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Warm finish to the growing season, varied precip outlook... The extended weather forecast from the National Weather Service calls for increased chances of above-normal temperatures across virtually all of the contiguous U.S. for August through October, aside from the far northwestern Corn Belt, PNW and West Coast. The 90-day forecast shows a bubble of below-normal precipitation over much of the western Corn Belt westward through the Rocky Mountain region. The eastern Corn Belt has “equal chances” for normal, above-normal and below-normal precip during the 90-day period. Above-normal rainfall is likely across the Delta, Southeast and Atlantic Coast.
Despite the forecast for hotter- and drier-than-normal conditions in the western Corn Belt during the second half of the growing season, the Seasonal Drought Outlook only calls for drought conditions to develop or persist in extreme western/southwestern areas of the region.
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IGC raises global corn, wheat production forecasts... The International Grains Council (IGC) increased its 2024-25 world grains production forecast by 9 MMT to 2.321 billion tons, still below projected consumption of 2.324 billion tons. As a result, global grain stocks in the new-crop marketing year are expected to decline to a 10-year low. “With feed, food and industrial consumption expected to increase to record highs, a 1% retreat in stocks is envisaged at the end of 2024-25 to a 10-year low of 586 million tons,” IGC said.
IGC increased its 2024-25 world wheat crop outlook by 8 MMT to 801 MMT, which would be up 8 MMT from 2023-24. IGC also raised its forecast for 2024-25 global corn production by 2 MMT to 1.225 billion tons, which would be up 1 MMT from the current year. The global soybean production forecast was unchanged at 415 MMT, which would be up 23 MMT from 2023-24.
Vance aggressive on trade, China and immigration policy... JD Vance, Donald Trump’s vice presidential running mate, delivered a speech Wednesday evening at the Republican National Convention, focusing on his personal background and his commitment to the America First agenda, including aggressive trade and immigration policies. Vance presented himself as a “working-class boy” with humble origins, emphasizing his journey from a challenging upbringing to becoming a U.S. Senator. He shared his story of growing up in a working-class family in southwestern Ohio, dealing with his parents’ divorce and his mother’s struggle with drug and alcohol abuse.
A few key policy areas were mentioned:
• Vance emphasized his commitment to the America First approach, which typically includes policies on trade, immigration and foreign policy.
• He mentioned a shift in approach regarding defense expenditure among U.S. partners, indicating an end to complacency in this area.
• Vance criticized President Joe Biden’s immigration policy, suggesting a tougher stance on border control and immigration reform.
• The speech included tough rhetoric on China, implying a more confrontational approach to U.S./China relations. Vance emphasized the need to “stop the Chinese Communist Party from building their middle class on the backs of American citizens,” suggesting a tougher stance on trade with China.
• Vance criticized President Biden for supporting NAFTA, calling it a “bad trade deal that sent countless good jobs to Mexico.” This comment suggests Vance is taking a stance against free trade agreements that he believes harm American workers, aligning with the America First economic approach often associated with Donald Trump’s policies. (NAFTA passed with Republican votes as well.) He attributed job losses in Ohio and across the nation to Biden’s backing of NAFTA. He also criticized China’s entry into the World Trade Organization in 2001, linking it to job losses and economic challenges in the United States. He pledged to boost domestic manufacturing, stating, “We’re done sacrificing supply chains to unlimited global trade.” This indicates Vance’s position represents a shift from traditional Republican trade policies, further emphasizing the change in the party’s approach to trade under Trump’s influence and a move toward protectionism.
• Vance vowed to fight for “forgotten” workers and restore the American dream, suggesting policies aimed at supporting working-class Americans.
• Vance expressed a desire for a swift resolution to the Ukraine crisis. He advocated for shifting focus away from Ukraine and towards addressing the challenges posed by China, which he views as the most significant threat to the United States. This stance aligns with the “America First” doctrine that Vance supports, which generally emphasizes a more cautious approach to committing U.S. troops overseas.
SAF production surge in the United States... Reuters reported U.S. sustainable aviation fuel (SAF) production capacity could increase by 1400% in 2024 if all planned capacity additions are realized, according to the U.S. Energy Information Administration (EIA).
• Domestic biofuels production is expected to rise about 50% in 2024, driven primarily by the increase in SAF production.
• The White House aims to meet the entire U.S. aviation fuel demand with SAF by 2050 and to supply at least 3 billion gallons annually by 2030.
Current and future production
• In 2023, the U.S. consumed around 1.6 million barrels per day (bpd) of jet fuel.
• EIA projects SAF output to grow from 2,000 bpd to nearly 30,000 bpd in 2024.
Notable projects
• Phillips 66’s Rodeo facility: Achieved a renewable fuel production target of 50,000 bpd in June 2023, with 10,000 bpd being SAF.
• Valero’s Diamond Green project: In partnership with Darling Ingredients, this project at the Port Arthur, Texas, refinery is expected to produce 15,000 bpd of SAF by the end of 2024.
Importance and Investments
• SAF produced from agricultural and waste feedstocks has gained increased investments due to the EPA’s Renewable Fuel Standard.
• Increasing SAF production is critical to meeting long-term environmental and energy goals set by the government.
Farm groups advocate for domestic feedstocks in SAF tax credits... American Farm Bureau Federation, National Farmers Union, National Corn Growers Association and American Soybean Association jointly urged the Biden administration to ensure that tax credits for sustainable aviation fuel (SAF) are available only for low-carbon fuels made from U.S.-grown feedstocks. They also recommended broadening the list of climate-smart farming practices to produce lower-carbon “sustainable” crops. Currently, some foreign feedstocks are best suited to benefit from the SAF credits.
Program details
• 40B tax credits: Current guidance for 40B tax credits (for SAF produced from 2022-24) only qualifies a fraction of U.S. biofuels, lacking a domestic feedstock requirement and being rigid in its farming practice stipulations.
• 45Z Tax credits: These tax credits will be available in 2025 for sustainable aviation fuel (SAF). The administration has yet to issue regulations for these credits.
Concerns and recommendations
• Domestic benefits: The farm groups emphasized that without clear domestic feedstock requirements, the policy’s benefits might be diverted from American farmers.
• Expanded compliance options: They criticized the 40B guidelines for being too strict and suggested additional compliance options for qualifying feedstocks.
Related developments
• Pilot project announcement: CF Industries and Poet announced a pilot project using low-carbon ammonia fertilizer to grow corn for ethanol production, potentially reducing ethanol’s carbon intensity by up to 10%. The project will start this fall and continue through the 2025 harvest.
Southern Ag Today: Trade policy also important in next farm bill... The latest issue of Southern Ag Today, notes the U.S. share of exports for major commodities has been steadily declining, exacerbating the cost-price squeeze due to high input costs. It says there is a call for meaningful enhancements in commodity programs and increased funding for trade promotion programs.
Trade promotion programs
• Foreign Market Development Program (FMD): Partners with agricultural organizations to reduce trade barriers and expand export opportunities by identifying new markets or improving processing capabilities.
• Market Access Program (MAP): Provides cost-sharing for consumer-oriented activities to increase demand for U.S. agricultural commodities.
Funding history and proposals
• Historical funding: The last increase in FMD and MAP funding was in the 2002 Farm Bill, setting MAP at $200 million and FMD at $34.5 million.
• Proposed increases: The House Agriculture Committee’s Farm, Food, and National Security Act of 2024 and the Senate Republican-drafted farm bill framework propose doubling MAP and FMD funding.
Bottom line: Southern Ag Today writers Dr. Joe Outlaw and Dr. Bart Fischer say that while farm bills typically focus on commodity programs, enhancing market development activities is crucial to stimulate demand for U.S. agricultural products, benefiting the entire agriculture sector.
ECB holds interest rates steady... The European Central Bank (ECB) has kept its main interest rate at 3.75%, aligning with market expectations. Despite concerns about geopolitical uncertainty and rising wages, ECB left open the possibility of a rate cut in September. Most economists predict a rate cut at the ECB’s next meeting on Sept. 12, provided inflation data continues to trend toward the 2% target.