Trump Beef Package Could Put MCOOL at Center of Farm Bill Fight

Greer signals new U.S./China agriculture announcements during Xi visit

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Link: U.S. Ag Trade Deficit Reaches $18.2 Billion Through July
Link: U.S. 2026 Farm Income Falls Despite Record $47.4 Billion
          in Government Payments
Link: Putin Peace Remark Knocks War Premium Out of Wheat — For Now

UP FRONT

■  TOP STORIES

— Trump beef package could put MCOOL at center of farm bill fight: Expected White House support for mandatory beef labeling could strengthen Sen. John Thune’s (R-S.D.) MCOOL provision already included in the stalled Senate farm bill, even as ranchers remain angry over increased beef imports.

— Greer signals new U.S./China ag announcements during Xi visit: USTR Jamieson Greer says agriculture and non-tariff barriers will be key deliverables when Chinese President Xi Jinping visits Washington, with market impact depending on concrete new access and purchases.

— Witkoff/Kushner shuttle mission revives Ukraine peace push: Planned U.S. envoy visits to Moscow and Kyiv raise hopes for renewed negotiations, but territorial disputes and continued Black Sea attacks remain formidable obstacles.

— Black Sea wheat flows collapse despite peace talk pressure on prices: Ukrainian seaborne wheat exports are effectively suspended and Russian shipments have plunged, underscoring that physical supply disruptions remain severe despite peace optimism weighing on futures.

— Black Sea disruptions raise food security and migration risks: Reduced Ukrainian export capacity is increasing freight and storage costs while raising concern about food inflation, political instability and migration pressures in vulnerable importing countries.

— Global food prices hit highest since 2022 as supply risks return: FAO’s Food Price Index rose 1.9% in August as every major commodity category increased, reflecting weather problems, Black Sea disruptions and tightening trade flows.

— U.S. diesel hits record $5.85 as global supply squeeze deepens: Record retail diesel and farm-country off-road prices near $5 per gallon are sharply increasing harvest and transportation costs amid historically tight distillate inventories.

— White House backs Buying American Cotton Act: Administration support gives the National Cotton Council a major boost in its push for tax incentives encouraging greater use of traceable U.S.-grown cotton.

■  FINANCIAL MARKETS

— Equities today: U.S. stock futures weakened after stronger-than-expected August payroll growth raised Treasury yields and increased expectations for another Federal Reserve rate hike.

— Equities yesterday: The Dow gained 1.18%, Nasdaq 1.40% and S&P 500 1.06% in Thursday trading.

— August jobs surprise sharpens Fed rate hike risk: Payrolls jumped 162,000 and unemployment held at 4.1%, strengthening the case for a September Fed hike while moderating wage growth leaves inflation data as the likely deciding factor.

■  AG MARKETS

— USDA daily export sale — 250,600 MT soybeans: USDA reported a new 2026/27 soybean sale to unknown destinations.

— Grains ease as rally consolidates; strong jobs report adds dollar pressure: Corn, soybeans and wheat edged lower as traders took profits, while a stronger dollar added pressure despite ongoing Black Sea, China-demand and weather support.

— French corn collapse lifts EU premiums as wheat stabilizes: Record-low French corn ratings are reinforcing expectations for heavy EU imports, while wheat remains volatile amid conflicting Black Sea supply risks and peace hopes.

— China soybean auction draws no buyers: Sinograin’s Sept. 2 sale of 68,000 MT of imported soybeans posted zero purchases as its floor price exceeded crushers’ willingness to pay.

— Big Pro Farmer corn yield gap does not necessarily signal big USDA cut: Historical analysis suggests the unusually wide 2026 yield gap is likely to narrow and does not guarantee USDA will cut its forecast anywhere near Pro Farmer’s estimate.

— Cotton AWP rises to near 74 cents: The Adjusted World Price climbed to 73.92 cents per pound, its highest since February 2024, while USDA announced another special import quota.

— Ag markets yesterday: Soybeans, soybean meal and cattle futures advanced Thursday, while corn, wheat, soybean oil, cotton and lean hogs declined.

■  ENERGY MARKETS & POLICY

— Motiva restarts storm-hit units at nation’s largest refinery: The Port Arthur refinery restart removes one near-term threat to fuel supplies, but tight distillate inventories leave diesel vulnerable to further disruptions.

■  WEATHER

— NWS outlook: Extreme heat across the Corn Belt, Plains and Delta threatens late crops and accelerates dry-down, while thunderstorms bring localized heavy rain from the Upper Midwest into the Mid-Atlantic and Gulf Coast.

■  TOP STORIES

—Trump beef package could put MCOOL at center of farm bill fight
White House moves may ease rancher anger, but imports remain the key test

President Donald Trump is expected to announce additional actions affecting the U.S. cattle and beef industry Friday, with a push to restore mandatory Country of Origin Labeling (MCOOL), stepped-up scrutiny of beef-processing concentration and measures expanding opportunities for farmers and ranchers to market locally processed meat potentially among the most important pieces. But unlike some of the other initiatives, MCOOL already has a legislative vehicle: Senate Majority Leader John Thune’s (R-S.D.) proposal was added to the pending Senate farm bill on a strong bipartisan vote last month.

That makes any endorsement from Trump more consequential than simply calling on Congress to begin work on MCOOL. The Senate Agr Committee voted 17-6 on Aug. 6 to add Thune’s American Beef Labeling Act to the Agricultural Act of 2026. All committee Democrats joined six Republicans in supporting the amendment. Thune subsequently listed his MCOOL legislation among his provisions incorporated into the Senate farm bill.

The broader farm bill, however, remains stuck in committee. The panel failed 10-11 to report the legislation after negotiations broke down primarily over the timetable for states to assume part of the cost of SNAP benefits. Senate Agriculture Chairman John Boozman (R-Ark.) deliberately recessed rather than adjourned the markup, preserving the amendments already adopted and allowing the committee to resume where it left off. Boozman has said he wants another vote shortly after senators return to Washington Sept. 14.

That fundamentally changes the MCOOL political equation. Trump does not need to persuade lawmakers to start from scratch or wait for a standalone Thune bill to move. The provision is already attached to a farm bill that Senate Ag leaders intend to bring back before the committee within weeks.

A strong White House endorsement could therefore increase pressure on Republicans and Democrats to preserve the provision as the farm bill moves forward — and potentially give cattle-state lawmakers another reason to resolve the broader SNAP impasse.

Thune provision creates a path back to mandatory labeling. The Thune language does not simply reinstate the MCOOL system Congress repealed in 2015. His American Beef Labeling Act requires the U.S. Trade Representative, working with USDA, to devise a World Trade Organization-compliant means of restoring mandatory beef labeling within 180 days after enactment and implement it within one year. If the administration fails to complete the process within that year, MCOOL would automatically be reinstated for beef. That mechanism is important because the earlier U.S. program was successfully challenged by Canada and Mexico at the WTO, ultimately exposing the U.S. to more than $1 billion annually in authorized retaliation. Congress subsequently repealed mandatory beef and pork COOL in December 2015.

The Thune approach attempts to solve that problem by giving the administration time to develop a system capable of surviving another international trade challenge rather than simply reviving the previous rules.

Trump backing the Thune provision could also put the administration in an unusual position. USTR and USDA would ultimately be responsible for figuring out how to implement the very MCOOL system Trump would be urging Congress to enact. That means a presidential endorsement could carry more weight than the usual expression of support for legislation.

There is also already a tougher voluntary U.S.-origin standard in place. Since Jan. 1, beef carrying claims such as “Product of USA” must come from animals born, raised, slaughtered and processed domestically. But processors are not required to make such claims, which is precisely why MCOOL supporters argue the voluntary system does not provide consumers with complete origin information.

Farm bill provides a vehicle — but very little time. The problem is congressional timing. The Senate returns Sept. 14, and Boozman has indicated he wants to resume the recessed farm-bill markup almost immediately. But House Republicans on Thursday scrapped the final two scheduled voting weeks of September. The House is now expected to return Sept. 14 for only one week of voting before members head back to their districts ahead of the Nov. 3 midterm elections. The Senate, by contrast, is currently scheduled to remain in session through Oct. 2.

That means getting the Senate bill through committee is only the first hurdle. Even if senators quickly resolve their SNAP dispute, the legislation would still have to clear the full Senate and ultimately be reconciled with the farm bill the House passed April 30. The existing farm-bill extension expires Sept. 30, making another extension increasingly likely if lawmakers cannot complete the legislation.

For MCOOL supporters, however, the Aug. 6 vote was significant. The 17-6 margin suggests beef labeling itself is not what is holding up the Senate farm bill. The overall package failed 10-11 while MCOOL attracted an overwhelming bipartisan majority. A Trump endorsement could make removing that provision later politically more difficult.

Packers and processing are the easier executive targets. Trump is also expected to flesh out his promise to attack what he has called a “nasty monopoly” in meat processing. Last week, Trump said he was directing that legal documents be prepared to give farmers and ranchers more ability to process their own livestock. USDA Secretary Brooke Rollins subsequently said the administration was preparing actions to expand interstate sales, strengthen smaller processors and eliminate outdated regulations. The four largest beef processors — Tyson Foods, JBS USA, Cargill and National Beef — account for roughly 85% of U.S. beef processing.

USDA already began moving in that direction Monday with its Ranchers First initiative, including guaranteed loans for smaller processors and greater flexibility for cattle grazing on conservation acreage affected by disasters and wildfires. Rollins said USDA wants to increase competition and transparency while rebuilding the domestic cattle herd.

Additional steps could include making it easier for state-inspected meat to enter interstate commerce, expanding processing exemptions or pilot programs, financing smaller slaughter facilities and stepping up Justice Department or USDA enforcement of competition laws.

But those measures have limitations. Allowing more local processing can improve options for individual ranchers and create additional regional competition, but it will not rapidly replace the enormous throughput of the major packing companies. Reuters reported agricultural economist David Anderson of Texas A&M University has questioned whether on-farm processing volumes would be large enough to materially alter national competition. Meat-industry groups and the National Cattlemen’s Beef Association have also cautioned against weakening federal inspection safeguards.

Meanwhile, the cattle shortage itself is squeezing packers. Tyson Foods this week again lowered its profit outlook as scarce cattle and elevated livestock costs continued to hammer its beef business. That reinforces an important point: packing-sector concentration and the present cattle shortage are related policy issues, but they are not the same problem. Breaking down processing barriers could improve producer leverage over time without materially increasing the number of cattle available during the next several years.

Wolf action would matter regionally, not nationally. The administration may also announce steps involving protected predators such as gray wolves, an issue of considerable importance to cattle and sheep producers in parts of the West and Upper Midwest. Such action could reduce livestock losses and regulatory burdens for affected ranchers, particularly if more management authority is shifted toward states. But predator policy would have little measurable effect on the national cattle inventory or retail beef prices. Its significance would be primarily producer-oriented and political rather than a short-term beef-supply solution.

Imports remain the source of the backlash. The difficulty for Trump is that virtually all of these cattle-friendly initiatives are being rolled out immediately after an import decision many ranchers view as directly contrary to the goal of rebuilding the U.S. herd. Trump’s Aug. 26 proclamation temporarily added 300,000 metric tons of lean beef trimmings to the lower-tariff quota, divided into 100,000-metric-ton monthly tranches beginning Sept. 1 and running for 90 days. The additional quota applies to lean trimmings used with domestic beef in ground-beef production. The White House says exporters are encouraged to sell the product at a 25% discount from the going import price. The White House argues the imports will primarily compete with the cull-cow market rather than fed cattle and will provide consumers with temporary relief while the domestic herd rebuilds. It estimates the measure could add roughly 10% to projected beef supplies during the period.

Many cattle producers view that reasoning skeptically. Their concern is straightforward: the economic signal needed to rebuild the cattle herd is sustained profitability. Cow-calf operators retain heifers and forgo immediate income because they expect future cattle values to justify the expense of feeding and maintaining those animals. A government policy specifically intended to lower beef and cattle prices can weaken that incentive at the exact point the administration is asking producers to expand.

The backlash has already spread across cattle country. Ranchers and farm organizations argue that bringing discounted foreign beef into the market could pressure cattle values and prolong the rebuilding process. The dispute has also renewed demands for mandatory labeling so consumers can distinguish imported beef from U.S.-produced product.

Perspective: MCOOL could be Trump’s strongest political response. Of the initiatives expected Friday, MCOOL may have the most potential to change the political conversation with ranchers precisely because Congress has already advanced it farther than at any point in years. Antitrust enforcement, small-processor assistance and predator relief are meaningful to producers, but most will take time to produce measurable economic results. MCOOL offers something more immediate politically: a clear distinction between domestic and imported beef at the retail counter at a time when the administration itself is deliberately increasing imports. Trump support could also provide a significant boost to the Senate farm bill. The administration has been deeply involved in negotiations over the legislation, particularly the SNAP dispute. If Trump makes enactment of MCOOL a priority, resolving that broader dispute becomes more consequential for cattle producers.

But none of Friday’s announcements changes the central contradiction confronting the administration. Trump wants to lower beef prices for consumers now while simultaneously convincing ranchers to invest in expanding cattle numbers for the future. The import policy addresses the first objective quickly. MCOOL, processing reforms, antitrust enforcement and herd-building incentives address the second objective much more slowly.

Bottom line: Friday’s package could contain several policies cattle producers have sought for years, and the expected MCOOL endorsement would be particularly noteworthy because the Thune language is already embedded in the pending Senate farm bill after a 17-6 committee vote. The question is no longer whether Congress has a vehicle for MCOOL — it does. The questions are whether Trump can help get the stalled farm bill moving again and whether that longer-term commitment is enough to overcome rancher anger over an import program that is already operating today.

—Greer signals new U.S./China ag announcements during Xi visit
Farm trade and non-tariff barriers are expected to be central to the talks

U.S. Trade Representative Jamieson Greer says the United States and China are likely to announce new agriculture-related measures when Chinese President Xi Jinping visits Washington later this month, with the focus on improving market access rather than negotiating another sweeping trade agreement.

Greer told Fox News that the Trump administration is “not looking for a giant comprehensive trade agreement with China” but instead intends to manage the relationship through targeted agreements. He said the Xi visit should produce announcements involving agriculture and non-tariff barriers affecting agricultural trade, with the objective of encouraging additional U.S. sales to China.

The agriculture reference is significant. Rather than relying solely on Chinese purchase commitments, the administration appears to be pushing Beijing to address regulatory and administrative barriers that can restrict U.S. agricultural exports. Such measures can be especially valuable because removing a market-access obstacle can have a longer-lasting effect than a one-time commodity purchase.

Key details remain unresolved. Greer did not identify which agricultural products would be covered, what non-tariff barriers China might remove or whether Beijing would make specific purchasing commitments. Those details will determine whether the Xi meeting produces a meaningful increase in U.S. agricultural demand or primarily another set of policy commitments.

Bottom line: Greer’s comments strengthen expectations that agriculture will be one of the tangible deliverables from the Trump-Xi meeting, but the market impact will depend on whether China offers measurable new access and purchases rather than broad promises to facilitate trade.

—Witkoff/Kushner shuttle mission revives Ukraine peace push
First Kyiv visit would broaden U.S. diplomacy, but territory and Black Sea remain major hurdles

The Trump administration appears ready to restart high-level shuttle diplomacy between Moscow and Kyiv this weekend, raising expectations for a renewed push to end the 4 1/2-year war — but there is still little evidence that Russia and Ukraine have narrowed the fundamental differences that derailed earlier negotiations.

U.S. envoys Steve Witkoff and Jared Kushner are expected to travel to Russia and Ukraine Saturday and Sunday, according to Russia’s TASS news agency. Reuters said Friday there had been no immediate official confirmation, although discussions have centered on a possible Sept. 6 visit to Kyiv. If completed, it would be Witkoff’s and Kushner’s first trip to the Ukrainian capital after multiple negotiating missions to Moscow.

The reported trip is more significant than another routine round of consultations because it would put the two principal U.S. negotiators face-to-face with both sides during the same diplomatic swing. Witkoff and Kushner last met Russian President Vladimir Putin in Moscow in January for roughly four hours of talks. Reuters reported Friday that Russian officials do not want the envoys to travel on to Kyiv and have been trying to alter those plans — an indication that even the choreography of the mission has become part of the negotiating contest.

Putin’s comments Thursday helped open the diplomatic window. He said there is a chance of reaching an agreement and acknowledged that the U.S., China and other countries can assist, while insisting that Russia and Ukraine ultimately must reach an agreement themselves. Ukrainian Foreign Minister Andrii Sybiha, meanwhile, said he expected a “new dynamic” in diplomacy, and President Volodymyr Zelenskyy confirmed that preliminary dates for meetings with the U.S. representatives had been discussed.

But Putin’s remarks should not be confused with a substantive concession. The central dispute remains territory. Moscow continues to demand that Ukraine relinquish additional territory, while Kyiv rejects conditions it considers equivalent to surrender. The fact that Putin is publicly emphasizing that Russia and Ukraine must settle the issue themselves can also be read as an effort to demonstrate diplomatic flexibility without backing away from Russia’s territorial demands.

The sequence of the proposed trip will matter. If Witkoff and Kushner go to Moscow first, Putin gets the first opportunity to frame what Russia considers negotiable and what remains non-negotiable. A subsequent Kyiv meeting would then test whether Washington believes there is enough overlap to formulate another bridging proposal. Sources say the first major signal to watch will not be optimistic language after the meetings, but whether the envoys emerge with agreement on another negotiating session, a partial ceasefire or specific confidence-building measures.

Black Sea could be the most practical early test. For agriculture and commodity markets, the most consequential near-term question is whether diplomacy produces any movement toward a Black Sea ceasefire. Ukraine proposed in August that both sides halt attacks on civilian targets in the Black Sea after strikes on ships, ports and grain facilities sharply disrupted exports. Russia rejected that approach, arguing that partial truces amounted to unacceptable “half-measures.”

The physical disruption remains severe. Russian attacks effectively pushed much of Ukraine’s grain traffic away from Greater Odesa toward the lower-capacity Danube route, where as many as 70 vessels were recently queued near the Sulina Canal. Ukrainian grain exports from Aug. 1-21 totaled only 539,000 metric tons, versus 1.73 million tons a year earlier.

Markets nevertheless are already removing some geopolitical premium merely on the possibility of progress. December Chicago wheat fell 2.8% Thursday to $7.52 1/4, with Putin’s peace comments cited as a major catalyst. European wheat also fell sharply before recovering part of its losses as traders recognized that there had been no actual reduction in military activity or improvement in Black Sea shipping.

Perspective: The weekend mission represents the most tangible diplomatic development behind Putin’s peace comments, so the grain market reaction is understandable. But prices may be running ahead of the facts. A visit is not a ceasefire, and a willingness to talk is not agreement on territory. Until there is evidence that attacks on ports and commercial shipping will stop — or that Russia will reconsider a Black Sea maritime truce — the underlying logistical risk to Russian and Ukrainian grain exports remains intact.

The bigger potential shift would come if Witkoff and Kushner return with a timetable for renewed Russia/Ukraine negotiations plus discussion of a Black Sea stand-down. That combination could remove considerably more war premium from wheat. Conversely, if the Moscow and Kyiv meetings simply expose the same territorial impasse, Thursday’s decline in wheat could prove to have been another case of markets pricing peace faster than diplomats can produce it.

—Black Sea wheat flows collapse despite peace talk pressure on prices
Kpler says Ukrainian seaborne wheat exports are effectively suspended while Russian shipments plunge 80%

Kpler says Ukraine’s seaborne wheat exports are now effectively suspended, while Russian wheat shipments totaled just 380,000 metric tons over the latest two weeks, down about 80% from 1.8 million tons a year earlier. Russia’s Sea of Azov wheat flow also remains suspended, further tightening available Black Sea supply.

Some Ukrainian grain continues to move through the Danube and overland routes, but those alternatives remain congested and substantially more expensive. There is also no verified reopening of Novorossiysk’s major grain terminals, where damage from August attacks continues to constrain Russian exports.

Perspective: The latest vessel-flow data reinforce that Thursday’s pullback in Chicago and Paris wheat following Vladimir Putin’s comments about possible peace was largely a diplomatic-risk correction, not evidence of improved grain logistics. Physical Black Sea wheat availability remains severely restricted, leaving the market vulnerable to renewed gains if shipping conditions fail to improve.

—Black Sea disruptions raise food security and migration risks
Ukraine’s export capacity falls as attacks deter shipping and strain alternative routes

Renewed Russian attacks on Ukrainian Black Sea ports and vessels are sharply restricting grain exports, raising concerns in Europe over global food prices, Ukraine’s economy and potential migration pressures. Euronews’ Jorge Liboreiro reports that EU foreign ministers are warning of another food-security shock as fighting increasingly disrupts the Black Sea trade corridor.

Since July, Russia has intensified attacks on Ukrainian ports and vessels, while Ukraine has retaliated against Russian shipping and port infrastructure. The escalation has come during Ukraine’s harvest, leaving wheat, barley and corn accumulating inside the country.

Before the latest attacks, Ukraine moved about 6 million metric tons of agricultural and steel products per month through Odesa, Chornomorsk and Pivdenny. Alternative routes are now handling about 4.5 million tons, but officials say those routes cannot fully replace Black Sea shipping. The Danube route through Romania is also being hampered by unusually severe drought.

The disruption is hitting Ukrainian farmers particularly hard. Higher transportation costs and inadequate storage are depressing domestic crop prices and increasing financial pressure as growers prepare for another planting season. Meanwhile, reduced export revenues could aggravate Ukraine’s already significant government financing needs.

European officials are increasingly concerned about the broader consequences. Reduced Ukrainian grain availability could lift food inflation in import-dependent countries in Africa and the Middle East, potentially increasing political instability and migration pressure on Europe.

Perspective: The immediate grain-market issue is less an absolute loss of Ukrainian exports than a rising risk premium around logistics and availability. Ukraine is still moving substantial volumes through alternative corridors, but roughly 1.5 million tons per month of former port capacity is effectively missing under the figures cited by Euronews. Continued attacks would increase freight, insurance and storage costs and could increasingly divert buyers toward competing wheat suppliers. The bigger bullish risk would come if disruptions persist into the planting season, forcing financially stressed Ukrainian farmers to reduce acreage or inputs and turning today’s transportation problem into a future production problem.

—Global food prices hit highest since 2022 as supply risks return
Sugar surges nearly 12%, while wheat, corn and vegetable oils rise amid weather problems, Black Sea disruptions and tightening trade flows

World food commodity prices climbed to their highest level in nearly four years in August, signaling that weather, geopolitical and trade risks are once again building a meaningful premium into agricultural markets.

The UN Food and Agriculture Organization’s Food Price Index rose 1.9% from July to 133.3 points, its second consecutive monthly increase and highest reading since November 2022. More significantly, every major commodity category increased. The overall index was 2.5% above August 2025, although still 16.8% below the record reached in March 2022.

FAO Chief Economist Maximo Torero said the August increase shows that the “risk premium is returning to food markets,” with climate shocks, geopolitical tensions and disrupted trade logistics converging to raise concerns over future supplies.

Sugar was easily the biggest mover. The FAO Sugar Price Index surged 11.9% to 106.4 points, its highest since June 2025. Hot and dry conditions have reduced European Union sugar beet yield expectations, while El Niño threatens production in important Asian producers. Lower output in Brazil’s Center-South region added to the concern, and India’s decision to allow duty-free raw sugar imports reinforced expectations of tighter global supplies. That combination is important because sugar increasingly sits at the intersection of the food and energy markets. With Brazil able to shift sugarcane between sugar and ethanol, elevated energy prices can strengthen ethanol economics and potentially tighten sugar availability further.

Cereal prices provide the more important signal for the broader agricultural economy. FAO’s Cereal Price Index rose 2.2% to its highest level since May 2024. Global wheat prices increased 2.6% during August and were 15% above a year earlier, reflecting disrupted Black Sea export logistics, weaker European crop prospects after hot and dry weather and a weaker U.S. dollar.

World corn prices rose 2.5%, with FAO citing concerns about yields in portions of the U.S. Corn Belt, deteriorating EU production prospects, strong ethanol and livestock-feed demand and interruptions to Ukrainian exports. The closure of the Strait of Hormuz and resulting concerns over agricultural input availability provided additional support. Rice prices increased a more modest 0.5%.

There is an important counterweight: the world is not yet facing an outright shortage of grain. FAO forecasts 2026 global cereal production at 2.98 billion metric tons, down 2% from last year but still the second-largest crop ever. World cereal stocks are projected at 947.2 million tons, leaving the stocks-to-use ratio at 31.6%, down slightly from 31.9% but still historically comfortable.

That suggests the current grain rally is being driven as much by where supplies are located and whether they can move efficiently as by absolute global scarcity. Russia and Ukraine are expected to accumulate wheat inventories partly because restricted export routes prevent those supplies from reaching buyers easily. FAO expects world cereal trade to retreat from record levels to 509.3 million tons in 2026/27.

Vegetable oils are another inflation warning. The FAO Vegetable Oil Price Index rose 0.6% to 196.9 points, its highest level since June 2022. Palm and soy oil prices strengthened on strong import demand and concerns that El Niño could hurt Southeast Asian palm production, more than offsetting declines in sunflower and rapeseed oil.

The oil complex deserves particular attention because it links food markets with biofuel demand and energy prices. Rising crude oil prices can improve biodiesel and renewable-diesel economics, increasing competition for palm and soybean oil just as weather concerns threaten production.

Dairy prices increased 2.3%, the first monthly advance in four months, as hot and dry EU weather tightened milk supplies. Milk powders and cheese led the increase. Dairy prices, however, remained nearly 22% below a year earlier, indicating that not every component of the food complex is experiencing the same inflation pressure.

Meat prices rose 1%, led by poultry, pork and sheep meat. High temperatures slowed hog growth in Europe, tightening slaughter supplies. Beef was the exception: international bovine prices declined as Chinese import quotas pushed Brazil and Australia to compete more aggressively for alternative export markets.

Perspective: the breadth of the increase matters most. The key message from the August report is not simply that the headline index reached its highest point since 2022. It is that all five major food categories moved higher simultaneously. During periods when one commodity — sugar, for example — drives the index while grains and oils fall, the inflation signal is relatively narrow. August looks different. Weather problems are affecting Europe, Asia and parts of North America; Black Sea logistics remain impaired; Middle East tensions are influencing energy, fertilizer and shipping costs; and El Niño is creating additional uncertainty for 2026/27 production.

That does not yet amount to another 2022-style global food crisis. Global grain inventories remain relatively large and the FAO index is still nearly 17% below its March 2022 peak. But the cushion is becoming less reassuring because significant stocks are increasingly located in places where transportation, sanctions, war or export policy can prevent supplies from moving freely.

For U.S. agriculture, the trend is potentially supportive for grain and oilseed prices, particularly if Black Sea disruptions persist and overseas crop problems worsen. But there is another side: higher vegetable-oil, energy and grain prices can raise feed, fuel and food-processing costs and eventually contribute to renewed consumer food inflation.

The August FAO report therefore looks less like evidence of a global food shortage and more like a warning that the era of abundant, easily accessible and relatively cheap agricultural commodities is becoming less certain. If weather deterioration combines with additional Black Sea or Middle East disruptions this fall, the relatively comfortable global supply cushion could shrink quickly.

—U.S. diesel hits record $5.85 as global supply squeeze deepens
Farm diesel remains below pump prices, but harvest costs are climbing sharply

U.S. diesel prices have reached a record $5.85 per gallon just as farmers move deeper into harvest, turning the global distillate shortage into another significant cost problem for agriculture. AAA put the national retail diesel average at exactly $5.85 Friday, Sept. 4, exceeding the June 2022 record. The Associated Press reported that diesel has risen from about $3.76 before the U.S.-Iran war began in late February, with higher fuel costs already working through freight, food production and other parts of the economy.

That amounts to an increase of $2.09 per gallon, or nearly 56%, in roughly six months. For perspective, every $1-per-gallon increase adds $1,000 to the cost of consuming 1,000 gallons. At a $2.09 increase, 5,000 gallons of fuel represents roughly $10,450 in additional expense if a producer were paying the full increase.

The bigger concern is that this is no longer simply a crude oil story. It is increasingly a diesel-specific supply problem.

Reuters reports the U.S. diesel refining margin, or crack spread, surged to a record intraday $108.02 per barrel this week. U.S. refiners have responded by running hard, but global supplies remain constrained by disruptions in the Middle East and Ukrainian attacks on Russian refineries. Russia, a major diesel exporter, has banned diesel exports through Sept. 30. Before the Iran conflict, roughly 900,000 barrels per day of diesel moved through the Gulf — about 10% of global seaborne diesel supply.

Meanwhile, the raw material pressure remains considerable. Brent crude was near $95.05 per barrel Friday morning and WTI near $90.66, with Brent up about 6.5% for the week. Only four commodity vessels were observed moving through the Strait of Hormuz Thursday, well below the recent 10-day average of roughly 15.

Inventories provide little cushion. EIA reported total U.S. distillate stocks at 104.2 million barrels for the week ended Aug. 28. East Coast inventories fell to just 19.3 million barrels, a record low in EIA data going back to 1990. Reuters said U.S. distillate inventories averaged their lowest August level for this time of year since 1982.

That matters because diesel demand is now entering a seasonally difficult period. Northern Hemisphere crop harvest increases agricultural fuel consumption at the same time distributors begin building heating-oil supplies for winter. Heating oil and diesel compete for much of the same refinery output.

What farmers are actually paying. Farmers generally are not paying the full $5.85 national headline price for fuel used in tractors, combines and other off-road machinery. Agricultural diesel is normally red-dyed and exempt from the federal highway fuel excise tax. The federal diesel tax is 24.4 cents per gallon, and qualifying farm use is specifically treated as a nontaxable use. State motor-fuel taxes may also be removed depending on state rules.

EIA does not publish a national farm or off-road diesel price, making the $5.85 AAA figure an imperfect proxy for farm costs. EIA specifically notes that off-road diesel is generally exempt from federal and state highway excise taxes.

But current dealer quotes show how expensive farm fuel has nevertheless become. In eastern Iowa, Victor Oil listed No. 2 red diesel at $4.859 per gallon on Sept. 1, versus $5.459 for clear diesel — a 60-cent difference. In southwest Kansas, Sublette Cooperative quoted premium dyed diesel at $4.759 on Sept. 2 versus $5.259 for clear road diesel. And a Minnesota supplier on Sept. 3 listed off-road No. 2 diesel at $5.059, compared with $5.639 for regular No. 2 diesel, although the off-road price did not include applicable sales taxes.

Those are individual dealer quotations rather than statewide averages, but they suggest that farm diesel in important production areas is currently running roughly $4.75 to just above $5 per gallon, depending on location, quantity, delivery terms and taxes.For comparison, AAA’s on-road diesel averages Friday were $5.66 in Iowa, $5.82 in Illinois, $5.43 in Kansas, $5.73 in Minnesota, $5.56 in Nebraska and $5.54 in North Dakota.

Agriculture faces more than a tractor fuel problem. The impact on farmers extends beyond the diesel going directly into combines. Higher diesel raises the cost of grain hauling, custom harvesting, fertilizer and chemical delivery, livestock transportation, rail movement and barge freight. Those costs can eventually show up as higher custom rates, fuel surcharges or weaker local cash grain basis.

That makes diesel particularly painful for agriculture because producers have limited ability to reduce usage during harvest. A farmer can postpone some field operations, but once corn or soybeans are ready, harvesting and hauling the crop is largely unavoidable.

The key risk is duration. A brief geopolitical easing could pull crude and diesel futures sharply lower. But the diesel market currently has several problems simultaneously — constrained Gulf shipments, reduced Russian exports, historically low U.S. inventories and rising seasonal demand. That combination suggests diesel could remain unusually expensive even if crude prices stop climbing.

Bottom line: The record $5.85 national diesel price somewhat overstates what most farmers are paying for tax-exempt dyed diesel, but it does not overstate the underlying problem. Farm country quotes near $5 per gallon represent a substantial harvest cost at a time when crop margins are already under pressure. And with distillate inventories unusually thin, agriculture is heading into peak diesel-consumption season with very little supply cushion.

—White House backs Buying American Cotton Act
Administration endorsement gives National Cotton Council a major legislative win

The White House is urging Congress to pass the Buying American Cotton Act, a major victory for the National Cotton Council and other cotton groups that have made the bill a priority. 

The legislation would create a tax credit aimed at increasing use of traceable U.S.-grown cotton in finished products, with stronger incentives for domestic textile manufacturing. In a formal Statement of Administration Policy, the Trump administration said it “strongly supports” the bill and indicated the president would sign it if Congress approves it.

Perspective: The endorsement does not guarantee passage, but it substantially improves the bill’s political standing and gives cotton-state lawmakers more leverage to include it in a year-end tax, farm or other legislative package. For NCC, the challenge now shifts from securing White House support to getting Congress to act.

■  FINANCIAL MARKETS

—Equities today: U.S. equity futures weakened after the August employment report came in much stronger than expected, as investors reassessed the outlook for Federal Reserve policy. The economy added 162,000 jobs, well above expectations near 55,000-56,000, while unemployment held at 4.1%. The reaction reflects a classic “good news is bad news” trade. The stronger labor market reduces pressure on the Fed to keep rates unchanged and allows policymakers to focus more heavily on still-elevated inflation. The two-year Treasury yield jumped to around 4.41%, while market expectations for a September Fed rate increase moved to roughly 60%.

In Asia, Japan +1.3%. Hong Kong +1.7%. China -0.3%. India +0.5%.
 

In Europe, at midday, London flat. Paris -0.1%. Frankfurt +0.2%.

—Equities yesterday: 

—August jobs surprise sharpens Fed rate hike risk

Payrolls jump 162,000, but softer wages leave September decision tied to CPI

U.S. job growth rebounded much more sharply than expected in August, giving the Federal Reserve additional evidence that the labor market can withstand restrictive interest rates while complicating hopes that policymakers will remain on hold. Nonfarm payrolls increased 162,000, nearly triple the roughly 56,000 gain economists surveyed by Reuters had expected, while the unemployment rate held at 4.1%, according to the Bureau of Labor Statistics.

There was also an important improvement in the previous data. BLS revised July payrolls from a previously reported 23,000 decline to a 21,000 increase and raised June employment growth from 20,000 to 31,000. Together, June and July employment was 55,000 higher than previously estimated. That differs slightly from some early reports describing July as a 23,000 gain.

Still, the 162,000 headline exaggerates the breadth of the acceleration. Food services and drinking places accounted for 59,000 jobs, while local-government education added another 42,000. Together those two categories generated 101,000 jobs, or roughly 62% of the entire payroll increase. Moreover, the education gain largely reversed July’s decline, and BLS said employment in that category has shown little net change since January 2025.

There were some encouraging private-sector signals. Manufacturing employment increased 16,000, including gains in machinery and fabricated-metal manufacturing, and is now 58,000 above its December 2025 low. Construction employment increased 22,000, although BLS characterized the monthly change as little changed statistically. Health care added 13,000 jobs. Conversely, the information sector lost 23,000 jobs, including declines in data processing, publishing and broadcasting.

The wage numbers keep the report from being an unequivocally hawkish signal. Average hourly earnings rose 0.3% in August to $37.75, but year-over-year wage growth slowed to 3.1% from 3.2% in July. The average workweek edged up to 34.4 hours. Labor-force participation also improved to 61.6% from 61.4%, while the number working part time for economic reasons dropped by 414,000 to 4.4 million.

Fed implications: Strong enough to keep a hike firmly in play. The report strengthens the hand of Fed officials worried more about inflation than employment. Before the jobs release, financial markets were roughly evenly divided over whether the Fed would leave its target range at 3.50%-3.75% or raise rates by 25 basis points at the Sept. 15-16 FOMC meeting. Chairman Kevin Warsh’s Jackson Hole remarks had pushed expectations toward tightening, while Gov. Christopher Waller’s more dovish comments Thursday pulled the odds back toward 50-50.

August employment makes it harder to argue that the Fed needs to hold rates because the labor market is deteriorating. But it does not settle the September decision. Annual wage growth of 3.1% is hardly evidence of a wage-price spiral, and most of the employment surprise was concentrated in a few sectors. The three-month average for June through August is only about 71,000 jobs per month, still consistent with a labor market that has cooled substantially from earlier expansion rates.

That puts even more weight on the August PPI and CPI reports due Sept. 10 and Sept. 11. Warsh has emphasized that the Fed needs confidence inflation is returning toward its 2% objective, while Waller has indicated that further improvement in inflation could justify leaving rates unchanged.

Agriculture implications: Better demand, but potentially higher financing costs. For agriculture, the jobs report carries both positive and negative implications. The positive is consumer demand. Continued employment growth, a steady 4.1% unemployment rate and rising wages support household spending. Particularly notable is the 59,000 increase in restaurant employment, suggesting food-service activity remains resilient.  That is generally favorable for higher-value food demand, including beef, pork, poultry and dairy. The potential negative comes through interest rates and the dollar. A labor market that refuses to weaken significantly gives the Fed less reason to lower rates and more room to tighten if inflation remains stubborn. That could keep operating-loan rates, machinery financing and farmland borrowing costs elevated — an increasingly important issue for producers already dealing with tight margins and higher input costs.

A more hawkish Fed outlook can also support the U.S. dollar, making U.S. corn, soybeans, wheat and meat more expensive for foreign buyers. Thus, a report that is reassuring for the broader economy can be less favorable for commodity exporters if it ultimately translates into higher Treasury yields and a firmer dollar.

Bottom line: The August employment report removes much of the fear generated by July’s initially reported job loss, but it does not signal a return to a booming labor market. The combination of 162,000 new jobs, 4.1% unemployment and moderating 3.1% wage growth is strong enough to keep a September Fed rate hike very much alive without making one inevitable. The deciding evidence now shifts from employment to inflation — making next week’s PPI and CPI reports potentially more consequential for interest rates, the dollar and agricultural markets than today’s payroll surprise.

■  AG MARKETS

—USDA daily export sale: 250,600 MT soybeans received during the reporting period for unknown destinations for 2026/27.

—Grains ease as rally consolidates; strong jobs report adds dollar pressure

Soy oil leads losses while heat, China demand and Black Sea risks limit selling

U.S. grain and oilseed futures are mostly lower Friday morning, but the declines remain relatively contained following this week’s sharp volatility. The market appears to be consolidating recent gains rather than abandoning the bullish supply risk story, although a much stronger-than-expected U.S. jobs report has added a fresh outside market headwind through a stronger dollar and higher interest rates.

In the latest trade, December corn is at $5.39 1/4, down 1 1/2 cents; November soybeans at $13.10 1/2, down 5 3/4 cents; October soybean meal at $346.90, down $1.70; and October soybean oil at 68.62 cents, down 101 points. December Chicago SRW wheat is at $7.48 3/4, down 5 1/2 cents, while December Kansas City HRW wheat is at $8.11 3/4, down 3 3/4 cents.

Wheat continues to shed some of its Black Sea war premium, but the physical market remains much tighter than the futures action might suggest. Russian President Vladimir Putin’s statement Thursday that there is a “chance” for a peace agreement triggered substantial profit-taking, and U.S. negotiators are expected to visit Moscow and Kyiv as diplomatic activity increases. But nothing approaching a ceasefire or restoration of normal Black Sea grain flows has been achieved.

Indeed, Reuters reports Asian importers have recently shifted at least 500,000 metric tons of wheat purchases toward Australia and Argentina because of delays and uncertainty involving Russian and Ukrainian supplies. That suggests the wheat retreat is being driven more by reduced speculative risk premium and long liquidation than by any real improvement in Black Sea logistics. Thursday’s December Chicago wheat close at $7.54 1/4 was already nearly 20 cents lower after prices had fallen much more sharply early in the session.

Soybeans remain fundamentally better supported than the overnight decline implies. USDA reported another 192,000 metric tons of new-crop soybeans sold to China Thursday, following 202,000 tons Wednesday and 136,000 tons Tuesday — 530,000 tons in three consecutive daily announcements. Weekly USDA data also showed 2026-27 soybean net sales of 1.948 million metric tons, with China accounting for about 972,000 tons. That continuing Chinese demand should make sustained breaks in soybeans harder to maintain unless buying suddenly slows.

The bigger weakness is again soybean oil, which is down more than a cent per pound. That looks primarily like liquidation after the oilseed complex’s powerful recent advance rather than deterioration in the broader energy story. Crude oil remains historically elevated amid U.S.-Iran tensions, with Brent around the mid-$90s per barrel and WTI near $91. High petroleum prices remain supportive longer term for biofuel economics even when vegetable-oil futures experience short-term corrections.

Corn continues to show comparatively good resilience. December futures are holding near $5.40 despite harvest approaching and this week’s speculative shakeout. Weather remains part of the support. Extreme heat warnings remain in place across portions of Kansas into Tuesday, while parts of Missouri face temperatures 10 to 15 degrees above normal and minimal rainfall. USDA reported only 13% of the corn crop mature as of Aug. 30, meaning enough of the crop remains vulnerable for the market to continue attaching some weather premium.

Demand is also providing a cushion. USDA reported 1.986 million metric tons of 2026-27 corn sales for the week ended Aug. 27. While harvest supplies will increasingly become a counterweight, the combination of export demand and concern that late-season heat has trimmed yield potential is helping prevent a deeper break.

The new complication Friday is the U.S. jobs report. August payrolls increased 162,000, far above expectations near 56,000, while unemployment remained at 4.1%. The dollar index responded by rising about 0.4%, and Treasury yields jumped as traders increased expectations for additional Federal Reserve tightening. A stronger dollar is modestly negative for U.S. grain export competitiveness and could encourage additional commodity fund profit-taking ahead of the Labor Day weekend.

Bottom line: The overnight board is bearish, but the magnitude of the losses is more important than the direction. Corn is barely lower, soybeans remain above $13 and wheat is stabilizing after Thursday’s much larger liquidation. The market is removing some speculative excess after an exceptionally strong rally, while the underlying bullish issues — Black Sea export disruption, continued Chinese soybean buying, strong corn demand and late-season U.S. heat — have not disappeared. The risk entering the long weekend is that traders reduce positions further, but fresh Black Sea trouble, another Chinese purchase or worsening U.S. weather could quickly bring buyers back.

—French corn collapse lifts EU premiums as wheat stabilizes

Paris corn nears $8.05/bu as Black Sea risks keep wheat volatile

European grain markets are firming into Friday, led by an increasingly severe corn supply problem, while wheat is stabilizing after Thursday’s sharp peace-headline selloff. French corn conditions have deteriorated to another record low just as harvest begins, reinforcing expectations for unusually heavy EU import needs. Wheat, meanwhile, is trying to separate the possibility of renewed Russia/Ukraine diplomacy from the reality that Black Sea export logistics remain severely disrupted.

Paris December wheat is up €1.25 at €250.00 per metric ton. Using a Sept. 4 euro near $1.162, that equals about $290.60 per metric ton, or $7.91 per bushel on a 60-pound wheat basis. The modest recovery follows Thursday’s retreat after Russian President Vladimir Putin raised hopes of a possible negotiated settlement in Ukraine. December Euronext wheat had reached €259.25 earlier in the week as Black Sea disruptions fueled a sharp risk-premium rally before falling back toward €248.50 Thursday.

Paris November corn is up €0.50 at €272.50 per metric ton, equivalent to roughly $316.75 per metric ton or $8.05 per bushel on a 56-pound corn basis. The extraordinary European premium reflects much more than general grain-market strength: the EU is confronting an increasingly serious corn shortage.

French corn ratings deteriorated another percentage point, with only 27% of the crop rated good/excellent as of Aug. 31, versus 62% a year earlier. Harvest is beginning under exceptionally poor conditions, while some corn in livestock regions is being chopped for silage rather than carried to grain because drought has also reduced forage supplies. The deterioration suggests that final yields could still disappoint earlier estimates.

The French agriculture ministry’s earlier 35% decline referred to projected corn production, not yield. Its August forecast put grain-corn production near 9.0 million metric tons, down about 35% from 2025 as both acreage and yields declined, with the average yield then projected at 70.3 quintals per hectare, or 7.03 metric tons per hectare. More recent crop deterioration points to additional downside risk.

Some prices estimates of only 45.6 million metric tons for the EU corn crop is particularly striking. That would be substantially below the European Commission’s recent 50.1-million-ton projection, itself near a two-decade low and about 20% below the recent average. If those forecasts are close to correct, the EU will have to rely unusually heavily on imported corn at a time when Ukraine — normally one of Europe’s most convenient suppliers — faces major logistical uncertainty.

Black Sea wheat remains cheaper on paper. Russian 12.5% protein wheat offered from Baltic ports at $269 per metric ton equates to about $7.32 per bushel, roughly 59 cents below the Paris wheat equivalent. But the price differential understates the importance of origin, freight and execution risk. Disruptions around Black Sea ports have already pushed Asian importers toward alternative suppliers.

Reuters reports that Asian buyers recently booked at least 500,000 metric tons of Australian and Argentine wheat as uncertainty mounted over Black Sea deliveries. Australian Premium White wheat at $315-$330 per metric ton works out to roughly $8.57-$8.98 per bushel, while Argentine wheat at $310-$315 per metric ton equals about $8.44-$8.57 per bushel. Buyers are effectively paying more for supply certainty.

That is why peace headlines remain capable of producing violent futures-market corrections without immediately eliminating the physical-market premium. Putin’s comments were enough to trigger profit taking after wheat’s multiyear-high rally, but there is still no ceasefire or agreement restoring normal Black Sea shipping. Until port operations and vessel traffic actually normalize, Russian and Ukrainian export risk should continue to command a premium in competing origins.

Malaysian palm oil is firmer but remains caught between supportive energy/weather signals and heavy nearby supplies. October futures are up 7 ringgit at 4,775 ringgit per metric ton. At roughly 4.046 ringgit per dollar, that converts to about $1,180 per metric ton, or 53.5 cents per pound — a useful comparison with U.S. soybean-oil values.

Palm oil has support from firmer crude oil amid renewed U.S./Iran tensions, rising El Niño concerns and Indonesia’s continued push toward the B50 biodiesel mandate. Drier Southeast Asian weather could restrict 2027 production, while Indonesia’s output is projected to decline about 2.9% to 56.8 million metric tons. Higher petroleum prices also improve the economics of vegetable oils as biodiesel feedstocks.

Demand from India is another positive. August palm-oil imports rose about 7% from July to 780,000 metric tons, the highest in six months, while soyoil purchases jumped 21% to a record 601,000 tons as refiners stocked up ahead of the festival season.

However, palm oil still faces substantial resistance from inventories and exports. Cargo surveyors estimated Malaysian August exports fell 6.5% to 14.9% from July, while stocks have climbed to their highest level in several months. Those factors explain why stronger crude, El Niño risks and improving Indian demand have generated only a modest price response so far.

Bottom line: The most fundamentally bullish development in international grain markets is increasingly European corn rather than wheat. France’s record-low crop ratings, shrinking EU production and forage shortages are creating a genuine physical deficit that will require imports. Wheat remains dominated by Black Sea geopolitics — vulnerable to sharp declines whenever peace expectations rise but supported by continuing export disruptions. Palm oil has a potentially bullish 2027 weather-and-biofuel story, but near-term Malaysian stocks and sluggish exports are keeping that market from breaking decisively higher.

—China soybean auction draws no buyers

Sinograin’s Sept. 2 imported soybean sale posts 0% clearance as floor price proves too high

China’s Sept. 2 Sinograin imported soybean auction failed to attract any buyers, a sharp reversal from strong participation in recent reserve sales. Sinograin offered 68,000 metric tons, but none sold, producing a 0% clearance rate. The auction carried a 4,330 yuan-per-metric-ton floor price, and with no transactions there was no average price.

The result compares with a 76.6% clearance rate on Aug. 26, when roughly 222,800 MT sold at an average near 4,163 yuan/MT. The failed sale suggests Sinograin’s asking price moved above crushers’ willingness to pay and may signal weaker near-term demand for reserve soybeans as buyers assess domestic margins and incoming import supplies.

—Big Pro Farmer corn yield gap does not necessarily signal big USDA cut

History shows USDA and Pro Farmer estimates tend to converge as harvest nears

Grant Gardner, writing for Southern Ag Today (link), argues that the unusually wide gap between the Pro Farmer 2026 corn yield estimate and USDA’s August forecast should not automatically be interpreted as evidence that USDA will make a similarly large downward revision in upcoming WASDE reports. Historical data show that USDA and Pro Farmer estimates generally move closer together as the season progresses, regardless of how far apart they start.

The info: USDA’s August estimate put the 2026 U.S. corn yield at 180.7 bushels per acre, down 2.3 bushels from its previous forecast, while Pro Farmer estimated 173.2 bushels, a striking 7.5-bushel gap. Pro Farmer’s soybean estimate of 53.3 bushels was actually 0.6 bushel above USDA’s 52.7-bushel forecast.

But Gardner’s review of 2016-2025 data finds that Pro Farmer typically estimates corn yields below USDA in August. The Crop Tour averaged 3.5 bushels below USDA’s August estimate but only 2.3 bushels below the eventual final yield. Even in years when the initial disagreement was unusually large, the gap generally narrowed by October to roughly the same level seen in years when the two forecasts began close together.

That suggests this year’s headline 7.5-bushel difference exaggerates the amount of new production information by Pro Famer using Crop Tour results and other information. Because Pro Farmer has averaged about 3.5 bushels below USDA in nine of the past 10 years, Gardner argues the incremental signal this year may be closer to four bushels rather than 7.5 bushels. USDA’s August forecast also historically has been more accurate than the Pro Farmer estimate when measured against the final yield.

Bottom line: The Pro Farmer estimate reinforces the case that USDA’s corn yield could move lower, but history does not support assuming USDA must move anywhere close to Pro Farmer’s 173.2-bushel estimate. The September Crop Production report will provide USDA’s next survey-based assessment. For producers evaluating the recent corn rally, Gardner cautions that some of the bullishness may be based on expectations for a USDA yield reduction larger than historical relationships justify.

—Cotton AWP rises to near 74 cents. The Adjusted World Price (AWP) for cotton is at 73.92 cents per pound, effective today (Sept. 4), up from 71.52 cents per pound the prior week, and the highest since the week ended Feb. 23, 2024, when it was 75.12 cents per pound. Meanwhile, USDA announced that Special Import Quota #21 will be established Sept. 10 for the import of 25,376 bales of upland cotton, applying to supplies purchased not later than Dec. 8 and entered into the U.s. not later than March 8, 2027. This is the third special import quota announced this fall as the US Far East price exceeded the prevailing world market price for any consecutive 4-week period.

—Ag markets yesterday:

■  ENERGY MARKETS & POLICY

—Motiva restarts storm-hit units at nation’s largest refinery

Return of Port Arthur capacity eases one near-term diesel supply risk

Motiva has restarted all units knocked offline by Tropical Storm Edouard at its Port Arthur, Texas, refinery, including a 90,000-barrel-per-day crude unit, coker, reformer and alkylation unit. The facility is the largest U.S. refinery, with about 730,000 barrels per day of total throughput capacity.

The restart removes an important near-term threat to gasoline and diesel supplies at a time when U.S. refineries are already operating near maximum rates. However, it does not resolve the broader diesel shortage: distillate inventories remain about 14% below their five-year average, leaving fuel prices vulnerable to additional outages or supply disruptions.

■  WEATHER

— NWS outlook: Extreme heat is now the top story for agriculture: Extreme Heat Warnings are centered on the mid-Mississippi Valley with widespread Heat Advisories across the Corn Belt, Plains, and Delta, highs and heat indices in the 90s to 100s, and record-warm overnight lows offering little relief — a stress and dry-down accelerant for late-filling corn and soybeans through the holiday weekend. The other main feature is a corridor of strong to severe thunderstorms from the Upper Midwest to the Mid-Atlantic, as an upper trough deepens over southeastern Canada; storm complexes along a stalled front could drop 1-3 inches from Wisconsin to Virginia (Marginal excessive-rain risk), with eastern Ohio and Pennsylvania most flood-vulnerable on already-wet soils. The corridor sags south through the weekend, most active over the southern Mid-Atlantic Saturday. Along the Gulf Coast, leftover tropical moisture from Edouard keeps scattered flash-flood-capable storms going from east Texas to Florida — a Marginal risk, with southern Louisiana and New Orleans flagged for urban flooding — while the Southwest monsoon holds a Slight risk along the Arizona–New Mexico line. For ag areas beyond the heat: northern-fringe Corn Belt storms bring welcome moisture to Wisconsin and the Great Lakes edge, east Texas gets a break from Edouard’s deluge but stays showery, and the Delta bakes.

Link to our weather briefing out earlier this morning.

■  REFERENCE LINKS TO KEY TOPICS

Index to links of special reports & other items of note