decision to reinstate and expand the WOTUS rule. Zeldin argued that the WOTUS rule represents federal overreach and places an undue burden on farmers, landowners and local governments. He stated that the rule would negatively impact agriculture, construction, and other industries by expanding federal authority over water bodies and wetlands. The congressman emphasized that the expanded definition of WOTUS would lead to increased regulations and permitting requirements for activities on private property. He contended that this expansion of federal control would hinder economic growth and development in rural areas.
As for his position on climate change, Zeldin stated: “I believe that climate change is real,” marking a departure from previous EPA leaders during the first Trump administration and from Trump. Regarding EPA’s role in regulating carbon dioxide emissions, Zeldin referenced a 2007 Supreme Court decision, noting that while the ruling grants EPA the authority to regulate greenhouse gases, it does not mandate such action. He emphasized the agency is “authorized, not required” to regulate carbon dioxide emissions.
Terrain report: ARC and PLC to offer higher support (for some) in 2025... With Congress authorizing another one-year extension of the 2018 Farm Bill through Sept. 30, 2025 (besides more than $30 billion in ad hoc assistance to ag producers experiencing natural and economic disasters), crop farmers across the country now know what risk management tools are available to them for the new crop year.
Terrain said, “For some crops such as corn, soybeans and wheat, coverage levels will increase to levels at or near all-time highs. In addition to crop insurance, crop farmers with eligible base acres may enroll in Agriculture Risk Coverage (ARC) or Price Loss Coverage (PLC) on a commodity-by-commodity basis.”
Following are highlights for several major crops:
- Corn ARC-CO: $5.03/bu.
- Corn PLC: $4.26/bu.
- Soybean ARC-CO: $12.17/bu.
- Soybean PLC: $9.66/bu.
- Wheat ARC-CO: $6.72/bu.
- Wheat PLC: $5.56/bu.
According to the Congressional Budget Office, total program payments for the 2025-26 crop year are projected at $5.4 billion.
The full analysis from Terrain is available here.
Trump nominates four individuals for USDA posts... Richard Fordyce to serve as the Undersecretary for Farm Production and Conservation (FPAC); Dudley Hoskins to serve as the USDA Undersecretary for Marketing and Regulatory Programs (MRP); Luke Lindberg to serve as the Undersecretary for Trade and Foreign Agricultural Affairs (TFAA); and Michael Boren, a businessman and former firefighter, to be Undersecretary for Natural Resources and Environment.
GOP’s reconciliation package: potential offsets explored... House Budget Committee Republicans have drafted a comprehensive document outlining potential offsets and policy options for the GOP’s reconciliation package. Link to the document. This “menu of options” spans multiple committees and includes cost estimates for measures such as corporate rate cuts, adjustments to the SALT cap, expansion of the endowment tax, SNAP/food stamp savings and a border adjustment tax.
The document serves as a resource for House GOP members to evaluate, rather than a finalized list of provisions to include in the bill.
Major changes approved for FMMOs... Dairy producers have endorsed significant updates to the Federal Milk Marketing Orders (FMMOs), marking a pivotal shift in U.S. dairy pricing policy. Following a comprehensive USDA-led review, the modifications include:
- Reversal of 2018 Farm Bill changes: Returning to the “higher-of” Class I skim milk price formula to address losses exceeding $750 million under the previous system.
- Updated manufacturing allowances: New rates per pound set for cheese, butter, nonfat dry milk and dry whey.
- Adjusted skim milk composition factors: Revised standards include 3.3% true protein, 6.0% other solids and 9.3% nonfat solids.
- Removal of barrel cheese pricing: Excludes 500-lb. barrel cheddar cheese prices from federal surveys.
- New ESL product class: Introduces an average-based adjustment for extended shelf-life products.
Most changes will take effect on June 1, 2025, with some delayed until Dec. 1, 2025. This overhaul, supported by dairy farmers across all 11 FMMOs, aims to stabilize pricing, improve farmer incomes and enhance market dynamics.
USTR finds China’s shipbuilding ‘unreasonable’ and ‘actionable’... The U.S. Trade Representative’s office on Thursday said it has found China’s targeted dominance of the global shipbuilding, maritime and logistics sectors is “unreasonable” and is “actionable” under U.S. trade law. The findings of a USTR probe did not include a specific recommendation of penalties against Beijing, leaving next steps up to President-elect Donald Trump. China’s embassy in Washington said its development in those industries “is the result of technological innovation and active market competition of enterprises, thanks to its complete industrial manufacturing system and huge domestic market.”