Former President Jimmy Carter Dies at 100; State Funeral Planned

News/Markets/Policy Updates: Dec. 30, 2024

— Equities today: Asian and European stock indexes were mixed overnight. U.S. stock indexes are pointed toward weaker openings. In Asia, Japan -1%. Hong Kong -0.2%. China +0.2%. India -0.6%. In Europe, at midday, London -0.2%. Paris flat. Frankfurt flat.

U.S. equities Friday and the week: The Dow on Friday was down 0.77% to 42,992.21; the S&P 500: slipped 1.11% to 5,970.84; the Nasdaq: declined 1.49% to 19,722.03.

For the week, the S&P added +0.7%, while the blue-chip Dow gained +0.4%. The Nasdaq advanced +0.8%.

— Ag markets today: Corn, soybeans and wheat firmed during the overnight session, with March corn reaching the highest level since June 26. As of 7:30 a.m. ET, corn futures were trading 1 to 2 cents higher, soybeans were 4 to 6 cents higher, and wheat was mostly 2 to 3 cents higher. The U.S. dollar index was around 140 points lower, and front-month crude oil futures are about 30 cents firmer.

Cash cattle traded at mostly $1.00 higher prices last Friday, suggesting the string of cash cattle strength will extend to six straight weeks when official data is released later this morning. Wholesale beef prices firmed $1.99 for Choice to $322.38 and $2.36 for Select to $291.13. That was the highest level for Choice beef since Oct. 28.

The CME lean hog index is down 25 cents to $84.85 as of Dec. 26, snapping a six-day string of gains. The pork cutout dropped 62 cents last Friday to $95.07, as declines in loins, butts and picnics offset gains in other cuts.

— Agriculture markets Friday and the week:
• Corn: March corn futures settled a tick higher to $4.54 and nearer session highs. That marked a 7 3/4 cent gain on the week.
• Soy complex: January soybeans fell 8 cents to $9.80 but gained 5 1/2 cents on the week. January soymeal closed down $4.80 to $300.90 but marked a $6.40 weekly gain. January soyoil rose 5 points to 39.52 cents and gained 4 points on the week.
• Wheat: March SRW wheat futures rose 5 1/2 cents to $5.46 1/2, near the daily high and for the week up 13 1/2 cents. March HRW futures rose 3 cents to $5.54 1/2, near the session high and on the week up 9 3/4 cents.
• Cotton: March cotton rose 14 points to 68.89 cents but marked an 83-point weekly gain.
• Cattle: February live cattle rose 55 cents to $190.65, near the daily high and on the week up $2.25. January feeder cattle futures gained $2.075 to $261.375, near the daily high and for the week up $5.775.
• Hogs: February lean hog futures fell a nickel to $84.14, which marked a weekly loss of $1.775.

— Malanga: 2025: Promises and potential perils. The following are highlights of a look ahead at 2025 from Dr. Vince Malanga, president of LaSalle Economics:

Fiscal policy: Malanga expects an extension of the 2017 Tax Cut and Jobs Act, with modifications likely to encourage capital investment. Oil prices are projected to decrease, with fossil fuels prioritized over renewable energy sources like wind. A strong push for deregulation is anticipated, supporting a productivity revival and lowering inflation in 2025.

Monetary policy: The Federal Reserve’s (FRB) mixed signals make predictions challenging. While rate cuts and quantitative tightening continue, assumptions about tariffs and immigration policy are adding complexity. If inflation trends downward, the Federal Open Market Committee (FOMC) may further reduce rates. A neutral rate of 4%-4.5% is expected under current conditions, potentially dropping to 3% if fiscal policies align as anticipated. This would likely stimulate residential construction.

Politics: The Trump administration is expected to gain support for economic deregulation but will face challenges in streamlining the federal government. Efforts may focus on procurement efficiencies to achieve significant cost savings. While the Inflation Reduction Act will likely be scaled back, tariffs and deportations are anticipated to be more selective. A resolution of conflicts in the Middle East and Eastern Europe and improved relations with China are crucial assumptions for economic stability.

Economic outlook: If these assumptions hold, a temporary economic relapse from fiscal drag could occur. However, with nimble FOMC actions, economic growth may stabilize around 3%, supported by 2% inflation and a 4% ten-year Treasury yield. This growth would benefit corporate profits and aid in reducing the long-term deficit, potentially accelerating deficit reduction trends.

— Key factors economists say could shape agriculture in 2025. According to the latest Ag Economists’ Monthly Monitor (link), ag economists are eyeing numerous issues that could impact agriculture in 2025, from trade policies and deregulation to evolving farmer strategies and economic uncertainties. Highlights from the latest insights include:

Economic Recession in Agriculture: A majority of ag economists agree the sector is in or nearing a recession, with 56% confirming the downturn.

Alternative Land Uses: Interest in programs like CRP and solar energy to diversify farmer income is growing.

Policy and Trade Shifts: High uncertainty surrounds tariff policies, biofuel regulations, and the new administration’s approach to agricultural trade and taxation.

Regional Income Variability: Economists highlight disparities between regions like the Midwest and struggling southern states.

Foreign Competition: The depreciating Brazilian real may intensify competition for U.S. agricultural exports.

Cash Rent and Farm Bill Outlooks: Stable cash rent prices amid declining crop values and uncertainty over federal support programs remain concerns.

Market perspectives:

— Outside markets: The U.S. dollar index was weaker. Bloomberg reports “the dollar is headed for its best year in almost a decade as U.S. economic strength reins in expectations for the Federal Reserve’s rate-cutting cycle, and Trump’s threats of harsh tariffs underpin bullish bets on the currency.” Meantime, Nymex crude oil futures prices are near steady and trading around $70.75 a barrel. The yield on the benchmark 10-year U.S. Treasury note is on the rise and is presently at 4.6%. Spot gold fell 0.2% to $2,617.18 an ounce.

— Argentine farmers to plant more corn, fewer soybeans than previously expected. Argentine farmers are expected to plant 6.6 million hectares of corn this year, according to the Buenos Aires Grain Exchange, up 300,000 hectares from its prior forecast. Soybean planted area was reduced 200,000 hectares from the exchange’s prior forecast.

— NWS outlook: Snow showers likely across parts of the Northern Rockies and
Northern/Central Plains today... ...Much above average temperatures continue for the Central and Eastern U.S today; cooling trend spreads from West to East this week.... ...Critical Fire Weather expected for portions of the Southern High Plains today.

(NWS)

Items in Pro Farmer’s First Thing Today include:
· Grains firmer to open the week
· Cash cattle, boxed beef prices firm
· Cash hog index, pork cutout slip
· Brazil to remain wet, Argentina mostly dry
· China urges more aid for people in need as economic woes persist

— Russia approves grain intervention sales. The Russian government approved the sale of up to 3 MMT of wheat, rye and barley from federal intervention fund reserves in 2025, Interfax news agency reported. Grain purchased during interventions in 2014-2016 and 2022-2024 will be sold at exchange auctions. Grain intervention sales are intended to help stabilize domestic food prices.

— Russia trims wheat export tax. Russia’s tax on wheat exports will decline to 4,346.1 rubles ($40.45) per metric ton for Jan. 13-14, down from 4,768.7 rubles ($44.38) from Dec. 25-Jan. 12. The export tax has still surged 379% since mid-September, as Russia’s ag ministry tries to slow shipments.

— China launches probe into beef imports, sending Brazilian meat stocks tumbling. Shares of JBS SA, the world’s largest meat producer, and other Brazilian beef companies plunged following China’s announcement of an investigation into surging beef imports. The probe, initiated at the request of Chinese industry associations, will determine if increased imports have harmed domestic producers. China’s Ministry of Commerce stated the investigation could conclude within eight months but may be extended if necessary.

China, the world’s largest beef importer, has seen beef imports rise over 70% since 2019, pressuring its local producers amid oversupply and weak demand. Brazil, the top supplier to China, sends nearly half of its beef exports there, making this development critical for its meat industry. Shares of Brazilian firms like Minerva SA and Marfrig Global Foods SA also dropped sharply, alongside JBS.

Brazil’s government and industry leaders are seeking to demonstrate that exports complement Chinese production rather than harm it. Simultaneously, they aim to diversify markets, targeting countries like Japan, Vietnam, and South Korea.

The investigation could also impact other major beef exporters, including Argentina, Australia, and the U.S. Past Chinese probes have resulted in steep tariffs, raising concerns among global producers. While Argentina is less reliant on beef exports to China, officials are closely monitoring the situation, given China’s significance to its industry. Similarly, U.S. beef exporters, who have seen mixed trade figures with China in 2024, are watching the developments.

— China announces tariffs adjustments for 2025. China’s finance ministry announced adjustments to various import tariff categories, effective Jan. 1, aimed at increasing imports of high-quality products, expanding domestic demand and promoting high-level purchases. Provisional import tariffs below the most-favored-nation rates will be applied to 935 items, the ministry said. Import tariffs will be reduced on ethane and certain recycled copper and aluminum raw materials to advance green and low-carbon development. Tariffs on commodities including molasses and sugar-containing pre-mixed powders will increase but be reduced on items such as cyclic olefin polymers, ethylene-vinyl alcohol copolymers and automatic transmissions for special-purpose vehicles such as fire trucks and repair vehicles. Import tariffs will also be reduced on items such as sodium zirconium cyclosilicate, viral vectors for CAR-T tumor therapy, and nickel-titanium alloy wires for surgical implants.

— China boosts EV Adoption with new 30% mandate for government fleets. China’s Ministry of Finance has mandated that at least 30% of annual vehicle purchases by government departments must be electric vehicles (EVs), with plans to increase this minimum in coming years. The directive, aimed at promoting eco-friendly vehicles, comes as part of Beijing’s broader push toward carbon neutrality by 2060.

China, the world’s largest EV market, accounts for over 60% of global EV sales, with domestic brands like BYD and Nio leading the market. The country has incentivized the transition to EVs with subsidies, tax exemptions, and rapid expansion of charging infrastructure. However, intense competition has driven ongoing price cuts among manufacturers, including BYD and Tesla.

— The looming uncertainty: Trump’s trade threats test Mexican industry. With Donald Trump poised to return to the White House, the Mexican business world is bracing for the potential fallout of renewed trade policies, the New York Times reports (link). While nearshoring — shifting production closer to the U.S. — has been a boon for Mexico under tariffs on Chinese imports, Trump’s latest proposal threatens to disrupt this trend: a 25% tariff on all goods from Mexico and Canada. “We are together in this adventure, the United States and Mexico,” said Daniel Córdova, a factory manager in Monterrey, Mexico. “We need each other. A divorce is never cheap.” His sentiment reflects the shared economic dependency between the two nations. However, as the specter of tariffs looms, Córdova’s company, Trane, is considering shifting production to U.S. plants, a move echoed by others in the industry. Uncertainty reigns across sectors, with major players like Honda and Mazda pausing future investments.

Despite these challenges, many see opportunity. “Trump hates China more than he hates Mexico,” remarked Isaac Presburger, whose apparel business thrives on U.S. exports. The sentiment is shared by Baldwin Britton, CEO of Plastiexports, who predicts that nearshoring will only intensify under a continued focus on reducing dependence on Chinese manufacturing.

Mexican officials and industry leaders remain cautiously optimistic, pointing to the intertwined nature of North American trade. Emmanuel Loo, Nuevo León’s economy secretary, noted, “Trump can’t do what he wants to do on China without Mexico.”

The U.S.-Mexico-Canada Agreement (USMCA) is due for a formal review in 2026. The review, set to begin on July 1, 2026, is designed as a “joint review” involving all three participating countries. During this process, the parties will have the opportunity to: (1) Analyze the agreement’s efficiency; (2) Consider recommendations for improvements; (3) Decide on appropriate adjustments; and (4) Determine the continuance of the USMCA. The U.S. Trade Representative must initiate public consultations by October 2025 and report to Congress by January 2026. Some experts see Trump’s tariff threat to force the Canadian and Mexican governments to agree to an earlier renegotiation of its terms. He could seek to add rules making it harder for Chinese companies to use Mexico as an entry point to the American market.

Still, the stakes are high. Economists warn that sweeping tariffs could slow U.S. growth and drive up consumer prices. As the North American trade pact faces potential renegotiation, businesses like Trane are already adapting, sourcing more components locally to hedge against shifting policies. “We don’t know what decisions he could take,” Córdova admitted. “We need to prepare for different scenarios. There are many variables.”

— Commerce affirms compliance of Mexican tomato companies with 2019 agreement. The U.S. Department of Commerce (DOC) determined that Ceuta Produce S.A. DE C.V. and Valores Horticolas Del Pacifico S.A. De C.V. complied with the terms of the 2019 Agreement Suspending the Antidumping Duty Investigation on Fresh Tomatoes from Mexico. The review covered the period from Sept. 1, 2021, to Aug. 31, 2022. While the DOC noted minor instances of “inadvertent or inconsequential noncompliance,” it concluded that the agreement remains in line with statutory requirements for continuation.

— Pritzker announces $820 million investment in SAF in Southwest Illinois. Illinois Governor JB Pritzker announced an $820 million investment by Avina Clean Hydrogen in Southwest Illinois to establish a state-of-the-art facility producing sustainable aviation fuel (SAF). The project, in collaboration with the Illinois Department of Commerce and Economic Opportunity (DCEO), aims to strengthen Illinois’ clean energy economy, create 1,150 jobs, and reduce aviation carbon emissions by up to 25 million metric tons annually. The facility will leverage existing infrastructure to supply ASTM-certified fuel to major Midwest airports, aligning with Illinois’ 2024 Economic Growth Plan and boosting the state’s leadership in clean energy and advanced manufacturing.

— Tragic explosion at Tyson Foods plant in Georgia leaves one dead, several injured. On Dec. 26, an explosion and fire at the Tyson Foods poultry plant in Camilla, Georgia, resulted in one fatality and multiple injuries. The incident, described as a boiler explosion by union representatives, caused significant damage, including a partial building collapse. The explosion claimed the life of Bajarma Batozhapov, a 61-year-old woman from Las Vegas, who was accompanying her husband, a truck driver, at the time. Several others sustained injuries, including severe burns. Batozhapov, who was sleeping in a truck that partially caught fire, was not an employee of the plant.

Response and investigation. Tyson Foods is collaborating with local authorities to determine the cause and has expressed condolences, prioritizing worker safety. The Retail, Wholesale and Department Store Union (RWDSU), representing 1,600 plant workers, is assisting those affected and advocating for a thorough investigation.

The plant, a key employer in Mitchell County, plays a vital role in the local economy. Camilla Mayor Kelvin Owens underscored its importance, emphasizing community support for the affected workers and their families. The incident has sparked discussions on the need for enhanced safety measures in poultry processing facilities. The RWDSU is calling for industry-wide reforms to prevent similar tragedies.

— The seed oil debate: health hazard or misplaced concern? The debate over seed oils has intensified, with figures like Robert F. Kennedy Jr. claiming these oils harm health, while nutrition experts argue they are not inherently problematic. The controversy underscores a larger issue: the American diet and patterns of overconsumption.

Critics like Kennedy assert that seed oils contribute to chronic diseases, involve unhealthy industrial processing, and harm the environment. He describes them as “one of the unhealthiest ingredients we have in foods.”

Nutrition scientists largely disagree, citing decades of research showing seed oils can improve health outcomes when replacing saturated fats. They argue that claims of toxicity and inflammation are unfounded.

The real issue: processed foods and overconsumption. Experts highlight that the problem lies in the context of seed oil consumption:

• Processed foods: Seed oils are prevalent in processed foods.
• Imbalance: Excessive intake of omega-6 fatty acids, without balancing omega-3s, can contribute to dietary issues.
• Overconsumption: High-fat content in oils necessitates moderation.

Health experts advise:

• Cooking at home to control oil intake.
• Reducing processed and fast foods.
• Balancing omega-6 and omega-3 fatty acids.
• Using oils, including seed oils, in moderation.

Bottom line: While the debate continues, most experts agree that seed oils are not inherently harmful when consumed as part of a balanced diet. Focus on overall dietary patterns, not scapegoating single ingredients, is key to better health.

— FDA weighs ban on controversial red dye No. 3. The FDA is nearing a decision on banning red dye No. 3, a synthetic additive linked to cancer in animals and used in various foods like candy, drinks, and fruit cocktails. While banned in cosmetics since 1990, the dye remains approved for food use, prompting criticism from food safety advocates. They argue it poses potential health risks and violates federal law prohibiting carcinogenic substances in food.

Despite manufacturers defending its safety and economic value, growing pressure from lawmakers, consumer groups, and new state bans — such as California’s recent legislation — has intensified calls for action.

Of note: The FDA plans to announce its decision in the coming weeks, which could significantly impact food manufacturing standards.

WASDE | Crop Production | USDA weekly reports | Crop Progress | Food prices | Farm income | Export Sales weekly | ERP dashboard | California phase-out of gas-powered vehicles | RFS | IRA: Biofuels | IRA: Ag | | Russia/Ukraine war, lessons learned | | SCOTUS on WOTUS | SCOTUS on Prop 12 pork | New farm bill primer | | Gov’t payments to farmers by program | Farmer working capital | USDA Ag Outlook Forum |