Sinograin Auctions Clear Way for China’s U.S. Soybean Buying Push

Biofuel import squeeze raises RIN risk as mandates climb; 45Z and EPA’s half-RIN plan tighten supply as biodiesel mandates rise

Link: Diesel Supply Squeeze Threatens U.S. Harvest and Farm Margins
Link: Subject Warsh’s Honeymoon Is Over: The Bond Market Just Fired a Warning Shot

Link: Corteva Raises 2026 Outlook as Margin Gains Offset Sales Miss
Link: Boozman Reverses Course, Adds Year-Round E15 to Senate Farm Bill 2.0
Link: The War Premium: High Fuel and Materials Costs Will Outlast the Fighting in Iran
Link: Beijing Threatens Retaliation as U.S. Closes Door on Chinese Robots

Link: ADM Doubles Down on Crush: Four-Plant Upgrade to Add 25 Million Bushels of Soybean Demand
 

UP FRONT

■  TOP STORIES

— Fresh fighting supports crude, but tanker flows now dictate the next move: Oil retains a sizable geopolitical premium as U.S./Iran fighting continues, but prices increasingly depend on actual tanker traffic through Hormuz, the Red Sea and the Black Sea.

— Sinograin auctions clear the way for China’s U.S. soybean buying push: China’s reserve auctions are freeing storage space for pledged U.S. soybean purchases, potentially reducing Brazilian sales through early 2027.

— Biofuel import squeeze raises RIN risk as mandates climb: Lost tax credits, tariffs and EPA’s planned half-RIN policy are discouraging imports as rising biodiesel mandates tighten supplies and support domestic feedstock demand.

— New Texas screwworm case raises pressure on border reopening: Another cattle case in Brewster County raises the U.S. total to 43, but USDA’s plan to reopen the Douglas, Arizona, crossing remains intact.

— Farm Bill 2.0 text delayed as SNAP and E15 deals remain unsettled: Sen. John Boozman (R-Ark.) still targets an Aug. 6 markup, but unresolved SNAP concessions and E15 language threaten the bill’s path through Congress.

■  FINANCIAL MARKETS

— Equities today: Technology strength is supporting a higher opening, although Apple’s decline, rising Treasury yields, Middle East tensions and elevated oil prices could fuel volatility.

— Equities yesterday: Stocks rallied sharply July 30, with the Nasdaq climbing 2.78%, the S&P 500 gaining 1.66% and the Dow rising 1.19%.

■  AG MARKETS

— USDA daily export sales: Exporters reported selling 252,000 metric tons of soybeans to unknown destinations for delivery during 2026-27.

— Grain markets slide as crop-friendly rain trumps global risk: Corn, soybeans and wheat retreated as improving Midwest weather outweighed strong export demand and threats to Black Sea shipping.

— International grain prices: A sharply smaller EU corn crop and 15-year-low French ratings are increasing import needs, while cheap Russian supplies continue limiting wheat prices.

— Cotton AWP rises again: The Adjusted World Price increased to 64.66 cents per pound for the week beginning July 31, remaining above 60 cents since April.

— Ag markets, Thur., July 30: Row crops extend retreat as wheat, cotton and cattle find support: Corn and soybeans weakened on liquidation, while Black Sea concerns lifted wheat and technical buying supported cotton and cattle.

■  WOTUS

— OMB meetings push EPA’s WOTUS rewrite beyond July: Additional stakeholder sessions have delayed EPA’s rule into August as the administration focuses on producing a legally durable definition.

■  FERTILIZER

— Brazil fertilizer pullback puts corn crop and exports at risk: High costs, expensive credit and shipping disruptions could reduce fertilizer use, posing the greatest threat to Brazil’s second-crop corn production.

■  CHINA

— China signals faster fiscal support, but no stimulus bazooka: Beijing plans to accelerate bond-funded infrastructure spending and targeted credit support without launching a massive consumer-focused stimulus package.

■  TAX POLICY

— Higher inflation will widen 2027 tax breaks—but not for everyone: Indexed brackets and deductions should increase, but frozen thresholds and chained-CPI adjustments will expose more taxpayers to higher liabilities.

■  POLITICS & ELECTIONS

— Fetterman threat raises stakes in Democrats’ Israel divide: Sen. John Fetterman (D-Pa.) says he could leave the party over an anti-Israel platform, potentially complicating Democratic Senate strategy and coalition unity.

■  WEATHER

— NWS outlook: Severe storms and heavy rain threaten the Mississippi, Ohio and Great Lakes regions, while flooding risks persist elsewhere and dangerous heat expands across the West.

— Corn Belt rains rescue yield potential as southern Plains drought deepens: Timely rainfall and cooler weather are protecting Midwest corn and soybean yields, while extreme heat and worsening drought threaten Southern Plains crops and livestock.

■  TOP STORIES

—Fresh fighting supports crude, but tanker flows now dictate the next move

Crude oil is ending July with a substantial geopolitical premium, but Friday’s decline underscored an important shift in the market: Traders are increasingly responding to actual tanker movements rather than every military headline

West Texas Intermediate crude reached over $84 per barrel Friday morning, while Brent was at $87.50. WTI is on track for an 18% July gain and Brent for a 21% advance, snapping two consecutive monthly declines. The scale of the rally shows that the market is pricing a sustained probability of disruption —  yet a complete or permanent loss of Middle Eastern supply.

Renewed fighting between the U.S. and Iran is keeping that risk premium embedded. U.S. Central Command said it completed a “heavy wave” of strikes against Iranian Revolutionary Guard targets late July 29 in response to attempted Iranian missile attacks on U.S. forces. The exchange has reduced expectations for a near-term diplomatic breakthrough, although Friday’s weaker crude prices show that another round of strikes will not necessarily produce a lasting rally unless it physically reduces exports.

The critical distinction is that Thursday’s improvement occurred mainly in the Bab el-Mandeb Strait, not the Strait of Hormuz. Kpler data showed 25 commodity vessels passing through Bab el-Mandeb on Thursday, while only two tankers transited Hormuz. Before the conflict, Hormuz carried roughly one-fifth of global oil and liquefied natural gas supplies, meaning traffic through the Gulf’s most important outlet remains severely impaired despite occasional large cargo movements.

That explains why crude can fall on a day of military escalation: Even a modest increase in shipments provides immediate barrels to refiners and demonstrates that the waterways are not completely closed. But it would be premature to treat the increase as a normalization of Gulf trade. Tanker availability is tightening, insurance and freight costs have risen, and vessel owners remain reluctant to enter areas where the security situation can change within hours.

Saudi Arabia’s proposed multinational maritime coalition could eventually improve confidence in the Red Sea corridor. Representatives from 43 countries and the European Union attended the Saudi-hosted meeting, but only 14 countries formally supported the initiative. Oman and the United Arab Emirates were notably absent from the initial group of supporters.

The coalition therefore remains more of a strategic signal than an immediate solution. Its effectiveness will depend on which countries provide ships, aircraft and intelligence; whether vessels receive direct escorts; and whether participating governments agree on rules for responding to Houthi attacks. A poorly coordinated coalition could deter attacks, but it could also widen the conflict if escort vessels become targets.

The third pressure point is the Black Sea, where loadings at the Caspian Pipeline Consortium terminal were suspended for the third time in July after two tankers were attacked. CPC handles about 80% of Kazakhstan’s oil exports and close to 2% of global crude supply, making it far more important than a typical regional terminal.

The significance of the CPC disruption extends beyond the barrels involved. The Black Sea attacks are geographically separate from the conflict affecting Hormuz and the Red Sea. Simultaneous problems across independent supply routes reduce the market’s ability to replace one disrupted grade or cargo with another. Kazakhstan also has limited near-term alternatives because its largest oil fields were developed around the CPC export system.

Underlying market fundamentals are providing additional support. U.S. crude inventories fell 7.2 million barrels to 404.5 million barrels last week—the lowest level since 2018. That leaves refiners and consumers with a smaller cushion if Middle Eastern or Black Sea disruptions persist.

The market outlook: The current price structure assumes that disruptions will remain intermittent rather than become permanent. Continued recovery in tanker traffic, a functioning Red Sea escort system and another CPC restart could remove several dollars of geopolitical premium. But a sustained shutdown of Hormuz, Bab el-Mandeb or the CPC terminal could quickly return Brent above $100. One energy analyst expects Brent to swing between $80 and $100 as the conflict ebbs and flows.

For U.S. agriculture, the immediate consequence is higher diesel, freight and production costs. Higher petroleum prices may improve the relative economics of biofuels, but that benefit would be policy-dependent and could be outweighed initially by increased transportation and input expenses.

Upshot: The central lesson is that oil is no longer reacting simply to whether attacks occur. It is reacting to whether ships sail, terminals load and insurers remain willing to cover the voyage. As long as several major export corridors remain vulnerable at the same time, crude’s July risk premium is unlikely to disappear completely.

—Sinograin auctions clear the way for China’s U.S. soybean buying push

Reserve sales clear space for U.S. cargoes and pressure Brazilian demand

China’s Sinograin sold roughly half of the 504,000 metric tons of imported soybeans offered Friday in its largest reserve auction since January. That indicates about 250,000 metric tons moved into commercial channels. Sinograin has scheduled another auction of 501,158 metric tons for Wednesday, Aug. 5 — not Friday — involving soybeans produced between 2022 and 2025.

The significance is less about the size of one auction than the return to a regular auction schedule. Sinograin is rotating older imported beans out of government warehouses and into China’s crushing sector, which should create storage capacity for incoming cargoes. Similar auctions early this year were widely interpreted as an effort to clear space for U.S. soybeans purchased following the 2025 trade truce.

That explanation is particularly persuasive now. The White House says China committed to buying at least 25 million metric tons of U.S. soybeans in each of 2026, 2027 and 2028. The current auctions therefore appear to be part of the logistical preparation needed to accommodate a large fall and winter U.S. export program, although Beijing has not publicly characterized the auctions that way.

The 50% clearance rate nevertheless provides an important market signal. China can move reserve supplies, but commercial crushers are not willing to buy unlimited quantities at the prices and locations being offered. Buyers may be discounting older soybeans, transportation costs or weak processing margins. Sinograin may consequently have to lower its auction prices, offer more attractive delivery terms or hold auctions for several weeks to create the desired storage capacity.

The partial sale should not be interpreted as evidence China is abandoning its U.S. purchase commitment. Instead, it reinforces the likelihood that the buying program will remain heavily state directed. Earlier this year, Sinograin and COFCO accounted for China’s major U.S. purchases, while private crushers continued to favor cheaper Brazilian supplies. Political commitments can redirect state purchases, but they do not automatically change the commercial economics facing private buyers.

A purchase program large enough to move both markets. USDA currently forecasts China will import 115 million metric tons of soybeans during 2026-27 and crush 111 million metric tons. A 25-million-ton U.S. commitment would equal more than one-fifth of China’s expected annual imports. USDA also projects U.S. soybean exports at 1.66 billion bushels, or approximately 45 million metric tons, meaning China’s commitment would be equivalent to roughly 55% of the projected U.S. export program. The calendar-year trade pledge and USDA’s September-August marketing year are not directly comparable, but the scale shows why China’s purchases could dominate U.S. export demand.

For Brazil, the displacement is likely to be concentrated in the period from the U.S. harvest through the early stages of Brazil’s next harvest. China can prioritize U.S. soybeans from September through January, reducing demand for Brazilian old crop supplies and limiting early bookings of Brazil’s 2026-27 crop. Because crushers arrange coverage and freight months in advance, the effects could extend into January and February 2027.

But Brazil is unlikely to lose 25 million metric tons of exports on a one-for-one basis. Some Brazilian beans will be redirected to Europe, Southeast Asia, the Middle East and other markets that would otherwise have purchased U.S. soybeans. USDA is forecasting increased soybean exports from both the U.S. and Brazil as China’s overall imports and global soybean trade expand. Brazil also remains structurally competitive and should regain leverage once its new harvest accelerates in early 2027.

For U.S. growers, a concentrated Chinese buying program would support Gulf and Pacific Northwest export demand, strengthen interior basis levels and reduce the amount of new-crop soybeans that must compete for domestic storage. Brazilian export premiums, meanwhile, could weaken during the U.S. shipping window as exporters compete for alternative destinations.

The principal risk remains implementation. U.S. officials were still pressing China this week to meet its agricultural commitments fully, meaning the reserve auctions are evidence Beijing is preparing for additional imports — not proof that all 25 million metric tons have been contracted or scheduled for shipment.

Bottom line: Sinograin is constructing the logistical runway for a major rotation back toward U.S. soybeans. The process should shift Chinese demand away from Brazil during the fourth quarter of 2026 and into early 2027, but Brazil’s price advantage and ability to redirect exports mean the effect will be a reshuffling of global trade flows rather than a permanent loss of Brazilian soybean demand.

—Biofuel import squeeze raises RIN risk as mandates climb; 45Z and EPA’s half-RIN plan tighten supply as biodiesel mandates rise

Valero says lost credits are slowing imports as EPA demands more biodiesel

Valero Energy says the sharp slowdown in U.S. biofuel imports is not simply a matter of weak demand. It reflects a policy structure that has stripped imported biodiesel and renewable diesel of federal tax support just as refiners face record Renewable Fuel Standard (RFS) requirements.

During Valero’s second-quarter earnings call, Eric Honeyman, the company’s senior vice president for renewable operations and low-carbon fuels, said foreign supplies have been constrained by the elimination of tax benefits for imported biofuels, limited registration among some foreign producers and new tariffs. U.S. biodiesel imports through June were only about one-quarter of the 40.6 million gallons imported during the same period in 2024, according to Argus Media data cited by Reuters.

The central change was the expiration of the $1-per-gallon biodiesel blender’s tax credit after 2024. Because the old credit was claimed by the company blending the fuel in the U.S., qualifying imported biodiesel could receive the same subsidy as domestically produced fuel.

Its replacement, the Section 45Z Clean Fuel Production Credit, operates very differently. It is a producer credit available only for transportation fuel made in the U.S. Beginning with fuel produced in 2026, qualifying fuel also must be derived exclusively from feedstocks grown or produced in the U.S., Canada or Mexico. Imported finished biofuel receives no 45Z credit, while fuel produced domestically from South American or Asian feedstocks generally loses eligibility as well.

That creates a substantial price disadvantage for foreign gallons. An importer must overcome the absence of the tax credit, freight and potentially tariffs before its product becomes competitive with U.S.-produced renewable fuel. Even when imported fuel can still generate full-value RINs during 2026 and 2027, the RIN may not be valuable enough to offset the missing tax benefit.

Mandates are rising faster than supply. The import slowdown comes as EPA has dramatically expanded biomass-based diesel requirements. The agency finalized an 8.86-billion-RIN requirement for 2026 and 8.95 billion RINs for 2027. After including the partial reallocation of previously exempted small-refinery volumes, the applicable totals rise to 9.07 billion RINs this year and 9.20 billion in 2027.

EPA estimated that meeting the 2026 standard would require about 5.4 billion physical gallons of biodiesel and renewable diesel, more than 60% above the 2025 level. But domestic production has not kept pace. Biodiesel plants were operating at less than 77% of capacity in May and renewable diesel plants at about 78%, compared with the roughly 90% utilization EPA assumed. May production generated 736 million biomass-based diesel RINs, well below the approximately 915 million needed each month to remain on pace.

Imports would ordinarily provide a release valve. Instead, federal policy has made those gallons less attractive economically. The result is a tighter D4 RIN market, greater reliance on the existing RIN bank and rising compliance costs for refiners that cannot generate enough credits through their own blending operations. The RIN bank has already been shrinking, and analysts have warned it could be largely depleted by the end of 2026 if production continues to trail the mandate.

The 2028 policy could deepen the divide. EPA declined to impose its proposed “half-RIN” treatment on imports during 2026 and 2027, recognizing that the industry needed more time to adjust. However, the agency has announced its intention to implement the policy beginning in 2028 through its next RFS rulemaking. Under that approach, imported renewable fuel and U.S.-produced fuel made from imported feedstocks would receive only half as many RINs as domestic fuel produced from domestic feedstocks. EPA has not yet completed the future regulatory action, but its stated direction is clear.

The timing may itself discourage foreign suppliers. A producer considering the cost of registering with EPA, developing U.S. customers and arranging shipping faces only a limited 2026-2027 period in which imported gallons retain full RIN value. Beginning in 2028, the same fuel could generate only half the compliance credit. That makes investment in the U.S. market less attractive even before the policy formally takes effect.

University of Illinois agricultural economist Scott Irwin disputes Valero’s contention that insufficient foreign registrations are a major constraint, arguing that enough registered import and domestic production capacity exists to satisfy the 2026 requirements. That suggests the immediate bottleneck is less about theoretical capacity than whether plants and importers can profitably produce and deliver the gallons at prevailing feedstock, RIN and fuel prices.

Domestic agriculture gains leverage — but also risk. For U.S. agriculture, the policy combination is broadly supportive of domestic fats and vegetable oils. Restricting 45Z eligibility to North American feedstocks and eventually discounting RINs tied to imports should increase demand for soybean oil, corn oil, animal fats and used cooking oil sourced within the region. That can strengthen soybean-crush margins, support additional processing investment and shift more soybean value toward the domestic oil market.

However, 45Z’s North American definition also includes Canadian and Mexican feedstocks, meaning not all of the resulting demand is guaranteed to flow to U.S. farmers. Meanwhile, rapidly rising feedstock prices could squeeze biodiesel plants that cannot pass those costs through higher fuel or RIN values. A mandate intended to stimulate domestic production can become counterproductive if feedstock scarcity keeps plants from operating at the utilization rates EPA assumed.

Valero’s own results illustrate the opportunity for integrated domestic producers. Its Diamond Green Diesel joint venture reported second-quarter operating income of $717 million, compared with a $79 million loss a year earlier, as stronger renewable-fuel economics accompanied higher diesel prices and RFS demand.

The policy challenge is that Washington is attempting to accomplish two objectives simultaneously: sharply increase biomass-based diesel consumption and reduce reliance on foreign fuel and feedstocks. Those goals can coexist over time as domestic capacity and oilseed processing expand, but the transition is proving difficult. In the near term, slower imports and lagging domestic production are likely to keep D4 RIN values elevated and increase pressure on EPA to provide compliance flexibility, resolve refinery exemptions or reconsider how aggressively obligations rise after 2027.

Bottom line: imported biofuel has shifted from being an economical compliance tool to a higher-cost supply of last resort. That supports domestic producers and U.S. soybean-oil demand, but it also raises the risk that refiners will struggle to secure enough physical fuel and RINs to meet mandates that were built on much higher production assumptions.

—New Texas screwworm case raises pressure on border reopening

USDA’s Douglas plan remains intact 

USDA’s Animal and Plant Health Inspection Service (APHIS) has confirmed another New World screwworm (NWS) case in cattle in Brewster County, Texas, bringing the nationwide total to 43. Eight cases remain active and 35 are considered inactive. Twelve cases have been confirmed in July, including all eight of the currently active cases — a concentration that suggests the outbreak is still evolving despite progress in closing earlier investigations.

The latest detection brings Brewster County’s total to three cattle cases: two active and one inactive. The county’s location near the Mexican border makes the cluster particularly important as USDA prepares to resume cattle imports from Mexico through the Douglas, Arizona, port of entry.

For now, the new case is not expected to change USDA’s reopening plans. But the decision remains vulnerable to further detections and will depend heavily on inspection, treatment and animal-movement protocols that USDA has not yet fully detailed.
 

The case count numbers are improving: 12 for July is a big improvement from 31 in June, although the latest confirmation from USDA is dated July 29 so there is still time for additional cases this month.

USDA has said the reopening will be suspended if NWS is detected in cattle presented for entry. That creates a narrow path forward: Trade can resume, but only while surveillance and inspection systems prevent infected animals from crossing.

Of note: The larger concern is that the growing July case count could increase pressure on USDA to demonstrate that the outbreak is contained before expanding cattle movements. Even without a formal delay, importers, feeders and livestock markets may face continued uncertainty until the agency releases detailed reopening procedures and shows that new cases are not spreading beyond the affected area.

—Farm Bill 2.0 text delayed as SNAP and E15 deals remain unsettled

Boozman keeps Aug. 6 alive, but the emerging compromise may be too narrow

Senate Ag Committee Chair John Boozman (R-Ark.) is delaying release of the final Farm Bill 2.0 markup vehicle until today or Saturday as negotiators work through what he called a “couple of glitches.” Boozman continues to say the committee’s Thursday, Aug. 6, markup is “still on,” but as of Friday morning the panel’s public website still pointed to the June 23 discussion draft and had not posted an Aug. 6 markup notice. The delay appears tied primarily to unresolved negotiations over SNAP and the precise form of the E15 provision rather than a decision to abandon the markup. That is what we signaled in a special report (link) on this topic Thursday. 

The text delay is therefore more than a routine drafting problem. Boozman needs to assemble legislation that can attract at least one committee Democrat, satisfy competing ethanol and refining interests and avoid losing too many House Republicans when the two chambers eventually reconcile their bills. Each of those goals points toward compromise, but not necessarily toward the same compromise.

Year-round E15 is the easier part of the political equation. Boozman previously argued that the issue belonged under the jurisdiction of the Senate Environment and Public Works Committee, but he had also left open the possibility of including it if that committee signed off. His decision to put E15 into Farm Bill 2.0 suggests the jurisdictional obstacle has been managed sufficiently for markup, although the final text will reveal whether the issue has been fully resolved or simply deferred to the floor. Year-round E15 gives Midwestern Democrats a tangible agricultural achievement while turning the farm bill into what may be ethanol supporters’ last viable legislative vehicle this year.

But the details of the E15 language could matter as much as its inclusion. Reports indicate the Senate version will be narrower than the House-passed Nationwide Consumer and Fuel Retailer Choice Act. The House bill not only authorizes permanent year-round E15 sales but also rewrites the Renewable Fuel Standard’s small-refinery exemption system. Among other changes, it would eventually replace the existing hardship-petition process with new automatic exemptions for qualifying refiners and prevent EPA from reallocating some exempted blending obligations to other refiners. Those provisions helped secure a House compromise but have generated opposition from refinery-state senators.

A stripped-down Senate approach could make the bill easier to move through the chamber by separating the popular E15 market-access provision from the more divisive SRE overhaul. It also could reduce the risks CBO identified for soybean growers: CBO concluded that the House bill’s limits on reallocation would weaken biomass-based diesel and soybean-oil demand enough to outweigh the modest benefit of additional ethanol demand for corn. But removing or substantially altering the SRE compromise would create a major House/Senate difference and could unravel the coalition of ethanol, petroleum and retail interests that supported the House measure.

SNAP remains the more consequential problem. Boozman and Senate Ag Ranking Member Amy Klobuchar (D-Minn.) are discussing a delay in the state benefit-cost requirements enacted in last year’s reconciliation law, with current talks reportedly centered on one year. Klobuchar and other Democrats have sought at least a two-year delay, while the bipartisan National Conference of State Legislatures has called for both benefit and administrative cost sharing to be delayed until 2030.

The scope of Boozman’s offer will be critical. The new law does not impose just one cost shift. Beginning Oct. 1, 2026, the federal government’s share of SNAP administrative expenses falls from 50% to 25%, leaving states responsible for 75%. Beginning in fiscal 2028, states also must pay 5%, 10% or 15% of SNAP benefit costs when their payment error rates exceed 6%, 8% or 10%, respectively. The attached report notes that only nine states were below the 6% threshold and that the national error rate was 10.62%, putting most states on course to owe at least some benefit costs.

Consequently, a one-year postponement covering only the benefit-cost provision may not be enough. Democrats could argue that states would still face the earlier and immediate administrative-cost increase. Conversely, extending both provisions for two years would carry a larger federal price tag, raising demands from Republicans and the Trump administration for a budget offset. The involvement of senior administration officials in the negotiations indicates that the cost and structure of the SNAP concession have become central to the final drafting dispute.

Committee arithmetic leaves Boozman with little room to maneuver. With Sen. Mitch McConnell (R-Ky.) still absent and not medically cleared to return, the committee is effectively divided 11–11. A tie cannot report the bill, so Boozman needs at least one Democratic vote unless McConnell returns before the markup. Even a narrow deal sufficient to win one Democrat would not necessarily solve the larger problem: Republicans hold 53 Senate seats and would need broader Democratic support to reach the 60 votes generally required to overcome a filibuster.

That makes the duration of the SNAP delay a test of whether Boozman is negotiating only for committee passage or for eventual enactment. A one-year delay might secure the single vote needed on Aug. 6. A two-year delay, or a broader compromise addressing administrative costs, would stand a better chance of creating a durable Senate coalition—but would be harder to sell to House budget hawks.

The House passed its farm bill 224–200 on April 30, with 14 Democrats supporting it, but that coalition was built around leaving the reconciliation law’s SNAP cost shifts largely intact. A Senate package that adds E15 while delaying SNAP costs would change the political balance: some conservative House Republicans could defect, forcing House Ag Committee Chair GT Thompson (R-Pa.) and Speaker Mike Johnson (R-La.) to replace them with additional Democrats. A narrowly tailored one- or two-year delay probably represents the outer limit of what could survive both chambers, particularly without an offset.

The legislative calendar is now the final obstacle. Even if the committee completes its markup Aug. 6, the Senate is scheduled to leave shortly afterward. Leaders would still have to find floor time, secure 60 votes, negotiate the E15 and SNAP differences with the House and bring the resulting agreement back through both chambers. The current farm bill extension expires Sept. 30 — the same day government funding runs out.

Bottom line: The delayed language does not yet mean the Aug. 6 markup will collapse, but it confirms that Boozman has not secured the bargain needed to make it meaningful. E15 improves Farm Bill 2.0’s political appeal, especially among corn-state lawmakers, but SNAP will determine whether the bill can leave committee and whether it has any realistic path through the Senate. The attached report estimated a roughly 75% probability that final enactment slips beyond the Nov. 3 elections and identified another one-year extension as the most likely fallback. The latest delay only strengthens that assessment.

■  FINANCIAL MARKETS

—Equities today: U.S. Dow opened around 220 points higher, led by technology shares after Amazon surged about 11% on stronger cloud growth. Apple’s nearly 8% decline following a cautious outlook is limiting the broader advance. The session could remain volatile following Thursday’s sharp rebound. Labor costs increased 0.9% during the second quarter, slightly above expectations, pushing Treasury yields higher and reinforcing concerns that the Federal Reserve may keep monetary policy restrictive. Investors also remain sensitive to Middle East tensions, elevated oil prices and whether heavy artificial-intelligence spending will continue producing strong earnings growth.

In Asia, Japan +4%. Hong Kong +0.1%. China +0.7%. India +0.2%.
 

In Europe, at midday, London +0.5%. Paris +1%. Frankfurt +1%.

—Equities yesterday: 

■  AG MARKETS

—USDA daily export sales: 252,000 MT soybeans to unknown for 2026/27. 

— Grain markets slide as crop-friendly rain trumps global risk

Corn, soybeans and wheat retreat as Midwest rain improves yield prospects

Grain futures traded broadly lower overnight Friday, with improving U.S. crop weather outweighing strong export demand and escalating threats to Black Sea shipping. September corn fell to about $4.43 per bushel, while August soybeans traded near $11.78 1/2. August soybean meal slipped to roughly $314 per ton and August soybean oil traded around 67.40 cents per pound. September soft red winter wheat dropped to approximately $6.55, while September hard red winter wheat traded near $7.24 1/4. The losses extended a sharp reversal from last week’s weather-driven rally. Traders are increasingly confident that widespread rainfall and cooler temperatures will stabilize U.S. corn and soybean yield prospects, at least through the opening days of August.

• Midwest rain pressures corn. Corn remained under pressure as forecasts called for significant rainfall across southern Minnesota, eastern Iowa, northern Illinois and other portions of the central and eastern Corn Belt. Some locations could receive between 1.5 inches and more than 3 inches through early next week, while parts of Nebraska and South Dakota also are expected to receive additional moisture. The timing is favorable for corn completing pollination and entering grain fill. Although some areas of the northwestern Corn Belt have received less rain than expected, the broader weather pattern has reduced the immediate risk of widespread yield losses. September corn at $4.43 is about 20 cents below its level at the end of last week. December futures have moved below their 20-day moving average, signaling that the market’s technical momentum has turned bearish after prices reached a near-term peak around $4.92 on July 24. The next significant support area for December corn is near $4.60, followed by roughly $4.55. The downside is being cushioned by strong demand. U.S. new-crop corn sales exceeded 1 million metric tons during the week ended July 23, and total old-crop commitments remain nearly 23% ahead of the comparable year-earlier period. Longer-term disruption of Black Sea exports also could eventually shift additional demand toward the U.S. For now, however, traders are treating favorable weather as the more immediate market force.

• Soybeans lose weather premium ahead of August. Soybeans are entering their most important weather period as the crop moves through pod setting and pod filling. The expected rainfall and a temporary break from extreme heat have reduced concerns that the decline in national crop ratings will translate into major yield losses. USDA rated 63% of the soybean crop good to excellent as of July 26, down from 66% a week earlier and 70% last year. Ordinarily, that deterioration would support prices, but the market is looking ahead to the improved moisture outlook rather than backward at the ratings decline. The weakness in August soybean meal and soybean oil points to liquidation across the broader soy complex. Soybean oil has been particularly vulnerable following its recent rally, despite continued expectations for strong domestic biofuel demand. ADM’s plans to expand annual North American oilseed-processing capacity by 700,000 metric tons reinforce the longer-term bullish outlook for domestic soybean crush demand. But those investments do not immediately offset the pressure from better crop weather, technical selling and traders reducing previously accumulated long positions. China remains the primary support beneath the soybean market. USDA reported 519,000 metric tons of new-crop sales to China during the latest reporting week, followed by a separate 132,000-ton sale. Outstanding U.S. soybean sales to China for 2026-27 have reached 2.78 million metric tons, or roughly 11% of China’s 25-million-ton purchase commitment. That business should help limit the depth of the decline, but traders will want evidence that Chinese buying continues as the U.S. harvest approaches.

• Wheat risk premium fades. Wheat posted the largest overnight losses even though the security threat surrounding Black Sea exports continues to intensify. Attacks have disrupted shipping through the Sea of Azov and Kerch Strait and damaged grain infrastructure at Russia’s Taman export complex. Russian exporters have been forced to redirect some grain by truck and rail toward other Black Sea terminals, increasing costs and congestion. The market’s problem is that those disruptions have yet to produce a meaningful increase in U.S. wheat demand. U.S. wheat export commitments for 2026-27 are running 27% below a year earlier. USDA forecasts full-year exports at 775 million bushels, down 15% and the lowest in three years. Until importers begin shifting purchases toward the U.S., traders appear reluctant to maintain a large geopolitical premium in Chicago and Kansas City futures. September SRW wheat near $6.55 remains well below its July 24 intraday high above $7.11. September HRW near $7.24 also has retreated substantially from last week’s three-year high near $7.77.

• Outlook: weather controls the near-term direction. The overnight trade shows that the market has shifted from pricing potential crop damage to pricing the possibility of trendline or better yields. That does not mean weather risk has disappeared. Extended forecasts indicate above-normal temperatures could return across the Corn Belt during the Aug. 5-13 period, while below-normal rainfall probabilities are expanding across parts of the western Corn Belt and northern Plains.

The immediate question is whether forecast rainfall verifies. Widespread, soaking totals would likely keep corn and soybean prices under pressure next week. Patchier rainfall — especially across northwestern Iowa, southwestern Minnesota and the eastern Dakotas — could quickly restore a weather premium. Friday’s month-end positioning also may amplify price movement. But absent a deterioration in the weekend forecast, rallies are likely to encounter selling as traders reassess whether last week’s highs marked the peak of the summer weather market.
 

—International grain prices: EU corn crop shrinks again as wheat trades at a rare discount to corn

European grain futures ended the week modestly lower, but the small daily declines mask a supply picture on the Continent that keeps getting worse: the European Commission took a major cut out of its corn crop estimate, French corn ratings fell to a 15-year low, and EU wheat is now trading at a rare and widening discount to EU corn

• Paris futures. September wheat futures on Euronext (MATIF) fell €1.75/MT to €227.75/MT. At the current exchange rate of roughly $1.14 per euro, that is about $260/MT, or $7.08/Bu — a daily decline worth about 5.5 cents/Bu in U.S. terms. Paris August corn futures fell €2.00/MT to €250.25/MT, equal to about $286/MT or $7.26/Bu, a decline of nearly 6 cents/Bu. Note the relationship: EU wheat is trading €22.50/MT (about $26/MT) below EU corn, with French corn valued at $7.20-7.50/Bu. Corn normally trades at a discount to wheat, so an inversion of this size is a flashing signal that European feeders will push wheat into rations as fast as they can — supporting domestic wheat demand while trimming, at the margin, how much corn the EU must import.

• The EU corn problem. French corn ratings fell for the seventh consecutive week to just 34% good/excellent, down from 38% last week and the lowest rating in 15 years. The deterioration is now fully reflected in official numbers: the European Commission cut its EU corn crop forecast to 51.9 MMTs from 59.9 MMTs last month — a stunning 8.0-MMT reduction in a single month that puts the crop 14% below last year. The Commission responded by raising its 2026/27 EU corn import estimate to 24.0 MMTs versus 19.1 MMTs in the current crop year, which would rank among the largest EU import programs on record. At roughly $7.26/Bu, EU corn is valued at close to a $2.80/Bu premium to nearby CBOT corn futures (around $4.45-4.50/Bu late this week) — an import arbitrage that is wide open. Ukraine and South America are the natural suppliers, with U.S. corn a marginal beneficiary given EU biotech restrictions, but a 24-MMT EU import program tightens the world coarse-grain trade for everyone.

• EU wheat. The Commission also lowered its EU soft wheat crop estimate (excluding durum) to 124.4 MMTs, down 1.9 MMTs from June, and trimmed EU wheat exports 1.0 MMT to 29.0 MMTs. The smaller export program partly reflects the price relationships noted above: with wheat trading well below corn inside the EU, feed-wheat demand will absorb tonnage that would otherwise move offshore. That same feed demand puts a floor under EU wheat even as export competition stays stiff.

• Russian wheat. Russian FOB wheat is reportedly offered at $235/MT for August shipment from Russian deep-water ports — about $6.40/Bu. That is roughly a $25/MT discount to Paris futures and keeps Russia the price-setter in world wheat trade. The caveat: the Russian FOB market remains poorly defined, with limited forward offers beyond nearby positions. Until forward offers appear in volume, that $235 level is more a marker than a firm market, but it still functions as the ceiling that Paris and Chicago rallies must trade against.

• Palm oil. October Malaysian palm oil futures fell 41 ringgits to close at 4,642 RM/MT. At about 4.07 ringgits to the dollar, that is roughly $1,140/MT, or near 51.7 cents/lb — still a premium-priced vegetable oil that keeps world veg-oil values underpinned despite the day’s setback.

Bottom line: The EU has flipped from a comfortable grain supplier to a major coarse-grain importer in the space of a month. An 8-MMT corn crop cut, a 15-year-low French crop rating and a 24-MMT import forecast are supportive inputs for world corn trade, even with U.S. participation limited. In wheat, the bearish weight of cheap Russian offers at $235/MT ($6.40/Bu) is being offset by shrinking EU exportable supplies and an internal EU price structure that begs wheat to be fed. The result: world wheat has a firmer floor than the headlines suggest, and the corn import bill Europe is about to run up will be felt across the 2026/27 world balance sheet.

—Cotton AWP rises again. The Adjusted World Price (AWP) for cotton is at 64.66 cents per pound, effective today (July 31), up from 63.82 cents per pound the prior week. The AWP has been at or above 60 cents per pound every week since the week of April 10.

—Ag markets, Thur., July 30: Row crops extend retreat as wheat, cotton and cattle find support

Black Sea risk lifts wheat as profit taking hits row crops and hogs

Agricultural futures finished Thursday, July 30, with a sharply divided tone. Corn and the soybean complex extended their retreat as speculative longs continued to exit positions, while wheat gained on escalating threats to Black Sea exports. Cotton and cattle rebounded on technical buying, but lean hogs suffered another wave of profit-taking.

The session’s broader message was that traders remain willing to pay for specific supply risks, such as disrupted wheat exports or tight cattle supplies, but are reluctant to rebuild broad bullish positions without stronger confirmation from weather, demand or government policy.

Corn’s technical damage deepens. December corn fell 3 1/4 cents to $4.68 1/2, closing near the daily low and at its weakest level in two weeks. The decline itself was modest, but the location of the close was more troubling for market bulls. The recent daily-chart uptrend has been negated, and the market has been unable to hold the gains generated by last week’s buying.

The selling appeared to be driven more by profit-taking and weak long liquidation than a sudden deterioration in corn fundamentals. Even so, the absence of a new weather threat has allowed traders to remove risk premium. Corn now needs to quickly recover the $4.75-to-$4.80 area to stabilize the chart. Failure to do so would leave the market vulnerable to additional selling as traders shift their attention toward crop size and the approach of harvest.

Soybeans struggle as soyoil remains the weak link. November soybeans dropped 4 cents to $11.88 3/4, finishing near the session low and hitting a three-week low. September soybean meal slipped 40 cents to $317.50, while September soybean oil declined 44 points to 68.22 cents, also setting a three-week low.

Meal’s relative stability helped prevent a more aggressive soybean selloff, but soyoil continues to undermine the complex. The market is dealing with technical liquidation as well as uncertainty surrounding Environmental Protection Agency decisions on small refinery exemptions and Renewable Fuel Standard compliance. Reuters reported that EPA is considering extending the Sept. 1 compliance deadline for 2025 renewable fuel obligations as refiners face elevated renewable identification number costs and the agency works through pending exemption requests. That uncertainty makes traders less confident about near-term biomass-based diesel demand for soybean oil.

The soybean market is no longer simply pausing after a rally. Closing near the lows while establishing fresh three-week lows indicates that sellers continue to control the short-term trend. Bulls will need either a threatening August weather forecast, renewed export demand or greater certainty about biofuel policy to reverse the current momentum.

Black Sea attacks restore some wheat risk premium. Wheat futures posted modest gains, with September SRW wheat rising 2 3/4 cents to $6.63 1/2, September HRW gaining 5 1/4 cents to $7.30 3/4 and September spring wheat advancing 6 1/2 cents to $7.11 1/2.

The gains followed reports of significant damage to a major Russian grain terminal at Taman on the Kerch Strait. Reuters reported that the Demetra-controlled facility has an annual capacity of 5 million metric tons. Shipping through the Sea of Azov and Kerch Strait—routes that previously handled as much as one-quarter of Russian grain exports—has been halted since July 10 because of drone attacks. Russian exporters have attempted to reroute grain to deeper Black Sea ports by rail and truck, but attacks on those facilities have also increased. We have issued several special reports on this topic in recent days. 

The relatively restrained wheat rally was revealing. Traders are rebuilding a geopolitical risk premium, but they are not yet pricing in a prolonged loss of Russian exports. The market appears to believe grain can still move through alternative ports, although transportation costs, delays and insurance risks are rising. Additional attacks that materially reduce loading capacity at deep-water terminals would likely produce a much stronger response.

Cotton’s uptrend survives. December cotton jumped 114 points to 80.67 cents, finishing near the daily high. The rally erased much of Wednesday’s setback and kept the daily-chart price uptrend intact.

Technical buying and an intraday decline in the U.S. dollar supported prices. A weaker dollar can improve the competitiveness of U.S. cotton in world markets, but follow-through buying will still require evidence that export demand is responding. Thursday’s rebound restored positive momentum without yet establishing a decisive breakout.

Cattle rebound as traders reconsider the recent selloff. August live cattle surged $3.325 to $231.225, closing near the daily high and reaching a two-week high. August feeder cattle rose $2.20 to $346.475.

The rally reflected bargain hunting and corrective buying following the sharp liquidation tied partly to USDA’s planned phased reopening of the border to Mexican cattle. The border announcement caught traders off guard and contributed to margin-driven liquidation, even though imports are expected to resume gradually and domestic cattle supplies remain historically tight.

Thursday’s strength increases the likelihood that August live cattle established a near-term low, analysts note. Feeder cattle are less technically secure because their daily-chart downtrend remains intact. The next test will come from the cash cattle and boxed beef markets: Futures can recover from an oversold condition, but sustaining the rally will require packer demand and wholesale beef values to stabilize.

Hog rally gives way to a potential market top. August lean hogs plunged $2.25 to $98.425, finishing near the daily low and at a three-week low. The contract’s previous uptrend has been decisively broken, suggesting that a near-term top has formed.

The decline appears to reflect heavy profit-taking after the market’s recent advance, but the weakness also indicates growing concern that the cash hog rally is losing momentum. With the August contract moving closer to expiration, traders will increasingly demand confirmation from the cash index. Without renewed cash strength, futures may remain under pressure as speculative longs continue to reduce exposure.

Bottom line: Thursday’s close left agricultural markets with distinctly different narratives. Corn and soybeans need a fresh weather or demand catalyst to stop their technical deterioration. Wheat is rebuilding geopolitical premium, although traders have not yet concluded that Black Sea exports face a lasting shutdown. Cotton and cattle remain technically constructive after strong rebounds, while lean hogs appear to have shifted from an advancing market into a corrective phase.

■  WOTUS

—OMB meetings push EPA’s WOTUS rewrite beyond July

NRDC joins late-stage review as legal durability eclipses speed

EPA’s latest attempt to redefine “waters of the United States” (WOTUS) will miss the administration’s July timetable as additional stakeholder meetings extend the White House review into August.

The Natural Resources Defense Council is the latest group scheduled to meet with the Office of Management and Budget’s Office of Information and Regulatory Affairs (OIRA). Its addition raises the number of meetings associated with the current package to eight, with three still scheduled after July 31. That puts the review just below the 10 OMB meetings conducted in 2025 on the earlier “Final Clarifying Definition” package.

The rule was submitted to OMB on June 30 and remained under review at the end of July. The remaining published meetings include sessions with the American Petroleum Institute on Aug. 3 and the American Chemistry Council on Aug. 4. Earlier meetings involved the American Road and Transportation Builders Association, Edison Electric Institute and the Competitive Enterprise Institute, among others.

The meeting lineup underscores how much of the late-stage debate involves industries whose construction, energy and land-development activities can trigger Clean Water Act permitting requirements. NRDC’s participation brings a prominent environmental voice into a review that, so far, has been weighted toward business and deregulatory interests.

NRDC has argued that the proposal would eliminate federal protections for numerous wetlands and streams, potentially increasing pollution and flood risks and reducing protections for drinking-water sources and wildlife habitat. EPA, meanwhile, says the rule is designed to implement the Supreme Court’s 2023 Sackett v. EPA decision by more precisely defining “relatively permanent” waters, “continuous surface connection,” tributaries and jurisdictional wetlands.

The central issue for OMB may therefore be less whether the rule should narrow federal jurisdiction — the Trump administration has already made that policy choice — than how far EPA can go without creating new legal vulnerabilities. Environmental organizations and Democratic-led states are almost certain to argue that the agencies are using Sackett to exclude waters and wetlands that the Supreme Court did not directly address. Farm, construction and energy interests could sue from the opposite direction if the final definitions remain too subjective or leave seasonal features within federal jurisdiction.

That legal-durability test is particularly important because the country is already operating under a regulatory patchwork. EPA says the amended 2023 rule is being implemented in 24 states, the District of Columbia and U.S. territories, while the pre-2015 regulatory regime, interpreted through Sackett, applies in the other 26 states because of ongoing litigation. A new rule is intended to establish a more consistent national standard, but immediate lawsuits could reproduce the same state-by-state divisions.

The American Farm Bureau Federation’s absence from the OMB meeting list is notable, but it does not indicate that agriculture has been shut out of the process. OIRA meetings are requested by stakeholders rather than assigned by the White House, and OIRA says it will meet with any interested party while a rule is under review. Farm Bureau also filed extensive comments in January urging EPA to narrow the definition of “relatively permanent,” clarify when wetlands are covered and preserve exclusions for prior converted cropland and ditches.

Farm Bureau may conclude that its written comments and previous engagement with EPA and the Army Corps adequately placed agriculture’s priorities in the record. It also broadly welcomed the proposed rule, although it sought changes intended to prevent ordinary farm features — including irrigation ditches, low areas, ponds and seasonal drainages — from being treated as federally regulated waters. Still, the absence is worth watching because the OMB review is often the final opportunity to influence regulatory language before a rule is released. Farm Bureau or other agricultural organizations could still request meetings as long as the review remains open.

The administration’s Unified Agenda had listed July 2026 as the target for a final rule, but that date was an agency projection rather than a statutory deadline. OMB’s record specifically says there is no legal deadline for the review. The July target is now impossible because meetings continue into August and EPA and the Army must still complete, sign and arrange publication of the rule after OMB finishes.

There is also an unusual discrepancy in the government records. The Unified Agenda places the action in the “Final Rule Stage,” but OMB’s pending-review page labels the package as a “Proposed Rule.” That could be a classification or data-update issue. However, if OMB is reviewing a supplemental proposal rather than the final regulation, EPA could face another public-comment period, pushing final action considerably further into the future.

An August conclusion remains possible if the package is, in fact, the final rule and OMB moves quickly after the remaining meetings. OIRA reviews have no minimum duration and ordinarily may last as long as 90 days, subject to extensions. But the growing meeting docket suggests the White House is prioritizing administrative and legal defensibility over the regulatory agenda’s original timetable.

Bottom line: Missing the July deadline is less significant than what the additional review reveals. EPA is trying to produce a WOTUS definition narrow enough to satisfy farmers and regulated industries, but legally and scientifically defensible enough to survive the lawsuits that will almost certainly follow. The eventual language governing seasonal streams, wetlands, ditches and prior converted cropland — not whether the rule arrives in July or August — will determine whether the administration achieves the regulatory certainty it has promised.

■  FERTILIZER

— Brazil fertilizer pullback puts corn crop and exports at risk

Delayed buying could slow Brazil’s expansion and aid U.S. competitiveness

Brazil’s fertilizer market is signaling a meaningful deterioration in farm economics ahead of the 2026/27 crop season. Some sources predict fertilizer deliveries could fall by at least 10% from last year’s record 49 million tonnes as the Middle East conflict drives up nutrient and freight costs, while expensive credit, mounting farm debt and disappointing crop margins constrain growers’ purchasing power.

A 10% decline would reduce deliveries to roughly 44 million tonnes, although industry estimates range from a 5 million- to 10 million-tonne contraction. The critical question is whether the decline reflects greater efficiency and drawdowns of existing inventories—or whether growers ultimately apply less fertilizer than crops require.

Brazil is particularly vulnerable because imports supplied about 88% of its fertilizer consumption in 2025. The country imported approximately 95% of its nitrogen, 96% of its potash and 72% of its phosphate requirements. Domestic production has not kept pace with the rapid expansion of soybean and corn acreage.

Soybean risk appears manageable — but is growing. The soybean outlook is not yet at the crisis stage. About 80% of fertilizer purchases have reportedly been completed, compared with 85% at this point last year, and buying accelerated during the past three weeks as soybean prices improved relative to fertilizer costs.

Soybeans also require relatively little applied nitrogen because the crop fixes nitrogen biologically. The greater concern is whether financially stressed growers reduce phosphate and potash applications, particularly on Brazil’s highly weathered soils and newly converted or degraded acreage where fertility reserves are limited.

USDA currently projects Brazil’s 2026/27 soybean crop at a record 186 million tonnes, with exports reaching 118 million tonnes and domestic crush rising to 65 million tonnes. Those forecasts leave substantial demand for the crop, meaning even a modest yield disappointment could force competition between exporters and Brazil’s expanding processing industry.

For scale, a 1% shortfall from USDA’s soybean production forecast would equal about 1.9 million tonnes. That would not automatically translate into an equivalent export decline because Brazil could draw down stocks or adjust crush, but it illustrates how a small yield change could tighten the global balance.

Second-crop corn faces the greater threat. The fertilizer situation poses a larger production risk for Brazil’s second corn crop, or safrinha. Growers have reportedly purchased only 30% of their fertilizer needs, compared with 35% a year ago. Much of that crop will not be planted until early 2027, leaving farmers exposed to several more months of volatile nitrogen and phosphate prices.

Corn is far more dependent than soybeans on nitrogen applications. Growers facing tight credit may reduce application rates, plant fewer marginal acres or shift some land away from corn after harvesting soybeans. Delayed imports could also leave fertilizer arriving during Brazil’s congested planting and port season, limiting farmers’ ability to apply nutrients at the optimal time.

USDA currently forecasts Brazilian corn production at 139 million tonnes in 2026/27, domestic use at 98 million tonnes and exports at 44 million tonnes. With domestic feed, livestock and ethanol users competing for supplies, a significant production miss would likely be reflected disproportionately in reduced export availability.

A 2% production shortfall would amount to roughly 2.8 million tonnes. Such a decline would not overturn Brazil’s position as a major corn exporter, but it could tighten supplies during the middle of 2027, when Brazil normally competes most aggressively with U.S. corn in markets across Asia, the Middle East and Latin America.

Logistical risks add to the problem. The roughly three-month lead time between fertilizer shipments leaving suppliers such as Saudi Arabia or Morocco and reaching Brazilian farms is becoming increasingly important. Any disruption at the Strait of Hormuz or Bab el-Mandeb could affect shipping schedules, insurance costs and the availability of sulfur, ammonia, urea and phosphate products.

Sulfur’s rise from $435 to more than $1,150 per tonne is especially damaging for phosphate production. Mosaic’s temporary curtailment of Brazilian operations demonstrates that the problem is no longer limited to imported finished fertilizer; it is also restricting domestic processing of imported raw materials.

Brazilian farmers cannot wait indefinitely. Soybean planting begins in September, while fertilizer for second-crop corn must be positioned before planting accelerates early next year. Purchases delayed for financial reasons can therefore become logistical shortages even when sufficient global supplies technically exist.

Implications for the U.S. ag sector. For U.S. grain producers, the development is potentially supportive. Lower Brazilian yields, reduced second-crop corn acreage or slower agricultural expansion would diminish one of the principal sources of growth in global soybean and corn supplies. Brazil’s corn export forecast of 44 million tonnes compares with USDA’s projected 81 million tonnes of U.S. corn exports, underscoring how changes in Brazilian availability could redirect meaningful business toward the United States.

U.S. soybean exporters could also benefit if Brazil fails to produce its projected record crop, particularly during the late-2026 and early-2027 U.S. export window. The effect would depend heavily on Chinese purchasing policy, exchange rates and the size of the U.S. harvest, but reduced Brazilian export competition would generally strengthen U.S. basis levels and export premiums.

There is an important offset: the same Middle East disruptions squeezing Brazil could increase U.S. fertilizer costs for the 2027 crop. The United States produces a much larger share of its nitrogen and phosphate needs, making it less vulnerable than Brazil, and many farmers secured 2026 supplies before the conflict escalated. Still, U.S. growers remain heavily dependent on imported potash and could face higher nitrogen and phosphate prices when fall purchasing begins.

Bottom line: The immediate threat is not necessarily a sharp collapse in Brazil’s soybean crop, given the advanced level of fertilizer coverage. The greater risk lies with second-crop corn and with Brazil’s longer-term acreage expansion. Unless crop prices improve enough to restore farmers’ purchasing power—or fertilizer and credit costs retreat — the fertilizer pullback could reduce Brazilian yield potential and exports while temporarily improving the competitive position of U.S. corn and soybean producers.

■  CHINA

—China signals faster fiscal support, but no stimulus bazooka

Beijing will accelerate bond-funded spending and consider targeted new measures, with infrastructure likely to receive more support than households 

China’s Politburo promised to step up economic support during its July 30 meeting, but the message was one of faster execution and targeted additions — not a return to the massive, debt-fueled stimulus campaigns Beijing employed during earlier downturns.

The Communist Party’s top decision-making body called for a “more proactive fiscal policy,” stronger countercyclical adjustments and the timely introduction of “practical and effective” incremental measures. Officials were instructed to accelerate fiscal spending and the use of government bond proceeds while improving coordination between fiscal and monetary policy.

The distinction between new stimulus and faster deployment of existing stimulus is important. China already authorized 4.4 trillion yuan — about $650 billion — of local-government special-purpose bonds for 2026. Local governments had issued only 2.07 trillion yuan through June, or roughly 47% of the annual quota, leaving about 2.33 trillion yuan available for the second half.

That gives Beijing considerable room to lift spending without increasing its official deficit or approving a major supplemental package.

Infrastructure is likely to be the principal beneficiary. The Politburo specifically called for advancing major national projects and the “six networks”: water systems, modern power grids, computing infrastructure, next-generation telecommunications, underground urban pipelines and logistics networks. These projects provide an immediate outlet for bond proceeds and can generate near-term demand for steel, copper, cement, machinery and energy.

China watchers say the government could also redirect more special-purpose bond funds toward actual construction rather than land purchases or local-government debt management. Land buybacks may stabilize municipal finances and property markets, but they generate less immediate economic activity than building transportation, energy or digital infrastructure. A shift toward shovel-ready projects would therefore make the same amount of borrowing more stimulative.

The policy change reflects weakening momentum. China’s economy expanded 4.3% during the second quarter, its slowest pace in more than three years and below Beijing’s 4.5% to 5% full-year growth target range. Household consumption and private investment have remained weak even as manufacturing and exports continue to support overall growth.

Fiscal policy also has room to catch up. Government revenue increased 4.7% during the first half, including a 5.3% rise in tax receipts, while fiscal spending rose only 1.5%. Meanwhile, land-sale revenue plunged 31.5%, underscoring the continuing pressure on local governments from the property downturn.

Beijing is therefore likely to release some of the spending it has effectively kept in reserve, particularly during the third quarter.

Monetary policy will probably play a supporting rather than leading role. The Politburo said authorities should use and adjust monetary-policy tools “as appropriate,” but it did not explicitly promise reductions in benchmark interest rates or bank reserve requirements. The language gives the People’s Bank of China room to act without committing it to broad easing.

Fiscal-financial coordination could include expanded interest subsidies, financing guarantees, additional relending quotas and targeted credit programs for technology, small businesses, consumer services and infrastructure. China’s 2026 policy framework already includes a 100-billion-yuan domestic-demand fund intended to support loan subsidies and financing guarantees.

A benchmark rate cut remains possible if growth deteriorates further, but it is not the central message from the meeting. Faster bond spending and structural lending programs can provide support without squeezing bank margins or encouraging another surge in unproductive borrowing.

The biggest unanswered question is whether support will reach consumers. The Politburo again emphasized expanding domestic demand, employment support and services consumption. But the announced approach remains focused largely on producing better goods, services and infrastructure rather than directly increasing household income.

That matters because infrastructure spending can stabilize headline growth without resolving China’s underlying imbalance between strong industrial supply and weak household demand. Unless forthcoming measures include larger social benefits, consumer subsidies or income support, households may continue saving heavily because of uncertainty over employment, housing values and retirement costs.

Market implications: The announcement is modestly supportive for Chinese equities, industrial metals, crude oil and construction-related commodities because it lowers the risk of a sharper second-half slowdown. However, the absence of a major supplemental borrowing package limits the potential upside.

For agriculture, the implications are less direct. Improved economic confidence and employment could marginally strengthen food, restaurant and livestock-feed demand, but infrastructure-led stimulus is far more bullish for copper and steel than for soybeans, corn or meat. A meaningful lift for agricultural imports would require stronger household consumption, improved livestock margins or specific government purchasing initiatives.

Bottom line: Beijing is moving from policy promises toward faster implementation. Special-purpose bond issuance and spending should accelerate, with more funds likely flowing into infrastructure and strategic national projects. But this is a calibrated effort to place a floor beneath growth — not a pedal-to-the-metal stimulus program capable of rapidly transforming China’s consumer economy or global commodity demand.

■  TAX POLICY

—Higher inflation will widen 2027 tax breaks—but not for everyone

Indexed provisions rise, while frozen thresholds quietly raise tax bills

Higher inflation will provide taxpayers with some protection in 2027 by widening federal income tax brackets and increasing numerous deductions, credits and exclusions. But the benefit will be uneven: Many important tax thresholds remain frozen, allowing inflation to push more income, investment gains and Social Security benefits into the federal tax system.

The Internal Revenue Service has not yet released the official inflation adjustments for tax year 2027, which will apply to income earned in 2027 and returns filed in 2028. Those figures are normally announced each fall. The IRS adjusted more than 60 tax provisions for 2026, and the continued rise in consumer prices points to another broad increase for 2027, although individual provisions may remain unchanged because the law requires amounts to be rounded.

Analysts say among the provisions likely to increase are the ordinary income tax brackets, standard deduction, alternative minimum tax exemptions, adoption credit, foreign earned income exclusion, estate-and-gift-tax exemption and the income breakpoints separating the 0%, 15% and 20% long-term capital-gains rates. The annual gift-tax exclusion could also rise, although it remained at $19,000 for 2026 because the inflation adjustment was not large enough to clear the statutory rounding hurdle.

The child tax credit is now part of that inflation-adjusted group. The 2025 tax law permanently set the maximum credit at $2,200 per qualifying child and provided for inflation indexing after 2025. The credit remained at $2,200 for 2026 after rounding, but higher inflation could produce an increase for 2027. The law also made the larger standard deduction and higher alternative minimum tax exemptions permanent, avoiding the sharp changes that otherwise would have occurred after 2025.

These adjustments are designed primarily to prevent “bracket creep”—the taxation of nominal income gains that merely compensate workers for inflation. A taxpayer receiving a 3% pay increase during a period of 3% inflation has not gained purchasing power. Without indexing, however, that taxpayer could be pushed into a higher bracket or lose part of a tax benefit despite having no real increase in income.

The adjustment does not fully match headline inflation. Since 2018, the tax code has used the Chained Consumer Price Index for All Urban Consumers, or C-CPI-U, rather than the traditional CPI-U. The chained index accounts for consumers substituting among products as relative prices change—for example, buying less beef and more pork when beef prices rise faster.

Because the chained CPI generally rises more slowly, tax brackets and deductions also increase more slowly. The Congressional Budget Office (CBO) has estimated that the chained measure historically grows about 0.25 percentage point less per year than the traditional CPI-U. The difference appears small in any single year, but it compounds: Over time, brackets are narrower, deductions are smaller and taxpayers move into higher effective tax rates sooner than they would under the pre-2018 formula. The 2017 law made that indexing change permanent, creating what critics describe as a slow-moving or “stealth” tax increase.

Frozen thresholds are the larger long-term problem. The most visible example is the exclusion for gains on the sale of a primary residence. Since 1997, qualifying homeowners generally have been allowed to exclude up to $250,000 of gain, or $500,000 for married couples filing jointly. Those amounts have never been adjusted for nearly three decades of inflation and home-price appreciation.

That can discourage longtime homeowners — particularly retirees in rapidly appreciating markets — from selling or downsizing. The tax is imposed only on gain above the homeowner’s adjusted basis after accounting for qualifying improvements and selling expenses, but a growing number of owners can still exceed the exclusion after holding property for several decades. The resulting “lock-in” effect may reduce the number of existing homes offered for sale, although changing the tax treatment would not address the underlying shortage of newly constructed housing.

Legislative proposals. Rep. Jimmy Panetta (D-Calif.) and Sen. John Cornyn (R-Texas) have introduced companion versions of the bipartisan More Homes on the Market Act. H.R. 1340 and S. 3332 would double the exclusions to $500,000 for individuals and $1 million for joint filers and index them for inflation thereafter. The House bill was referred to the Ways and Means Committee in February 2025, while the Senate measure was referred to the Finance Committee in December 2025. Neither has advanced beyond the committee-referral stage.

The proposal has more bipartisan and industry support than earlier attempts, but its route to enactment remains narrow. A stand-alone bill is unlikely to receive valuable floor time, meaning the provision probably would need to be attached to a broader tax, housing or year-end legislative package. Proposals to eliminate federal capital-gains taxes on primary-home sales entirely face even greater obstacles because of their revenue cost and the likelihood that the largest benefits would flow to owners of highly appreciated properties.

Other frozen tax thresholds create similar effects. The 3.8% net investment income tax begins at $200,000 of modified adjusted gross income for single filers and $250,000 for joint filers. The 0.9% Additional Medicare Tax uses the same single and joint thresholds. None automatically rises with inflation.

Social Security’s provisional-income thresholds are also frozen at $25,000 for individuals and $32,000 for couples —t he initial levels established in 1983. The Social Security Administration notes that Congress intentionally left those thresholds unindexed, meaning inflation and nominal income growth gradually subject more beneficiaries to taxation.

Landlords face another static provision: The special allowance permitting up to $25,000 of qualifying rental real-estate losses begins phasing out once modified adjusted gross income exceeds $100,000 and generally disappears at $150,000. The home-acquisition debt limit for deductible mortgage interest is similarly fixed at $750,000 for most mortgages taken out after Dec. 15, 2017.

Bottom line: Higher inflation produces larger nominal tax breaks in 2027, but it does not necessarily make taxpayers better off. Indexed brackets and deductions provide partial protection against bracket creep. Meanwhile, the chained CPI formula limits that protection, and frozen thresholds continue to lose real value.

Inflation therefore gives taxpayers relief with one hand while taking it away with the other. Without congressional action, unindexed provisions will steadily reach more middle- and upper-middle-income households, retirees, homeowners and small property investors—even when their real economic circumstances have changed little.

■  POLITICS & ELECTIONS

—Fetterman threat raises stakes in Democrats’ Israel divide

Any switch could alter Senate math, but the deeper risk is coalition fracture

Sen. John Fetterman (D-Pa.) has turned the Democratic Party’s widening dispute over Israel into a potential Senate-control issue, warning that he would leave the party if opposition to Israel and U.S. military assistance became an official Democratic position. “That’s my red line,” Fetterman said, emphasizing that disagreement among individual lawmakers would not necessarily force him out, but adoption of an explicitly anti-Israel party platform could.

That distinction matters. Democrats have not adopted such a platform, and their next presidential platform will not be written until 2028. Fetterman’s warning therefore appears less like notice of an imminent departure and more like an effort to establish leverage over the party’s future direction. Still, it is the clearest scenario he has offered for abandoning the Democratic label, and some Democratic senators are reportedly taking the possibility seriously.

The immediate Senate consequences would depend entirely on what Fetterman did after leaving. Republicans currently hold 53 seats, compared with 45 Democrats and two independents aligned with the Democratic caucus. Democrats therefore need a net gain of four seats in the 2026 elections to reach 51 and overcome a Republican vice president’s tie-breaking vote.

Were Fetterman to become a Republican or an independent who declined to caucus with Democrats, the Democratic path could effectively become one seat steeper. A Republican switch would produce a 54-46 alignment, requiring Democrats to gain five seats to reach a majority. But if Fetterman followed the model of former Sens. Kyrsten Sinema of Arizona and Joe Manchin of West Virginia — dropping the party label while continuing to support the Democratic organizing structure — the practical Senate math might remain unchanged. Manchin continued caucusing with Democrats after registering as an independent, while Sinema made clear she would not join the Republican caucus.

Fetterman’s Pennsylvania seat itself is not on the ballot in November. His current term runs through Jan. 3, 2029, meaning Democrats would not immediately lose the seat through an election even if he changed parties. The threat instead hangs over the composition of the Senate elected in 2026 and over Fetterman’s own possible reelection campaign in 2028.

The larger warning for Democrats is that Fetterman’s position is increasingly out of step with the party’s voters and a growing share of its congressional membership. A March Pew Research Center survey found that 80% of Democrats and Democratic-leaning independents viewed Israel unfavorably, up from 69% in 2025 and 53% in 2022. A separate AP-NORC survey found 58% of Democrats believed the U.S. was providing Israel too much support.

That shift became unmistakable during the July 15 House vote on an amendment offered by Rep. Thomas Massie (R-Ky.) that would have eliminated $3.3 billion in Israeli security assistance. The amendment failed 104-314, but 103 Democrats supported it, 98 opposed it and 10 voted present. It was a symbolic defeat legislatively but a watershed politically: a majority of Democrats casting a yes-or-no vote supported eliminating the funding.

That does not mean the Democratic Party has formally become “anti-Israel.” Voting against an aid package can reflect objections to the conduct of Israeli Prime Minister Benjamin Netanyahu’s government, civilian casualties, humanitarian restrictions or the absence of conditions on U.S. weapons—not opposition to Israel’s existence or security. But Fetterman has increasingly rejected those distinctions, positioning himself as an unqualified defender of the alliance while criticizing Democrats who use terms such as “apartheid” or “genocide” to describe Israeli policy.

The political danger runs in both directions. Democratic candidates in primaries increasingly face pressure to oppose or condition military aid, especially from younger and progressive voters. In general elections, however, Republicans will seek to portray those positions as evidence that Democrats have abandoned Israel, potentially creating problems with Jewish voters, moderates and national-security-oriented independents. The divide is already influencing competitive Senate and House primaries, including the Michigan Senate contest.

Democratic leaders’ most likely response will be strategic ambiguity: defending Israel’s right to exist and protecting some security assistance while allowing members to demand ceasefires, humanitarian access and tighter conditions on offensive weapons. That approach may postpone Fetterman’s stated red line, but it will not resolve the underlying conflict between a rapidly changing Democratic electorate and lawmakers who still view support for Israel as a defining commitment.

Bottom line: Fetterman is not yet costing Democrats a Senate seat, and an immediate party switch appears unlikely. But his warning shows how the Israel dispute could complicate Senate organizing, deepen damaging primary battles and force Democratic candidates to choose between the preferences of their increasingly skeptical base and the risks of appearing hostile to a longtime U.S. ally.

■  WEATHER

— NWS outlook: Risk for severe thunderstorms and heavy rainfall across the Mississippi Valley into the Great Lakes and Ohio Valley… …Flash flooding and severe thunderstorm risk across portions of the Four Corners… …Daily rounds of heavy downpours bring localized flash flooding risks to the Southeast… …Dangerous heat builds across the Southwest on Friday, Intermountain West/northern High Plains on Saturday.

 

—Corn Belt rains rescue yield potential as southern Plains drought deepens

Cooler weather supports grain fill, but August heat keeps risks elevated

A broad rain event is reaching the Corn Belt at a critical point in the growing season, stabilizing corn yield prospects and materially improving the outlook for soybeans. The 1- to 2-inch-plus totals reported across northeastern Kansas, Nebraska and South Dakota — followed by heavier rain shifting into Minnesota, Iowa, Wisconsin and Illinois — are especially valuable because they follow a period of rapidly increasing heat and moisture stress.

The latest U.S. Drought Monitor showed drought expanding or intensifying across Minnesota, Iowa, Wisconsin, Illinois, the Dakotas, Nebraska and Kansas before the current system arrived. Flash-drought indicators were particularly concerning in parts of the Upper Midwest, where July temperatures ranked among the warmest on record at several locations.

Rain protects corn grain fill — but cannot undo earlier damage. For much of the Corn Belt, corn has completed pollination and is moving through blister, milk and early grain-fill stages. The rainfall therefore arrived too late to change the number of kernels established in fields that suffered pollination problems, but it can prevent additional kernel abortion and preserve kernel size and weight.

Drought immediately after pollination can cause kernels at the tip of the ear to abort, while prolonged stress during grain fill reduces kernel weight and accelerates maturity. Cooler temperatures are also beneficial because they slow crop development, reduce nighttime respiration and potentially lengthen the grain-filling period.

The system should consequently raise confidence that a large portion of the central and eastern Corn Belt can retain above-average yield potential. But “crop-saving” does not necessarily mean that the crop has returned to its maximum potential. Fields that lost kernels during earlier heat or that entered the rain with depleted subsoil moisture will remain more vulnerable when above-normal temperatures return.

Northwestern Iowa is an important exception. Light coverage there leaves a pocket of one of the nation’s most productive corn regions with limited moisture reserves. Far southeastern South Dakota and southwestern Minnesota were also shortchanged. Those areas will depend heavily on the next round of thunderstorms expected beginning Monday night.

Soybeans could gain even more than corn. The rainfall may be even more consequential for soybeans, which are entering pod setting and seed filling — stages during which August weather often determines final yields. Soybeans can compensate for short periods of earlier stress by setting additional flowers and pods when moisture improves, although prolonged drought during pod set and seed fill reduces pod numbers, seed size and nitrogen fixation.

Repeated showers during the first half of August would therefore support pod retention and seed size, particularly across Minnesota, Wisconsin, Iowa and Illinois. The accompanying week of near- to below-normal temperatures should also reduce crop water demand and give shallow-rooted fields time to recover.

That creates a potentially bearish weather signal for soybean futures. The market has greater reason to assume that national yields can stabilize or improve, particularly if the next two weeks deliver multiple rain events rather than one isolated system.

The extended forecast is less certain than the near-term outlook. The projected “ridge-rider” pattern — thunderstorms traveling around the northern edge of a strong central U.S. heat ridge — could produce several rounds of locally heavy rain. But such patterns are notoriously uneven. One county can receive several inches while an adjacent county receives little or nothing.

The official NOAA outlook issued July 30 favors above-normal temperatures across nearly the entire country during Aug. 5-13. It also tilts toward below-normal precipitation across much of the northern and central Plains during the six- to 10-day period, with dryness becoming more pronounced from Texas through Oklahoma, Kansas and parts of Nebraska during Week Two. That does not necessarily contradict forecasts for repeated thunderstorms in the northwestern Corn Belt. Localized storm clusters can produce excessive totals while regional average rainfall remains below normal. It does mean that confidence in widespread, evenly distributed rainfall should decline beyond the first seven days.

Flooding, ponding, hail and damaging winds are possible where storms repeatedly follow the same track. Saturated fields could also experience nitrogen losses or root stress. However, NOAA had not designated a broad Week Two excessive-precipitation hazard as of July 30, suggesting the flooding concern is localized rather than a Belt-wide threat.

Southern Plains face a much more damaging pattern. The Southern Plains outlook is decidedly unfavorable. Temperatures of 100 to 110 degrees from Kansas southward, combined with limited rainfall, would rapidly increase evaporation and deepen existing moisture deficits. The July 28 Drought Monitor already showed drought intensifying in the Texas Panhandle, where year-to-date precipitation deficits ranged from 3 to more than 8 inches.

The heat threatens dryland sorghum and cotton, raises irrigation demand and accelerates pasture deterioration. Cattle producers could face shrinking forage supplies, declining stock-water quality and greater dependence on hay or supplemental feed. Persistent drought can also discourage producers from retaining replacement heifers, slowing any rebuilding of the U.S. cattle herd. Oklahoma State University research notes that drought reduces forage availability and substantially increases reliance on stored feed.

Periodic rain across the northern Hard Red Winter wheat belt would help restore soil moisture ahead of fall planting and winter grazing establishment, although it could delay the remaining harvest or reduce quality in unharvested fields. Farther south, heat and dryness will leave wheat producers entering the planting season with increasingly poor seedbed moisture.

Market implications: For corn and soybeans, the immediate market interpretation is likely bearish because the forecast reduces the risk of a sharp national yield decline. Corn benefits from protected kernel weight, while soybeans retain considerably more capacity to add yield during August. But the forecast does not eliminate weather risk. Northwestern Iowa and neighboring portions of Minnesota and South Dakota still need rain, Week Two warmth will increase water demand again, and ridge-rider thunderstorms rarely provide uniform coverage. The emerging divide is increasingly clear: the central and eastern Corn Belt is gaining yield stability, while the Southern Plains is moving toward deeper agricultural losses. That contrast could pressure corn and soybean prices while supporting regional feed, forage, hay and livestock costs — and it leaves the market highly sensitive to whether the early-August storms repeatedly reach the northwestern Corn Belt or begin shifting around it.