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Soybean producers: Increase 2024-crop sales... July soybean futures hit their highest level since mid-February. While short-term upside momentum is building and could produce additional gains, we view the price strength as too good of an opportunity to pass up. We advise soybean hedgers and cash-only marketers to sell another 10% of 2024-crop production to get to 65% priced. Our next upside target would be the $11.00 level in nearby futures. Given USDA’s initial 2025-26 soybean ending stocks projection of 295 million bu., we’ll hold off on additional new-crop sales at this time.
House panel approves GOP tax package... The House Ways and Means Committee approved Republicans’ $3.8 trillion tax package in a party-line 26-19 vote. It was a huge development in the GOP’s quest to extend the 2017 tax cuts and enact President Donald Trump’s domestic agenda.
House Republicans want a floor vote on the full reconciliation bill next week. But first they need to figure out a SALT cap, which remains unresolved after the tax markup.
Individual Tax Provisions
- Permanent Extension of 2017 Tax Cuts: The bill makes permanent the individual income tax rate reductions enacted in the 2017 Tax Cuts and Jobs Act (TCJA), including the 10%, 12%, 22%, 24%, 32%, 35% and 37% brackets, as well as the increased standard deduction.
- Child Tax Credit: Increases the Child Tax Credit to $2,500 through 2028, with the Additional Child Tax Credit of $1,400 (inflation-adjusted) made permanent. After 2028, the Child Tax Credit reverts to $2,000, indexed for inflation.
- Elimination of Taxes on Tips and Overtime: Temporarily eliminates federal income taxes on tips and overtime pay until 2028.
- Home Mortgage Interest Deduction: Makes permanent the $750,000 limitation on home mortgage acquisition indebtedness.
Business and Investment Provisions
- Qualified Business Income Deduction (Section 199A): Increases the deduction from 20% to 23% and makes it permanent, with expansion to certain qualified business development company interest dividends.
- Bonus Depreciation: Extends 100% bonus depreciation, particularly for property used in manufacturing, and allows for full expensing of research and development (R&D) costs.
- Global Intangible Low-Taxed Income (GILTI) and Foreign-Derived Intangible Income (FDII): Makes permanent a 50% deduction for GILTI and a 37.5% deduction for FDII, effectively lowering the tax rates on these types of income.
- Estate and Gift Tax: Permanently increases the unified estate and gift tax exemption to $15 million per taxpayer, indexed for inflation.
The Clean Fuel Production Credit (45Z) is not being ended under the reconciliation package and would be extended through 2031 instead of ending in 2027. The program also shifts provisions to allow for feedstocks to come from Mexico or Canada, a nod to Canadian canola. The language further makes clear that imported used cooking oil (UCO) from China will not be able to be a feedstock used to produce fuel to claim the credit. The legislation would end the transferability of the 45Z credits, a provision that biofuel interests warn could stymie expansion of biofuel production. The end of transferability would prevent those producers from selling the credits to another biofuel producer.
Section 179 would allow businesses to write off up to $2.5 million of the cost of equipment and software. The limit would phase down as spending exceeds $4 million.
GOP leaders are hoping to solidify a package that can pass the full House by Memorial Day.
Iowa average cash rent declines nearly 3%... The average cash rent for an acre of Iowa cropland is $271, according to the annual survey conducted by Iowa State University. That is a 2.9% decline from the 2023 and 2024 average of $279 an acre.
West-central crop district 4 reports the highest average cash rent at $295 an acre, down $2 from last year. The lowest average cash rent is reported by south-central crop district 8 at $215 an acre. District 9 (southeast) is the only district to record an increase from 2024.
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China trade deal doesn’t solve Fed’s problems but it may ease some pressure... The agreement between the U.S. and China to roll back their respective tariffs for 90 days has led to renewed optimism that the worst of America’s trade wars is over. However, Bloomberg Opinion columnist Bill Dudley, a former president of the New York Federal Reserve banks says he’s not seeing the “breakthrough” and there’s still plenty of scope for economic damage that the Federal Reserve will struggle to contain.
Dudley wrote: “First, the rollback might not last and doesn’t change the broad contours of the story. Tariffs will still be high, fueling inflation and stunting growth. The Yale Budget Lab estimates that the average effective tariff rate will be 17.8%, up from about 2.5% when President Trump started his second term. That’s enough to increase the price level and the unemployment rate by about 1.7 and 0.35 percentage points, respectively.”
ING Economics says with the price hike threat from tariffs receding thanks to recent agreements and with leading housing indicators pointing to a cooling in shelter costs, there will continue to be scope for Federal Reserve interest rate cuts later in the year. A receding tariff threat — especially in light of improving U.S./China trade dynamics — is helping reduce inflationary fears that had been stoked by earlier tariff-driven cost concerns. ING Economics notes that commodities excluding food and energy, which would bear the brunt of tariff impacts, make up just 19.4% of the Consumer Price Index (CPI) basket. This leaves room for broader disinflationary trends in housing and services to anchor overall inflation. Supporting this narrative, Tuesday’s NFIB small business survey showed a continued decline in pricing pressure. The group concludes: “We had been looking for the Fed to wait until September before cutting and that still holds, but rather than start with a 50bp cut, it appears more likely to be a 25bp move.”
EPA proposes rolling back ‘forever chemical’ rule... EPA plans to rescind much of the Biden administration’s first nationwide drinking water standard aimed at protecting people from “forever chemicals” known as PFAS but will maintain current limits on two of these chemicals. PFAS are found in hundreds of consumer and commercial products, including non-stick pans, cosmetics, firefighting foams and stain-resistant clothing.
The rule finalized last year by the Biden administration EPA had set limits for five individual PFAS chemicals: PFOA, PFOS, PFNA, PFHxS and HFPO-DA. It gave all public water systems three years to complete monitoring for these chemicals and required them to inform the public of the level of PFAS measured in their drinking water. In cases where PFAS chemicals are found at levels exceeding the standards, the water systems were required to install systems to reduce PFAS in their drinking water by 2029.
Under the new proposal, EPA would allow drinking water systems more time to develop plans for addressing PFOA and PFOS and extend the compliance date for those two to 2031. It would also rescind the regulations and reconsider the regulatory determinations for the other three PFAS chemicals.
EPA plans to issue a proposed rule this fall and finalize it by spring 2026.
EPA also will launch a campaign called PFAS OUT to connect with every public water utility known to need capital improvements to address PFAS in their system.