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An internal Trump administration battle over whether to ban U.S. diesel exports appeared to be playing out in media reports Wednesday.
Energy Secretary Chris Wright reiterated his opposition to the prospect of a ban in remarks Wednesday morning, saying it would be a “blunt tool” that wouldn’t work in terms of lowering U.S. prices. Speaking at a Climate Week panel discussion, he said: “We’re the largest diesel exporter in the world, but that same refinery that produces diesel also produces gasoline and jet fuel. So, if you can’t export the diesel that comes out of our refineries when you run out of places to store it, and you have to reduce U.S. refining, which would put upward pressure on gasoline prices and jet fuel prices.”
That’s an argument that’s been voiced by numerous energy analysts, who contend a ban, while aiming to lower record domestic diesel prices, would potentially do more harm than good. But a Politico report said the administration was preparing a 90-day export ban, despite splits within the administration. The report said that in addition to Wright, Treasury Secretary Scott Bessent and Interior Secretary Doug Burgum have argued against an export ban.
Reuters later reported that a White House official described the Politico report as not accurate. Wright, who was attending a series of events on the sidelines of the United Nations General Assembly, told WSJ Journal House that the administration wouldn’t stop all exports of diesel but would implement restrictions as part of a voluntary plan. Wright offered few details, and industry lobbyists noted that discussing restrictions among refiners could violate antitrust laws, the Wall Street Journal said.
Diesel futures fell in response to speculation over potential export curbs, with front-month Nymex diesel down 3.4% at $4.7764 a gallon. AAA pegged the current national average for road diesel at $6.5217 a gallon, near the recently set record high.
Oil futures ended higher, snapping a five-day losing streak, with U.S. benchmark West Texas Intermediate rising 1.8% to $92.16 a barrel and Brent up 3.9% to $103.08 a barrel. U.S. weekly inventory data were seen bearish for oil as crude stocks rose by 3 million barrels, putting inventories 2% above the five-year average, according to Dow Jones Newswires. Product stocks remained tight, with gasoline inventories 6% below average for the time of year and distillate stocks 12% below average.
Market recap: Grain and soy complex futures fell, feeling pressure in part from a jump in the U.S. dollar after a private gauge of U.S. economic activity came in strong and reinforced expectations for Federal Reserve rate hikes. A renewed surge in Treasury yields contributed to a risk-off tone across markets, with the yield on the 10-year T-note – the most important financial market reference point in the global economy – pushing above the 5% threshold to its highest level in 19 years (see item below).
- December corn fell 7 ¾ cents to $5.29.
- November soybeans shed 7 ½ cents to end at $13.18.
- December soft red winter wheat finished 8 ¾ cents lower at $7.08 ½, hitting a four-week low.
- December cotton rose 2 points to 82.89 cents.
- October live cattle rose $2.15 to end at $220.925.
- November feeders jumped $6.30 to $329.50.
- October lean hog futures gained 60 cents to $79.875.
Xi arrives, truce extended: President Donald Trump greeted Chinese leader Xi Jinping on the tarmac at Joint Base Andrews ahead of Thursday’s summit meeting. Bullish traders have high hopes the meeting will provide some breakthroughs on the ag trade front, including the end of China’s retaliatory 10% tariff on U.S. soybean imports.
- Treasury Secretary Scott Bessent told Fox News that he and Chinese Vice Premier He Lifeng agreed to extend the trade truce reached in South Korea last fall for two months to Jan. 10. “I don’t know whether a bigger deal can be done. I don’t know whether we will just roll the current deal,” Bessent said, according to Bloomberg.
There’s also much attention on whether China will signal a commitment to what the White House has said is a pledge to buy $17 billion in non-soybean agricultural goods on a pro-rated basis this calendar year, on top of its purported pledge to buy 25 million metric tons (MMT) of soybeans in 2026, 2027 and 2028. China has been a regular soybean buyer over the past several weeks, booking more than half of its alleged commitment. Beijing has never publicly affirmed the size of any purchase commitments.
Treasury yields surge: Bond vigilantes put a scare back into financial markets Wednesday. It isn’t just that the yield on the 10-year note is rising (yields fall as Treasury prices drop), it’s the speed of the move. The yield surged 14.7 basis points to 5.113%, its highest since July 2007, according to Dow Jones Market Data. Treasury Secretary Scott Bessent has been fighting the rise in yields by implementing larger government buybacks of U.S. debt. Rising yields are blamed on burgeoning U.S. government debt; increased corporate debt issuance by AI-related firms, which competes for demand with Treasuries; and inflation worries, which have been amplified by surging diesel prices.
Ukraine weighs Baltic options: Ukraine’s agriculture ministry said its exploring the use of Baltic Sea ports for grain exports, Reuters reported, following a similar move by Russia as both sides seek alternatives to Black Sea routes disrupted by the war. The report said Russian companies are repurposing fertilizer, coal, and other cargo terminals at the country’s Baltic and Arctic ports to handle grain exports after Ukrainian drone attacks disrupted shipments through the Black Sea. Reuters noted that most Ukrainian cargo, including grain, has been rerouted through the country’s three Danube river ports after Russian attacks effectively blocked its Black Sea ports, which previously handled 90% of exports. However, that adds around $50 a metric tone in logistics costs, making Ukrainian grain uncompetitive and creating bottlenecks. Transport via the Baltic, however, would add about $100 per ton to export expenses, the ministry said, according to the report, requiring around $2 billion in international support to offset the higher cost.