China Approaches 70% Mark of Soybean Purchase Commitment
Used Cooking Oil (UCO) theft emerges as costly shadow market | Johanns says U.S. farm aid insufficient | Ford takes huge hit on EV trucks | Update on 45Z, 45Q | Mexico opens trade probe into U.S. pork imports
Link: Confused by How USTR, USDA, and Treasury Officials Have Been Describing
the U.S./China Soybean Deal?
Link: Video: Wiesemeyer’s Perspectives, Dec. 13
Link: Audio: Wiesemeyer’s Perspectives, Dec. 13
Updates: Policy/News/Markets, Dec. 16, 2025
UP FRONT— China’s soybean buying quiets early doubters — Beijing booked three more U.S. cargoes, lifting purchases to ~8 MMT (~70% of its 12 MMT pledge) and signaling more buying ahead even as Brazil harvest prospects loom and premiums may soften.— U.S. job market cools as unemployment hits 2021-high — The jobless rate rose to 4.6% and payroll gains were modest amid messy shutdown-delayed data and revisions that keep the underlying trend “fuzzy” into early 2026.— Used cooking oil theft turns into organized, multistate crime — Renderers say renewable-fuel incentives have made grease valuable enough to spawn a $300–$500M/year black market, capped by federal racketeering and money-laundering charges against 13 suspects.— Johanns warns Trump farm aid won’t stabilize agriculture without market access — The former USDA secretary argues ad hoc payments need to be paired with a new farm bill, stronger export outcomes from tariffs, and expanded biofuels/SAF demand.— FBA vs. ECAP: bridge aid comes with sharper restrictions — Accountants flag a lower effective ceiling for many operations and a new AGI test that could reduce or eliminate payments compared with the prior program.— Mexico opens anti-dumping/anti-subsidy probe into U.S. pork — The investigation adds fresh trade risk for U.S. exporters, even under USMCA, as petitioners allege price discrimination and subsidization.— House sends whole-milk school lunch bill to Trump — The measure restores whole milk eligibility and eases access to nondairy substitutes, giving schools more flexibility without mandating menu changes.— Equities today: global risk-off ahead of delayed U.S. data — Markets softened into the jobs/CPI slate, with attention on how shutdown-disrupted releases could sway the early-2026 Fed path; Nasdaq is also pushing for near-24-hour trading.— Equities yesterday: modest pullback — Major U.S. indexes finished slightly lower versus late last week, reflecting cautious positioning into macro releases.— Retail sales flat, but “core” spending rebounds hard — Headline October sales stalled on autos and fuel, while the GDP-relevant control group jumped 0.8%, suggesting sturdier underlying demand.— Ford takes a $19.5B EV hit and pivots strategy — The company is scrapping some large EV truck plans and leaning more on hybrids/lower-cost electrification as incentives fade and demand softens.— Miran challenges the Fed’s inflation read — The governor argues lagged shelter measures and measurement quirks are overstating inflation (“phantom inflation”), risking overly tight policy as labor conditions weaken.— Argentina loosens its exchange-rate band in January — Buenos Aires widens the peso band using inflation-linked adjustments and targets reserve rebuilding, but markets still debate whether it’s enough versus a freer float.— Sinograin schedules a third weekly soybean auction — China is clearing reserve space with another 550,000-ton offering as U.S.-purchased shipments near arrival.— Ag markets: grains mostly weaker, cattle firmer — Corn, soybeans and wheat slid, while live and feeder cattle gained; hogs fell.— Oil Tuesday: prices sink to multi-month lows — Peace-talk optimism and weak China data reinforced oversupply fears, pushing Brent below $60 and WTI toward the mid-$50s.— Oil Monday: Venezuela disruption offset by glut narrative — Sanctions and seizures tightened Venezuelan flows, but broader expectations for ample supply into 2026 kept pressure on prices.— 45Z windfall debate: Irwin says ethanol could benefit materially — The economist estimates ~11¢/gal for a “representative” plant (pre-CCS) and potential corn-bid uplift, while acknowledging plant-specific scoring and outstanding IRS guidance.— 45Z explainer: which clean fuels qualify and why it matters — The credit is performance-based on lifecycle emissions, shaping economics for RNG, biodiesel, renewable diesel, SAF, ethanol and more as verification rules evolve.— 45Q explainer: carbon capture credit mechanics — 45Q pays per ton of CO₂ captured and stored/used, often complementing biofuel pathways that aim to lower carbon intensity and unlock other incentives.— China cuts EU pork duties after 18-month probe — Final anti-dumping tariffs drop sharply versus preliminary levels, easing pressure on European exporters while offering limited support for China’s hog sector.— U.S. challenges WTO’s core MFN principle — Washington argues uniform treatment no longer fits a world of divergent economic systems, signaling deeper skepticism toward the current multilateral rulebook.— Red/blue/purple America: the map is stable, the fault lines aren’t — Charlie Cook says down-ballot outcomes diverge sharply from presidential patterns in battlegrounds, and flags New Hampshire as a potential new “purple” entrant.— Weather: Northwest storms, warmer West/Central, Arctic air fading East — Forecast calls for heavy rain/snow in the Northwest while above-average temperatures persist elsewhere and cold retreats midweek. TOP STORIES—China’s continued purchases of U.S. soybeans making initial naysayers not remembering their errant predictionsChina booked an additional three cargoes of U.S. soybeans on Monday, pushing its total buying pace to up to 8.0 million metric tons — nearly 70% of its 12 MMT purchase pledge. China will likely purchase another 3 to 4 MMT of purchases for January and February combined. While Brazilian FOB soybean premiums have firmed despite the recent CBOT decline, premiums are expected to weaken amid slower Chinese buying and the prospect of a record Brazilian harvest. Of note: Remember when some grain analysts and traders initially said (1) there was no soybean purchase agreement with China and (2) they didn’t need the U.S. soybeans relative to much cheaper Brazilian beans? These analysts may be good at market outlook, but they flunked the course of geopolitics. —U.S. unemployment rate increased to 4.6% in November 2025 from 4.3% in August, exceeding market expectations of 4.4% and marking the highest level since September 2021. Employment rose in health care and construction in November, while federal government continued to lose jobs. Nonfarm payrolls grew slightly more than expected in November, the Bureau of Labor Statistics reported Tuesday in numbers delayed by the government shutdown. Job growth totaled 64,000 for the month, better than estimate for 45,000. Besides the November report, the BLS released an abbreviated October count that showed payrolls down 105,000. While there was no official estimate, Wall Street economists were largely expecting a decline following a surprise increase of 119,000 in September. As for revisions, BLS said that August was revised to a loss of 26,000 jobs (down 22,000) while September was revised down to 108,000 (decline of 11,000). This suggests the jobs market did show little growth in November and when the factor that Fed Chair Jerome Powell indicated exists in the jobs data being about 60,000 too high each month, the net job gains were potentially less than 5,000. Market impact: U.S. stock index futures shifted higher in the wake of the data while the U.S. dollar index weakened further, and the 10-year Treasury note yield also eased slightly. The report could start to alter the expectation for the Jan. 27-28 Federal Open Market Committee (FOMC) meeting where expectations have been for a steady rate call as the policy outcome. There was only a slight shift in CME FedWatch tool in wake of the jobs report — was 75.6% for steady rate in January, but now at 73.4%Of note: Analysts say it will likely take until the January and February Employment reports to clear up some “fuzzy” information, including revisions.—Used Cooking Oil (UCO) theft emerges as costly shadow marketRenderers warn biofuel demand is fueling organized theft, safety risks, and higher costs for restaurants The North American Renderers Association (NARA) estimates that $300 million to $500 million worth of used cooking oil (UCO) is stolen each year in the United States, highlighting a fast-growing black market tied to booming demand for renewable fuels. Link UCO — a key feedstock for renewable diesel and sustainable aviation fuel (SAF) — has become far more valuable in recent years as federal and state clean-fuel incentives have expanded. That rising value has turned restaurant grease bins into attractive targets, according to renderers and food-service operators. Federal prosecutors have charged 13 Chinese nationals in what authorities describe as a coordinated, multistate scheme to steal and resell UCO — a commodity that has grown increasingly valuable as a key feedstock for biodiesel and other low-carbon transportation fuels. A federal grand jury in Des Moines, Iowa, returned a nine-count indictment alleging racketeering conspiracy, interstate transportation of stolen property, and money laundering. Prosecutors say the defendants systematically stole UCO from restaurant collection tanks across the Midwest and South, then transported and resold the oil through a network of warehouses and intermediaries. According to court filings, the thefts occurred in at least 10 states, including Iowa, Illinois, Indiana, Ohio, Minnesota, Missouri, Nebraska, Kentucky, Tennessee, and Alabama. The indictment suggests the activity was not opportunistic but organized and sustained, involving repeated trips, coordinated logistics, and resale operations. Four defendants have already made initial court appearances in federal court in Iowa, with additional appearances expected as the case proceeds. A trial date has been scheduled for early 2026. Industry groups say theft ranges from opportunistic siphoning to organized crews using tanker trucks, falsified paperwork, and forged contracts to pose as legitimate collectors. In some cases, stolen oil is blended into lawful supply chains, making enforcement difficult. Renderers warn the impacts extend beyond lost revenue. Restaurants can face equipment damage, sanitation problems, and liability risks when unauthorized collectors spill grease or leave containers unsecured. Legitimate recyclers also say theft undermines traceability requirements that are increasingly important for low-carbon fuel credits under programs such as California’s Low Carbon Fuel Standard and federal clean fuel incentives. NARA and allied trade groups are urging stronger state-level penalties, clearer ownership rules for waste grease, and better coordination with law enforcement, arguing that used cooking oil theft is no longer a nuisance crime but a significant economic and regulatory issue tied directly to U.S. biofuels policy. As demand for low-carbon fuels continues to grow, renderers caution that without tighter oversight, the underground market for stolen grease is likely to expand alongside it.The indictment sends a clear signal that authorities are prepared to police that market aggressively — and that the economics of clean fuels now extend well beyond refineries, reaching all the way back to restaurant grease bins. —Johanns: Trump’s farm aid falls short without stronger market accessFormer USDA secretary, senator and governor urges a “financial bridge” for farmers as bankruptcies rise, calling for expanded biofuels policy, a new farm bill, and clearer export gains from tariffs A former Republican USDA secretary and senator from Nebraska is warning that the Trump administration’s latest round of farm aid will not be enough to stabilize the farm economy without clearer progress on market access and longer-term policy support. In a Politico interview, Mike Johanns said the administration’s plan to distribute $12 billion in farm aid over the coming months offers limited relief at a time when farm bankruptcies are still rising and producers remain under pressure from years of losses and growing competition from exporters such as Argentina and Brazil. The aid follows the completion of $10 billion in disaster assistance authorized by Congress Dec. 21, 2024, but Johanns argued that ad hoc payments alone will not keep farmers afloat while they wait for tariff-driven trade gains to materialize. Johanns said policymakers should focus on providing a financial bridge for producers until trade negotiations translate into tangible new export markets and domestic job creation. That, he suggested, could include passing a new farm bill, expanding tax credits, and leaning more heavily into biofuels and sustainable aviation fuel. “If we could open up opportunities for biodiesel, soybean oil turned into aviation fuel, it would change everything,” Johanns said in the interview. While the Trump administration and its trade advisers maintain that the short-term pain from tariffs will ultimately benefit U.S. agriculture, Johanns said those negotiations must deliver measurably better markets — not just promises — for farmers and ranchers. He pointed to biofuels policy as a clear example of how government action can create durable demand, noting the role expanded ethanol blending once played in boosting corn markets. Johanns also reiterated his long-held view that farmers do not want to rely on subsidies. Instead, he said, the government’s role should be to open markets and level the playing field, allowing U.S. producers to compete globally on their own merits. “I don’t know a single farmer out there that wants to farm for government subsidies,” he said. “They want to farm for the marketplace.” FBA vs. ECAP: What farmers need to know about the new bridge aidNew limits and eligibility rules could sharply narrow who benefits from USDA’s latest relief program The Trump administration and USDA last week unveiled the Farmer Bridge Assistance (FBA) program, positioning it as short-term relief while longer-term farm policy questions remain unresolved. But as details have emerged, accountants and farm policy analysts say the new program differs in meaningful — and potentially costly — ways from the Emergency Commodity Assistance Program (ECAP) it effectively replaces. Paul Neiffer, a CPA and principal at Farm CPA Report, said the headline comparison masks some significant shifts that farmers need to understand before assuming FBA will provide similar support. Quote of note: “While the payment cap is technically higher than ECAP, the overall structure of FBA is much more restrictive,” Neiffer said. “For many larger operations and specialty crop producers, this will translate into materially lower assistance — or no payment at all.” Tighter payment limits. Under FBA, total payments are capped at $155,000, which is about $30,000 higher than ECAP’s general limit. However, ECAP allowed substantially higher caps for certain producers — particularly specialty crop operations — with limits reaching as high as $900,000. That higher ceiling is eliminated under FBA, meaning larger and more diversified farms face a significantly lower maximum payout. In addition, producers with farm adjusted gross income (AGI) exceeding 75% of total AGI no longer qualify for expanded payment eligibility, further narrowing access for large-scale operations. New AGI restrictions. Unlike ECAP, which imposed no AGI limit, FBA applies the standard $900,000 AGI cap. Neiffer notes that this limit is expected to apply not only to the entity receiving payments, but also to its owners — a detail that could sharply reduce or fully disqualify payments for many farm businesses. “That AGI test is a major departure from ECAP,” Neiffer said. “It’s likely to prevent some producers from receiving their full payment, and in some cases any payment at all.” Only partial loss coverage. Even for those who qualify, FBA is expected to cover only 25% to 30% of estimated Title I losses for the 2025 crop, according to early estimates. That has raised questions about whether Congress will eventually step in with supplemental assistance. For now, Neiffer cautions farmers to treat FBA as exactly what its name implies — a temporary bridge. “This is not a full replacement for losses producers are facing,” he said. “The real question is whether lawmakers follow up with additional relief once the scope of those losses becomes clearer.” As with prior aid programs, much will depend on congressional action in the months ahead. Until then, producers are being urged to review eligibility carefully and temper expectations about how much FBA will ultimately deliver.  —Mexico opens trade probe into U.S. pork importsAnti-dumping and subsidy investigation raises fresh uncertainty for U.S. producers despite USMCA protections Mexico’s Economy Ministry has launched anti-dumping and anti-subsidy investigations into imports of U.S. pork leg and shoulder, a move that could ultimately result in new duties on the products, according to a government document released Monday. The probe will examine whether U.S. pork exports harmed Mexico’s domestic pork industry between 2022 and 2024, following petitions filed by five Mexican pork producers. The petitioners allege that U.S. pork was sold under conditions of price discrimination and supported by subsidies, pressuring domestic prices and eroding profitability and returns on investment for Mexican producers. Details: According to a report from Noticias Financieras, the investigation covers imports from Jan. 1-Dec. 31, 2024, and a period of Jan. 1, 2022-Dec. 31, 2024, as the injury period in the exam. Companies asking for the probe said they cited a range of subsidies that were provided by the U.S. government, state governments, and the U.S. pork industry. The total imported volume of pork grew 10% over the 2022-2024 period, including a 1% rise in 2023 and a 9% increase in 2024, while domestic production grew 1% in 2023 and 7% in 2024, according to the report, with imports from seven different countries with the U.S. holding 86% of the shipments. The industry contends the imports captured nearly all the demand growth for pork, forcing Mexican producers to find other markets that were not TIF (Tipo Inspección Federal) markets. The TIF is a strict government certification process for meat processing plants which facilitate the products entering international commerce. The rise in imports meant that the excess production was forced to be put into non-TIF markets where the companies said can result in lower prices received for the product as the non-TIF markets are ones where consumers are not willing to pay the costs involved in meeting the TIF process, the report said. NPPC responds. “Our industry prides itself on fair business practices with all our international markets, and we are disappointed the Mexican government is moving forward with this investigation,” Maria C. Zieba, vice president of government affairs at the National Pork Producers Council, said in a statement. She added that NPPC is reviewing the petitions and emphasized that Mexico is a major U.S. pork market with “decades-long partnerships.” The Economy Ministry said it elected to open the investigation based on the producers’ filings. USDA and the Office of the U.S. Trade Representative did not respond to requests for comment. Any duties imposed because of the investigation would come despite the U.S.-Mexico-Canada Agreement, signed during President Donald Trump’s first term, which generally eliminates tariffs on qualifying goods traded among the three countries. —House sends whole milk bill to Trump, expanding school nutrition optionsMeasure restores whole milk eligibility in school lunches and eases access to nondairy alternatives, delivering a bipartisan victory for dairy advocates. The House has passed legislation clearing the way for whole milk to return to the national school meal program, sending the bill to President Trump’s desk and marking a significant policy win for the dairy industry. (We incorrectly said on Monday that the bill had not yet passed the Senate; it did, shortly before the Thanksgiving break.) The bill amends the National School Lunch Program by excluding milk fat from saturated-fat calculations, allowing schools to offer whole milk alongside existing options. It also permits students to receive nondairy milk alternatives without a doctor’s note for the first time. The measure does not mandate menu changes, leaving districts to assess student demand once it becomes law. House Ag Committee Chair GT Thompson (R-Pa.) emphasized the flexibility baked into the bill. “This legislation does not require any student to drink or any school to serve whole milk,” Thompson said on the House floor. “Rather, it simply gives schools the flexibility to serve a broader variety of milk in the school lunchroom.” Dairy industry leaders applauded the vote. Gregg Doud, president and CEO of the National Milk Producers Federation, said the group will work with federal officials and school districts to implement the changes next year, calling the bill’s passage a meaningful step toward improving student nutrition and a testament to bipartisan persistence in Congress. |
| FINANCIAL MARKETS |
—Equities today: Global markets were lower amid investor caution ahead of a bevy of U.S. data, including the jobs report, that may help signal the path for Federal Reserve policy next year. Wall Street futures were in negative territory after major North American markets closed lower yesterday. Traders were anxious to see results of instead of the Jobs report (see item above in blue box) that would have occurred on Dec. 5 if it hadn’t been for the federal government shutdown. The Bureau of Labor Statistics released partial data for October and its full set of November data this morning. The October unemployment rate won’t be published because it’s more difficult to collect household survey data than it is to collect information from businesses for the establishment survey, Wells Fargo economists explained in a note to clients. Thus, there was a nonfarm payrolls number and unemployment rate for November, but just a payrolls number for October. The latest Consumer Price Index report, which was also delayed, will be released on Thursday. It, too, may cloud the outlook for rates. There are no Fed officials scheduled to speak today and earnings season is slowing down materially with just one quarterly report due today: LEN ($2.23) which will leave investors primarily focused on the key economic data due out early in the day. In Asia, Japan -1.6%. Hong Kong -1.5%. China -1.1%. India -0.6%. In Europe, at midday, London -0.4%. Paris -0.1%. Frankfurt -0.5%.
Of note… 23/5: Nasdaq is reportedly submitting paperwork with the Securities and Exchange Commission to launch round-the-clock trading of stocks. The stock exchange is seeking regulatory clearance to let investors trade for 23 hours a day, five days a week, according to Reuters. (More technically, it wants to run two trading sessions, between 4 a.m. and 8 a.m. and then from 9 p.m. to 4 a.m.) The New York Stock Exchange and Cboe also want to host longer market hours amid demand from investors.
—Equities yesterday:
| Equity Index | Closing Price Dec. 15 | Point Difference from Dec. 12 | % Difference from Dec. 12 |
| Dow | 48,416.56 | -41.49 | -0.09% |
| Nasdaq | 23,057.41 | -137.76 | -0.59% |
| S&P 500 | 6,816.51 | -10.90 | -0.16% |
—U.S. retail sales stall in October, but core spending signals stronger growth
Headline sales flat amid auto and fuel weakness, while GDP-relevant core measure posts sharp rebound
U.S. retail sales were unchanged in October from September, undershooting expectations for a modest 0.1% increase and following a downwardly revised 0.1% gain in the prior month. The headline stagnation masked notable divergences beneath the surface, with several large categories dragging on overall activity.
Sales at auto dealers fell sharply by 1.6%, while gasoline stations (-0.8%), building material and garden equipment dealers (-0.9%), health and personal care stores (-0.6%), and food services and drinking places (-0.4%) also recorded declines. Together, these sectors weighed heavily on the top-line figure.
By contrast, the so-called “control group” — retail sales excluding food services, autos, building materials, and gasoline, and used directly in GDP calculations — surged 0.8%. That marked a strong rebound from a 0.1% decline in September and far exceeded forecasts of a 0.1% increase, pointing to underlying resilience in consumer demand.
Spending gains were broad-based across discretionary and goods-oriented categories. Furniture and home furnishing sales jumped 2.3%, sporting goods and hobby stores rose 1.9%, nonstore retailers climbed 1.8%, and miscellaneous retailers increased 1.5%. Clothing sales advanced 0.9%, electronics stores rose 0.7%, general merchandise stores gained 0.5%, and food and beverage stores edged up 0.3%.
Taken together, the data suggest that while headline retail activity cooled in October, core consumer spending — the component most relevant for economic growth — remained robust, reinforcing signs of momentum heading into the final quarter of 2025.
—Ford to take $19.5 billion hit as EV demand falters
U.S. carmaker overhauls EV truck plans amid weak demand, regulatory shifts and policy headwinds
Ford Motor Company has signaled a major strategic reset in its electric vehicle (EV) ambitions, warning it expects to take a $19.5 billion charge over the next two years after scrapping plans to build several large electric trucks and refocusing on more economically viable products. The decision underscores mounting pressure on legacy automakers as consumer demand for EVs softens and federal policy incentives recede under the Donald Trump administration’s regulatory changes.
The Detroit-based carmaker has abandoned key components of its previous EV roadmap — notably larger electric pickup and three-row models — considering sluggish sales and shifting market dynamics, prompting the substantial writedown.
Industry data show that demand for Ford’s existing EV models has weakened sharply. Recent reporting indicates that sales of EVs such as the Mustang Mach-E and F-150 Lightning plunged roughly 61% in November compared with the prior year, a decline linked to the elimination of federal EV tax credits and broader policy changes under President Trump that have dampened incentives for electric-vehicle buyers.
Executives have publicly acknowledged the daunting market environment. Ford CEO Jim Farley has warned that electric-vehicle sales in the U.S. could fall by half from prior expectations after the $7,500 federal tax credit expired, suggesting the EV segment “will be way smaller than we thought” as policy support shifts and consumer interest softens.
Outlook: Ford expects 2025 operating profit of $7 billion, up from earlier guidance of $6 billion to $6.5 billion. That implies a fourth-quarter profit of about $1.3 billion, which is above expectations, according to FactSet. Ford is starting a stationary energy-storage business, like Tesla’s.
Bottom Line: This pivot by Ford — which also includes deeper investment in hybrid and lower-cost electrified vehicles — reflects the broader challenges facing traditional automakers adapting to a rapidly changing marketplace, where high prices, reduced incentives and evolving regulations are forcing costly reassessments of electrification strategies. The New York Times today wrote: “The question is, how should we think about these billion-dollar mistakes? Did American carmakers misunderstand consumer demand? Or did they miss the political winds that would end subsidies? A combination of both? And will this turn away from EVs leave U.S. manufacturers uncompetitive in the global market?”
—Miran challenges the inflation narrative at the Fed
Governor argues “phantom inflation” and lagging data are keeping policy too tight as labor risks rise
Federal Reserve Governor Stephen Miran mounted a detailed critique of the Fed’s inflation framework in a speech at Columbia University, arguing that policymakers are overreacting to what he called “phantom inflation” embedded in distorted and backward-looking data. Miran said pandemic-era imbalances and statistical quirks are overstating current price pressures, leading the Fed to maintain an unnecessarily restrictive stance.
Miran, who is on unpaid leave from the White House, has consistently pushed for deeper rate cuts than most of his colleagues since joining the central bank. On Tuesday, he warned that holding rates too high because of residual inflation artifacts from 2022 risks avoidable job losses. “Keeping policy unnecessarily tight because of an imbalance from 2022, or because of artifacts of the statistical measurement process, will lead to job losses,” he said.
At the center of Miran’s critique is the Fed’s preferred inflation gauge, the personal consumption expenditures (PCE) index, which most recently showed annual inflation running at 2.8% in September. That reading, he noted, is already dated due to the lingering effects of the longest federal government shutdown on data releases — and still reflects components that no longer track real-time economic conditions.
Miran singled out shelter inflation as the most problematic element. He argued that the data policymakers rely on are heavily lagged and tied to pandemic-era housing shortages rather than current supply and demand. “The current elevated readings for shelter inflation are an after-echo of previous, rather than current, supply–demand imbalances in the economy,” he said, pointing to evidence that new-tenant rents have been rising only modestly for the past two years.
He also took aim at portfolio management fees, another contributor to PCE inflation. According to Miran, the way these fees are measured artificially boosts inflation readings during equity market gains. When asset prices rise, assets under management increase, lifting fee revenues even if the actual quantity of services provided has not changed. “What ought to be recorded as an increased quantity of services consumed is instead recorded as increased prices,” he said, calling the result a misclassification rather than genuine inflation.
Miran acknowledged an uncomfortable possibility — that goods inflation may be settling at a structurally higher level than before the pandemic — but dismissed the idea that tariffs are a major or persistent driver. He characterized tariff-related price increases as a “transient shock,” not a justification for keeping policy tight as labor market conditions soften.
The broader message, Miran said, is that prices today are far more stable than headline figures imply, even if they remain elevated relative to pre-pandemic levels. With employment risks rising, he argued that monetary policy should pivot accordingly. “While American families are still rightly distraught with that experience and unhappy with affordability, prices are now once again stable, albeit at higher levels. Policy should reflect that,” he said.
Miran was the lone governor to advocate for a 50-basis point rate cut at last week’s FOMC meeting. Most policymakers supported a 25-basis point reduction, while Chicago Fed President Austan Goolsbee and Kansas City Fed President Jeffrey Schmid voted to hold rates steady — underscoring how far Miran currently sits from the center of the committee’s inflation consensus.
—Argentina to loosen currency exchange rate band in January
Moves aim to rebuild FX reserves and calm investor concerns about President Javier Milei’s economic strategy
Argentina’s central bank will adjust its managed peso exchange-rate band starting Jan. 1, 2026, loosening the framework that has guided the peso’s movement against the U.S. dollar in an effort to rebuild scarce foreign currency reserves and address investor unease over the country’s economic policy under President Javier Milei.
Under the updated system, the upper and lower limits of the peso’s trading band will widen each month in line with the previous month’s inflation rate, replacing the 1% monthly adjustment previously in place. This change is designed to prevent an overly strong real exchange rate that had weighed on reserve accumulation, with inflation running above the old band-adjustment pace.
As part of the broader plan, the central bank will also launch a reserve-buying program intended to add up to $10 billion by the end of 2026, contingent on market liquidity and money-demand conditions.
Analysis: While the shift represents the most significant modification to Argentina’s exchange rate regime since the current band was introduced in April under an IMF-backed program, economists and investors remain cautious. The previous policy — aimed at strengthening the peso to curb inflation — has been criticized for slowing the build-up of hard currency needed to service debt and import bills, contributing to a peso sell-off in recent months.
Critics argue that even a more flexible band may not fully satisfy markets’ calls for a fully floating exchange rate and a faster increase in reserves, but the change is seen as a step toward addressing Argentina’s persistent foreign exchange constraints and bolstering confidence in Milei’s unorthodox economic agenda.
| AG MARKETS |
—Sinograin schedules third soybean auction to clear space ahead of U.S. arrivals
China offers another 550,000 tonnes from state reserves as storage pressure builds
China’s state grain buyer Sinograin announced a third consecutive weekly auction of imported soybeans, offering 550,000 metric tons from state reserves on Dec. 19, according to a notice published Tuesday. The soybeans were produced in the 2022 and 2023 crop years.
The move follows a state-reserve auction held earlier this week in which Sinograin offered about 500,000 metric tons and sold roughly 63% of the volume, Reuters reported. The back-to-back sales underscore Beijing’s effort to clear warehouse space as additional soybean shipments purchased from the United States are expected to arrive in coming weeks.
—Agriculture markets yesterday:
| Commodity | Contract Month | Closing Price Dec. 15 | Change from Dec. 14 | Units |
| Corn | March | $4.39 3/4 | -1 cent | per bushel |
| Soybeans | January | $10.71 3/4 | -5 cents | per bushel |
| Soybean Meal | January | $303.50 | +$1.00 | per ton |
| Soybean Oil | January | 49.48 cents | -59 points | per pound |
| Wheat (SRW) | March | $5.20 3/4 | -8 1/2 cents | per bushel |
| Wheat (HRW) | March | $5.12 | -6 cents | per bushel |
| Wheat (Spring) | March | $5.68 3/4 | -7 cents | per bushel |
| Cotton | March | 63.94 cents | +11 points | per pound |
| Live Cattle | February | $230.55 | +$1.00 | per cwt |
| Feeder Cattle | January | $330.925 | +82 1/2 cents | per cwt |
| Lean Hogs | February | $83.85 | -67 1/2 cents | per cwt |
| ENERGY MARKETS & POLICY |
—Tuesday: Crude slides to multi-month lows as peace hopes and demand fears weigh on market
Russia/Ukraine talks stoke expectations of looser sanctions while weak China data reinforces oversupply concerns
Oil prices dropped to their lowest levels since May, slipping below $60 a barrel as markets weighed the prospect of a Russia/Ukraine peace deal alongside fresh signs of slowing demand from China. Brent crude fell about $1.11 to $59.45 a barrel, while U.S. West Texas Intermediate slid nearly 2% to around $55.71.
The decline was driven largely by growing optimism that negotiations to end the war in Ukraine could eventually lead to an easing of sanctions on Russian oil, potentially adding more supply to an already well-stocked market. Analysts said the possibility of additional Russian volumes has sharpened fears of a glut heading into 2026.
Those supply concerns were compounded by weak Chinese economic data. Factory output growth slowed to a 15-month low, and retail sales posted their weakest increase since late 2022, reviving doubts about whether global demand will be strong enough to absorb rising supply.
While U.S. authorities last week seized an oil tanker linked to Venezuela, traders said the move had limited impact. A buildup of oil held in floating storage, along with a recent surge in Chinese purchases of Venezuelan crude ahead of potential sanctions, has blunted the effect of the seizure.
Market watchers said prices could continue grinding lower as peace talks progress unevenly and demand remains under pressure, though some see Brent stabilizing above the mid-$50s barring a sharper downturn in global growth.
—Monday: Oil slips as oversupply outlook overshadows Venezuela disruptions and Ukraine diplomacy
Traders balance fresh U.S. sanctions on Venezuelan crude against expectations of ample global supply and the prospect of easing Russia-related sanctions
Oil prices edged lower Monday as markets weighed short-term supply disruptions against a persistently bearish longer-term outlook. Brent crude settled at $60.56 a barrel, down 56 cents, while U.S. West Texas Intermediate closed at $56.82, off 62 cents. Both benchmarks followed losses of more than 4% last week, reflecting growing consensus that global oil markets will remain oversupplied well into 2026.
Tensions involving Venezuela provided some support, after U.S. authorities seized a tanker last week and imposed new sanctions on shipping firms and vessels linked to Venezuelan crude. The measures have sharply curtailed exports, disrupted loadings, and prompted some tankers to turn away from ports amid rising security and operational risks. A reported cyberattack on Venezuela’s state oil company further complicated shipments, though traders said the impact was muted by ample global supplies and barrels already en route to major buyers.
Meanwhile, oil prices were pressured by renewed optimism around diplomatic efforts to end the war in Ukraine. Recent talks between Ukrainian officials and U.S. envoys were described as constructive, reviving speculation that a peace agreement could eventually lead to eased sanctions on Russian oil and additional supply returning to the market. Even the possibility of such an outcome has reinforced bearish sentiment.
Macroeconomic concerns added to the downside. Weak data from China signaled slowing factory activity and softer consumer demand, while broader risk-off sentiment weighed on commodities. Major banks continue to forecast widening oil surpluses beyond 2025, with supply growth expected to outpace demand through at least 2026, keeping crude prices under pressure despite ongoing geopolitical risks.
—Economist: 45Z tax credit overhaul poised to deliver windfall for ethanol producers
University of Illinois economist Scott Irwin says revised clean-fuel incentives could lift corn bids and channel billions into the ethanol sector
Major changes to the federal 45Z clean fuels tax credit are set to take effect beginning Jan. 1, with significant financial implications for the U.S. ethanol industry (see next item for more details about the program). Scott Irwin, an agricultural economist at the University of Illinois, said the July reconciliation package (OB3) sharply improves the economics for ethanol producers — even those that have not invested in carbon capture or sequestration technologies. Speaking with Brownfield, Irwin said a typical Midwestern ethanol plant could qualify for roughly 11 cents per gallon beginning Jan. 1 under the revamped credit. Brownfield spoke with Irwin during the 2025 FarmDoc Farm Assets Conference in Bloomington, Illinois. (However, when you listen to what Irwin said in detail (link), some important nuances surface.)
Of note: The IRA has still not released the 45Z final guidance. While more info is expected for tax year 2025 by the end of the year, the IRS/Treasury is not expected to come out with regulations beyond 2025 until the first half of next year. However, see the box below regarding how Irwin and others are noting some impacts even before regulations are known.
Irwin said that benefit is likely to flow back into the farm economy. He estimates the credit could translate into roughly a 32-cent-per-bushel boost in corn bids tied to ethanol demand. “For a Corn Belt farmer located close enough to normally market to an ethanol plant, the obvious question becomes: ‘You’re receiving this money—how are we going to share it?’” Irwin told Brownfield.
On an industry-wide basis, Irwin estimates the revised 45Z credit could funnel as much as $2 billion per year into the ethanol sector, depending on production volumes and credit qualification.
Comments: Irwin said ethanol plants with the indirect land use in general had a score of above 50, making them basically ineligible for the credits. With indirect land use removed, he says ethanol plants should now be under 50 and his figure of around 11 cents is for a “representative” ethanol plant. But he notes that the scores are plant specific, but it should translate into ethanol plants, even those that do not do anything for carbon capture, should be looking at receiving around 11 cents based on the current GREET model.
While Irwin says this will provide ethanol plants with that type of infusion, a scan of corn bids at ethanol plants in Iowa does not indicate they have adjusted their basis levels or increased their bids into the first several months of the year. In fact, basis levels widen a bit when the switch is made to May futures relative to deliver offers at ethanol plants.
In his remarks to Brownfield, Irwin did not mention the still-pending rules from IRS. He contrasted the 45Z situation as being a certainty versus how he views the 2026 and 2027 RFS final rule which has not yet been finalized. He labels that uncertain but claims the 45Z credit is certain for ethanol plants. He did say those that do take action on carbon capture (details below) could get even more benefits but that would require investment that will cost $$ and take time.
| What is known from statute and modeling versus what is not yet finalized by regulation. Irwin is not claiming certainty. He is making a conditional, back-of-the-envelope estimate based on what is already written in law, longstanding lifecycle emissions models, and how ethanol plants currently score under those models — even though IRS regulations are still pending. What is already fixed in law (even without IRS rules). Even before IRS issues regulations, several things are not discretionary: The credit formula exists in statute Section 45Z clearly defines:• The reference carbon intensity (CI) of petroleum fuels• The credit calculation, which scales linearly with how much cleaner a fuel is than the petroleum baseline• The maximum credit value per gallon IRS regulations cannot change these statutory mechanics — they only clarify implementation details. Ethanol’s approximate carbon intensity is already well known. Lifecycle CI scores for corn ethanol are not speculative:• USDA, DOE, California (LCFS), and GREET modeling have evaluated corn ethanol for decades• Typical Midwest ethanol CI scores cluster in a narrow, well-documented range• Plants already know roughly where they sit relative to gasoline Irwin is relying on existing CI benchmarks, not guessing. Why an “11 cents per gallon” estimate is defensible Irwin’s 11¢/gal figure reflects:• Baseline corn ethanol CI• No carbon capture• No major process upgrades• Meeting only the base (non-enhanced) credit When you plug those known CI ranges into the statutory 45Z formula, you get a low-double-digit cents-per-gallon credit. That’s why you’ll hear similar estimates from: • University economists• Ethanol trade groups• Carbon credit brokers• Tax equity advisors They’re all doing the same math, using the same publicly available CI ranges. What IRS rules do affect (and what they don’t) IRS rules WILL affect:• Which CI model is officially accepted (likely GREET)• Treatment of farming practices• Book-and-claim rules• Verification and auditing• Stacking with other credits• Timing and transfer mechanics IRS rules WILL NOT:• Rewrite the statute• Change ethanol’s fundamental lifecycle emissions• Eliminate eligibility for conventional ethanol altogether• Turn a low-CI fuel into a zero-credit fuel overnight So, while exact pennies may change, the existence of a material credit is not in doubt. Why Irwin and others can talk about corn basis impacts now Irwin is an ag market economist, not a tax lawyer. He’s asking: “If ethanol plants receive X cents per gallon in new revenue, how much of that could reasonably show up in corn bids?” That’s a competitive market question, not a regulatory one. Historically:• Ethanol margins do get shared with corn producers in competitive draw areas• Plants bidding for bushels must pass through some benefit• The 30-ish cents per bushel estimate assumes partial pass-through, not 100% He’s explicitly saying farmers should pressure plants, not that the outcome is automatic. What Irwin is not claiming. Irwin is not saying:• Every ethanol plant will get exactly 11¢/gal• IRS rules are irrelevant• Corn prices will mechanically rise 32¢ everywhere• The credit is risk-free or permanent He is saying: “Based on what we know today, the floor value looks meaningful — and farmers should pay attention.” That is a reasonable, fact-based interpretation, not regulatory overreach. Bottom Line: Even without final IRS regulations:• The law exists• The formula exists• Ethanol’s CI performance is known• The directional incentive is unambiguous• The order of magnitude (billions annually) is plausible So, Irwin’s remarks are best understood as: An informed estimate under reasonable assumptions — not a guarantee. That’s entirely consistent with how economists analyze new policy before final rulemaking, especially in ag and energy markets. |
—Clean fuels and the 45Z tax credit: What qualifies and why it matters
Performance-based clean fuel credits reward lower emissions, reshape biofuel economics, and are poised for growth as IRS guidance firms up
The 45Z clean fuels tax credit applies to a broad range of domestically produced transportation fuels, with the value of the credit tied directly to how much each fuel reduces lifecycle greenhouse gas (GHG) emissions compared with petroleum. Unlike fixed tax incentives, 45Z is performance-based, favoring fuels and production pathways that deliver the largest emissions reductions.
What counts as a “clean fuel” under 45Z. Eligible fuels span much of today’s biofuels and emerging clean-energy landscape:
•Renewable natural gas (RNG): Produced from organic waste such as agricultural manure, municipal solid waste, or wastewater through anaerobic digestion. The resulting biogas is upgraded into pipeline-quality RNG and used in compressed natural gas vehicles.
•Biodiesel: Made from vegetable oils or animal fats via transesterification, producing a diesel substitute typically blended with petroleum diesel.
•Renewable diesel: Produced through hydrotreating oils and fats into a hydrocarbon fuel chemically identical to petroleum diesel, allowing full “drop-in” use without engine modification.
• Sustainable aviation fuel (SAF): A low-carbon jet fuel produced from biomass, waste oils, or alcohol-to-jet pathways. SAF is chemically similar to conventional jet fuel and is blended at ratios typically between 10% and 50%.
•Ethanol: Primarily corn-based in the U.S., ethanol is blended into gasoline (E10–E85) and can also serve as a feedstock for SAF. Its carbon intensity can be lowered through carbon capture and sustainable farming practices.
•Hydrogen: Eligible when sold for transportation use under §45Z, though clean hydrogen used outside transportation generally falls under the separate §45V credit.
How fuels qualify and how the credit is calculated. To qualify, a fuel must have lifecycle GHG emissions below 50 kg CO₂e per million BTUs. In January 2025, the IRS directed producers to use the 45ZCF-GREET model from Argonne National Laboratory to calculate emissions. Fuels listed in IRS emissions tables can rely on preset values; others must apply for a provisional emissions rate (PER) backed by GREET modeling.
The credit formula is straightforward but consequential:
• Credit per gallon (or equivalent) = $1.00 × [1 − (Fuel GHG emissions ÷ 50)]
• Fuels with near-zero emissions can earn close to the full $1.00 per gallon, while higher-emitting fuels receive proportionally smaller credits.
Why 45Z is different — and riskier. Unlike wind or solar credits, 45Z credits are tied to feedstock-dependent production, exposing projects to agricultural commodity risks. A dairy closure can disrupt RNG feedstock; crop price swings can affect biofuel margins. Buyers are not liable for credits that never materialize, but they do face uncertainty around expected volumes.
Credits are expected to operate under a “book-and-claim” system, where environmental attributes are tracked separately from physical fuel molecules. The IRS is expected to provide further verification guidance, but this information has been delayed for months.
Why buyers are interested. Tax credit buyers are drawn to §45Z for two reasons:
•Production-backed certainty: Credits are verified against actual fuel output.
•Operational predictability: Established facilities with operating histories can offer more stable projections than weather-dependent renewables.
Market status and pricing. The 45Z market remains early stage due to incomplete IRS guidance. In 2024, only biofuels-related investment tax credits were widely transacted, making up about 3.5% of the overall transferable credit market.
Due diligence and insurance. Because of feedstock and modeling risks, 45Z transactions require deeper diligence:
• Stability and financial health of feedstock suppliers
• Operator track record across projects
• Verification of emissions modeling or PER approval
Insurance is common in biogas deals; in 2024, nearly all included full-wrap insurance policies.
Outlook: Regulatory clarity is the key catalyst ahead. Final IRS guidance, which has long been expected, should unlock broader market participation. Politically, 45Z enjoys bipartisan support: the One Big Beautiful Bill Act, signed July 4, 2025, extended the credit through 2029 and clarified favorable rules on feedstock origin (U.S., Mexico, Canada) while excluding indirect land-use change from emissions calculations.
Bottom line: 45Z is set to become a central incentive shaping U.S. biofuels, ethanol, SAF, and RNG markets — rewarding the cleanest fuels, but demanding rigorous documentation and risk management.
| The 45Q program is a federal tax credit designed to incentivize carbon capture, utilization, and storage (CCUS) in the United States. What 45Q does. Section 45Q of the Internal Revenue Code provides a per-ton tax credit for capturing carbon dioxide (CO₂) that would otherwise be released into the atmosphere and either:• Permanently stored underground, or• Utilized in approved ways (such as enhanced oil recovery or conversion into other products) The credit applies to CO₂ captured from industrial facilities, power plants, and ethanol plants, among others. Credit Values (Current Law). For projects that meet prevailing-wage and apprenticeship requirements:• $85 per metric ton of CO₂ captured and permanently stored• $60 per metric ton of CO₂ used for utilization or enhanced oil recovery (EOR) Lower credit values apply if labor requirements are not met. Why 45Q matters for ethanol. Ethanol plants are among the lowest-cost sources of capture-ready CO₂, because fermentation produces a relatively pure CO₂ stream. As a result:• Many ethanol plants are pairing 45Q with carbon capture and storage (CCS) projects• 45Q can significantly reduce an ethanol plant’s carbon intensity (CI) score• Lower CI scores can unlock additional value under other programs (such as 45Z clean fuel credits or California’s LCFS) Key Eligibility Rules• CO₂ must be measured, verified, and securely stored• Projects must meet minimum capture thresholds• Credits are generally available for 12 years after the project is placed in service• Projects must begin construction by statutory deadlines set by Congress How 45Q differs from 45Z45Q: Pays for capturing and storing carbon (input-based, per ton of CO₂)45Z: Pays for low-carbon fuels produced (output-based, per gallon or per unit of fuel) In short, 45Q rewards the act of capturing carbon, while 45Z rewards the production of cleaner fuels — and many ethanol plants are structured to benefit from both, depending on their investments and compliance strategy. |
| TRADE POLICY |
—China cuts pork duties on EU imports after lengthy probe
Final anti-dumping ruling sharply lowers tariffs, easing pressure on European exporters while offering modest support to China’s struggling hog sector
China has significantly reduced tariffs on pork imports from the European Union, delivering partial relief to European producers after an 18-month anti-dumping investigation that was widely viewed as retaliation for EU duties on Chinese electric vehicles.
In its final ruling released Tuesday, China’s Ministry of Commerce set new tariffs ranging from 4.9% to 19.8% on EU pork imports for a five-year period starting Wednesday. The move marks a sharp rollback from preliminary rates of 15.6% to 62.4% imposed in September. Importers will be refunded the difference on duties paid since the provisional decision.
The ruling affects more than $2 billion in EU pork exports to China and comes as a relief to producers that rely heavily on the Chinese market, particularly for offal such as pig ears and feet, which have limited demand elsewhere. China imported $4.8 billion worth of pork and offal in 2024, with over half sourced from the EU. Spain was the bloc’s largest exporter by volume.
The investigation, launched in June 2024, hit major exporters including Spain, the Netherlands and Denmark. It unfolded alongside broader diplomatic engagement, including renewed talks on EV tariffs and recent visits to Beijing by French President Emmanuel Macron and Spain’s King Felipe. Spanish regional officials also pressed for tariff relief, citing Spain’s openness to Chinese investment in autos.
Industry groups welcomed the lower rates but stressed they still represent a cost. France’s pork association Inaporc said all cooperating exporters were granted a 9.8% rate, offering “a sense of relief,” though not something the industry could celebrate outright.
The decision comes as China’s domestic hog sector struggles with oversupply and weak consumer demand. Pork prices have fallen throughout 2025 and are expected to remain under pressure. While the reduced duties may slightly lift imported pork prices and ease food price deflation, analysts say the impact will likely be modest — benefiting Chinese pig farmers more than price-sensitive import segments.
China continues to wield trade tools elsewhere against the EU, with an anti-subsidy investigation into EU dairy exports due to conclude next February and tariffs already imposed on EU brandy, underscoring that trade tensions between Beijing and Brussels remain far from resolved.
—U.S. mounts sweeping challenge to WTO foundations, rejects MFN as outdated
Washington tells members the multilateral system no longer fits a world of divergence, signaling deeper skepticism under Trump’s second term
The United States has delivered its most forceful critique yet of the World Trade Organization (WTO), telling fellow members that core pillars of the system — including the most-favored-nation (MFN) principle — are no longer fit for purpose. In a Dec. 15 communication circulated ahead of the WTO General Council’s final meeting of the year, Washington argued that the institution is structurally incapable of addressing modern trade challenges such as overcapacity, economic security and supply-chain resilience.
Responding to a reform report prepared by Norway’s WTO ambassador Petter Ølberg, the U.S. said reform discussions must expand well beyond decision-making rules and special treatment for developing countries. Instead, it urged members to confront what it described as systemic failures embedded in WTO rules themselves, particularly MFN, the Secretariat’s growing role, and limits placed on the security exception.
The document marks the first major policy declaration in Geneva since Joseph Barloon’s confirmation as U.S. ambassador to the WTO and offers the clearest articulation yet of the second Trump administration’s posture toward the multilateral trading system. The tone is often hostile, accusing the WTO of presiding over “severe and sustained imbalances” driven by overcapacity, concentrated production and non-market economic systems.
At the center of the critique is MFN treatment, which requires countries to apply the same trade terms to all partners. The U.S. argues the principle was designed for an era of convergence toward market-oriented policies — an assumption it now calls “naïve.” According to Washington, today’s global economy is defined by divergence, chronic trade surpluses and incompatible economic models, requiring governments to treat trading partners differently rather than apply uniform rules.
The U.S. also contends that MFN discourages “welfare-enhancing liberalization” by forcing an all-or-nothing approach to negotiations, blocking narrower deals among willing partners. It points to existing exceptions, such as special and differential treatment for developing countries, as evidence that MFN has never been universally appropriate.
Beyond MFN, the U.S. sharply criticized the WTO Secretariat, arguing it has exceeded its administrative mandate by shaping agendas, advocating policy outcomes and publicly evaluating members’ trade measures. That expansion, Washington said, undermines trust in the Secretariat’s neutrality and raises questions about resource use — concerns underscored by the U.S. decision to withhold its WTO budget contribution for most of 2025.
The communication also reiterates U.S. objections to WTO dispute panels that have narrowed the scope of the security exception. Washington maintains that determinations of “essential security interests” are sovereign decisions not subject to WTO review, particularly in cases involving Section 232 tariffs.
Finally, the U.S. rejected the idea that the WTO should tackle new areas such as overcapacity, economic security or supply-chain resilience, arguing the institution lacks both competence and credibility. Efforts to address non-market practices through committees and disputes have failed, it said, and negotiations would only yield weak, easily exploited rules.
Bottom Line: The message ends with a stark warning: without reforms that acknowledge its limits and refocus on achievable core functions, the WTO risks sliding further into irrelevance.
| POLITICS & ELECTIONS |
— A nation divided—and one state to watch
Why America’s red, blue, and battleground states behave so differently down the ballot
Charlie Cook, writing in National Journal, argues that the familiar map of red, blue, and purple America is more than a presidential-election shorthand — it reflects deeply entrenched partisan realities that extend far down the ballot. Since 2016, the country has effectively settled into a stable configuration of 24 reliably Republican states, 19 reliably Democratic ones, and seven true battlegrounds where control regularly flips.
Cook notes that presidential results in these blocs have been strikingly consistent. President Trump carried all 24 red states in each of the last three elections, while Democrats swept the 19 blue states. The seven purple states — Arizona, Georgia, Michigan, North Carolina, Pennsylvania, Wisconsin, and Nevada — have shifted at the top of the ticket over time, but Trump ultimately carried all seven in 2024.
What stands out, however, is how sharply these blocs diverge below the presidential line. In red states, Republicans enjoy near-total dominance: every Senate seat, nearly every governorship, all statewide executive offices, every partisan state legislature, and more than three-quarters of U.S. House seats. Blue states show a similar Democratic advantage, though Cook highlights that Democrats’ margins are thinner than Republicans’ are in red states, particularly in state legislatures and House delegations.
The most puzzling dynamics appear in the seven purple states. Democrats outperform Republicans in Senate and gubernatorial races, yet Republicans control a clear majority of U.S. House seats and most state legislative chambers. Cook suggests several explanations, including decades of stronger Republican investment in local and state party-building, Democrats’ relative neglect of down-ballot infrastructure since the mid-2000s, and GOP success in mobilizing culturally conservative local issues. He also argues that Republican losses in high-profile statewide races may reflect weaker Senate and gubernatorial nominees — often tied to MAGA politics — rather than a lack of underlying GOP strength.
Cook also highlights a long-term shift in which states matter most. Traditional presidential tipping-point states such as Florida and Ohio dominated Electoral College math from 2000 to 2012 but have dropped out entirely over the past three elections, underscoring how fluid the battleground map can be over time.
Looking ahead, Cook flags New Hampshire as the blue state most likely to break the current mold. While Democrats have carried the state in eight of the last nine presidential elections, Republicans have quietly built durable power below the top of the ticket — winning five straight gubernatorial races and controlling the legislature in five of the last six cycles. With Sen. Jeanne Shaheen retiring and a competitive 2026 Senate race shaping up, Cook suggests that a Republican pickup could push New Hampshire into the purple column.
If that happens, he concludes, analysts may soon be talking about an eighth battleground state — proof that while America’s partisan map looks frozen, its fault lines are still shifting just beneath the surface.
| WEATHER |
— NWS outlook: Heavy rain and snow likely in Northwest this week… …Above average temperatures continue across the West and Central U.S., while Arctic air begins to erode in the East on Wednesday.
