EPA Weighs Partial Reallocation of Biofuel Waivers Under RFS

Rollins criticized for comments on “lower costs, more exports” claim | Food price outlook

LINKS

Link: Video: Wiesemeyer’s Perspectives, Feb. 22

Link: Audio: Wiesemeyer’s Perspectives, Feb. 22 

Updates: Policy/News/Markets, Feb. 26, 2026

UP FRONT

TOP STORIES

— EPA weighs partial reallocation of biofuel waivers under RFS: Reuters reports the Trump administration is leaning toward requiring large refiners to pick up at least 50% of waived SRE blending volumes, a compromise that could lift biofuel demand and RIN values while raising compliance costs for big oil.

— EPA’s RFS Set 2 rule moves to OMB review: The final 2026–2027 RFS package is now in interagency review, with markets keyed on (1) higher biomass-based diesel volumes, (2) proposed 50% RIN credit for imported biofuels/feedstocks, and (3) how (or whether) SRE reallocation is finalized by end of March.

— Year-round E15 legislation stalls — but supporters say deal is still “close”: The House missed the Feb. 25 target with text still unresolved, as negotiators wrestle over SRE treatment; supporters say momentum remains, but uncertainty continues to chill retail E15 expansion.

— USDA headquarters shakeup accelerates as GSA advances South Building disposal: USDA and GSA are moving toward vacating the South Building as USDA plans to shift about 2,600 jobs out of the Washington region, betting cost savings and a smaller federal footprint outweigh risks to continuity and institutional capacity.

— Pesticides debate emerges as flashpoint in Surgeon General confirmation hearing: Nominee Dr. Casey Means threaded a needle between farm-state yield/affordability arguments and public-health scrutiny of cumulative chemical exposure, signaling pesticides could become a bigger part of national health messaging even without direct regulatory authority.

— China signals retaliation risk if U.S. trade probe leads to new tariffs: Beijing warned of “all necessary measures” if the U.S. Phase One review becomes a basis for new duties, hardening rhetoric ahead of the planned late-March Trump Beijing visit.

— USTR launches critical minerals supply chain review: USTR opened a public-input process (comments due March 19) on trade tools to expand domestic and allied sourcing of critical minerals, hinting at longer-run agreements rather than an immediate action.

FINANCIAL MARKETS

— Equities today: U.S. Dow opened around 150 point higher and are now up around 270 points. Focus is whether software (IGV) holds up after softer Salesforce guidance, with Jobless Claims (est. 215K) and Fed Gov. Bowman also on the radar alongside U.S./Iran talks.

— Equities yesterday: Stocks rose broadly (Dow +0.63%, S&P 500 +0.81%, Nasdaq +1.26%), reflecting a risk-on tone despite crosscurrents in rates and geopolitics.

— Stellantis takes major EV-related write-downs as energy transition pace slows: Stellantis posted a huge second-half 2025 loss driven by EV-related charges, underscoring an industry reset on adoption speed as tariff and policy uncertainty adds pressure.

— IMF flags tariff uncertainty as risk to otherwise “buoyant” U.S. economy: IMF says the bigger drag may be policy volatility itself — dampening investment planning — while also highlighting longer-run fiscal and external-balance vulnerabilities.

AG MARKETS

— USDA daily export sale: USDA reported 178,000 MT corn sold to Japan.

— Minimal U.S. soybean sales to China in latest USDA weekly update: China buying was muted in the Feb. 19 week (holiday effects), putting extra focus on the next report to confirm whether post–Lunar New Year demand is returning.

— Southern Brazil weather draws market focus: After recent rains helped stabilize Rio Grande do Sul, a new dry forecast is reviving debate about final Brazilian crop size — and keeping futures sensitive to 7–10 day updates.

— India faces hotter March — crop risks emerging: Forecast heat threatens wheat and rapeseed during key growth stages, raising downside yield risk and potential policy/import implications if stress intensifies.

— Agriculture markets yesterday: Grain, livestock, and fiber mostly firm (notably soy complex and cattle), with wheat mixed — reinforcing a market still trading weather, exports, and policy signals.

FARM INPUT COSTS

— Rollins’ “lower costs, more exports” claim draws pushback from farm country: Critics say some inputs have eased off peaks but remain historically high relative to crop prices, while interest and labor pressures persist and “trade deals” don’t automatically translate into near-term export gains.

ENERGY MARKETS & POLICY

— Thursday: Oil prices slip as inventories rise and traders watch Iran talks: A big U.S. crude build and weaker physical signals weighed on prices, but Iran-related geopolitical risk is still the key swing factor.

— Wednesday: Oil prices hold steady despite big U.S. stock build: Bearish inventory data was offset by conflict-risk premium, leaving crude rangebound as talks continue.

TRADE POLICY

— U.S./India trade engagement resumes informally: Lutnick and Goyal held a constructive meeting, but formal negotiations remain paused as India waits for clarity on Section 122 tariffs.

— USTR says new Section 301 probes are about leverage — not tariff revenue: USTR’s general counsel framed 301 as behavior-changing leverage (not a revenue tool), as the administration rebuilds tariff strategy under new legal constraints.

CONGRESS

— No Washington work for Congress: House is out; party retreats dominate the week.

POLITICS & ELECTIONS

— 2028 Democratic field begins to take shape: Early chatter is wide open with governors leading the conversation, but senators and potential disruptors remain in the mix as the party tests messages in a Trump-era political landscape.

FOOD POLICY & FOOD INDUSTRY

— Food price outlook 2026: Food inflation is moderating but remains uneven across categories, with USDA ERS projecting overall prices up 3.1% this year. Restaurant prices are expected to continue rising faster than grocery costs, while beef, beverages, and sweets remain key inflation pressure points even as eggs and some staples pull lower.

— Kennedy promotes “eat real food” agenda in Texas: RFK Jr. headlines an Austin rally to spotlight the administration’s Dietary Guidelines and MAHA-aligned food messaging, alongside a mix of advisers and allied leaders.

TRANSPORTATION & LOGISTICS

— Trans-Pacific shipping sends mixed signals as U.S. imports normalize: Falling spot rates and excess vessel capacity strengthen importer leverage in contract talks, even as underlying demand looks more stable than year-over-year comps suggest.

WEATHER

— NWS outlook: Active showers and storms along a Southern front, a clipper bringing modest Northern Plains/Upper Midwest snow, and continued warmth/dryness across much of the Lower 48.¡

TOP STORIES—EPA weighs partial reallocation of biofuel waivers under RFSReuters: Administration plan would shift at least half of exempted blending obligations to large refiners, potentially boosting biofuel demand The Trump administration has settled on a tentative plan requiring large oil refiners to absorb at least 50% of biofuel blending volumes waived under the Small Refinery Exemption (SRE) program, according to multiple sources familiar with the discussions, as reported by Reuters. Under the federal Renewable Fuel Standard (RFS), refiners must blend specific volumes of ethanol and other biofuels into the fuel supply or purchase compliance credits known as Renewable Identification Numbers (RINs). Smaller refiners, however, can receive exemptions if they demonstrate economic hardship — a provision that has long fueled tension between agriculture and petroleum interests. Industry divide over reallocation. The proposed approach would likely increase compliance costs for larger refiners, which have argued that reassigning exempted volumes unfairly raises their operational burden and could ultimately lead to higher fuel prices. Biofuel producers and farm groups, meanwhile, have pushed for full reallocation of waived gallons, arguing it is necessary to maintain demand for ethanol and biodiesel and support feedstock markets tied to U.S. agriculture. The administration’s apparent compromise — reallocating at least half the waived volumes — signals a middle-ground approach, though officials indicated the percentage could eventually rise above 50%. Backlog of waived volumes raises stakes. The issue has gained urgency after the administration processed a substantial backlog of SRE requests covering 2023–2025, totaling more than 2 billion gallons of waived blending obligations. Those gallons represent a meaningful share of renewable fuel requirements and have intensified debate over who should bear compliance responsibilities. EPA officials have recently indicated that reallocating at least part of the waived volumes is now preferred, marking a shift from earlier consideration of options ranging from zero to full reallocation. According to Reuters, discussions remain fluid and no final decision has been announced. Next steps for EPA and White House. The Environmental Protection Agency has already submitted proposed 2026 and 2027 biofuel blending quotas to the White House, with a final rule expected by the end of March. The agency has said that the blending targets and the waiver-reallocation decision will be released together — a move likely to carry major implications for both fuel markets and the agricultural sector. Officials cautioned that the plan still requires White House approval and could be modified before final publication. Bottom Line: A partial reallocation of waived biofuel volumes would represent a policy shift toward supporting biofuels and farm demand, while increasing regulatory obligations for larger refiners — setting up another flashpoint in the long-running agriculture-versus-oil debate. EPA’s RFS Set 2 rule moves to OMB reviewFinal 2026–2027 biofuel mandates enter interagency process as market watches biodiesel targets, import RIN limits, and small refinery exemption reallocation EPA’s final Renewable Fuel Standard (RFS) rule for 2026 and 2027 has advanced to the Office of Management and Budget (OMB), launching the formal interagency review that typically takes several weeks before publication. The move confirms earlier signals from agency officials and marks another step toward completion of the long-anticipated RFS Set 2 rule. The final package consolidates two key actions — the main RFS volume-setting rule and the supplemental proposal addressing how Renewable Fuel Standard obligations waived under small refinery exemptions (SREs) could be reallocated. Together, these issues have drawn intense scrutiny from biofuel producers, refiners, and agricultural markets since the proposal first emerged in mid-2025. Key issues markets are watching. Several elements remain central to industry expectations:• Biomass-based biodiesel volumes: The proposed rule included a significant increase in required levels, making this one of the most closely watched components for soybean oil and renewable diesel markets.•Imported biofuels and feedstocks: EPA proposed awarding only 50% of Renewable Identification Number (RIN) value for imported biofuels or feedstocks, a change that could reshape trade flows and compliance strategies.•Small refinery exemption (SRE) reallocations: A major point of debate is whether EPA will redistribute waived obligations across the broader market or delay/drop the proposal entirely — a decision with potential implications for RIN prices and compliance costs. Timeline and implications. EPA has stated it intends to finalize the rule by the end of March, a timeline that would still leave the agency behind statutory RFS deadlines. The OMB stage is the final major procedural hurdle before publication, meaning the market now enters a wait-and-see period as interagency reviewers weigh potential adjustments. Since the original proposal in June and the supplemental proposal in September, the rule has become a major focus for renewable fuels markets. A total of 18 stakeholder meetings were held during the review process, underscoring the high level of industry attention and the stakes tied to final policy choices. Bottom Line: The RFS Set 2 rule is nearing the finish line, but several unresolved decisions — especially biodiesel volumes, treatment of imports, and SRE reallocation — could still materially shift compliance costs, renewable fuel demand, and agricultural feedstock markets once the final rule is released. —Year-round E15 legislation stalls — but supporters say deal is still “close”House misses deadline as lawmakers juggle farm, refinery, and fuel-market interests in ongoing push to allow permanent year-round E15 sales The long-running effort to authorize nationwide, year-round sales of E15 fuel hit another delay this week after the Feb. 25 House deadline passed without a vote, leaving the policy in limbo despite continued optimism from key lawmakers. The E15 Rural Domestic Energy Council failed to finalize legislative text ahead of the deadline, though Rep. Derrick Van Orden (R-Wis.) said draft language is still being refined and suggested momentum remains. According to Van Orden, lawmakers are trying to strike a balance among competing interests — including corn and soybean farmers, biomass producers, and refiners of all sizes — a process he described as complicated and politically sensitive. A major sticking point remains small refinery exemptions (SREs) under the Renewable Fuel Standard (RFS). Independent refiners argue that expanding year-round E15 could effectively raise blending obligations and increase compliance costs, warning in a recent letter that the change may lead to plant closures, job losses, and higher fuel prices. Biofuel advocates, meanwhile, contend that permanent year-round access would provide market certainty, boost ethanol demand, and encourage broader infrastructure investment. President Donald Trump signaled support earlier this year, saying in a January appearance in Iowa that a deal was “close” and that he would sign legislation once passed by Congress — a sign that the issue remains politically active even as negotiations drag on. “No more excuses on E15,” the Iowa Corn Growers Association wrote on social media, tagging Iowa’s U.S. House members.  Sen. Chuck Grassley (R-Iowa) said his constituents are also growing restless, sharing with him their frustration across 13 town hall meetings last week. “It’s something that should’ve happened today based upon what we heard maybe a month ago now,” Grassley said during a Feb. 25 call with reporters. “And we’re hearing from farmers on this issue that they’re frustrated it’s not happening.” Timeline. Rep. Randy Feenstra (R-Iowa), who is co-leading the Rural Domestic Energy Council, told the Des Moines Register in a Feb. 24 interview he hopes to soon see a bill emerge out of negotiations, but he said dealmaking has been prolonged by a major snowstorm that hit Washington, D.C., and delayed members’ travel into the state. Feenstra said he expects a bill will come to the floor “maybe this week or next week.” “Because of the weather and everything, it might have to be pushed to next week,” he said. “But we’re very involved and engaged in having a vote here very shortly on E15 and hopefully getting it out of the U.S. House.” Feenstra said the council has been meeting with oil refiners which have pushed for exemptions to the requirements to blend ethanol into gasoline, undercutting the interests of ethanol producers. The policy uncertainty continues to slow adoption at the retail level. Out of roughly 100,000 U.S. fueling stations, just over 4,000 currently sell E15, up from roughly 3,000 two years ago. Retailers have been reluctant to invest further while summer sales restrictions remain unresolved, since current rules effectively block E15 sales during the peak driving season in many regions. Bottom Line: The legislative effort remains alive but stalled. Progress hinges on resolving the refinery exemption debate and balancing competing economic interests across agriculture, biofuels, and refining — a challenge that has repeatedly delayed a final deal despite growing political support.— USDA headquarters shakeup accelerates as GSA advances South Building disposalAgency targets cost savings, regional relocation and federal footprint reduction amid major workforce restructuring USDA and the General Services Administration (GSA) have begun preliminary steps to vacate USDA’s massive South Building headquarters in Washington, D.C., as part of a broader reorganization that will relocate thousands of employees and significantly shrink the department’s capital-region footprint. USDA Secretary Brooke Rollins said the GSA — which oversees federal real estate — will lead the long-term process involving the 2.1-million-square-foot South Building at 1400 Independence Ave. SW. Officials characterized the roughly 90-year-old facility as underused and costly, with the building now largely empty and carrying an estimated $1.6 billion in delinquent maintenance liabilities. While a sale remains the likely outcome, Rollins and GSA Administrator Ed Forst emphasized that the government is still in a consultative phase that could result in either a private-sector sale or repurposing by another federal tenant. “It is a long, it’s a comprehensive process,” Forst said, noting that officials plan to consult stakeholders and potential buyers before deciding on a final path forward. Federal real estate strategy driving the move. The disposal effort aligns with President Donald Trump’s push to reduce the federal government’s real-estate footprint and offload underutilized properties. GSA officials describe the South Building — spanning two city blocks just south of the National Mall — as the largest liability in the agency’s portfolio. The building is currently estimated to be roughly 70%–85% vacant, despite decades of prior use and past renovations. GSA said eliminating the building from federal ownership would remove significant financial risk and help catalyze redevelopment in Southwest D.C., where local leaders have been pursuing mixed-use transformation around L’Enfant Plaza and Federal Center SW. Although the building underwent major upgrades in recent years — including structural renovations, new offices, and upgraded mechanical systems covering about half the space — officials now view maintaining the property as economically unsustainable. USDA workforce reorganization and relocation. The building move is one piece of a sweeping USDA restructuring already underway. The department plans to relocate approximately 2,600 employees out of the national capital region by the end of the year, cutting its Washington-area staff from about 4,600 to roughly 2,000. USDA Deputy Secretary Stephen Vaden said employees will be informed of their future assignments in the coming months, with relocation timelines designed to accommodate families ahead of the next school year. USDA is establishing five regional hub locations for relocated employees:• Raleigh, North Carolina• Kansas City, Missouri• Indianapolis, Indiana• Fort Collins, Colorado• Salt Lake City, Utah Additional details on staffing and operations at those hubs have not yet been released. Separately, USDA also plans to dispose of its Braddock Place facility in Alexandria, Virginia. Food and Nutrition Service staff currently based there will relocate locally to the Yates Building in Washington or the George Washington Carver Center in Maryland. Operational goals — and concerns. Rollins said the reorganization aims to better align USDA staffing with departmental priorities, reduce management layers, and consolidate overlapping functions. She described the South Building — once bustling with activity — as mostly empty today, noting it contains roughly 7,000 offices that are largely unused. “The first time I walked through about a year ago, I was stunned,” Rollins said. Officials say the broader restructuring is also intended to reduce costs and modernize operations. USDA has already reduced staffing by more than 15,000 employees through voluntary paid-leave resignations, and officials have signaled layoffs could be used if employees decline reassignment. The plan, however, has drawn concern from employees and stakeholders. Feedback collected during USDA’s reorganization review generated about 14,000 responses, with roughly 82% expressing negative views, including fears of institutional knowledge loss and disruptions to farmer-support programs. Those concerns echo past experience: during Trump’s first term, USDA relocated the Economic Research Service and National Institute of Food and Agriculture to Kansas City in 2019, a move that resulted in significant staff losses before both agencies eventually reestablished headquarters in Washington during the Biden administration. Timeline and next steps. GSA has not committed to a firm timetable for the South Building’s final disposition, though Forst said he hopes to conclude the process before the end of President Trump’s term. Federal law now requires agencies to track building utilization and pushes GSA to consolidate or dispose of properties that remain more than 40% empty for two consecutive years — a broader policy backdrop encouraging agencies to reduce space. Bottom Line: USDA’s South Building disposal is no longer just a real-estate decision — it is part of a major structural reorganization that will reshape where thousands of USDA employees work, reduce the agency’s Washington presence, and test how effectively the department can maintain institutional capacity while shifting operations nationwide. USDA headquarters is spread across two buildings in Southwest Washington. Ag South is the large building with multiple courtyards shown in the bottom half of this photo. The Whitten building is the white building just to the north. — Pesticides debate emerges as flashpoint in Surgeon General confirmation hearingLawmakers press nominee on chemical exposure, farm productivity, and public health as pesticide policy takes center stage The Senate Health, Education, Labor and Pensions Committee (HELP) hearing on Feb. 25 centered largely on vaccines, chronic disease, and nutrition — but one of the most consequential exchanges for agriculture and public health came during questioning over pesticides and chemical exposure. As senators explored the nomination of Dr. Casey Means to serve as U.S. Surgeon General, pesticides became a focal point, highlighting a sharp tension between public-health caution and agricultural necessity. Farm-state concerns: productivity vs. public health. Sen. Jon Husted (R-Ohio) framed pesticides through the lens of food security and farm economics, describing how crop protection chemicals help prevent losses from pests such as earworms and other destructive insects. He argued that without pesticides, yields for corn, soybeans, fruits, and vegetables could fall substantially, threatening food affordability and supply reliability. Husted emphasized that many farmers worry public messaging around pesticides could undermine confidence in U.S. food production, even though the Surgeon General does not regulate agricultural chemicals directly. In response, Dr. Means acknowledged the importance of farmers and described the issue as highly complex. She said modern agriculture has developed a system that relies heavily on chemical inputs to maintain affordable food supplies, while also suggesting that long-term health implications warrant deeper study. Means’ position: cumulative exposure and long-term transition. Dr. Means repeatedly stressed that pesticide exposure should be evaluated as part of broader “cumulative environmental exposure” — a term she used to describe how chemicals in food, water, and the wider environment may collectively contribute to chronic disease. Her testimony outlined several key points:• She expressed respect for American farmers and acknowledged that rapid changes to pesticide policy could harm both producers and consumers.• She argued for expanded research into how pesticide, herbicide, and insecticide exposure may affect human health over time.• She suggested that agriculture will eventually need to move toward more sustainable practices that reduce dependence on what she described as “toxic chemicals.”• She cited developments such as precision agriculture and regenerative agriculture funding as potential paths toward reduced chemical reliance. This framing positioned pesticides less as an immediate regulatory problem and more as part of a long-term public-health and environmental research agenda. Glyphosate exchange intensifies debate. The discussion escalated when Sen. Edward Markey (D-Mass.) pressed Dr. Means about glyphosate, the active ingredient in many widely used herbicides. Markey referenced previous statements she made expressing concern about the chemical’s potential cancer risk and asked whether administration policies supporting domestic herbicide production could place families at risk. Means avoided directly criticizing administration policy, instead emphasizing:• The complexity of balancing health concerns with agricultural and national-security needs.• The reality that current farming systems depend on these chemicals.• The need for continued research and gradual transition rather than abrupt policy changes. She reiterated that public health leaders should pursue “transparent and honest conversations” about chemical exposure while recognizing practical constraints on farmers. Underlying policy divide. The pesticide discussion exposed a broader divide running through the hearing:• Farm-state lawmakers emphasized crop protection, yields, and affordability — warning against messaging that could stigmatize farming practices.• Public-health–focused lawmakers argued for stronger scrutiny of chemical exposure and cited growing scientific concern around environmental factors tied to chronic disease.• The nominee’s position attempted to bridge both sides — advocating more research while cautioning against sudden policy changes that could disrupt agriculture. What this means going forward. While the Surgeon General has no regulatory authority over pesticides — oversight largely resides with EPA and USDA — the office carries significant influence over public perception and health messaging. Senators signaled that how Dr. Means communicates on pesticides could shape national conversations around food safety, farming practices, and environmental health. The exchange suggests that if confirmed, pesticide exposure and environmental chemicals could become a visible part of the broader “root causes of chronic disease” narrative she repeatedly endorsed during the hearing. For agriculture, the debate underscored an emerging policy reality: future discussions around food, health, and chronic disease are increasingly likely to include questions about chemical inputs — balancing scientific uncertainty, consumer trust, and farm-level economic realities. Meanwhile, Calley Means also addressed criticism over pesticides during a MAHA Action call on Wednesday, defending the administration’s position amid ongoing debate. “There’s not gaslighting coming from the administration,” he said. “Personally speaking, this issue has been one of the most vexing — and, in many ways, depressing — topics we’ve encountered.” Means acknowledged the tension between MAHA and MAGA supporters following President Donald Trump’s pro-glyphosate executive order, describing the backlash as a “very suboptimal situation.” While he said the decision understandably sparked “a lot of outrage and a lot of discussion,” Means emphasized that the administration is pursuing a broad coalition approach that inevitably requires compromise. —China signals retaliation risk if U.S. trade probe leads to new tariffsBeijing says it has complied with Phase One deal and warns Washington against using investigation as a pretext for fresh duties China warned it will take “all necessary measures” if the U.S. uses its ongoing investigation into the Phase One trade agreement to justify imposing new tariffs, escalating rhetoric just weeks before a planned presidential visit to Beijing. China’s Commerce Ministry said Beijing has honored its commitments under the 2020 deal despite pandemic disruptions, including pledges on intellectual property protections and opening financial and agricultural markets. The statement argued that the U.S. has undermined implementation through export controls and investment restrictions, while urging Washington to evaluate the agreement “objectively and rationally.” The warning follows comments from U.S. Trade Representative Jamieson Greer, who said the administration could continue pursuing tariff action under Section 301 authority after the Supreme Court struck down broader emergency tariffs. The USTR launched a review of China’s compliance with the Phase One agreement in October 2025, keeping the possibility of new duties on the table. The exchange adds uncertainty to U.S./China trade relations at a sensitive moment. With President Donald Trump expected to visit Beijing March 31 to April 2 — his first trip there since 2017 — both sides appear to be positioning themselves ahead of negotiations. China emphasized it prefers using existing consultation mechanisms and focusing on areas of agreement, but made clear it would retaliate if additional tariffs are imposed. —USTR launches critical minerals supply chain reviewAgency seeks public input on trade policies to boost domestic production, reshoring, and allied partnerships The Office of the U.S. Trade Representative (USTR) has opened a public comment period (link) as it explores new trade policies aimed at strengthening critical minerals supply chains — a key step in building resilience for industries that depend on those materials, from energy and technology to manufacturing. USTR said it is seeking feedback on policies that would:• Increase the domestic availability of mined, refined, and processed critical minerals• Encourage reshoring of mining, processing, and refining operations back to the U.S.• Diversify supply sources by deepening partnerships with like-minded trading partners• Support downstream industries that rely on stable mineral inputs The agency also requested input on what commitments would be necessary to create a “resilient and non-distorted marketplace” among allied countries — potentially through a legally binding plurilateral agreement. The notice outlines a range of issues where stakeholders can weigh in, signaling that the administration is considering a broader long-term trade strategy rather than a near-term policy shift. Public comments are due by March 19, after which USTR will evaluate submissions before deciding next steps. While the request marks an early stage in policy development, it underscores growing U.S. focus on reducing dependence on concentrated global supplies and reinforcing supply chain security through trade tools. Any formal strategy emerging from this process is likely still months — or longer — away from implementation.

FINANCIAL MARKETS

—Equities today: U.S. equity futures are little changed this morning following mixed overnight tech earnings. Nvidia shares are up about 0.9% pre-market after delivering strong results that largely met — but did not significantly exceed — expectations. Meanwhile, Salesforce is down roughly 3% pre-open after beating earnings estimates but issuing softer-than-expected forward guidance.

On the macro front, Eurozone economic sentiment came in slightly below expectations. Today’s U.S. calendar is light, featuring Jobless Claims (consensus: 215K) and remarks from Fed Governor Michelle Bowman at 10:00 a.m. ET. Market attention, however, is likely to remain centered on software stocks and ongoing U.S./Iran talks.

Investors will be watching whether software — particularly the IGV software ETF — can hold up despite weaker CRM guidance. A resilient performance could help extend the recent rally, while a breakdown could trigger another rough session for equities.

On the geopolitical side, another round of U.S/Iran talks is underway today, and any signs of de-escalation would likely be viewed as supportive for risk assets.

In Asia, Japan +0.3%. Hong Kong -1.4%. China flat. India flat.

In Europe, at midday, London +0.1%. Paris +0.8%. Frankfurt +0.3%.

—Equities yesterday: 

Equity Index	Closing Price  Feb. 25	Point Difference  from Feb. 24	% Difference  from Feb. 24
Dow	49,482.15	+307.65	+0.63%
Nasdaq	23,152.08	+288.40	+1.26%
S&P 500	6,946.13	+56.06	+0.81%

—Stellantis takes major EV-related write-downs as energy transition pace slows

Automaker posts large second-half loss after reassessing electric-vehicle demand outlook; tariffs and policy shifts add pressure

Stellantis reported a sharp financial setback in the second half of 2025, posting a net loss of $23.8 billion (€20.1 billion) after recording massive writedowns tied largely to its electric-vehicle strategy. The company said it booked about €22.2 billion in charges, which CEO Antonio Filosa described as reflecting the industry’s overestimation of how quickly the energy transition would unfold.

Despite the loss, the automaker’s top line remained resilient. Net revenues rose 10% to €79.25 billion between July and December, supported by an 11% increase in vehicle shipments. However, those gains were outweighed by an adjusted operating loss of €1.38 billion, highlighting ongoing pressure on profitability as EV investments outpace near-term demand.

Stellantis maintained its 2026 guidance, forecasting mid-single-digit growth in net revenues and a low-single-digit adjusted operating margin. The company also warned that tariff exposure tied to the U.S. market is expected to increase, projecting costs of €1.6 billion in 2026, up from €1.2 billion in 2025.

The results make Stellantis the latest major automaker to absorb significant EV-related financial hits as the industry recalibrates expectations. Slower consumer adoption — compounded by the end of U.S. purchase subsidies for electric vehicles — has forced manufacturers to reassess investment timelines, pricing strategies, and production assumptions across their EV portfolios.

—IMF flags tariff uncertainty as risk to otherwise “buoyant” U.S. economy

Fund warns trade policy volatility, rising debt levels and external imbalances could weigh on growth momentum

The International Monetary Fund (IMF) said uncertainty surrounding U.S. trade policy — particularly the rapid shift in tariff strategy — could undermine what it otherwise describes as a strong and resilient U.S. economy.

In its latest annual review of the United States, the Washington-based institution said that while economic activity remains “buoyant,” persistent policy uncertainty may increasingly act as a drag on investment and business decision-making. The IMF warned that companies facing unclear trade rules may delay capital spending or expansion plans, potentially tempering growth.

Trade uncertainty front and center. The IMF’s warning comes as the Trump administration continues to reshape tariff policy following recent legal setbacks. After the Supreme Court struck down parts of the administration’s prior tariff framework, the White House moved quickly to impose a new 10% across-the-board tariff, with President Donald Trump signaling the rate could climb to 15%.

The Fund noted that shifting trade policies — and uncertainty about how long they may last — pose a greater risk than the tariffs themselves. Businesses and markets tend to react strongly when future costs and supply-chain structures become difficult to predict.

External balance and policy concerns. The IMF also highlighted concerns about the U.S. external position, pointing to the country’s declining net international investment position as a potential vulnerability. While the administration has justified new tariff actions by citing balance-of-payments concerns, many economists remain skeptical of that argument, and the IMF stopped short of endorsing it.

Fiscal risks remain in focus. Beyond trade policy, the report underscored mounting fiscal pressures. The IMF said U.S. budget deficits remain large by historical standards and warned that the rising trajectory of public debt could create broader stability risks.

Specifically, the Fund pointed to:

• A continuing rise in the public debt-to-GDP ratio

• Growing reliance on short-term debt financing

• Potential spillover risks to the global economy if debt dynamics worsen

• Bottom line

The IMF’s message is nuanced: the U.S. economy remains strong, but policy volatility — especially around tariffs — alongside long-term debt challenges could gradually erode that strength. The warning aligns with growing concern among global institutions that uncertainty itself may become a headwind, even if current economic indicators remain resilient.

AG MARKETS

—USDA daily export sale: 178,000 MT corn to Japan — 154,000 MT for 2026/27 and 24,000 MT for 2027/28.

—Minimal U.S. soybean sales to China in latest USDA weekly update. USDA weekly Export Sales data for the week ended Feb. 19 showed subdued activity for China for 2025/26, including net sales of 147,375 MT of sorghum, 75,531 MT of soybeans (which included 66,000 MT of cancellations and 66,000 MT shifted from unknown destinations), and 1,738 running bales of upland cotton. There were also net sales of 748 MT of pork for 2026. The period covered by the sales report includes China being essentially closed for the Lunar New Year holiday so attention will be heightened on data for the week ended Feb. 26 to see if their expected buying as resumed. The report showed that total U.S. soybean export commitments to China stood at 10,663,765 MT as of Feb. 19.

—Southern Brazil weather draws market focus

Dry outlook renews debate over Brazilian crop size as traders watch Rio Grande do Sul moisture trends

Weather conditions in southern Brazil are becoming a growing focus for grain markets as forecasts point to a drier pattern over the next week, raising fresh questions about final yield potential and overall crop size.

Dry spell raises concern. After receiving helpful rainfall over the past week, particularly in parts of Rio Grande do Sul (RG) — a key soybean and corn producing region — forecasts now show a shift toward drier conditions. Traders are watching closely because moisture during this stage of the growing season is critical for maintaining yield potential.

Crop-size uncertainty back in play. The central market question remains how much recent rains stabilized production versus how much stress could return if dryness persists. Analysts note that while prior precipitation likely prevented deeper yield losses in some areas, a prolonged dry window could still trim final output — especially in later-planted fields that rely on continued soil moisture.

Why markets care. Brazil is a major supplier of global soybeans and corn, and even modest changes in southern production estimates can influence export expectations, global supply balances, and futures prices. With much of the northern and central crop already advancing, southern states now carry outsized importance in determining final nationwide totals.

What traders are watching next.

• Updated rainfall forecasts over the next 7–10 days

• Field reports from Rio Grande do Sul on pod fill and grain development

• Any revisions to Brazilian production estimates from private analysts or government agencies

Bottom Line: The recent rains helped stabilize crop prospects in southern Brazil, but the emerging dry pattern is keeping uncertainty alive — and that uncertainty is fueling market conversation about whether Brazilian production estimates may still need to be adjusted.

—India faces hotter March — crop risks emerging

Above-average temperatures threaten wheat and rapeseed yields in key growing regions

India is expected to experience one of its warmest Marches on record, with significantly above-normal temperatures forecast across major wheat- and rapeseed-producing states. The heat could stress crops during critical growth stages, potentially cutting yields despite record planting.

The affected states account for more than 80% of India’s wheat and rapeseed output, raising concerns over production just as India aims for a bumper 2026 harvest to boost wheat exports and reduce edible-oil imports. Analysts warn persistent early-March heat may accelerate crop maturity and reduce grain quality — similar to conditions that led India to ban wheat exports in 2022.

Temperatures in some areas could exceed 40°C (104°F) by late March, also likely increasing electricity demand.

—Agriculture markets yesterday:

Commodity	Contract  Month	Closing Price  Feb. 25	Difference from Feb. 24
Corn	May	$4.42	+3 1/2¢
Soybeans	May	$11.65	+9 3/4¢
Soybean meal	May	$321.80	+$7.40
Soybean oil	May	60.67	+17 points
SRW wheat	May	$5.69 3/4	-3 1/2¢
HRW wheat	May	$5.64 1/4	-2 3/4¢
Spring wheat	May	$5.97	+1 1/2¢
Cotton	May	66.17¢	+61 points
Live cattle	April	$240.275	+$1.175
Feeder cattle	March	$366.30	+$1.20
Lean hogs	April	$95.20	+40¢

FARM INPUT COSTS

—Rollins’ “lower costs, more exports” claim draws pushback from farm country

Why farmers and analysts say the reality on input costs, margins, and trade markets is more complicated

USDA Secretary Brooke Rollins is facing criticism from farmers and industry analysts after comments made on Fox Business asserting that agricultural input costs have been brought down and that new trade deals are opening markets for producers.

Rollins argued that the administration has lowered costs for key inputs — including fertilizer, fuel, labor, and interest rates — while securing more than two dozen new trade agreements, calling the strategy a formula for stronger farm profitability and lower consumer prices.

But the reaction from producers and market analysts has been notably mixed — and in many cases skeptical — because current farm-level data paints a more nuanced picture.

Why farmers are pushing back

1) Input costs are easing — but remain historically high

The main source of frustration among growers is that while some input categories have stabilized or fallen from post-pandemic highs, overall production expenses are still near record levels.

USDA’s own latest projections show total farm production expenses rising again in 2026 — to about $477.7 billion, up roughly 1% from 2025.

Analysts emphasize that this is not the same as “costs coming down.” Instead:

• Some categories like feed, pesticides, and fuel are declining modestly.

• Others — especially cash labor, livestock purchases, electricity, and equipment-related expenses — are still increasing.

Many producers say their lived experience is that costs remain structurally elevated compared with pre-2020 levels, squeezing margins even if inflation has slowed.
 

Bottom Line: Stabilization isn’t the same as relief.

Josh Linville is fertilizer market analyst and Vice President of Fertilizer at StoneX, where he oversees fertilizer market analysis and helps producers, retailers, and industry participants understand pricing risk and market trends.Linville wrote:“Madam Secretary, fertilizer prices are still high for farmers.  When compared to corn prices: “Urea: 2nd highest value ever“UAN: 2nd highest value ever“NH3: 2nd highest value ever“DAP: 2nd highest value ever” “There are simple short and long term fixes. Just takes action.” NitrogenShort-term: “remove DEF requirements (puts nitrogen back to the farmer) Long-term: “back domestic production” PhosphateShort-term: “repeal countervailing duties”Long-term: “invest in countries with phosphate rock reserves and get long term supply agreements” PotashShort-term: “quit fighting Canada”Long-term: “quit fighting Canada”

2) Interest rates and labor remain pain points. Rollins cited lower interest rates and labor costs, but producers argue those pressures are still significant:

Financing costs remain well above pre-tightening cycles, keeping operating loans expensive.

USDA forecasts cash labor expenses continuing to rise in 2026, reflecting wage pressure and labor shortages.

For highly leveraged operations — especially row crop farms — interest expenses are still a major concern heading into planting decisions.

3) Commodity prices are falling faster than costs. Perhaps the biggest reason for criticism is that farm incomes depend on margins, not just expenses.

USDA expects net farm income to edge lower in 2026 despite government support payments, largely because crop prices have softened amid global oversupply.

Farmers argue:

• Corn, soybean, and wheat prices have retreated from 2022 highs.

• Even slightly lower input costs do little good when revenue drops faster.

Industry analysts increasingly describe the environment as one of “margin compression.”

4) Trade deals don’t guarantee stronger exports. Rollins’ reference to “24+ new global trade deals” also sparked debate.Analysts point out that:

• Many agreements represent frameworks or market-access improvements rather than immediate, measurable export growth.

• Global competition — particularly from South America — continues to pressure U.S. export volumes.

• Trade uncertainty remains a risk factor as tariff policies evolve and legal challenges continue.

Farm groups generally welcome expanded market access but note that new sales often take months or years to materialize — and can be offset by currency moves or global supply cycles.

5) Government payments are doing more of the heavy lifting. Another source of criticism is that current farm income forecasts rely heavily on federal aid.

USDA projects a sharp rise in direct government payments for 2026, helping prop up incomes as market returns weaken.

Some analysts argue that this undercuts claims of broad market-driven strength, saying the sector is still dependent on policy support rather than expanding margins.

The broader perspective — why both sides feel justified:

Rollins’ argument reflects a macro view:

• Inflation in several input categories has cooled.

• Some export channels are being reopened or expanded.

• Policy efforts aim to improve long-term competitiveness.

Farmers’ criticism reflects day-to-day economics:

• Costs remain high relative to crop prices.

• Debt and cash-flow pressures are increasing.

• Many operations see little immediate improvement at the farm gate.

Both realities can coexist — which is why reactions are so divided.

What this debate really signals. The pushback isn’t just about one interview — it reflects a wider tension inside U.S. agriculture right now:

•Policy messaging: Focused on improving trends and structural progress.

•On-the-ground sentiment: Focused on profitability this season, not direction of change.

With USDA forecasting only modest income declines but continued expense pressure, the debate is likely to intensify as spring planting progresses and trade negotiations evolve.

Bottom Line: Farmers and analysts aren’t necessarily disputing that some costs have eased — they’re arguing that the improvements haven’t been large enough to offset weaker commodity prices and persistent structural expenses. For many producers, the math still feels tight: costs may be off the highs, but margins remain under pressure.

ENERGY MARKETS & POLICY

—Thursday: Oil prices slip as inventories rise and traders watch Iran talks

Large U.S. crude build and softer physical market pressure prices despite ongoing geopolitical risk

Oil prices fell Thursday as a 16-million-barrel jump in U.S. crude inventories — the biggest increase in three years — and weakness in the North Sea physical market weighed on sentiment.

Brent crude dropped to about $70 per barrel, while WTI slipped near $64.60.

Markets remain focused on U.S./Iran talks in Geneva, which could ease fears of supply disruption if diplomacy progresses. Saudi Arabia is reportedly preparing contingency supply plans, while OPEC+ may modestly raise output ahead of summer demand.

Bottom Line: Bearish supply signals are pulling prices lower, but geopolitical risk tied to Iran continues to provide support, leaving oil direction dependent on the outcome of ongoing talks.

—Wednesday: Oil prices hold steady despite big U.S. stock build

Geopolitical risk offsets bearish supply data

Oil prices ended little changed Wednesday as a massive U.S. crude inventory increase pressured markets but failed to outweigh concerns about potential conflict between the U.S. and Iran.

Brent crude settled modestly higher near $70.85 per barrel, while WTI edged lower to around $65.42, reflecting a market still dominated by geopolitical risk rather than fundamentals.

The EIA reported a much larger-than-expected crude build, driven by higher imports and lower refinery activity — normally a bearish signal. However, Brent and WTI held near recent highs as traders focused on Middle East tensions and the risk of supply disruption.

President Donald Trump reiterated that Washington will not allow Iran to develop a nuclear weapon, while U.S./Iran talks continue in Geneva. Iran’s role as OPEC’s third-largest producer keeps markets alert to any escalation that could tighten supplies.

Saudi Arabia is reportedly preparing contingency plans to raise output if needed, while OPEC+ is expected to discuss a modest production increase at its March 1 meeting.

Bottom Line: Bearish inventory data and geopolitical risk continue to pull oil prices in opposite directions, leaving the market largely rangebound.

TRADE POLICY

—U.S./India trade engagement resumes informally

Commerce Secretary Lutnick and Trade Minister Goyal discuss economic ties in New Delhi amid pause in formal negotiations

U.S. Commerce Secretary Howard Lutnick and India’s Trade Minister Piyush Goyal held a lunch meeting in New Delhi on Feb. 26 to discuss trade and broader economic partnership issues, according to posts by the Indian official and the U.S. envoy to India. The meeting was described publicly as constructive, with U.S. envoy Sergio Gor calling it a “highly productive lunch” and highlighting multiple areas of potential cooperation between the two countries.

The discussion comes at a sensitive moment in U.S.–/ndia trade relations. Reuters reported that Lutnick’s visit to India was personal rather than official, suggesting the meeting was more informal and not part of active trade negotiations.

Formal talks between Washington and New Delhi are currently paused after President Donald Trump’s administration implemented a 10% tariff on imports under Section 122 of U.S. trade law. In response, India indicated it would hold off on further trade negotiations until there is clearer direction on how the new U.S. tariff framework will be applied.

Goyal has previously said that talks could resume once India has greater clarity on the policy’s implications, leaving the New Delhi lunch discussion more as a diplomatic touchpoint rather than a negotiating session.

Bottom Line: While the lunch meeting signals continued dialogue and a willingness to maintain engagement, formal U.S./India trade talks remain on hold until uncertainty surrounding the Section 122 tariffs is resolved.

—USTR says new Section 301 probes are about leverage — not tariff revenue

Trade officials frame investigations as a tool to pressure trading partners, while broader tariff strategy faces legal and economic scrutiny

The Office of the U.S. Trade Representative (USTR) said its upcoming Section 301 investigations are designed to gain negotiating leverage over foreign trade practices — not to raise government revenue — according to USTR General Counsel Jennifer Thornton speaking at a Washington trade conference.

Thornton emphasized that Section 301 of the Trade Act of 1974 allows the administration to use tariffs as pressure tools to push trading partners to remove practices considered unfair or discriminatory. She said USTR’s focus is on changing behavior and negotiating outcomes rather than generating fiscal income, even though the administration has often promoted tariff revenue publicly as a policy benefit.

The remarks come after the Supreme Court struck down President Donald Trump’s emergency-powers tariffs, prompting the administration to launch a contingency strategy. That plan includes:

New Section 301 investigations will target major trading partners on issues such as industrial overcapacity, forced labor, and pharmaceutical pricing practices.

Section 122 tariffs — a temporary 10% global duty (potentially rising to 15%) that can remain in place for 150 days unless Congress extends it.

Thornton said the outcome of the 301 probes remains uncertain, noting some cases could result in negotiated settlements rather than new tariffs. Under the statute, consultations with foreign governments are required and could lead to the removal of trade barriers without tariff escalation.

She described the investigations as part of a broader restructuring of U.S. trade policy, arguing that earlier Section 301 actions — including the first-term probe into China’s technology practices — reshaped global trade dynamics and continue to influence current strategy.

Section 122 rationale and legal risks. Thornton also defended the administration’s use of Section 122, which is based on concerns about the U.S. balance-of-payments position. She cited a current account deficit equal to roughly 4% of GDP in 2024, along with a sharply negative net international investment position, as justification for emergency action.

However, she acknowledged debate over whether the U.S. faces a sufficiently severe balance-of-payments crisis — and conceded the Section 122 tariffs are likely to face court challenges. The administration hopes the measure will remain in place for the full 150-day window while longer-term policies are developed.

Bottom Line: USTR is presenting the new wave of Section 301 investigations as a negotiating lever meant to reshape trade relationships rather than a revenue strategy. But the effort unfolds against a complex backdrop — legal uncertainty over temporary tariffs, internal messaging differences about revenue goals, and broader questions about how aggressively the administration can rebuild its tariff regime after the court ruling.

CONGRESS

—No Washington work for Congress. The House is out of session. Democrats are at their retreat in Leesburg, Va. Republicans are at the NRCC retreat in Key Biscayne, Fla.

POLITICS & ELECTIONS

— 2028 Democratic field begins to take shape — early rankings show wide-open race

Washington Post analysis says governors dominate early chatter, but senators, progressives and even celebrities remain in the mix

The unofficial race for the 2028 Democratic presidential nomination is already taking shape, even though no one has formally entered the race. According to a new analysis by the Washington Post, the field is unusually broad this early — spanning governors, senators, former national candidates and outsider figures — with no clear frontrunner locked in yet.

Below is a concise digest of the key takeaways and the main tiers emerging so far, based on the Post’s ranking and interviews with political insiders.

Standout early favorites

Gavin Newsom: California’s governor is positioned as an early leader in several informal and early-stage Democratic polls. The Washington Post notes Newsom has used high-profile legal and political clashes with President Donald Trump to raise his national profile, while also trying to soften his image as a wealthy, coastal liberal through a rebranding effort.

Josh Shapiro: The Pennsylvania governor is framed as Newsom’s ideological and stylistic counterweight — coming from a key swing state and often emphasizing pragmatism and bipartisan cooperation. His willingness to critique elements of the Democratic left and highlight his Jewish faith has helped distinguish his national brand.

Bottom Line: Governors — especially those from electorally competitive states — are dominating the early top tier.

The “middle of the pack” — serious but still undefined contenders

Kamala Harris: Still polls well among Democratic voters and is continuing public appearances following her previous presidential run.

Mark Kelly: The Arizona senator’s recent clashes with the Trump administration boosted his visibility; he has said he will “seriously consider” a run.

Pete Buttigieg: Seen as a strong communicator, especially among early-state voters.

JB Pritzker: Wealth and willingness to attack Trump directly could help — though billionaire status may cut both ways politically.

Wes Moore: The only sitting Black governor, gaining notice through policy fights with the administration.

Andy Beshear: Pitching a message centered on winning back rural America.

Rahm Emanuel: Re-emerging as a centrist voice pushing structural reforms and moderate solutions.

Key Takeaway: Many mid-tier candidates are testing messages rather than launching campaigns — a sign that the party’s ideological direction is still unsettled.

Dark horses and potential disruptors

Alexandria Ocasio-Cortez: One of the most recognizable progressive figures in the party. The Post notes her national profile and strong grassroots appeal could instantly reshape the race if she runs — though she’s also weighing longer-term career options.

Other names drawing speculation

• Gretchen Whitmer: Frequently discussed but publicly hesitant.

• Ro Khanna: Focused on working-class messaging and “economic patriotism.”

• Cory Booker: Renewed interest after a high-profile Senate speech.

• Stephen A. Smith: Mentioned as an outsider possibility as celebrity speculation enters the conversation.

Strategic themes emerging early. According to the Washington Post, several recurring themes are shaping early positioning:

•Swing-state credentials vs. progressive energy: Governors like Shapiro and Beshear stress electability, while progressives such as Ocasio-Cortez represent ideological enthusiasm.

•Trump contrast remains central: Many potential candidates are already defining themselves through legal or policy clashes with the Trump administration.

• Brand reshaping: Several figures — notably Newsom and Harris — are trying to reposition their public image ahead of any formal move.

•Room for surprises: Party strategists told the Post the field is open enough that someone not currently in the spotlight could still emerge.

Political context. The early jockeying reflects a Democratic Party still debating its post-2024 identity — balancing progressive energy, moderate electability, and regional strategy. With no declared candidates and little hard polling this far out, visibility and narrative-setting matter more right now than formal campaign infrastructure.

Bottom Line: The Washington Post portrays the 2028 race as unusually fluid — with governors leading early chatter, but plenty of space for senators, progressive leaders, or even outsider figures to reshape the field before campaigning officially begins.

FOOD POLICY & FOOD INDUSTRY

— Food price outlook 2026 — inflation moderates, but key categories still volatile

ERS projects food prices to rise 3.1% this year, with restaurant prices leading grocery inflation while meat, beverages, and sweets remain pressure points
 

USDA Economic Research Service’s February 2026 Food Price Outlook shows overall food inflation continuing to cool from post-pandemic highs — but not evenly across categories. While total food prices are expected to rise at a moderate pace, consumers are likely to see meaningful differences between grocery stores and restaurants, and wide swings across individual food items.

---

Headline inflation picture

• All food prices: up 0.4% from December 2025 to January 2026; 2.9% higher year-over-year.
• Overall CPI (economy-wide inflation): also up 0.4% monthly and 2.4% annually — meaning food inflation is currently moving roughly in line with broader inflation.
• Food-at-home (grocery): up 0.6% month-to-month, 2.1% year-over-year.
• Food-away-from-home (restaurants): up 0.1% monthly but still 4.0% higher than a year ago.
   

2026 forecast (ERS midpoint):

• All food: +3.1%
• Food at home: +2.5%
• Food away from home: +3.7%

Bottom Line: Restaurant inflation is expected to continue running faster than grocery inflation — a continuation of the post-2009 trend driven by higher labor and operating costs.

---

Category trends — big divergence beneath the averages
 

Price changes varied sharply across food categories in early 2026:

Categories showing notable monthly increases

• Processed fruits and vegetables
• Nonalcoholic beverages
• Fish and seafood
• Other meats
• Pork
• Cereal and bakery products
• Sugar and sweets
   

Category showing significant decline

• Eggs — a sharp monthly drop after the prior HPAI-driven price spike.

ERS expects 7 of the 15 grocery categories it tracks to rise faster than historical averages in 2026 — including:

• Beef and veal
• Other meats
• Fish and seafood
• Processed fruits and vegetables
• Sugar and sweets
• Cereal and bakery products
• Nonalcoholic beverages

---

Key commodity callouts
 

Beef: tight supplies remain the story

• Prices slipped modestly month-to-month but were still 15% higher year-over-year in January.
• Ongoing contraction of the U.S. cattle herd since 2019, combined with strong consumer demand, is keeping prices elevated.
• 2026 forecast: +5.5% (with wide uncertainty).
   

ERS is effectively reinforcing the supply-driven cattle cycle narrative — tight herd numbers continue to dominate pricing signals.

---

Pork and poultry: relatively stable

• Pork prices rose modestly and are forecast up about 1.9% this year.
• Poultry prices remain largely flat, with only minimal expected inflation.

---

Eggs: major deflation underway

• Prices fell 5.3% just from December to January.
• Retail egg prices are down 34.2% from a year ago.
• With HPAI outbreaks easing and production recovering, ERS projects:
  • Egg prices down 27.4% in 2026.

This will likely act as one of the largest downward contributors to grocery CPI this year.

---

Sugar, sweets, and beverages: strong upward pressure

• Sugar and sweets: +6.7% forecast, driven largely by candy/chocolate pricing.
• Nonalcoholic beverages: +5.2% forecast, partly tied to higher global coffee prices.

These categories are among the strongest inflation contributors within food-at-home.

---

 

Fresh produce outlook

• Fresh vegetables: forecast +1.4%
• Fresh fruits: forecast +0.2%

ERS emphasizes that weather and seasonality continue to create wide potential swings, reflected in large prediction ranges.

---

Historical context — from shock inflation to normalization

• 2022: Food prices surged 9.9%, the fastest increase since 1979 (HPAI, war-related disruptions, energy inflation).
• 2023: Inflation slowed but remained elevated.
• 2024–2025: Food inflation eased to 2.3% and 2.9%, respectively.
• 2026 outlook suggests a return closer to long-run norms — though restaurant prices remain structurally higher.

---

 

PPI signals — what’s coming down the pipeline

ERS highlights Producer Price Index (PPI) trends because they often lead retail CPI:

• Farm-level cattle prices rose 20.9% in 2025; expected to rise again in 2026.
• Farm-level egg prices expected to fall sharply as production recovers.
• Milk prices projected to rebound.
• Vegetable and fruit farm prices remain highly weather sensitive.
• Wheat prices continue a multi-year decline after the 2022 Russia–Ukraine spike, with only a modest additional drop expected in 2026.
   

Key Takeaway: Volatility is still present upstream in the supply chain, meaning retail prices may not move smoothly even if overall inflation moderates.

---

 

Ag and policy perspective

From a broader market and policy standpoint:

• Food inflation is normalizing, but category volatility remains high.
• Protein markets are bifurcated — beef inflation persists while eggs deflate sharply.
• Restaurant inflation remains sticky, implying labor and service costs are still structurally higher.
• PPI volatility suggests potential CPI surprises later in the year, especially tied to weather and livestock cycles.

For producers and policymakers, this outlook supports a narrative of:

• easing consumer inflation pressure
• continued livestock supply constraints
• uneven price signals across the food system

—Kennedy promotes “eat real food” agenda in Texas

Health secretary highlights new dietary guidelines and MAHA food-policy priorities at Austin rally

Health Secretary Robert F. Kennedy Jr. will appear today at an “Eat Real Food” rally in Austin, Texas, underscoring the Trump administration’s newly released Dietary Guidelines for Americans and advancing the Make America Healthy Again (MAHA) movement’s push for nutrition-focused policy changes.

The event is designed to spotlight what organizers describe as recent “food wins” tied to the MAHA agenda, including efforts to encourage less-processed foods and greater consumer awareness around dietary choices. Kennedy is expected to frame the guidelines as part of a broader public-health strategy emphasizing whole foods and prevention-based health outcomes.

Joining Kennedy on stage are senior adviser Calley Means, U.S. Chief Design Officer Joe Gebbia Jr., HumanCo founder Jason Karp, and Rep. Monica De La Cruz (R-Texas) — reflecting a mix of government officials, business leaders, and policy advocates aligned with the administration’s food-policy messaging.

Bottom Line: The rally marks a high-profile public rollout of the administration’s nutrition agenda, positioning dietary guidance and food-system messaging as key elements of the broader MAHA health platform.

TRANSPORTATION & LOGISTICS

—Trans-Pacific shipping sends mixed signals as U.S. imports normalize

Falling ocean freight rates offer relief to importers even as global trade activity remains brisk

Major U.S. importers are entering 2026 contract negotiations with ocean carriers from a position of growing leverage, as trans-Pacific shipping rates continue to decline after the volatility of recent years.

Spot rates from key Asian export hubs — including China, Japan, and South Korea — to the U.S. West Coast have dropped below longer-term contract levels, signaling softer pricing power for shipping lines. Industry analysts attribute the decline largely to excess capacity, as carriers take delivery of new vessels ordered during the pandemic-era shipping boom, leaving more space available than current demand requires.

Retailers and logistics managers are preparing to renegotiate annual shipping contracts next month, expecting more favorable terms amid the downtrend in rates. The softer pricing environment reflects a rebalancing of supply and demand rather than a collapse in consumer demand.

While U.S. import volumes are projected to decline during much of the first half of 2026, the comparison is skewed by unusually strong imports last year, when companies accelerated purchases to avoid anticipated tariff risks. As a result, current declines may overstate underlying weakness in trade flows.

The National Retail Federation projects first-half imports will be roughly 2% lower year over year, but logistics executives say many importers anticipate flat volume growth for the full year — suggesting a stabilization rather than a downturn.

Bottom Line: The trans-Pacific trade lane is flashing mixed signals — weaker shipping rates and softer year-over-year import comparisons on one side, but steady consumer demand and a global trade environment still moving at a healthy pace on the other.

WEATHER

— NWS outlook: Daily showers and thunderstorms across the Southern U.S. along cold front… …Clipper system brings modest snowfall from the Northern High Plains into the Upper Midwest this weekend… …Warm temperatures and dry conditions continue for much of the Lower 48.