Oil Slides as Hormuz Diplomacy Outweighs Fresh Shipping Attack; Bessent Signals Deal Could Come Today

Rollins to unveil NASS data overhaul at Farmfest today

Link: Teamsters Reject Cargill Deal, Extending Fort Morgan
          Plant Shutdown
Link: FDA Sends Ultra-Processed Food Definition to OMB —
         But Not as a Rule
Link: Vaden: Reorganization Rolls On, Fertilizer Probe Goes Public
         This Fall — and Farmers Will Be Asked to Help
Link: EPA Grants Full or Partial Relief on Three SRE Petitions
Link: Booker Draws Democratic Red Line as Klobuchar Keeps
         Farm Bill 2.0 Talks Alive
 

Link: Video: Wiesemeyer’s Perspectives, Aug. 2
Video show is now on You Tube,Spotify & Apple
Link: Audio: Wiesemeyer’s Perspectives, Aug. 2

UP FRONT

■  TOP STORIES

— Oil Slides as Hormuz Diplomacy Outweighs Fresh Shipping Attack; Bessent Signals Deal Could Come Today: Crude prices reversed sharply lower as hopes for a temporary Strait of Hormuz agreement outweighed another vessel attack, though shipping remains severely restricted and the war premium has not disappeared.

— Rollins to Unveil NASS Data Overhaul at Farmfest Today: USDA Secretary Brooke Rollins is expected to announce Midwest farmer-feedback sessions and a fall review comparing two years of NASS and WASDE forecasts with final estimates.

— EPA Grants Three SREs, Exempting 160 Million RINs: EPA granted one full and two partial small-refinery exemptions for 2024, creating a potential new reallocation gap and modestly bearish pressure on RINs.

■  FINANCIAL MARKETS

— Equities Today: Global stocks and U.S. futures advanced as investors assessed major corporate earnings and conflicting signals over U.S./Iran diplomacy. U.S. Dow opened around 700 points higher.

— Equities Yesterday: The Dow gained 693 points, the Nasdaq rose 540 and the S&P 500 added nearly 111 as Wall Street began August with a broad rally.

— China’s Big Investors Return to Gold Near $4,000: Chinese gold ETFs recorded 14 consecutive days of inflows as institutions used bullion’s pullback to diversify amid volatile equities, Fed uncertainty and Middle East risks.

■  AG MARKETS

— USDA Daily Export Sale: USDA reported a sale of 132,000 MT of U.S. soybeans to China for delivery during 2026-27.

— Grains Retreat as Weather Outlook Overrides Crop Rating Concerns: Soybeans and wheat led overnight losses as favorable Midwest rainfall forecasts outweighed declining crop ratings and additional Chinese soybean buying.

— International Grain Prices: Fading rain prospects and spreading heat have locked in a sub-50 MMT European corn crop, potentially making the EU the world’s largest corn importer in 2026-27.

— U.S. Crop Progress: Week Ended Aug. 2: Corn, cotton, sorghum and pasture ratings deteriorated, while soybean conditions held steady and spring wheat ratings improved.

— Aug. 3 Ag Markets Rebound From Early Lows, but Trend Shift Remains Unproven: Grains and cotton recovered on bargain buying, Chinese demand and Black Sea risks, while cattle and hogs weakened and broader bullish confirmation remained absent.

■  FARM POLICY

— Report: Base-Acre Expansion Could Improve the Farm Safety Net’s Fit: Economist Carl Zulauf says adding up to 30 million base acres could better align commodity-program support with currently planted and insured acreage, though benefits will vary widely by crop and farm.

■  SCREWWORM

— Active New World Screwworm Cases Continue to Fall: Only seven of 44 confirmed U.S. cases remain active, strengthening USDA’s case for cautiously reopening Mexican cattle trade through Douglas, Arizona, on Aug. 24.

■  ENERGY MARKETS & POLICY

— Report: 45Z’s Headline Value Could Be Large, but the Farm Share Remains Unclear: Illinois modeling shows low-carbon corn could generate substantial tax-credit value, but producer premiums will depend on plant efficiency, local buyers and how the credit is divided.

■  POLITICS & ELECTIONS

— Far-Left Democrats Seek a Breakthrough in Michigan and Missouri; Moderates Have a Choice to Make: Democratic primaries will test progressive strength in two competitive Michigan races and two safely Democratic House districts, with Gaza, outside spending and electability central issues.

■  WEATHER

— NWS Outlook: Slight risks of severe thunderstorms and excessive rainfall extend across portions of the Upper Mississippi Valley, Southwest, Carolinas, Florida and central United States.

— Cooler Corn Belt Outlook Eases Crop Stress as Southern Plains Bake: Frequent storms and milder temperatures favor central and northern crops, while extreme heat and dryness threaten Southern Plains livestock, pastures and crops.

■  TOP STORIES

—Oil slides as Hormuz diplomacy outweighs fresh shipping attack; Bessent signals deal could come today 

Brent and WTI retreat as markets bet on a temporary shipping accord

Crude oil prices are trading lower Tuesday morning as early gains fueled by another vessel attack near the Strait of Hormuz gave way to renewed expectations that Gulf mediators may be making progress toward a temporary maritime and military de-escalation. 

WTI and Brent crude were extremely volatile Tuesday morning. Quotes put September WTI around $78.04 after it traded as high as $82.33, while October Brent was near $81.89 after reaching $86.33. The reversals followed rapidly changing signals over U.S./Iran diplomacy, Qatar-led mediation and continued shipping risks around the Strait of Hormuz.

That structure suggests traders still see the greatest danger in immediate physical supplies and tanker movements, but expect at least partial normalization over the coming months. Tuesday’s later selloff also hit nearby Brent harder than deferred contracts — October was down $1.88, compared with $1.03 for December and 82 cents for March — indicating that diplomatic headlines are removing some prompt risk premium without eliminating the broader supply-tightness signal. A durable reopening of Hormuz would likely flatten the curve further; failed talks or additional vessel attacks could quickly steepen backwardation again.

Treasury Secretary Scott Bessent said a deal between the U.S. and Iran over control of the Strait of Hormuz could come as soon as Tuesday, sending oil prices plunging. “We’re in talks with the Iranians and I think there is a chance we may have a deal today or tomorrow to open the strait,” Bessent said on CNBC. Asked whether such a deal would include Iran charging a toll on ships passing through the key waterway, the secretary said, “I think there would be freedom of movement” without giving specifics.

The reversal is dramatic. Brent had risen above $86 earlier Tuesday as traders reacted to Iran’s denial that direct negotiations were underway and to news that a commercial vessel had been struck. But those gains evaporated after Qatar reportedly said language for a possible agreement had been drafted and was circulating among negotiators, with mediation focused on immediate de-escalation and reopening the Strait of Hormuz.

Diplomacy remains indirect and highly fragile. President Donald Trump continues to say discussions with Iran are underway and has called the current effort Tehran’s “last chance” to reach an agreement. Iranian officials maintain that they are not negotiating directly with Washington and say their discussions are limited to talks with Oman over safe navigation through Hormuz. Qatar, Saudi Arabia, the United Arab Emirates, Oman and Pakistan are playing intermediary roles.

That distinction may be more political than practical. Tehran does not want to acknowledge negotiations conducted under the threat of U.S. attacks, while the Trump administration wants to show that military pressure is forcing concessions. The most reasonable interpretation is that substantive messages are being exchanged indirectly, even though there is not yet a formal U.S./Iran negotiating session.

U.S. strike threat paused, not removed. Trump canceled what he described as “massive attacks” over the weekend after Saudi Arabia, Qatar, the United Arab Emirates and other governments pressed for more time to seek an agreement. But he subsequently threatened “decapitation” if Iran does not accept a deal, indicating that leadership and command targets could be included in another U.S. strike package. Iran has responded by denying that it requested negotiations and accusing Washington of aggression.

The immediate risk of a large U.S. strike has therefore declined, but it has not disappeared. Trump has repeatedly established short diplomatic windows and then threatened renewed military action when Iran disputes his account of negotiations or rejects U.S. conditions.

A new factor may be influencing Washington’s calculations. Reuters reported Tuesday that the U.S. has used “virtually all” of the ATACMS and Precision Strike Missiles available to the campaign, along with nearly half of its global Tomahawk inventory. U.S. defensive stocks also have been heavily drawn down, although the Pentagon says the military retains the capabilities needed to protect U.S. interests.

The depleted inventories do not prevent another attack, but they make a prolonged campaign relying heavily on long-range precision weapons more difficult. That strengthens the incentive for Washington to pursue a temporary settlement or concentrate any future strike on a smaller number of high-value targets. It also may explain why Gulf diplomatic pressure has recently received greater consideration.

Fresh vessel strike shows Hormuz is still dangerous. The diplomatic optimism contrasts sharply with conditions at sea. A dry-bulk vessel was struck by an unidentified projectile near Oman’s Al Khasab Peninsula, one of the narrowest points of the Strait of Hormuz. Reuters reported that the crew abandoned the vessel and one seafarer was missing.

The incident demonstrates that shipping remains exposed even while mediators discuss a transit agreement. It also raises questions about whether all Iranian military units, proxy forces and regional actors would observe an arrangement negotiated by Tehran and Oman.

Commercial movements remain minimal. Only six vessels — three tankers and three bulk carriers — crossed the strait Monday, down from seven Sunday. More than 100 ships per day would normally transit during peacetime. Iran has halted most traffic while the U.S. continues its blockade of Iranian ports and shipping.

Iran seeks a major role in managing the Strait. Iran’s current proposal would give Tehran control over inbound shipping and visibility over outbound movements, including the ability to intervene when it considered action necessary. Under the framework being discussed, outbound vessels would receive clearance through Oman after Iran was notified.

That is less than Iran’s original demand for control over traffic moving in both directions, but it remains far from the U.S. position that Hormuz must operate as an international waterway without Iranian tolls, inspections or political control.

The dispute is therefore no longer just about whether ships can physically cross the strait. It is about who sets the conditions for passage. Accepting Iran’s proposal could reopen trade more quickly, but Washington and Gulf governments would risk legitimizing Tehran’s use of attacks and maritime disruption to gain permanent authority over a global trade route.

Hormuz outlook: temporary corridor more likely than full reopening. A restricted, Oman-mediated shipping corridor now appears more plausible than a complete return to prewar navigation. Such an arrangement could establish a single route, designated transit periods, advance vessel notification and informal Iranian guarantees against attack.

That would permit some crude, liquefied natural gas and commercial cargoes to move, but it would not immediately restore normal flows. Shipowners, crews and insurers will need evidence that multiple tankers can transit safely before committing valuable vessels and cargoes.

The crucial indicators will be actual vessel movements rather than political statements. A rise from single-digit daily transits toward several dozen would indicate that an agreement is working. Continued attacks, abandoned vessels or Iranian intervention in outbound traffic would quickly reverse confidence.

Oil outlook shifts lower — but war premium remains. Tuesday’s decline shows that traders are assigning greater probability to a temporary diplomatic arrangement. The market is also unwinding part of the risk premium accumulated during July, when Brent and WTI rose sharply on repeated U.S./Iran attacks and severe Gulf export disruptions.

Goldman Sachs has projected that Brent will remain broadly between $80 and $90 per barrel until there is confirmation of either a new agreement or significant military escalation. With Brent now near the bottom of that range, a credible Hormuz corridor could push prices into the upper $70s. WTI could test the mid-$70s.

Analysts say the downside should remain limited unless shipping volumes actually recover. Middle East production remains below prewar levels, Gulf and Red Sea exports are restricted, Russian exports have declined and visible global inventories have recently tightened.

Conversely, another major vessel attack, collapse of the Oman talks or renewed U.S. strikes could send Brent rapidly back into the mid-to-upper $80s. An attack on oil production, export terminals or Gulf desalination and energy infrastructure would create a much larger move and could return Brent above $90.

Bottom line: The war has entered another unstable diplomatic window. Oil is falling because the market believes Gulf mediation may produce a temporary Hormuz shipping arrangement before the U.S. resumes large-scale attacks. That expectation has overwhelmed the bullish impact of Tuesday’s vessel strike.

But the decline should not be interpreted as evidence that the war is ending or Hormuz has reopened. Traffic remains near a standstill, Iran is demanding a supervisory role over shipping, and neither Washington nor Tehran acknowledges a common negotiating framework.

For now, crude prices will remain exceptionally headline driven. The first sustained increase in tanker traffic would validate Tuesday’s selloff. Another attack or a breakdown in indirect diplomacy would reverse it just as quickly.

—Rollins to unveil NASS data overhaul at Farmfest today

Vaden: Formal farmer feedback sessions across the Midwest, plus a fall ‘report card’ grading two years of NASS and WASDE forecasts against final numbers

USDA Secretary Brooke Rollins will use her appearance at Farmfest in Minnesota today (Aug. 4) to announce the department’s plan for addressing farmer distrust of USDA crop data and the eroding survey response rates plaguing the National Agricultural Statistics Service (NASS), Deputy Secretary Stephen Vaden signaled Monday in an interview on AgriTalk with host Chip Flory. “I think that when you see the secretary, who will be at Farmfest in Minnesota this week, she’ll be making an announcement that will talk about our data efforts and where we’re going to go from here,” Vaden said. “So I don’t want to get ahead of her announcement.”

While declining to front-run his boss, Vaden outlined the two pillars listeners should expect.

First, a formal channel for farmer input: “What you will see is this department having a formal setting for farmer feedback all across, in particular, the Midwest of the United States, about where we can do better with data,” he said. What USDA has been doing privately “is now about to go public, as the secretary will announce at Farmfest, and we’re going to invite farmers writ large to come and talk to us at a series of public events.”

Second, a forecast ‘report card.’ Vaden confirmed that a review he has previewed in past remarks will arrive this fall: “You will see a report coming out from us… as we get into the fall season, where we look at the numbers that NASS and the WASDE predicted for the past two growing seasons, and compare them to where the final numbers ended up, and give a report card and an accounting for where we were right, where we missed, and why we missed, and if there are changes that need to be made to ensure those misses don’t happen in the future.”

Working group laid the groundwork. Vaden revealed that just before joining the program he had been meeting with an ad hoc working group Rollins assembled at USDA “to have frank discussions about where we are with data.” The group includes corn farmers from Iowa and Illinois, representation from the corn growers organization through its members, and senior USDA officials: Under Secretary for Research, Education, and Economics Scott Hutchins — whose mission area oversees NASS — USDA’s chief economist, Vaden himself and Rollins.

A gradual rebuild, not a quick fix. Vaden was candid that restoring confidence in USDA statistics will take time, framing the effort as a sustained campaign rather than a one-time announcement. “This is not a situation where farmers began to ask questions on a certain date,” he said. “There’s been a growing decline in the response rate over a number of years, and the effort to reverse that and to get more confidence in USDA data is similarly going to be a gradual process which takes place over time. But we’re starting that process now.” He added that the initiative “will be a continuing effort, which is going to go forward over the next several months.”

Bottom line: Watch Rollins’ Farmfest remarks today for the specifics — the venues and timing of the Midwest listening sessions and the scope of the fall accuracy review. The announcement will mark the first public step in what USDA is casting as a multi-month drive to win back farmer participation in NASS surveys and confidence in the crop estimates that move markets.

—EPA grants three SREs, exempting 160 million RINs

Delek receives a full waiver; HF Sinclair and United Refining get partial relief

As noted in our special report Monday (link), EPA issued final decisions on Aug. 3 covering six petitions from four refineries for the 2023 and 2024 compliance years:

• One full exemption

• Two 50% exemptions
• No denials

• Three petitions ruled ineligible

•  160 million RINs of obligations exempted, all from the 2024 compliance year; no 2023 obligations were waived

Affected refineries

• Delek US/Alon Krotz Springs: Full 2024 exemption.

• HF Sinclair Parco: Partial 2024 exemption.

• United Refining: Partial 2024 exemption.

• Three additional HF Sinclair petitions — two for 2023 and one for 2024 — were ruled ineligible. EPA withheld the refinery-specific appendices as confidential business information.

Reallocation Implications

• EPA’s final 2026-2027 RFS rule reallocates 70% of the 2023-2025 exempted RVOs that were known when the standards were calculated. That calculation was made after EPA said it had decided all 2023 and 2024 petitions then before the agency, so Monday’s additional 160 million RINs were not included.

• Of note: Applying EPA’s existing formula would produce a 112-million-RIN reallocation requirement, notionally divided into approximately 56 million RINs for 2026 and 56 million for 2027. However, Monday’s action does not automatically raise the finalized percentage standards; EPA would need a separate adjustment or rulemaking to capture that volume.

Likely RIN and Soyoil Impact

•RINs: Bearish at the margin because refiners no longer need to retire 160 million RINs. EPA will return previously retired 2024-vintage credits rather than create new current-year RINs, limiting the immediate market shock. Returned 2024 RINs remain usable for 2024 or 2025 compliance, subject to applicable carryover rules.
•Soyoil: Split reaction: Some say it is modestly bearish because lower D4 RIN values can reduce the incentive to produce biodiesel and renewable diesel. The effect should be limited relative to prior multibillion-RIN SRE actions, and EPA has not publicly disclosed how the 160 million RINs divide among the renewable-fuel categories. But on trader noted “The market rumor late last week was there was going to be 100% exemptions, so today’s ruling being less is bullish — i.e., SBO price-whether it is bearish RINs we will see, but again less RINS than feared entering the market.”

Key issue ahead: Whether EPA revises its reallocation calculations. Without additional action, the waivers create a new hole in the agency’s stated policy of restoring 70% of exempted 2023-2025 obligations.

■  FINANCIAL MARKETS

—Equities today: Global markets rose as investors digested a packed earnings calendar and monitored conflicting U.S./Iran signals over efforts to end the five-month Middle East war. U.S. Dow opened around 700 points higher after Monday’s strong Wall Street gains, while TSX futures advanced as Canadian markets reopened following a holiday.

Earnings reports: In the U.S., investors are watching results from SpaceX, Advanced Micro Devices, Caterpillar, Merck, Amgen, McDonald’s, Arista Networks, Gilead Sciences, Pfizer and Spotify.

In Asia, Japan +0.3%. Hong Kong -0.6%. China +0.3%. India -0.3%.
 

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

—Equities yesterday: 

—China’s big investors return to gold near $4,000

Institutional inflows strengthen bullion’s floor amid Fed and war uncertainty

Chinese institutional investors are moving back into gold after the metal’s retreat toward $4,000 an ounce created what some fund managers view as a more attractive entry point. Bloomberg reported that gold-backed exchange-traded funds in China recorded inflows for 14 consecutive trading days through Monday — the longest streak since March — as volatile Chinese equities encouraged large investors to reconsider gold as a portfolio hedge.

Steve Zhou, an analyst at Huaan Fund Management Co., told Bloomberg that institutional interest increased after bullion fell toward the $4,000 level. The shift suggests investors are not simply chasing gold’s earlier rally but are treating the recent correction as an opportunity to establish or rebuild strategic positions.

That distinction matters. Chinese gold demand has often been associated with households buying jewelry, bars and coins, but sustained ETF inflows indicate growing participation by professional money managers. Those institutions typically allocate capital based on portfolio volatility, currency exposure and risk-adjusted returns rather than short-term consumer sentiment.

Gold prices were broadly steady Tuesday as the market balanced those underlying sources of demand against uncertainty surrounding U.S. monetary policy. Spot gold was little changed at about $4,053.40 an ounce during European trading, while U.S. gold futures were up 0.6% at $4,114.30. Bullion has remained largely confined to a $4,000-to-$4,100 range in recent weeks.

Chinese equities push funds toward safety. Recent volatility in China’s stock markets appears to be an important catalyst. When equity valuations become less predictable, institutions generally seek assets with lower correlations to stocks and clearer downside protection. Gold offers both characteristics, although it does not produce interest or dividends.

The latest buying also extends a broader regional trend. Asian gold ETFs attracted $2 billion in March, their seventh consecutive month of inflows, while first-quarter inflows reached a record $14 billion. China accounted for about $8 billion of that total, supported by geopolitical concerns, weaker local equities and currency-related demand.

The 14-day inflow streak therefore appears less like an isolated burst of bargain hunting and more like the resumption of an established diversification campaign.

China’s institutional demand could also provide an important floor under global prices. Western investment flows can shift rapidly with U.S. interest-rate expectations, Treasury yields and the dollar. More persistent Chinese buying could absorb some of the selling that occurs when Western funds reduce exposure.

Fed uncertainty caps the immediate upside. Gold’s near-term obstacle remains the Federal Reserve. Traders were assigning roughly a 63% probability to a September rate increase after the Fed left rates unchanged at its latest meeting but revealed significant divisions among policymakers. New York Fed President John Williams said inflation should gradually ease but warned that officials would respond with higher rates if price pressures remain persistent.

Higher interest rates generally work against gold because they increase the return available on Treasury securities and other interest-bearing assets. Gold’s inability to sustain a decisive move above $4,100 reflects the market’s reluctance to make a large directional bet before this week’s U.S. labor-market reports provide more evidence about economic momentum and inflation risks.

A weaker employment picture could reduce expectations for additional tightening and help gold break higher. Strong jobs data, particularly if accompanied by persistent wage pressure, could reinforce the case for a September rate increase and keep bullion range-bound or produce another test of support near $4,000.

Middle East risk cuts both ways. The Middle East conflict remains another major source of support — but its effect on gold is more complicated than a conventional safe-haven trade.

Conflicting U.S. and Iranian statements about negotiations, along with continued attacks affecting shipping near the Strait of Hormuz, are preserving demand for defensive assets. Meanwhile, the risk of disruptions to global energy flows gives investors another reason to maintain some gold exposure.

However, higher oil prices can also increase inflation and strengthen the argument for tighter Fed policy. That means an escalation in the Middle East may initially lift gold through safe-haven buying but later pressure it if surging energy costs push Treasury yields and rate expectations higher.

This helps explain why gold has remained relatively steady despite substantial geopolitical uncertainty: safe-haven demand is being offset by concern that the same conflict could keep U.S. interest rates elevated.

Outlook: $4,000 emerging as a strategic buying zone. Analysts signal the renewed Chinese institutional interest indicates that the area around $4,000 is becoming an important psychological and portfolio-allocation threshold. A sustained break below that level would challenge the emerging support structure, but repeated institutional purchases near it could make a deeper decline harder to sustain.

The immediate outlook remains one of consolidation, with Fed policy uncertainty limiting rallies and geopolitical risk discouraging aggressive selling. A move above $4,100 to $4,200 would suggest Chinese and broader investment demand is beginning to overpower interest-rate concerns. A fall below $4,000 would likely require either a meaningful easing of Middle East tensions or a substantial increase in expectations for U.S. rate hikes.

For now, Chinese funds appear willing to use price weakness to expand their allocations. That does not guarantee an immediate return to record highs, but it strengthens the longer-term demand base and increases the likelihood that corrections will continue to attract institutional buyers.

■  AG MARKETS

—USDA daily export sale: 132,000 MT soybeans to China for 2026/27. 

—Grains retreat as weather outlook overrides crop rating concerns

Soybeans lead losses as rain prospects blunt support from China buying

Grain futures moved lower overnight, led by soybeans and wheat, as traders shifted their focus back to improving Midwest moisture prospects and took profits following Monday’s broad rebound. September corn fell 3 cents to $4.46 1/4, September soybeans dropped 11 3/4 cents to $11.62, September soybean meal declined $2.30 to $313.10 and September soybean oil lost 52 points to 68.27 cents. September soft red winter wheat and hard red winter wheat each fell 8 1/2 cents, to $6.42 1/2 and $7.09 3/4, respectively.

The weakness does not mean crop concerns have disappeared. Instead, the overnight trade suggests forecasts for additional rain are preventing deteriorating corn conditions and recent Chinese soybean purchases from sustaining a rally.

•Soybeans: Soybeans led the decline as forecasts continue to show substantial rain chances during the crop’s critical pod-setting and pod-filling period. Potentially heavy rainfall is projected across parts of Iowa and Illinois this week, while federal outlooks through mid-August favor above-normal precipitation across much of the Corn Belt.

USDA rated 63% of the soybean crop good to excellent as of Aug. 2, unchanged from the previous week, while 62% was setting pods — seven percentage points ahead of the five-year average. Those figures reinforce expectations that the crop can still achieve a strong national yield despite July heat and localized dryness.

Monday’s confirmation of 488,000 metric tons of soybean sales to China and 136,150 tons to unknown destinations provided only temporary support. USDA this morning added a new flash sale: 132,000 MT soybeans to China for 2026/27. Chinese state buyers have reportedly purchased roughly 1 million tons of U.S. soybeans in the latest buying push, but the market appears to want evidence of sustained purchases rather than transactions concentrated among state-owned buyers responding to lower prices and political commitments.

Soybean oil also faced pressure from another sharp drop in crude oil. Brent and West Texas Intermediate crude fell about 4% Tuesday as markets became more optimistic that U.S./Iran diplomacy could reduce threats to oil shipments through the Strait of Hormuz. Lower petroleum prices tend to weaken the energy value attached to soybean oil and other biofuel feedstocks.

•Corn: Corn’s relatively modest decline reflects a market balancing favorable forecasts against increasingly worrisome crop ratings. USDA lowered the crop’s good-to-excellent rating two percentage points to 61%, the third consecutive weekly decline and down from 67% two weeks earlier. The deterioration was concentrated in parts of the western Corn Belt, including Nebraska and Kansas, where late-July heat and dryness may have reduced yield potential.

Corn development remains rapid, however. Ninety percent of the crop was silking and 43% had reached the dough stage, both ahead of their five-year averages. Meanwhile, rain projected for Iowa and Illinois could stabilize conditions in two of the largest producing states.

Demand is providing an important floor. Corn export inspections reached an eight-week high of 1.885 million tons last week, up 23% from the previous week and 45% from a year earlier. Marketing-year shipments were 25% above the year-earlier pace.

The implication is that corn may have less downside exposure than soybeans if crop ratings continue to slide. But the market will probably require evidence that recent damage is widespread enough to materially reduce the national yield before building a sustained weather premium.

•Wheat: Wheat gave back much of Monday’s recovery as improved spring wheat ratings and subdued U.S. export demand outweighed continuing Black Sea risks. USDA raised the spring wheat crop’s good-to-excellent rating two points to 55%, contrary to expectations for another decline. Winter wheat harvest reached 86%, matching the five-year average and maintaining seasonal supply pressure.

U.S. wheat export inspections fell 20% from the previous week and 51% from a year earlier. Shipments for the young 2026-27 marketing year were running 27% behind last year, limiting the market’s ability to capitalize on disruptions affecting Black Sea grain movement.

Outlook: Analysts say overnight losses reinforce the view that rallies will remain difficult to sustain while Midwest forecasts consistently replenish soil moisture. Soybeans are the most weather-sensitive market during August and therefore face the greatest immediate pressure from rain. Corn has more fundamental support from weakening crop ratings and strong exports, while wheat remains caught between geopolitical supply risks and disappointing U.S. demand.

The next major test will be whether forecasts verify and whether USDA’s Aug. 12 production estimates confirm that July heat reduced corn and soybean yield potential. Until then, the market is likely to remain volatile but increasingly skeptical of rallies that are not supported by a significant change in weather or another large wave of export buying.

—International grain prices: Fading French rains, spreading heat cement a sub-50 MMT European corn crop

Europe set to become the world’s largest corn importer in 2026-27, needing 25-26 MMT to plug feed gaps; Paris corn holds a $7.25/bu. equivalent even as Chicago-linked selling trims the board

•The weather story that matters most to world grain markets this morning is the one Europe did not get: rain. European forecast models overnight backed off the precipitation they had been offering France over the next week to ten days, with meaningful totals now confined mostly to the Alps — terrain that grows scenery, not corn. Meanwhile, heat pushes deeper into eastern European producing areas over the next three days, with highs in the upper 90s Fahrenheit advertised for Hungary and Romania, the EU’s two most important corn producers after France. For corn in pollination and early grain fill, that combination is doing irreversible damage.

A sub-50 MMT European corn crop is now assured, analysts note. The math that follows is stark: with usage commitments largely fixed, Europe will be the world’s largest corn importer in 2026-27, needing some 25-26 MMT to bridge feed supply gaps. That is a structural, season-long pull on exportable supplies from Ukraine, Brazil, Argentina and the United States — and it arrives just as importers elsewhere are also chasing coverage.

• Paris prices reflect the rationing job ahead. Paris corn eased €1.00/MT overnight to €248 — but that still works out to roughly $285/MT, or $7.25 per bushel in U.S. terms, a massive premium over U.S. Gulf values that is explicitly designed to pull imported feedgrains into the EU and price European corn out of feed rations wherever wheat can substitute. Paris milling wheat, the beneficiary of that substitution demand, gained €4.25/MT to €221 — about $254/MT, or a $6.92 per bushel equivalent. The wheat-corn relationship in Europe remains inverted relative to normal, and it will stay that way until import supply lines are established.

•China offers no relief on the demand side of the ledger. Dalian corn futures overnight slipped the equivalent of $.02/bu. to $8.30 — roughly $327/MT — a price that keeps China’s import arbitrage wide open against every major origin. With Europe and China both structurally short, the 2026-27 world corn trade will be a competition among importers, not exporters.

•Palm oil firms on exports and biofuel support. Malaysian palm oil futures strengthened Tuesday, hovering above MYR 4,650/MT — about $1,095/MT, or roughly 50 cents/lb — halting recent losses amid a weaker ringgit and firmer rival edible oils on the Dalian and Chicago exchanges. A modest rise in crude values earlier in the session also lent support, with lingering uncertainty over diplomatic efforts to resolve the U.S./Iran conflict continuing to underpin the biofuel outlook. Cargo surveyors pegged Malaysian July shipments up 12.1-19.5% from June; Indonesian H1 exports rose 2.5% year-over-year, and Indian festival-season buying is expected to build between July and October. Gains were capped by forecasts that Malaysian inventories likely hit a five-month high in July, and by caution ahead of China’s July trade data.

The macro backdrop leans friendly to risk assets but not to energy: WTI crude oil is down $2.00/barrel at $78.30, while Dow futures are up 450 points. Cheaper crude trims the biofuel bid at the margin, but it is weather — not macro — that owns the grain markets this week.

Bottom line: Every forecast run that pulls rain away from France and pushes heat into the Danube basin adds tonnage to Europe’s 2026-27 import bill, and at 25-26 MMT the EU will set the tone for world corn trade for the next twelve months. Paris corn at a $7.25/bu. equivalent is the market’s opening bid to attract those supplies — and a standing invitation for U.S., Ukrainian and South American exporters. Analysts say breaks in Chicago should be viewed against that backdrop: the world’s feed grain balance sheet is tightening, not loosening.

—U.S. crop progress : week ended Aug 2

USDA report released Aug. 3, 2026 

• Corn: 90% silking and 43% in dough, up 12 and 18 points for the week and ahead of average. Good/excellent fell two points to 61%, versus 73% last year; North Dakota dropped 13 points, Kansas eight and Nebraska six.

•Soybeans: 88% blooming and 62% setting pods, versus 84% and 55% on average. Good/excellent held at 63%, six points below last year; Kansas and Nebraska ratings declined, while Kentucky and North Carolina improved.

• Winter wheat: Harvest advanced five points to 86% complete, matching the five-year average and one point ahead of last year. Oregon, Washington and Michigan posted the largest weekly gains.

•Spring wheat: Harvest reached 5%, up three points but behind the 8% average. Good/excellent improved two points to 55%, versus 48% last year; South Dakota and Montana rebounded sharply, while Washington and North Dakota weakened.

• Cotton: 88% was squaring and 55% setting bolls, both near average. Good/excellent plunged four points to 42%, versus 55% last year; Oklahoma fell to 10% and Texas to 28%.

• Sorghum: 52% was headed and 28% coloring, with coloring five points ahead of average. Good/excellent dropped five points to 36%, 30 points below last year; Kansas and Texas posted the largest declines.

• Rice: 77% was headed, 10 points ahead of average; harvest reached 9%, with Louisiana already 51% complete. Good/excellent held at 71%, seven points below last year, as Texas and Mississippi deteriorated.

• Pasture/range: Good/excellent fell four points to just 25%, versus 44% last year; poor/very poor rose to 46%. North Dakota and Texas deteriorated sharply, while Wyoming, Colorado, New Mexico and Nebraska remained especially stressed.

—Mon., Aug. 3:Ag markets rebound from early lows, but trend shift remains unproven

China demand and Black Sea risks lifted grains; cotton led while livestock faded.

U.S. agricultural markets produced a sharply divided performance on Aug. 3. Corn, soybeans and wheat reversed from early three-week lows and finished near their daily highs, while cotton extended its technical advance to a nine-week closing high. Livestock markets were less constructive, as cattle surrendered early gains and lean hogs extended their pullback.

Analysts said the grain recovery looked primarily like a correction of oversold conditions rather than the beginning of a broad bullish trend change. Outside markets were mixed for agriculture: The Dow rose 693 points to a record, with the S&P 500 gaining 1.5% and the Nasdaq climbing 2.1%, but crude oil fell sharply as markets priced in a possible diplomatic opening between the U.S. and Iran. Brent crude dropped $6.35 to $83.77 and West Texas Intermediate fell $4.33 to $80.34. The equity rally encouraged risk-taking, but the oil decline removed some support from biofuel-linked commodities.

•Corn rebounds, but follow-through is essential. December corn rose 8 1/2 cents to $4.72 1/2 after reaching a three-week low during overnight and early trading. The contract’s close near the daily high was constructive because it showed bargain buying and short covering strengthened as the session progressed rather than fading into the close. USDA’s official grain-market data confirmed the December settlement at $4.72 1/2.

Still, Monday’s rally recovered only part of corn’s recent losses. Traders continue to balance deteriorating crop conditions against a generally favorable near-term weather pattern. Forecasts call for cooler temperatures and scattered rainfall across much of the Corn Belt, with the heaviest amounts expected in parts of Iowa, Wisconsin and Illinois. That should ease immediate stress, even as hotter and drier conditions persist in the Southern Plains and Delta.

USDA’s Crop Progress report, released after the futures close, provided a somewhat more supportive signal. Corn was rated 61% good to excellent as of Aug. 2, down two percentage points for the week and 12 points below a year earlier. Fourteen percent was rated poor or very poor, up from 12% the previous week. Because those figures were released after settlement, they did not cause Monday’s rally, but they could encourage additional buying if weather forecasts turn hotter or drier.

Perspective: Corn’s intraday reversal improves the near-term technical picture, but confirmation requires additional closes above Monday’s settlement and an ability to hold the $4.70 area. Failure to attract follow-through buying would classify the move as another corrective bounce inside a broader weather-driven decline.

•Soybean sales provide needed demand confirmation. November soybeans rose 4 3/4 cents to $11.92 1/4, September soybean meal gained 50 cents to $315.40 and September soybean oil jumped 153 points to 68.79 cents. All three contracts recovered from early lows, but soybean oil supplied most of the complex’s momentum.

USDA confirmed private sales of 488,000 metric tons of soybeans to China and 136,150 tons to unknown destinations, all for delivery during the 2026-27 marketing year. Together, the announcements represented 624,150 tons, or approximately 22.9 million bushels. The sales put actual tonnage behind recent reports of renewed Chinese purchasing interest rather than leaving the demand story dependent solely on trade rumors.

The muted gain in soybeans and nearly unchanged meal market, however, showed that traders are not yet prepared to build a sustained weather or demand premium. The 153-point soybean oil rally was particularly notable because it occurred despite the sharp drop in crude oil. That relative strength suggests short covering and vegetable-oil-specific positioning were more important than a general energy-market tailwind.

Post-close crop data were neutral for soybeans. USDA left the crop at 63% good to excellent, unchanged from the previous week but six points below last year. Pod setting reached 62%, seven points ahead of the five-year average, meaning the crop is moving quickly through its critical reproductive period.

Perspective: The Chinese purchases are important, but soybean bulls need a sequence of additional sales rather than an isolated announcement. Monday’s product-market structure — strong soybean oil, nearly flat meal and only modest soybean gains — still looks more like short covering than a broad reassessment of the U.S. supply-and-demand balance.

• Black Sea risk gives wheat a firmer fundamental floor. September soft red winter wheat rose 11 3/4 cents to $6.51, September hard red winter wheat gained 9 3/4 cents to $7.17 1/4 and September spring wheat advanced 5 1/4 cents. The winter wheat contracts closed near their daily highs after also reaching three-week lows early in the session. USDA market data confirmed the Chicago and Kansas City settlements.

Wheat’s rally had a stronger fundamental component than the corn advance. Russian attacks on Ukrainian ports and Ukrainian strikes against vessels and infrastructure serving Russian exports have disrupted Black Sea grain movements. The International Food Policy Research Institute estimated late-July Black Sea shipments were down more than 40% from a year earlier. Russia and Ukraine accounted for roughly 32% of global wheat trade in 2025-26, meaning even temporary transportation problems can force importers to seek alternative supplies.

The domestic crop report offered mixed signals. The winter wheat harvest reached 86% complete, equal to the five-year average, reducing the influence of U.S. harvest pressure. Meanwhile, spring wheat conditions improved two points to 55% good to excellent, which could restrain Minneapolis wheat relative to the winter wheat contracts.

Perspective: Wheat appears to have a firmer downside floor than corn or soybeans because the Black Sea risk is immediate and logistical, not merely theoretical. Monday’s rally will still require confirmation, but renewed attacks on ships or export terminals could quickly restore a larger geopolitical premium.

•Cotton extends the most convincing technical advance. December cotton rose 78 points to 82.57 cents, finishing near the session high and posting its highest close in nine weeks. Unlike corn and soybeans, cotton was not simply recovering from a fresh multiweek low; it was extending an established short-term uptrend. The rally in U.S. equities and gains across grains encouraged additional technical buying.

USDA’s post-close report added fundamental support. Cotton was rated just 42% good to excellent, down four percentage points from the prior week. Twenty percent of the crop was rated poor or very poor, compared with 16% one week earlier.

Perspective: Cotton carried the strongest technical signal among the major crop markets on Aug. 3. The deteriorating crop ratings could reinforce the breakout, although lower crude prices bear watching because cheaper petroleum can reduce the cost of polyester and other synthetic-fiber competitors.

•Cattle give up early strength as packer economics loom. October live cattle fell 52.5 cents to $226.725 after reaching a three-week high early in the session. September feeder cattle declined $1.225 to $342.55 after posting a two-week high. Both markets finished near their daily lows, producing a less constructive session than the settlement changes alone suggest.

Higher corn prices added a modest feed-cost headwind for feeder cattle. More importantly, the cattle market continues to wrestle with the conflict between historically tight animal supplies and deeply negative beef-processing margins. Tyson Foods said high cattle costs contributed to a projected fiscal-year beef-segment loss of $500 million to $650 million. That confirms the scarcity of market-ready cattle, but it also raises the risk that packers will resist bidding aggressively in the cash market whenever slaughter needs permit.

Perspective: The recent stabilization in futures suggests a near-term bottom may be developing, but Monday’s reversal from early highs did not confirm it. The next decisive signal will come from negotiated cash cattle trade. Firm cash prices would validate the technical recovery; weaker packer bids could trigger another test of recent futures lows.

•Hogs retreat despite a firmer pork cutout. October lean hogs fell $1.175 to $83.675 and settled near the daily low as profit-taking and long liquidation continued. USDA’s national negotiated base hog price was reported at $99.45, down 96 cents, reinforcing concern that the cash rally is losing momentum.

The weakness was not caused by a collapse in wholesale pork values. The pork cutout rose 90 cents to $100.91, helped by gains in bellies and hams, but estimated Monday slaughter totaled 430,000 head — 10,000 more than the previous Monday and slightly above a year earlier. Futures traders appeared more focused on increasing slaughter availability and the prospect of a cash-market peak than on the one-day cutout improvement.

Perspective: Hog futures are likely to remain vulnerable while negotiated cash prices soften. A stable cutout could slow the decline, but the market needs renewed cash strength or clearer evidence of tightening supplies before nearby contracts can sustain another rally.

Bottom line: The Aug. 3 session was an important stabilization day for crop markets, but not yet proof of a broad bullish turn. Corn benefited from an oversold rebound and deteriorating crop ratings; soybeans received real support from Chinese purchases but showed limited strength outside soybean oil; wheat retained the clearest fundamental risk premium because of Black Sea shipping disruptions; and cotton extended the strongest technical trend.

Livestock offered a more cautionary signal. Tight cattle supplies remain supportive, but packer losses and the failure to hold early futures gains argue against declaring a confirmed bottom. In hogs, fading cash prices and long liquidation outweighed a modest improvement in wholesale pork.

The next tests are whether China follows Monday’s soybean purchases with additional business, whether corn and cotton build on USDA’s lower crop ratings, whether Black Sea disruptions intensify and whether livestock cash markets validate — or reject — the recent attempts to establish futures-market lows.

■  FARM POLICY

—Report: Base-acre expansion could improve the farm safety net’s fit

Zulauf says acreage alignment determines whether supports can be combined

In an Aug. 3 farmdoc daily analysis (link), Ohio State University agricultural economist Carl Zulauf argues that the U.S. crop safety net works most completely when a planted acre is both insured and matched with a base acre of the same commodity. That alignment allows crop insurance indemnities and Agriculture Risk Coverage-County, or ARC-CO, and Price Loss Coverage, or PLC, payments to be combined on a per-acre basis. Zulauf concludes that the farm bill provision authorizing up to 30 million new base acres could increase the number of farms able to obtain that layered protection.

The paper emphasizes that crop insurance and commodity programs address different types of risk. Crop insurance primarily protects against production-year yield or revenue losses, while ARC and PLC address lower prices or revenues extending across multiple years. Farmers receive the fullest benefit from the two-part system when an acre planted and insured to a commodity is also supported by base acreage assigned to that same crop.

That distinction matters because the historical value of the combined safety net varies widely by commodity. From 2014 through 2024, crop insurance net indemnities and commodity program payments averaged approximately $145 per acre annually for peanuts, rice and cotton, compared with about $24 per acre for sorghum, wheat, corn, barley, oats and soybeans. The combined assistance covered roughly 15% of production costs for cotton, peanuts and rice, about 10% for sorghum and wheat, approximately 5% for barley, corn and oats, and only about 2% for soybeans.

The charts on page 2 reinforce the unevenness. Peanuts, rice and cotton received the highest average combined payments per acre, while soybeans were at the bottom. That suggests the economic value of obtaining additional matching base acres will not be uniform. A newly matched acre could carry considerably more potential safety-net value for historically payment-intensive crops than for commodities that rarely generate ARC, PLC or insurance payments.

Zulauf cautions that the actual degree of matching cannot be determined without individual farm-operation data, which are not publicly available. National data provide only a rough proxy because a farm operation may include several separate Farm Service Agency farms, each with its own base-acre history.

At the national level, 2024 insured acreage was below ARC-CO and PLC enrolled base acreage for every crop examined except soybeans. That indicates enough base acreage theoretically existed to match insured acres for most commodities, but it does not prove that the acres were located on the same farms or associated with the same current crop mix. Zulauf nevertheless sees a meaningful likelihood of matching because planting patterns usually change gradually and crops with declining acreage tend to become concentrated in their most competitive production regions.

Soybeans are the major exception. The report’s third figure shows substantially more insured soybean acres than enrolled soybean base, creating a structural gap that even a large national base-acre expansion may not eliminate. Zulauf argues that the financial importance of this mismatch has been moderated by soybeans generating a profit at harvest in 18 of the 30 years since the 1996 Farm Bill established planting flexibility.

The provision adding as many as 30 million base acres therefore has significance beyond simply expanding the acreage count. Some of the new base will be derived from acres planted to crops that currently are not program commodities. Assigning those acres to current program crops should increase the likelihood that a farmer’s present insured acreage can be paired with matching base acreage.

From a policy standpoint, however, new base acreage does not automatically translate into payments. Its value depends on which crops receive the base, whether those acres align with current planting and insurance decisions, and whether market prices or county revenues fall far enough to trigger ARC or PLC assistance. The report also does not estimate how the 30 million acres will be distributed among crops or regions, limiting any calculation of potential program costs or producer benefits.

Upshot: The broader takeaway is that base acre expansion may make the farm safety net more internally consistent. Crop insurance follows current plantings, while commodity assistance remains tied largely to historical base. Adding new base can narrow that disconnect, giving more producers the opportunity to combine short-term production protection with longer-term price and revenue support. Zulauf characterizes that improved alignment as a meaningful farm management benefit, although the absence of farm-level matching data leaves the nationwide impact uncertain.

■  SCREWWORM

—Active New World screwworm cases continue to fall

Only seven of 44 U.S. cases remain active as Douglas reopening nears

The number of active New World screwworm (NWS) cases in the United States continues to decline, providing another encouraging indication that federal and state containment efforts are gaining ground. USDA’s Animal and Plant Health Inspection Service (APHIS) continues to report 44 confirmed animal cases, but only seven remain active, while 37 have been moved to inactive status.

Half of the 14 cases confirmed during July remain active. All seven active cases were detected July 13 or later, meaning the older cases have either recovered or no longer require disease-mitigation measures. APHIS defines an active case as an individual animal still requiring treatment, wound management or other mitigation. An inactive designation means the infestation has been resolved or appropriate measures have been taken to prevent further spread.

The declining active count is significant because it suggests USDA, Texas animal-health officials and livestock owners are identifying and treating infestations before they can produce a widening outbreak. USDA has combined animal treatment and movement controls with surveillance, public outreach and large-scale sterile-fly releases. The department says it is dispersing 100 million sterile flies per week in Mexico and Texas, including more than 80 million weekly through its completed dispersal facility at Moore Air Force Base near Edinburg, Texas.

The case trend, however, should not be interpreted as an all-clear. APHIS cautions that an individual animal can be moved to inactive status while an infested or surveillance zone around that case remains in effect. The more important measures of whether NWS is being contained are the appearance of new cases, any expansion into additional counties, detections of wild NWS flies in surveillance traps and evidence that the pest has become established in wildlife.

So far, those broader indicators remain favorable. USDA has deployed more than 100 NWS-specific traps and is using thousands of other insect traps along the southern border. APHIS has also examined thousands of wild animals in Texas without finding evidence of NWS infestation. The lack of confirmed wild-fly or wildlife detections substantially strengthens the case that the U.S. outbreak remains a collection of containable animal infestations rather than an established, self-sustaining population.

Border reopening case strengthens. The improving domestic numbers are also likely reinforcing USDA’s plan to resume limited cattle imports from Mexico through Douglas, Arizona, beginning Aug. 24. USDA selected Douglas because it borders Sonora, which the department considers one of Mexico’s lowest-risk states because of its animal-health infrastructure, inspection programs and distance from the main concentration of NWS cases.

When USDA announced the plan July 24, it said the closest active case was approximately 325 miles from the Douglas port. Every animal entering through the reopened port will receive a full USDA inspection for signs of screwworm. The department also retains the authority to delay or pause trade if surveillance, audits or conditions in Sonora and Chihuahua indicate that risks have increased.

The falling U.S. active-case count does not by itself determine whether Douglas will reopen, since conditions in northern Mexico and Mexico’s compliance with the countries’ joint action plan remain critical. But it removes one potential obstacle: evidence that NWS is spreading rapidly or becoming entrenched on the U.S. side of the border.

For the cattle market, the Douglas reopening would represent a cautious first step rather than a return to normal trade. Limited Mexican feeder-cattle movement could modestly improve supplies for Southwestern feedlots, but a single port will not quickly erase the effects of prolonged import restrictions or the broader shortage of U.S. cattle. The greater significance is that a successful reopening could clear the way for USDA to consider subsequent openings at Santa Teresa and Columbus, New Mexico.

Bottom line: The next several weeks will therefore be decisive. Continued declines in active cases, no new geographic spread and the continued absence of wild-fly detections would support USDA’s argument that the outbreak is being contained. A new cluster, wildlife case or positive trap would quickly change that assessment and could put the Aug. 24 reopening timetable at risk.

■  ENERGY MARKETS & POLICY

— Report: 45Z’s headline value could be large, but the farm share remains unclear

Illinois corn modeling puts the gross pool at $0 to $243 per acre

A July 31 farmdoc daily analysis (link) by University of Illinois researchers Zhangliang Chen, Kaiyu Guan and Jonathan Coppess finds the Clean Fuel Production Tax Credit, or 45Z, could create meaningful per-acre value for Midwest grain produced with approved carbon-intensity-reducing practices. However, the authors repeatedly caution that the estimates represent the total potential tax-credit value created, not the premium a farmer would necessarily receive. Because the biofuel producer claims the credit, the amount ultimately passed back to the producer remains unknown. 

The report uses Illinois corn produced with cover crops as its primary case study and bases its calculations on USDA’s official Feedstock Carbon Intensity Calculator, or FD-CIC, version 1.0. Under the current model, the carbon-intensity reduction associated with an approved practice is predetermined for each county. That means one of the largest variables is not necessarily what happens on the farm, but the remaining carbon intensity associated with ethanol production and the rest of the fuel system.

Figure 1 on page 2 illustrates the calculation for Champaign County, Illinois. The authors begin with a cover-crop feedstock carbon intensity of 4,449.52 grams of carbon-dioxide equivalent per bushel. After conversion to a fuel-energy basis and the addition of an assumed ethanol-plant and rest-of-system carbon intensity of 20 kilograms per million British thermal units, the resulting 45Z credit is calculated at 16.6 cents per gallon.

What the calculation shows. Assuming a 220-bushel corn yield and 2.7 gallons of ethanol produced from each bushel, the acre would generate approximately 594 gallons of ethanol and a total potential 45Z value of $98.80 per acre. But that result changes sharply with the plant-side assumption:

• At a rest-of-system carbon intensity of 15, the estimated value rises to $158.20 per acre. 
• At a carbon intensity of 20, it is $98.80 per acre.
• At a carbon intensity of 25, it falls to $39.40 per acre. 

Those figures assume every bushel from the acre is used for ethanol and show the entire tax-credit pool before any division between the plant, grain buyer, farmer or other participants.

Figure 2 on page 3 expands the analysis across Illinois counties. Under the lowest plant-carbon-intensity scenario, the total estimated value from cover-crop corn ranges from roughly $107 to $243 per acre. The range falls to approximately $48 to $184 under the middle scenario and $0 to $125under the highest plant-carbon-intensity assumption.

Perspective: the plant may matter as much as the practice. The biggest takeaway is that qualifying farm practices alone will not determine whether 45Z becomes valuable to producers. In the Champaign County example, changing only the plant-side carbon-intensity assumption produces a nearly $119-per-acre swing in gross tax-credit value.

That creates the potential for a highly localized market. Corn delivered to a relatively efficient, low-carbon ethanol facility could generate substantially more 45Z value than otherwise identical corn delivered to a higher-carbon plant. Consequently, proximity to participating facilities, plant efficiency and individual buyer procurement programs could become as important as the producer’s conservation practices.

The report’s statewide maps also underscore that 45Z is unlikely to produce a uniform low-carbon grain premium. FD-CIC assigns different values to the same practice in different counties, while ethanol plants will have their own carbon-intensity profiles. The result could be a patchwork of premiums rather than a single broadly quoted market price.

Gross value is not the farm premium. The estimates should not be treated as expected farm revenue. Before a premium reaches the producer, some of the total value may be retained by the ethanol plant or grain buyer. Verification, recordkeeping, aggregation and other transaction costs could further reduce the amount available for distribution.
 

A county could therefore show a large modeled tax-credit pool while offering farmers only a modest grain premium — or no premium at all — if no participating plant or buyer is actively seeking documented low-carbon grain. The authors describe the estimates as an initial screening tool rather than a prediction of producer compensation.

From a farm-management standpoint, the eventual decision should be based on the net contracted premium, not the maximum modeled credit. Producers would need to compare any offered payment with the cost and production risk of the qualifying practice, documentation requirements, contract duration and the possibility that eligibility rules or plant demand could change.

The paper’s numerical work also applies specifically to Illinois corn and cover crops. It should not automatically be interpreted as an estimate for soybeans, other practices or other states.

Recordkeeping offers low-cost optionality. The authors recommend that producers begin preserving field-level records, including the conservation practice used, dates of field operations and supporting documentation. Exact verification requirements are not yet final, but organized records could give producers a first-mover advantage if local grain buyers begin offering low-carbon sourcing contracts.
 

Producers should also monitor whether nearby ethanol plants and grain buyers are developing procurement programs. Without a participating buyer willing to share some of the tax-credit value, a lower carbon-intensity score does not automatically produce a higher cash-grain price.

Bottom line: 45Z could develop into a significant new marketing channel for some Midwest producers, particularly those already using recognized practices and located near efficient ethanol plants. But it is better viewed as an emerging, contract-dependent market opportunity than a new government payment guaranteed to flow to the farm. The eventual value will depend on the size of the tax-credit pool, the presence of a participating local buyer and the portion of that value the buyer is willing to share.

■  POLITICS & ELECTIONS

—Far left Democrats seek a breakthrough in Michigan and Missouri; moderate Dems have a choice to make 

Tuesday’s votes test whether the far left can expand beyond safe Democratic seats

Farm left Dems enter Tuesday’s primaries with a credible opportunity to win four nationally watched Democratic contests: Michigan’s U.S. Senate nomination, Michigan’s 7th and 13th Congressional Districts and Missouri’s 1st District.

But the races are not interchangeable. Michigan’s Senate contest and 7th District race will produce nominees for two of November’s most competitive elections. Michigan’s Detroit-based 13th District and Missouri’s St. Louis-based 1st District are heavily Democratic seats where the primary winner will be strongly favored in November. The results therefore will test both the left’s strength inside the Democratic Party and its ability to carry that agenda into politically divided territory.

The common thread is less a single policy platform than growing dissatisfaction with Democratic gatekeepers, corporate political spending and continued U.S. support for Israel. Yet each progressive candidate has traveled a different path: Abdul El-Sayed has built a statewide populist campaign; William Lawrence has benefited from a divided field; Donavan McKinney has consolidated progressive and Black political support; and Cori Bush is seeking to reverse a defeat from only two years ago.

• Michigan Senate: the most consequential test. The Democratic Senate primary between El-Sayed and Rep. Haley Stevens (D-Mich.) is the clearest test of whether the progressive resurgence can extend beyond safely Democratic districts.

Stevens has nearly every institutional advantage: support from Gov. Gretchen Whitmer, retiring Sen. Gary Peters (D-Mich.), former Sen. Debbie Stabenow (D-Mich.), Senate Minority Leader Chuck Schumer (D-N.Y.) and much of Michigan’s Democratic establishment. Her campaign emphasizes manufacturing, her work on the Obama administration’s auto rescue and her record of winning competitive suburban elections.

El-Sayed, a former Wayne County health director, has been backed by Sen. Bernie Sanders (I-Vt.), Sen. Elizabeth Warren (D-Mass.), Rep. Alexandria Ocasio-Cortez (D-N.Y.) and Rep. Rashida Tlaib (D-Mich.). He has centered his campaign on Medicare for All, lower prescription-drug prices, restrictions on corporate political money and ending U.S. military aid to Israel.

The spending imbalance has been extraordinary. Groups supporting Stevens or opposing El-Sayed spent more than $50 million, including more than $30 million from AIPAC and affiliated organizations — the largest single-race investment in the pro-Israel group’s history. El-Sayed nevertheless enters Election Day with an apparent polling advantage. Public general-election polling, however, has not established a consistent electability gap between Stevens and El-Sayed against former Rep. Mike Rogers (R-Mich.), the unopposed Republican nominee.

An El-Sayed victory would therefore carry several messages analysts observe.

First, it would show that enormous outside expenditures cannot necessarily overcome an energized candidate with a strong small-donor and activist coalition. The more AIPAC and other groups spent, the easier it became for El-Sayed to present the race as a choice between Michigan voters and outside interests.

Second, the result would reinforce evidence that Israel and Gaza have become defining Democratic primary issues. AIPAC’s advertisements generally focused on El-Sayed’s domestic positions rather than Israel, but voters were well aware of the organization’s role. Defeating that level of spending would encourage other Democratic candidates to challenge both AIPAC and the party’s traditional foreign-policy consensus.

Third, it would weaken the establishment’s argument that progressives cannot compete statewide. That argument would not be settled until November, however. Michigan remains closely divided, and Rogers would be able to portray El-Sayed’s support for Medicare for All, an end to military assistance for Israel and other positions as outside the political mainstream.

The immediate lesson from an El-Sayed win would be about Democratic primary voters. Whether it represented a broader Michigan realignment would be determined in the general election.

•Michigan’s 7th District: the November stress test. The 7th District presents an even cleaner test of whether a progressive nominee can hold together a swing-district coalition.

William Lawrence, a co-founder of the Sunrise Movement, faces former U.S. Ambassador to Ukraine Bridget Brink and retired Navy SEAL Matt Maasdam. The winner will challenge first-term Rep. Tom Barrett (R-Mich.), who won with 50.3% in 2024 in a district President Donald Trump carried by only about one percentage point. Barrett’s seat is consequently near the top of the Democratic target list.

Lawrence’s position also reflects the establishment’s failure to consolidate. Brink and Maasdam divided support among Democrats prioritizing national-security credentials and general-election experience, leaving Lawrence with a potentially clearer path through the party’s progressive base.

Outside intervention further complicates the result. Punchbowl News reported that the Michigan Sunrise PAC aired advertisements attacking Maasdam and promoting Lawrence, using a media buyer connected to previous Republican-aligned attempts to influence Democratic primaries. The evidence does not prove that Lawrence coordinated with or was responsible for the group, but it allows his opponents to argue that Republicans viewed him as their preferred November opponent.

A Lawrence victory would be celebrated as evidence that progressive economic and climate messages can win in a district containing Lansing, college communities, suburbs and rural counties. But because this is a three-candidate primary, a plurality win would not necessarily mean most Democratic voters preferred his ideological approach.

The more meaningful verdict would come in November. Winning the primary would demonstrate strength among Democratic voters; defeating Barrett would demonstrate an ability to attract independents and crossover voters in one of the country’s most evenly divided districts.

Michigan’s 13th District: more than an ideological contest. The contest between Rep. Shri Thanedar (D-Mich.) and state Rep. Donavan McKinney (D-Detroit) is often described as another progressive challenge to an incumbent. That description is accurate but incomplete.

Thanedar holds some conventionally liberal positions and has the endorsement of House Minority Leader Hakeem Jeffries (D-N.Y.), Democratic Whip Katherine Clark (D-Mass.) and House Democratic Caucus Chair Pete Aguilar (D-Calif.). McKinney has support from Sanders, Tlaib, progressive organizations, Black state legislators and Detroit-area religious leaders.

The race also turns on class, local representation and the structure of the field. Thanedar, an Indian American multimillionaire who has spent heavily from his own wealth, previously benefited from several Black candidates dividing the opposition. McKinney is the only Black challenger listed on Tuesday’s ballot, giving voters dissatisfied with Thanedar a single alternative rather than several competing choices.

That distinction matters in a Detroit-anchored district with a large Black population. The Supreme Court’s April ruling sharply weakening Section 2 of the Voting Rights Act has also intensified national concern about maintaining Black political representation, although that ruling does not directly determine the outcome of this primary.

A McKinney victory would consequently reflect several overlapping forces: progressive momentum, anti-incumbent sentiment, opposition to self-funded candidates and a consolidated campaign to return the district to Black representation. It would be misleading to attribute the result solely to the Democratic Party moving left.

•Missouri’s 1st District: a direct test of what changed since 2024. The rematch between Rep. Wesley Bell (D-Mo.) and former Rep. Cori Bush (D-Mo.) offers the cleanest before-and-after measurement.

Bell defeated Bush in the 2024 Democratic primary after AIPAC and allied organizations spent millions against her. Bush’s criticism of Israel’s military campaign in Gaza was a central issue, while Bell presented himself as a more pragmatic and effective alternative.

Two years later, Bush is again running as an outspoken critic of Israel and the Democratic establishment. AIPAC is again supporting Bell, but the political environment has changed. An AP-NORC survey found that 58% of Democrats now believe the U.S. is too supportive of Israel, up from 45% in January 2024.

A Bush victory would be the strongest evidence from Tuesday’s races that Democratic attitudes toward Israel and Gaza have shifted enough to alter electoral outcomes. It also would suggest that her 2024 loss reflected the circumstances of that election rather than a permanent rejection by St. Louis-area voters.

A Bell victory would point in the opposite direction. It would indicate that incumbency, constituent service, fundraising and a less confrontational political style remain powerful even as Democratic voters grow more critical of Israel. Because the district is heavily Democratic, either result would primarily change the ideological balance of the House Democratic Caucus rather than the broader contest for House control.

•What a progressive sweep would — and would not — mean. A four-race sweep would place substantial pressure on Democratic leaders to reconsider how they approach primaries, election analysts signal.

It would show that establishment endorsements no longer automatically confer credibility, particularly when paired with extraordinary super PAC spending. It would make campaign-finance reform and opposition to corporate influence more central to Democratic messaging. It also would force party leaders to recognize that Gaza is not merely a foreign-policy disagreement but an issue shaping candidate recruitment, fundraising and turnout.

The results could also expose an organizational weakness among moderates. In Michigan’s 7th District, Brink and Maasdam competed for overlapping voters rather than consolidating behind one candidate. In the 13th District, McKinney benefited from unifying constituencies that had previously been divided. Candidate selection and field management may prove as important as ideology.

But a sweep would not establish that all general-election voters have moved left. Primary electorates are smaller, more partisan and more politically engaged. Missouri’s 1st and Michigan’s 13th are strongly Democratic; the Michigan Senate seat and 7th District are not.

The most significant result Tuesday would be an El-Sayed victory because it would place a progressive nominee in a genuine statewide battleground. A Lawrence win would create a similar, though smaller, experiment in the 7th District. McKinney and Bush victories would reshape the House Democratic Caucus, but El-Sayed and Lawrence would determine whether the left’s primary momentum can survive sustained Republican scrutiny.

Upshot: Tuesday could therefore be the far left’s moment inside the Democratic Party. Whether it becomes a durable political realignment will depend on what happens in Michigan in November.

■  WEATHER

— NWS outlook: There is a Slight Risk (level 2/5) of severe thunderstorms over parts of the Upper Mississippi Valley and the Southwest on Tuesday…

…There is a Slight Risk (level 2/4) of excessive rainfall over parts of the Carolina Coast, the Eastern Gulf Coast of Florida, and the Southwest

on Tuesday… …There is a Slight Risk (level 2/4) of excessive rainfall over parts of the Southwest on Tuesday and over parts of the Upper Great Lakes, Middle Mississippi Valley into the Central Plains on Wednesday…
 

—Cooler Corn Belt outlook eases crop stress as southern Plains bake

Frequent storms support Midwest crops, but heat and dryness intensify farther south

The latest 15-day forecast remains broadly favorable for much of the U.S. Corn Belt, where a persistent northwest flow aloft is expected to steer repeated rounds of ridge-rider thunderstorms across the region. Near- to mostly above-normal rainfall should maintain ample soil moisture during critical reproductive and grain-fill stages, while a cooler temperature trend across the northern Plains and northeastern Corn Belt has substantially reduced the risk of widespread heat stress.

The cooler adjustment is particularly important because it limits the potential for high nighttime temperatures and rapid moisture loss during crop development. Temperatures in those northern production areas are now projected to remain close to normal through the 15-day period, supporting corn pollination, kernel development and soybean pod setting.

The combination of moderate temperatures and adequate moisture should preserve high yield potential across much of the central and northern Corn Belt. From a market perspective, the forecast is likely to reinforce expectations for generally favorable national corn and soybean production unless future storms become excessively heavy or unevenly distributed.

Repeated thunderstorms are not entirely without risk. Ridge-rider systems can produce localized flooding, wind damage and hail, while persistently wet soils may increase disease pressure and limit fieldwork. Saturated areas could also experience nutrient loss or shallow-rooted crops, leaving them more vulnerable should conditions suddenly turn hot and dry later in August.

Even so, the broader Corn Belt outlook currently presents more opportunity than threat. The shift toward cooler temperatures removes one of the major weather risks that had been building over northern and eastern production areas.

Southern Plains heat becomes the primary weather threat. Conditions remain far more threatening across the Southern Plains. Temperatures are expected to regularly exceed 100 degrees during both the six- to 10-day and 11- to 15-day periods, with readings averaging as much as 10 degrees above normal.

The prolonged heat will sharply increase evaporation rates and livestock water demand while accelerating the deterioration of pastures and rangeland. Cattle performance could suffer as animals reduce feed intake and expend more energy managing heat stress. Producers may also face increased cooling, watering and supplemental-feed costs.

Crop impacts will depend on location and development stage, but cotton, sorghum and late-planted corn and soybeans will be vulnerable where irrigation is unavailable or water supplies are limited. Extreme temperatures can shorten reproductive periods, reduce grain or boll development and accelerate crop maturity before plants reach their full yield potential.

The heat will be compounded by strictly below-normal rainfall across southern portions of the hard red winter wheat belt. Although much of the current wheat crop has already been harvested, worsening moisture deficits could weaken pasture conditions and reduce soil-moisture reserves ahead of fall wheat planting. Producers may need meaningful rainfall before establishment of the next crop can proceed under favorable conditions.

Mid-South dryness raises crop and transportation concerns. The Mid-South is also expected to receive below-normal rainfall during the next 15 days, with near- to mostly above-normal temperatures returning to the region. The combination could begin to stress crops as soil moisture is depleted, particularly in areas that miss scattered thunderstorms or lack sufficient irrigation.

The dry forecast also offers little relief for already-low river levels. Continued deterioration could eventually create navigation restrictions, reduce allowable barge drafts and raise transportation costs as the fall harvest approaches. The immediate effect may be limited, but the risk will grow if below-normal rainfall continues deeper into August and across upstream portions of the river system.

National outlook favorable, but regional risks are growing. The developing pattern is increasingly divided. The main Corn Belt retains a favorable mix of rainfall and moderate temperatures, while the Southern Plains and Mid-South face escalating heat and moisture stress.

For agricultural markets, that split suggests weather may support national corn and soybean yield expectations while creating sharper regional differences in crop performance, pasture availability and cash basis levels. The greatest national production risk would emerge if Southern Plains heat expands northward or Corn Belt thunderstorms become less frequent during the second half of August.

Upshot: For now, however, the cooler Corn Belt forecast should limit weather-related risk premiums in grain futures, while the persistent heat and dryness farther south warrant close monitoring for livestock losses, declining pasture conditions and localized crop damage.

■  REFERENCE LINKS TO KEY TOPICS

Index to links of special reports & other items of note