Evening Report | Senate Ag panel unveils sweeping SNAP, farm safety net reforms

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Livestock producers: Extend feed coverage... We advise livestock producers to cover half of your November and December soymeal needs in the cash market. We also advise covering all corn-for-feed needs for August in the cash market, along with half of your needs for September and October. For soymeal, you now have full coverage in the cash market through July, with half of your needs for August, September, October, November and December covered in cash. For corn, you now have all needs through August covered in the cash market, with half of your needs for September and October covered in cash.

Senate Ag panel unveils sweeping SNAP, farm safety net reforms... The Senate Ag Committee has released a landmark title aimed at reining in the unchecked growth of the Supplemental Nutrition Assistance Program (SNAP) while improving the farmer safety net as part of the Senate’s reconciliation package. The package implements a comprehensive slate of changes designed to ensure responsible stewardship of taxpayer dollars, refocus nutrition assistance on those most in need and modernize agricultural support for U.S. producers.

The ag title marks a significant recalibration of SNAP. Key provisions prevent future administrative expansion, impose stricter work requirements for able-bodied adults up to age 64 — including parents of teenagers — and target benefits more narrowly to the truly needy. Exemptions remain for certain Native American groups. Waivers from work rules are now tightly restricted to areas with unemployment rates over 10%, curbing the Secretary’s broad discretionary authority.

States will face new incentives for accuracy and efficiency: Those with payment error rates above 6% must share SNAP benefit costs, with contributions rising for higher error rates. Administrative cost sharing is also rebalanced, reducing the federal share from 50% to 25% starting in fiscal year (FY) 2027. Further fiscal controls include eliminating the $550 million National Education and Obesity Prevention Grant Program after FY 2025 and restricting the use of internet expenses and some energy assistance in SNAP benefit calculations. SNAP eligibility is also now limited to U.S. citizens, nationals, lawful permanent residents and certain other specified groups.

The package invests in America’s farmers by modernizing safety net programs and risk management tools:

• Reference Prices and Farm Program Choices: Statutory reference prices for all major commodities are increased starting in 2025, with a new formula for annual adjustments. Farmers may now make annual elections between Agriculture Risk Coverage (ARC) and Price Loss Coverage (PLC), with increased flexibility for insurance options.
• Expanded Support and Payment Limits: Payment limits for Title I farm programs rise from $125,000 to $155,000 (inflation-adjusted), and the income limitation for disaster and conservation programs is broadened for those with at least 75% of income from farming.
• Sugar, Dairy and Disaster Programs: The bill extends and updates support for sugar and dairy producers, raises loan rates and boosts disaster assistance for livestock and specialty crop growers.

The title also delivers strategic investments to keep U.S. agriculture competitive and resilient:

• Conservation and Research: Mandatory funding increases for working lands conservation, specialty crop research and agricultural infrastructure projects.
• Animal Health and Disease Prevention: Enhanced funding for animal health defenses, disease preparedness and research, as well as grants for wool, cotton and citrus industries.
• Trade Promotion and Rural Development: Additional funds for expanding overseas markets for U.S. farm products and supporting bioenergy, horticulture and rural development programs.

Programs/Provisions Struck or Revised Due to Lack of Budgetary Effect

Subtitle C—Commodities

• Strikes the prior Section 10314 related to Suspension of Permanent Price Support Authority due to lack of budgetary effect.

Subtitle E—Crop Insurance

• Sec. 10507. Poultry Insurance Pilot Program. Strikes “, including Alabama, Arkansas, and Mississippi,” within Section 10507 due to lack of budgetary effect.

Slightly smaller hog herd expected... Analysts expect USDA’s Hogs & Pigs Report on Thursday afternoon to show the U.S. hog herd contracted 0.4% from year-ago as of June 1, based on a Reuters survey. The reduction is expected to be in the market hog inventory, while the breeding herd is anticipated to be near year-ago levels. The spring pig crop is anticipated to have expanded nearly 1% from last year due to a greater number of pigs saved per litter. Key will be any revisions USDA makes to past data.

Cold Storage Report: Beef, pork stocks decline less than normal in May... USDA’s Cold Storage Report showed frozen beef and pork stocks declined much less than their seasonal averages in May.

Beef stocks at the end of May totaled 407.8 million lbs., down 11.4 million lbs. from the previous month, whereas the five-year average was a 28.7-million-lb. decline. Beef inventories dropped 4.9 million lbs. (1.2%) from last year and were 33.7 million lbs. (7.6%) below the five-year average.

Pork stocks totaled 451.0 million lbs., down 5.2 million lbs. from April. The five-year average was a 28.4-million-lb. decline in pork stocks during the month. Pork inventories fell 31.5 million lbs. (6.5%) from last year and stood 69.0 million lbs. (13.3%) below the five-year average.

Frozen chicken breast meat stocks at 223.9 million lbs. increased 14.5 million lbs. from last year but were 2.8 million lbs. (1.2%) below the 2023 record.

USDA keeps food price outlook unchanged...USDA forecasts prices for all food will rise 2.9% this year, unchanged from last month. Food-at-home (grocery) prices are now projected to rise 2.2%, up the 2.1% increase forecast last month. Food-away-from-home (restaurant) prices are projected to increase 3.9%, down from 4.0% previously. USDA expects egg prices will increase 33.2% this year, down from a 39.2% rise projected last month. USDA projects price increases of 6.8% for beef/veal (up from 6.6% last month) and 2.3% for poultry prices (up from 2.1%). Pork prices are now predicted to increase 0.5% (up from a 0.2% decline).

U.S., Mexico near deal on steel import quota to ease tariffs... The U.S. and Mexico are in advanced talks to set a quota on Mexican steel imports that would allow a set volume to enter the U.S. at a lower tariff rate — a move designed to ease the impact of President Trump’s steep 50% duties while protecting domestic steelmakers.

Under the proposed framework, a “tariff-rate quota” would let Mexican steel imports up to roughly 2.8 MMT — based on the average shipped from 2015 to 2017 — avoid the full 50% tariff. Instead, these imports would face a 10% baseline charge. Imports above this threshold would be subject to the higher duty.

This plan would set the quota at about 88% of 2024 import volumes, ensuring U.S. steelmakers maintain a larger domestic share while giving some relief to manufacturers who rely on Mexican steel for cars and other products.

The quota is intended to strike a balance: protecting U.S. steel capacity, providing manufacturers with affordable supply and supporting a key trade partner.

Talks are still underway, but the quota approach reflects methods previously used in U.S. trade pacts with the UK and others – and comes amid intense industry lobbying on both sides of the border.

Brazil increases ethanol, biodiesel blending levels... Brazil’s National Energy Policy Council (CNPE) approved increasing the percentage of ethanol mixed in gasoline to 30% from 27%, and the amount of biodiesel in diesel to 15% from 14%. The changes take effect Aug. 1.

The 11.1% increase in the ethanol mandate will require more domestic corn use for fuel production. Despite a record corn crop this year, Brazil expects exports to fall 4.5 MMT (11.7%) from last year to 34 MMT.

The 7.1% increase for the biodiesel mandate will also require more domestic soybean use, though exports are still expected to be record-large this year.