Evening Report | November 22, 2024

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Your Pro Farmer newsletter is now available... President-elect Donald Trump’s proposed policies aim to boost American manufacturing, create jobs and reduce trade deficits by imposing significant levies on foreign goods. While tariffs can raise government revenue and protect certain industries, they often come with higher costs for consumers and risks of retaliation from trading partners. We look closer at key members of Trump’s leadership team and potential impacts from tariffs on News page 4. Efforts to strip China of its Permanent Normal Trade Relations trade status are also intensifying, signaling a turning point in U.S./China relations. On the ag policy front, disaster aid will be coming in December, as part of a broader aid package. Senate Ag Chair Debbie Stabenow finally released her farm bill proposal, but it has no chance of passing. It’s likely there will be a one-year extension of the 2018 Farm Bill. Brazil’s soybean crop is trending up after recent rains. The U.S. wheat crop has also been boosted by rains, though there are crop concerns in other countries. There are also geopolitical concerns as warfare between Russia and Ukraine intensified. We cover all of these items and much more in this week’s newsletter, which you can access here.

Trump taps Loeffler for USDA Secretary... Former Sen. Kelly Loeffler (R-Ga.) has been offered the position of Secretary of Agriculture by President-elect Donald Trump, according to multiple reports. The nomination aligns with Trump’s focus on agricultural policies and his previous administration’s initiatives in this area.

Loeffler’s qualifications to head USDA can be assessed through her professional background, political experience and involvement in agricultural and economic issues.

· Agricultural policy. Loeffler’s political stance has generally supported conservative agricultural interests. Her potential appointment comes at a time when agricultural reform is a significant focus for the incoming administration, particularly under Trump’s agenda.

Loeffler previously served on the Senate Ag Committee. She was appointed to this committee shortly after being sworn in on Jan. 6, 2020. Her involvement in the committee was noted by various officials, including former USDA Secretary Sonny Perdue, who acknowledged her understanding of the agricultural community, stemming from her background as part of a farming family.

During her time in the U.S. Senate, Loeffler sponsored the American Farmers, Food Banks, and Families Act of 2020 (S 3970). This legislation aimed to address food insecurity and support farmers during the Covid-19 pandemic. The bill proposed measures to enhance food distribution to food banks and families in need, thereby supporting both agricultural producers and those facing food shortages. The legislation sought to direct USDA to implement specific programs that would facilitate the donation of surplus agricultural products to food banks and improve access to nutritious food for families across the country. This initiative reflects her engagement with agricultural issues and her focus on addressing pressing needs within the agricultural community during a critical time. It ultimately did not progress beyond the committee stage.

Loeffler participated in announcing USDA funding for agricultural research in Georgia. For example, she highlighted a $323,834 grant awarded to the University of Georgia from the USDA National Institute of Food and Agriculture to improve crop protection and pest management. This initiative focused on developing tools to combat pests like the diamondback moth, which threatens crops in Georgia.

· Collaboration with other legislators: She worked alongside other congressional members, such as Rep. Sanford Bishop, to secure funding for research on pecans and peanuts, which are vital crops for Georgia’s economy. This included funding for various research projects aimed at improving agricultural practices and sustainability.

· Business experience: Loeffler is a former CEO of Bakkt, a financial services company focused on digital assets. This role provided her with significant experience in managing a large organization and understanding market dynamics, which could be beneficial in overseeing USDA’s various programs and initiatives.

· Ownership in sports: She was a co-owner of the Atlanta Dream, a WNBA team. This experience in sports management could contribute to her understanding of community engagement and economic development.

· Political experience: Loeffler served as the U.S. Senator from Georgia from 2020 to 2021, where she aligned closely with the Trump administration’s policies. Her time in the Senate included involvement in legislative discussions that could intersect with agricultural policy.

· Fundraising and political strategy: She has been actively involved in fundraising for Trump’s 2024 campaign and co-chairs his inauguration committee, indicating strong connections within the Republican Party and an understanding of political strategy.

Bottom line: Overall, while Loeffler’s legislative record on agriculture may not be extensive in terms of numerous bills sponsored, her involvement in key initiatives and support for agricultural research demonstrates her engagement with agricultural issues during her time in the Senate.

Cattle on Feed Report: Cattle herd slightly bigger than year-ago... USDA estimated there were 11.986 million head of cattle in large feedlots (1,000-plus head) as of Nov. 1, up 30,000 head (0.3%) from year-ago. Analysts on average expected a 0.1% decline in feedlot inventories. October placements increased 5.3% and marketings rose 4.7% from year-ago levels.

Placements increased in all but the heavyweight (1,000-plus lbs.) category, which was equal to year-ago. Placements increased 6.4% for lightweights (under 600 lbs.), 3.2% for 6-weights, 5.4% for 7-weights, 7.7% for 8-weights and 4.9% for 9-weights. Placements rose 45,000 head in Kansas, 30,000 head in Texas, 15,000 head in Nebraska, 5,000 head in Colorado and 21,000 head in “other states,” resulting in a 116,000-head increase.

All of the categories came in on the negative side of the average pre-report estimates, which could weigh on cattle futures on Monday. But we doubt there will be sustained market impacts.

Another big jump in Russian wheat export tax... Russia’s tax on wheat exports will increase to 3,020.3 rubles ($29.31) per metric ton for the week of Nov. 27-Dec. 4 up from 2,689.7 rubles ($26.11) the previous week. The export tax has surged 233% since mid-September. Russia’s ag ministry has asked exporters to not sell wheat below a minimum price of $250 per metric ton. The tax hikes are seen as a way to curb wheat exports.

CDC confirms H5N1 in a child in California... The U.S. Centers for Disease Control and Prevention on Friday confirmed the country’s first case of H5N1 in a child. California’s public health department had reported the presumptive case on Tuesday. CDC said there’s currently no evidence of person-to-person spread of H5N1.

Estate and gift tax updates for 2025... Key changes in estate and gift tax exemptions and valuation rules for 2025 offer expanded benefits, though some are temporary:

· Estate and gift tax exemption: The lifetime exemption rises to $13,990,000 in 2025 but is slated to drop to about $7 million after that unless extended by Congress. Given recent GOP election victories, the current higher exemption may remain or increase.

· Farm and business real estate valuation: Up to $1,420,000 of qualifying real estate can receive a special discounted valuation based on current use instead of market value. To qualify, real estate must meet specific estate and usage thresholds.

· Installment payment breaks: Estates with closely held businesses exceeding 35% of total value can defer up to $760,000 in taxes at a 2% interest rate.

· Annual gift tax exclusion: The exclusion rises to $19,000 per done in 2025. For example, married couples with multiple relatives can gift up to $266,000 in total without triggering a gift tax return.

EU urged to engage with Trump transition team on trade... European Union member states are pressing for a swift engagement with President-elect Donald Trump’s transition team to mitigate potential trade disruptions and tensions with the U.S., its largest trading partner. During a recent meeting in Brussels, EU trade ministers discussed strategies to prepare for Trump’s anticipated protectionist policies, including proposed tariffs ranging from 10% to 20%.

The EU is considering areas for enhanced cooperation, such as increasing liquefied natural gas imports from the U.S. and aligning efforts to counteract China’s trade practices. However, the bloc is also preparing retaliatory measures should the Trump administration implement tariffs that affect European businesses.

EU trade chief Valdis Dombrovskis emphasized the importance of a coordinated response to any new trade disputes. The EU’s stance is one of unity and proactivity, with Poland advocating for strong transatlantic relations, particularly in security matters, as it prepares to assume the bloc’s rotating presidency in January.

U.S. consumer sentiment ticks up in November... The University of Michigan’s Consumer Sentiment Index climbed to 71.8 in November, the highest since April. Consumer sentiment increased 1.8% from October and jumped 17.1% from last year. The current conditions index fell to 63.9, down 1.5% from October and 6.4% below year-ago. Consumer expectations increased to 76.9, up 3.8% from the previous month and 35.4% above year-ago.

Surveys of Consumers Director Joanne Hsu said: “Overall, the stability of national sentiment this month obscures discordant partisan patterns. In a mirror image of November 2020 (see chart), the expectations index surged for Republicans and fell for Democrats this month, a reflection of the two groups’ incongruous views of how Trump’s policies will influence the economy. In contrast, current conditions saw insignificant changes this month across the political spectrum, consistent with the fact that the resolution of the election exerted little immediate impact on the current state of the economy. Ultimately, substantial uncertainty remains over the future implementation of Trump’s economic agenda, and consumers will continue to re-calibrate their views in the months ahead.”

Year-ahead inflation expectations declined to 2.6%, the lowest since December 2020. Long-run inflation expectations rose to 3.2%.