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Your Pro Farmer newsletter is now available... Funds covered some of their record net short positions in the corn and soybean markets last week, which allowed futures to work off their recent lows. But given generally favorable weather, both markets face headwinds to sustained price recoveries. The annual Wheat Quality Council HRS tour found strong yield potential in top producer North Dakota, which helped keep a lid on the wheat market. On the political front, President Joe Biden withdrew from the presidential race and Vice President Kamala Harris garnered enough Democratic delegates to be former President Donald Trump’s new challenger. Our News page 4 feature this week takes a look at how Harris stacks up against Trump on some of the key issues for agriculture. China shocked markets by unexpectedly cutting interest rates and making other monetary policy moves in hopes of boosting its sluggish economy. We cover all of these items and much more in this week’s newsletter, which you can access here.
Core PCE unchanged in June... The personal consumption expenditures (PCE) price index rose 2.5% annually in June, down from 2.6% the previous month. The Fed’s preferred inflation gauge, core PCE that excludes food and energy prices, held at 2.6%. While inflation is gradually easing, stronger-than-expected second quarter GDP growth and a robust labor market may give the Fed reason to not cut interest rates too quickly.
Court vacates EPA denials of 2022 SREs... A federal appeals court on Friday said it rejected EPA’s decision in 2022 to deny small oil refineries temporary waivers from biofuels blending requirements and sent the matter back to the agency for further review. The opinion and details of the decision by the U.S. Court of Appeals for the District of Columbia remained sealed.
NCGA urges fair criteria for farming practices to qualify for SAF credits... National Corn Growers Association (NCGA) President Harold Wolle emphasized the importance of ethanol in reducing greenhouse gas emissions and the need for a level playing field for farmers. The tax credits, part of the Inflation Reduction Act, require biofuel producers to lower their carbon intensity score, which can be achieved through climate-smart agriculture practices. Corn growers are concerned about rigid standards that may not be feasible in all regions, which could hinder their contribution to climate goals.
NGFA submits ideas for climate-smart ag regarding biofuel feedstocks... The National Grain and Feed Association (NGFA) submitted recommendations to USDA regarding climate-smart agriculture practices and their impact on greenhouse gas (GHG) emissions for biofuel feedstocks. These recommendations respond to USDA’s request for information aimed at establishing voluntary standards for such feedstocks, as announced on June 27. These standards are part of the 2008 Food, Conservation, and Energy Act and aim to support clean transportation fuel policies, including the 45Z tax credit.
NGFA supports standards that encourage voluntary adoption of climate-smart practices and create additional revenue for farmers and agribusinesses. They highlighted the importance of U.S. leadership in global sustainable transportation fuel markets and made several key recommendations:
· Broad and science-based incentivization of all types of carbon reductions.
· Avoiding arbitrary bundling of practices when quantifying GHG emissions.
· Limiting farmer data collection to essential information for verification.
· Allowing farmers to market climate-smart commodities throughout the value chain.
· Implementing traceability standards that accommodate the mass balance system used in commodity handling.
Exxon Mobil enters carbon capture and storage (CCS) agreement with CF Industries... This partnership aims to reduce carbon dioxide emissions from CF Industries’ Yazoo City, Mississippi, complex. Here are the key details of the agreement:
Project overview
· Exxon Mobil will transport and permanently store up to 500,000 MT per year of captured CO2 from CF Industries’ Yazoo City complex.
· The project is expected to reduce the site’s CO2 emissions by approximately 50%.
· The startup for this CCS initiative is planned for 2028.
Impact and significance
· Brings Exxon Mobil’s total committed CO2 storage for customers to 5.5 MMT annually.
· Emissions reduction is equivalent to replacing about 2 million gasoline-powered cars with electric vehicles.
· Project represents CF Industries’ second major decarbonization effort using CCS technologies and their second collaboration with Exxon Mobil.
CF Industries’ investment and benefits
· CF Industries will invest approximately $100 million in its Yazoo City Complex to build a CO2 dehydration and compression unit.
· Project is expected to qualify for tax credits under Section 45Q of the Internal Revenue Code.
· Once operational, the Yazoo City Complex will be able to manufacture products with a substantially lower carbon intensity compared to conventional ammonia production sites.
Bottom line: This partnership between Exxon Mobil and CF Industries represents a significant step toward reducing carbon emissions in the fertilizer production industry while maintaining the critical role of ammonia in global food security and potential future energy applications.
Whitmer vetoes E15 rebate program... Michigan Governor Gretchen Whitmer (D) recently vetoed a $3 million grant program that aimed to incentivize the sale of E15 fuel by providing a 5 cent-a-gallon rebate to fuel retailers. This decision has sparked significant disappointment among Michigan’s agricultural and environmental groups. E15 is known for burning cleaner than pure gasoline, thereby reducing greenhouse gas emissions and improving air quality.
Whitmer defended her decision by stating the veto was a result of a lack of negotiation on the budget items. She indicated openness to future discussions, suggesting the door is not entirely closed on the possibility of revisiting the program.
The veto means that only 23 fuel retailers in Michigan currently offer E15, limiting the fuel’s availability and potential environmental benefits. Additionally, the agricultural sector misses out on a potential boost in ethanol demand.
EPA gets more funding under Senate bill... The Senate Appropriations Committee approved a $44.6 billion fiscal year (FY) 2025 Interior/Environment appropriations bill, surpassing the House version by $6 billion. The bill allocates $15.8 billion to the Interior Department, $9.3 billion to the EPA (compared to the House bill’s $7.4 billion), and $6.5 billion to the Forest Service. It also includes $4.1 billion for wildfire suppression and nearly $12.7 billion for tribal programs, with $8.5 billion for the Indian Health Service. Both the Senate and House agree on boosting funding for Indian Country programs.
USTR sets specific allocations for FY 2025 sugar TRQ... The Office of the U.S. Trade Representative (USTR) has published country-specific allocations under the Fiscal Year (FY) 2025 tariff-rate quota (TRQ) for raw cane sugar, refined and specialty sugar and sugar-containing products. USTR in June announced an in-quota quantity of the TRQ for raw cane sugar for FY 2025 of 1,117,195 metric tons raw value (MTRV), the minimum quantity. As for the refined sugar TRQ, USTR said it is allocating 10,300 MTRV to Canada, 2,954 MTRV to Mexico, and 7,090 MTRV to be administered on a first-come, first-served basis. USTR said that relative to the 64,709 metric tons of the TRQ for imports of certain sugar-containing products, 59,250 metric tons are allocated to Canada with the remainder (5,459 metric tons) available for other countries on a first-come, first-served basis.