U.S. Inflation Cools in December, Undercutting Forecasts

Treasury advances 45Z Clean Fuel Credit rulemaking — but only for 2025 | Trump addresses the nation | U.S. focus on Canada dairy policy via USMCA reset

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Link: SDRP Stage 2 Explained: What Producers Need to Know About Coverage,
         Quality Losses, and Deadlines
Link: Video: Wiesemeyer’s Perspectives, Dec. 13
Link: Audio: Wiesemeyer’s Perspectives, Dec. 13

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Updates: Policy/News/Markets, Dec. 18, 2025

UP FRONT— Treasury advances 45Z Clean Fuel Credit rulemaking — but only for 2025: Treasury sent the 45Z proposed rule to OMB, but the initial package is expected to cover only 2025 guidance, with a broader 2026–2029 framework now pushed into the first half of 2026 as Treasury incorporates OBBBA changes.— U.S. inflation cools sharply in December, undercutting forecasts: Headline CPI slowed to 2.7% (lowest since July) and core to 2.6%, beating expectations even as energy (+4.2% y/y) and food (+2.6%) stayed firm; the shutdown-driven data gap (missing October and no November monthly rate) still complicates comparisons.— Healthcare showdown slips into 2026 as ACA subsidy deadline looms: The House passed a GOP health package that omits extending enhanced ACA subsidies, while a separate three-year extension effort via discharge petition won’t reach the floor until after Jan. 1—making a lapse and higher consumer premiums likely without a late breakthrough.— Trump bets on optimism and symbolism in prime-time reset: Trump’s prime-time address emphasized easing affordability, tariffs and energy policy, and a symbolic $1,776 payment for 1.4 million service members, while previewing health-care and housing ideas without key details; his food-price claims hinge more on wholesale declines than what most consumers have seen at retail.— USTR Greer signals support for keeping USMCA intact despite Trump’s threats: Greer told lawmakers he supports staying in USMCA as the six-year review begins, framing disputes with Canada and Mexico as addressable—even as Trump continues to threaten letting the pact lapse or restructuring it.— FINANCIAL MARKETS — Equities today: Global markets were modestly higher in cautious trading ahead of European central bank decisions and key U.S. inflation data, while U.S. futures rebounded on strong tech earnings and AI-related optimism.— FINANCIAL MARKETS — Equities yesterday: U.S. stocks fell broadly, with the Dow down 0.47%, the S&P 500 down 1.16%, and the Nasdaq down 1.81%.— Waller sees scope for meaningful rate cuts as labor market stalls: Fed Governor Christopher Waller said rates may be 50–100 bps above neutral and could come down next year at a “moderate pace” as jobs growth runs “close to zero,” comments landing amid speculation he’s a contender to succeed Powell.— AG MARKETS — USDA daily export sale: USDA reported a daily sale of 114,000 MT of soybeans to unknown destinations for the 2025/26 marketing year.— AG MARKETS — China shows in weekly export sales (soybeans/sorghum): Weekly Export Sales (through Nov. 27) showed China activity including net sales of 509,000 MT of soybeans and 123,000 MT of sorghum (with a small net wheat reduction), alongside other commodity updates.— AG MARKETS — Bloomberg: China booked 7 MMT soybeans vs pledge: Bloomberg reported China has booked about 7 MMT of U.S. soybeans toward a 12 MMT pledge, while USDA-reported totals through Nov. 27 plus subsequent daily flashes put confirmed/announced sales at roughly 4.475 MMT, with additional volumes rumored (including Sinograin-linked buying).— AAFC flags elevated market risk as geopolitics cloud 2025–26 crop outlook: AAFC’s November outlook warned Canadian and global grain markets face unusually high uncertainty from geopolitical disruptions, trade-policy frictions, and macro volatility—complicating demand, logistics, and price discovery for export-heavy crops.— India moves to curb sugar glut with exports, ethanol push: India signaled it will manage a surplus by increasing exports and diverting more sugar to ethanol to protect cane farmers, a shift that could pressure global futures already near five-year lows.— Agriculture markets yesterday: Grains were mixed with corn higher and soybeans/wheat mostly lower; cotton rose, while live/feeder cattle and lean hogs fell on the day.— WOTUS reset: Supreme Court ruling and Trump proposal narrow federal reach over farm waters: Farm Bureau’s analysis says the Sackett framework and the administration’s proposal would exclude many features (isolated waters, most ditches, prior-converted cropland) and improve predictability, though jurisdictional determinations could still be slow in practice.— ENERGY MARKETS & POLICY — Thursday: Oil prices hold steady as Russia sanctions and Venezuela blockade risks loom: Crude prices were little changed as traders balanced possible tougher Russia sanctions against uncertainty over enforcement of a threatened Venezuela tanker blockade.— ENERGY MARKETS & POLICY — Wednesday: Oil prices bounce on Venezuela blockade, but inventory builds cap gains: Oil rebounded more than 1% on the Venezuela move, but larger-than-expected U.S. gasoline and distillate inventory builds limited the upside.— Iowa GOP leader signals new carbon pipeline fix for 2026 session: Iowa Senate Majority Leader Mike Klimesh said he will push early-session legislation to widen approved pipeline corridors (up to 10 miles each side) to allow voluntary easements outside the current route, drawing sharp criticism from landowner and environmental advocates.— TRADE POLICY — U.S. flags dairy access and streaming rules as leverage in USMCA review: Greer outlined U.S. priorities that include challenging Canada’s dairy supply management and elements of the Online Streaming Act, while keeping broader leverage options open.— EU/Mercosur safeguard deal signals tougher stance on South American farm imports: The EU-Mercosur safeguard would trigger investigations if imports exceed 8% of the rolling three-year average, signaling heightened political sensitivity and potential for stricter SPS scrutiny even absent formal quotas.— CONGRESS — Farmers warn of a Brazil land-conversion squeeze — Congress orders U.S. intel review of China’s role: NDAA language directs U.S. intelligence agencies (with State and USDA) to assess China-linked investment and land/infrastructure ties in Brazil’s ag sector, elevating farmer concerns into a national-security frame.— POLITICS & ELECTIONS — Alarm bells before the midterms: Karl Rove argues Trump’s rallies, rhetoric, and online behavior risk worsening weak approval ratings and setting up a 2026 GOP midterm backlash unless the White House pivots to disciplined, voter-focused governing.— FOOD POLICY & FOOD INDUSTRY — Farm labor crunch pushes up produce prices, farmer group warns: A Grow it Here report says chronic farm labor shortages and rising H-2A-related costs are squeezing specialty-crop growers and increasingly feeding through to higher consumer prices and more import reliance.— FOOD POLICY & FOOD INDUSTRY — DOJ unseals SNAP fraud case as administration sharpens crackdown: DOJ charged two Boston-area shop owners with trafficking nearly $7 million in SNAP benefits, as the administration signals tougher oversight and pushes states for more applicant data amid broader anti-fraud efforts.— WEATHER — NWS outlook: The National Weather Service warned of dangerous winds and heavy snow from the Northwest into the north-central U.S., heavy rain in parts of the Pacific Northwest, and above-average temperatures with potential records in parts of the West and Northeast/Mid-Atlantic. TOP STORIES—Treasury advances 45Z Clean Fuel Credit rulemaking — but only for 2025OMB review will focus on near-term guidance as broader rules for 2026–2029 are pushed into next yearThe Treasury Dept. sent its proposed rule governing the Section 45Z Clean Fuel Production Credit to the Office of Management and Budget for review, marking a key procedural step but signaling a narrow initial scope. According to people familiar with the process, the package under OMB review is expected to address only the 2025 tax year, with a more comprehensive rule covering 2026 through 2029 slated for the first half of 2026. The Trump administration’s regulatory agenda had previously characterized IRS notices issued in January 2025 as “draft intended rules” for the credit. However, progress slowed after the One Big Beautiful Bill Act (OBBBA) enacted several substantive changes to 45Z, requiring Treasury to rework key elements of the credit. Sources say the department prioritized issuing 2025-specific guidance to give fuel producers and other eligible firms clarity on how to claim the credit for the current tax year, even as longer-term rules remain under development. —U.S. inflation cools sharply in December, undercutting forecastsHeadline CPI falls to 2.7% as core inflation eases to 2.6%, despite renewed pressure from energy and food prices U.S. inflation cooled more than expected in December 2025, with the annual consumer price index (CPI) rising 2.7% — the lowest reading since July and well below forecasts of 3.1%. The result also marked a clear deceleration from the 3.0% pace reported for September, underscoring continued progress on inflation even as select cost pressures persist.  Energy prices remained a notable source of volatility, climbing 4.2% over the year. Gasoline prices edged up 0.9%, while fuel oil surged 11.3% and natural gas rose 9.1%. Food prices increased 2.6%, adding to household cost pressures, while shelter costs were up 3%, continuing to be a major contributor to overall inflation. Detail on food prices: The index for food increased 2.6% over the last year. The index for food at home rose 1.9% over the 12 months ending in November. The meats, poultry, fish, and eggs index rose 4.7% over the last 12 months. The index for nonalcoholic beverages increased 4.3% over the same period and the index for other food at home rose 1.3%. The cereals and bakery products index increased 1.9% over the 12 months ending in November and the fruits and vegetables index rose 0.1% over the year. In contrast, the index for dairy and related products decreased 1.6% over the same period. The food away from home index rose 3.7% over the last year. The index for full service meals rose 4.3% and the index for limited service meals rose 3.0% over the same period. Beyond essentials, several categories posted moderate gains, including medical care (2.9%), household furnishings and operations (4.6%), recreation (1.8%), and used cars and trucks (3.6%). Price increases were most subdued for apparel (0.2%) and new vehicles (0.6%), signaling easing pressures in some goods markets. Core inflation, which excludes food and energy, came in at 2.6% — well below expectations of 3% — reinforcing the view that underlying inflation trends are cooling. Data gaps remain, however, as the Bureau of Labor Statistics did not collect inflation data in October 2025 due to the 43-day government shutdown, leaving October figures missing and monthly rates for November unreleased. —Healthcare showdown slips into 2026 as ACA subsidy deadline loomsHouse advances GOP health package, but bipartisan impasse leaves enhanced ACA premium subsidies on track to expire at year-end U.S. health care policy action is likely to be pushed into January after the House narrowly passed a Republican health care package that sidesteps the most urgent issue facing consumers: the expiration of enhanced Affordable Care Act (ACA/ObamaCare) premium subsidies at the end of the year. The House approved the GOP package 216–211 on Thursday, but the bill omits any extension of the enhanced subsidies and is widely viewed as dead on arrival in the Senate, where it would require 60 votes and faces unified Democratic opposition. Separately, a push to extend the enhanced ACA premium subsidies for three years is moving forward procedurally in the House but not on a timeline that would avert a lapse. Four Republicans have signed onto a discharge petition, a maneuver that compels House leadership to bring the subsidy extension to the floor. That vote, however, is not expected until after Jan. 1. Even if the House approves the extension on a narrow vote, prospects in the Senate remain bleak. The upper chamber has already rejected a similar three-year extension, underscoring the persistent partisan divide over the subsidies. Absent a last-minute breakthrough, the enhanced ACA premium subsidies are set to expire Dec. 31, a development that would significantly raise health insurance costs for millions of Americans and leave the issue at the top of the congressional agenda when lawmakers return in January.—Trump bets on optimism and symbolism in prime-time resetPresident leans on affordability themes, patriotic payouts, and tariffs as he pitches a coming economic boom — while leaving major policy details unresolved President Donald Trump used a rare prime-time White House address Wednesday night to deliver what amounted to a political and economic reset: acknowledge lingering voter frustration over high prices, promise relief ahead, and argue that the U.S. economy is on the cusp of a major upswing heading into 2026. Trump said he plans to announce his pick for the next Federal Reserve chair soon and he promised to roll out housing reform plans next year.In a brisk, sub-20-minute speech, Trump sought to strike a careful balance between realism and optimism. He conceded that everyday costs remain elevated, but repeatedly insisted that inflation pressures are easing and that recent policy moves have laid the groundwork for what he described as an imminent “economic boom.” Central to that message was his claim that food prices — one of the most politically sensitive components of inflation — are beginning to come down, a point he emphasized as evidence that household budgets will soon feel relief. Trump portrayed lower grocery prices as a direct result of his broader economic agenda, pointing to energy policy, domestic production, and trade enforcement as factors helping ease pressure across the food supply chain. While he cited some specific data, the reference appeared designed to reassure voters who continue to judge inflation less by economic reports and more by weekly grocery bills. (See box below for perspective on food prices.)Of note: The tone marked a subtle shift from pure grievance toward reassurance, even as he continued to place blame on prior administrations, immigration policy, and what he called flawed trade arrangements. The most concrete moment of the address came with Trump’s announcement that more than 1.4 million U.S. service members would receive $1,776 payments before Christmas — a move heavy on symbolism and designed to underscore his “America first” message. Politically, the announcement was crafted to resonate quickly; policy-wise, it left unanswered questions about funding and congressional approval. Trump also previewed a reworked approach to health care, signaling support for sending money directly to individuals rather than routing subsidies through Affordable Care Act (ObamaCare) structures. The idea echoed long-standing conservative critiques of the ACA but stopped short of outlining how coverage standards, eligibility, or costs would be managed. A similar pattern emerged on housing, where he pledged “aggressive reform” without offering specifics on zoning, financing, or federal incentives. Trade policy remained central to Trump’s economic narrative. He credited tariffs with driving factory investment and job creation, reinforcing that trade enforcement remains the backbone of his growth strategy. While that message plays well with voters focused on manufacturing and national strength, it also underscores ongoing tensions for sectors sensitive to higher input costs and potential retaliation. President Trump has repeatedly claimed that gasoline prices have fallen significantly under his administration and taken credit for those lower pump costs as evidence of his economic leadership. For example, he has boasted that U.S. gas prices are at multi-year lows and suggested they could go as low as about $2 a gallon, linking the declines to his energy policies and increased domestic production. However, independent data show the average price is around $2.90 per gallon, and some of his specific claims about much lower prices in certain states have been fact-checked as inaccurate or exaggerated.Trump has touted reductions in mortgage costs under his administration, arguing that borrowers are paying significantly less than they would have under the prior administration. He has claimed, for example, that mortgage payments have come down by nearly $3,000 a year for homebuyers, presenting this as evidence that his policies are making housing more affordable and blaming previous policies for higher costs. Trump has also pressured for lower interest rates, criticizing the Federal Reserve for not cutting rates more aggressively, saying high borrowing costs are harming the housing market and that further rate reductions would help lower mortgage payments.Immigration and public safety rounded out the speech, with Trump returning to familiar themes of border enforcement, deportations, and law-and-order—areas where his rhetoric remains most forceful and concise. Notably absent was an extended discussion of foreign policy flashpoints, suggesting the administration sees domestic economic confidence, not geopolitics, as the decisive political terrain heading into the midterms. Overall, the address was less about unveiling new policy than about shaping perception: a White House attempting to reassure uneasy voters that relief is coming, momentum is real, and the administration’s disruptive approach is beginning to pay off. Whether that message resonates may depend less on tonight’s rhetoric and more on whether promised gains show up in household budgets before voters head back to the polls.What Trump Said About Food Prices President Trump claimed that egg prices had dropped significantly — using this as a key example of broader progress on “affordability” and food costs. He suggested that prices for eggs and other everyday goods were falling rapidly, framing this as evidence that inflation and food costs were easing for consumers. In context, Trump tied these claims to his broader argument that food prices and inflation overall are coming down quickly under his administration’s policies, including tariffs and economic actions. How Accurate Those Statements Were Egg Prices Wholesale vs. Retail:Trump’s claim about egg prices falling dramatically (e.g., steep percentages like “82%”) reflects movements in wholesale egg prices — the prices grocery stores pay suppliers — which did fall sharply from earlier 2025 peaks. Retail Reality:Actual prices paid by shoppers at the grocery store (retail prices) did not fall as dramatically. In fact, retail egg prices for most of 2025 stayed higher than at the start of the year, and even when wholesale prices fell sharply, retail prices lagged behind due to inventories bought earlier at higher cost. Experts note this lag means consumers haven’t seen the steep reductions Trump cited. Major fact-checkers conclude that Trump’s framing of egg price declines is misleading: yes, wholesale costs dropped substantially, but retail prices (what consumers pay) remained elevated and did not fall by the big percentages Trump implied. Broader Food Prices Mixed picture: Data from broader food price indexes show that while some individual food items (like certain fruits or eggs) can experience price declines from earlier spikes, total food prices overall have generally not fallen across the board. Many grocery categories — meats, dairy, coffee, etc. — have seen price increases or slower growth, meaning overall food inflation persists. Independent analysis finds that Trump’s broader claims about food and grocery prices being “down” are oversimplified: some items have seen declines, but many have not. The overall CPI food price measure remains elevated, and many consumers still feel rising costs at checkout. Bottom Line: Some wholesale food costs (especially egg prices) have fallen sharply from earlier 2025 peaks. Most retail food prices paid by shoppers have not dropped as dramatically, and many food categories remain expensive. Trump’s statements overstate the extent to which food prices overall have come down and can be misleading if interpreted as broad, across-the-board price declines. In short: there are kernels of truth (e.g., wholesale egg price declines), but the data do not support the implication that grocery and food prices generally are rapidly falling for consumers.  —USTR Greer signals support for keeping USMCA intact despite Trump’s threatsU.S. trade ambassador reassures lawmakers that the North American pact remains on track as its mandatory six-year review begins U.S. Trade Representative (USTR) Jamieson Greer is signaling support for keeping the United States in the U.S.–Mexico–Canada Agreement (USMCA), offering reassurance to lawmakers amid renewed uncertainty fueled by President Donald Trump’s public threats to let the pact lapse or split it into separate bilateral deals. Greer conveyed that message during closed-door briefings with members of Congress this week, according to multiple lawmakers who attended the sessions, as reported by Bloomberg Government. Greer’s remarks come as Trump has sharply criticized both Canada and Mexico, accusing them of unfair trade practices and floating additional punitive tariffs. The president has also suggested dismantling the three-nation agreement — despite having championed USMCA during his first term — raising alarms among lawmakers and industries dependent on North American supply chains. Greer struck a more measured tone, emphasizing continuity and process as the agreement enters its mandatory six-year review, according to senators and representatives present at the briefings,  “There’s a lot of posturing right now,” said Sen. James Lankford (R-Okla.) after a Senate Finance Committee session, noting that while disputes with Canada and Mexico persist, they are distinct and manageable. Lawmakers from both parties largely described the meetings as constructive, saying Greer appeared well-versed in the procedural steps ahead and open to targeted revisions that could address sector-specific concerns. Rep. Don Beyer (D-Va.), speaking after a House Ways and Means Committee hearing, said Greer repeatedly emphasized that USMCA is an improvement over NAFTA, its predecessor. The review process allows the three countries to extend, revise, or terminate the agreement, making congressional engagement a critical next step. Some lawmakers are pressing Greer to provide a formal written outline of U.S. objectives ahead of negotiations. “I think this is a good start,” said Sen. Thom Tillis (R-N.C.), “but at the end of the day, we have to have some sort of formal submission.” Greer declined to comment publicly on whether withdrawal from USMCA was discussed, and his office did not respond to requests for comment. Still, his private reassurances appear to have eased immediate concerns on Capitol Hill, at least temporarily, that the administration is preparing to abandon the cornerstone North American trade pact.

FINANCIAL MARKETS

 —Equities today: Global markets climbed in cautious trading ahead of European central bank interest rate announcements and crucial U.S. inflation data. U.S. stock futures are seeing a solid rebound thanks to strong tech earnings and positive AI news. In Asia, Japan -1%. Hong Kong +0.1%. China +0.2%. India -0.1%. In Europe, at midday, London +0.2%. Paris +0.2%. Frankfurt +0.2%.

—Equities yesterday: 

Equity Index	Closing Price  Dec. 17	Point Difference  from Dec. 16	% Difference  from Dec. 16
Dow	47,885.97	-228.29	-0.47%
Nasdaq	22,693.32	-418.14	-1.81%
S&P 500	6,721.43	-78.83	-1.16%

—Waller sees scope for meaningful rate cuts as labor market stalls

Fed governor says policy remains restrictive and signals openness to gradual easing amid chair speculation

Federal Reserve Governor Christopher Waller said Wednesday that U.S. interest rates could be as much as a full percentage point lower than current levels, arguing that weak job growth suggests monetary policy remains restrictive. Speaking at the Yale CEO Summit, Waller said employment gains are “close to zero,” a condition he said is inconsistent with a healthy labor market and leaves room for rate cuts next year to support hiring.

“I still think we’re probably 50 to 100 basis points off of neutral,” Waller said, adding that the Fed has “some room” to bring rates down. At the same time, he sought to reassure markets that the labor market is not in free fall, saying it is not “going off a cliff,” which would allow the central bank to move at a “moderate pace” rather than take dramatic action.

Waller’s comments come as he is being discussed as a potential successor to Fed Chair Jerome Powell, whose term expires in May, and he was scheduled to meet with President Donald Trump on Wednesday. Waller has been one of the more dovish voices on the Federal Open Market Committee, having dissented from the decision to hold rates steady in July and supporting the three quarter-point cuts implemented in September, October, and December.

His emphasis on gradualism may ease concerns among investors who are closely watching the Fed leadership process. Some market participants worry that a new chair perceived as yielding to White House pressure for lower rates could undermine the Fed’s independence and push bond yields higher. Waller’s framing — that policy easing can proceed cautiously and data-dependently — appeared aimed at tempering those fears while underscoring his view that rates remain above neutral.

AG MARKETS

—USDA daily export sale: 114,000 MT soybeans to unknown destinations, 2025/2026 marketing year. 

—More U.S. soybean sales, first sorghum sales show for China in latest weekly update. U.S. weekly Export Sales data for the week ended Nov. 27 included activity for China for the 2025/26 marketing year of net reductions of 2,000 metric tons of wheat, net sales of 123,000 metric tons of sorghum, net sales of 509,000 metric tons of soybeans. There was no sales activity for cotton reported but there were exports of 11,374 running bales, putting the outstanding sales total at 83,554 running bales. Activity for 2025 included net sales of 1,288 metric tons of pork along with exports of 2,062 metric tons to put the outstanding sales at 13,251 metric tons. As for sales of US soybeans to China, the report reflected the daily sales announcement of 312,000 metric tons that were announced Nov. 28 and additional sales of 197,000 metric tons, bringing the total through Nov. 27 and the daily export sales announced since that reporting period to 4.475 million metric tons of sales announced or confirmed by USDA.

—Bloomberg is reporting that China has now booked 7 million metric tons (MMT) of soybeans, moving it closer to the pledged purchases of 12 MMT as part of the trade deal between President Donald Trump and Chinese President Xi Jinping. The item also indicated that Chinese purchases of U.S. soybeans stand at less than 4 MMT. However, the USDA Export Sales data through the week ended Nov. 27 and daily export sales since that date bring the total to 4.475 MMT with more sales talked about in the Bloomberg item, including 2 MMT to China’s state stockpiler Sinograin. They have been auctioning off state-owned soybean supplies on a weekly basis, presumably to make room for newly purchased U.S. supplies.

Of note: As we reported earlier this week, trade source signal China has purchased 7.5 to 8 MMT of U.S. soybeans.

—AAFC flags elevated market risk as geopolitics cloud 2025-26 crop outlook

Canadian grain markets face continued uncertainty from global conflicts, trade disruptions, and price volatility

Agriculture and Agri-Food Canada’s (AAFC) November field crop outlook for the 2025-26 crop year underscores that uncertainty across Canadian and global grain markets remains unusually high, driven largely by persistent geopolitical tensions that continue to disrupt trade flows and undermine market stability. The report, released Wednesday afternoon, cautions that global conflicts, trade policy frictions, and shifting alliances are complicating export demand forecasts and price discovery for key crops.

Risk factors. AAFC notes that Canada’s outlook for grains and oilseeds is being shaped not only by domestic supply and yield expectations, but also by heightened risks in international markets. Ongoing geopolitical strains have increased the likelihood of sudden changes in trade access, shipping routes, and import policies, creating volatility for export-oriented crops such as wheat, canola, and pulses. These factors, the department suggests, make forward planning more difficult for producers and grain handlers alike.

The report also points to broader macroeconomic and policy uncertainty as compounding risks. Inflation pressures in major economies, currency fluctuations, and the potential for further trade restrictions or retaliatory measures are all cited as factors that could influence global demand and pricing over the coming crop year. As a result, AAFC emphasizes that outlook projections should be viewed with caution, as market conditions may shift rapidly in response to geopolitical or policy developments.

Overall, the November outlook signals that while fundamental supply-and-demand balances remain important, external geopolitical forces are playing an outsized role in shaping the 2025-26 market environment, leaving Canadian farmers and exporters operating in a more volatile and less predictable global landscape.

—India moves to curb sugar glut with exports, ethanol push

New Delhi signals more overseas sales and biofuel diversion to protect cane farmers as output surges

India plans to manage a growing sugar surplus by boosting exports and diverting more supplies into ethanol production, aiming to prevent a sharp drop in prices that could hurt sugarcane farmers, senior officials said, according to Reuters.

Food Secretary Sanjeev Chopra said India’s 2025/26 sugar output is projected to jump 18% to 30.9 million metric tons, even after diverting about 3.4 million tons for ethanol. With domestic consumption running near 29 million tons annually, production is set to exceed demand, prompting the government last month to approve exports of 1.5 million tons for the current season.

Chopra said the government is prepared to use “all possible measures” to contain surplus stocks, warning that excess supplies could weigh heavily on farmer incomes. Industry officials expect a supply glut to emerge by mid-January, likely pushing prices lower and straining mill finances and farmer payments.

India, the world’s second-largest sugar producer and largest consumer, had been a major exporter until drought conditions led to an export ban in 2023/24. Exports were tightly limited again last year, but the return of higher output has reopened the door to overseas shipments — moves that could add pressure to global sugar futures already near five-year lows.

Domestic prices have already slipped nearly 4% since the marketing year began on October 1. Chopra said New Delhi is also considering raising the domestic floor price for sugar sales and indicated further policy decisions could be announced within weeks to support mills and ensure timely payments to farmers.

—Agriculture markets yesterday:

Commodity	Contract  Month	Close  Dec. 17	Change vs  Dec. 16
Corn	March	$4.40 1/2	+4¢
Soybeans	January	$10.58 1/4	-4 1/2¢
Soybean Meal	January	$298.20	-$4.20
Soybean Oil	January	48.52¢	+16 pts
SRW Wheat	March	$5.06 1/4	-3 1/4¢
HRW Wheat	March	$5.07 3/4	+2 3/4¢
Spring Wheat	March	$5.62 1/2	-2 1/2¢
Cotton	March	63.43¢	+33 pts
Live Cattle	February	$229.55	-$1.15
Feeder Cattle	January	$341.525	-$1.80
Lean Hogs	February	$83.00	-$1.775

WOTUS

—WOTUS reset: Supreme Court ruling and Trump proposal narrow federal reach over farm waters

Farm Bureau says Sackett framework brings long-sought clarity, but implementation questions remain

In a special Market Intel policy analysis (link), Courtney Briggs of the American Farm Bureau Federation outlines how years of shifting definitions and court fights over “waters of the United States” (WOTUS) have created regulatory uncertainty for farmers and ranchers — and why the Supreme Court’s 2023 Sackett v. EPA decision marks a turning point. The Court unanimously scrapped the “significant nexus” test and narrowed federal jurisdiction to relatively permanent waters and wetlands with a continuous surface connection, a move Farm Bureau says provides the clearest legal standard in decades.

Briggs explains that the Trump administration’s proposed WOTUS rule (Nov. 17, 2025) adopts the Sackett framework, excluding isolated ponds, disconnected wetlands, groundwater, most ditches, and prior-converted cropland. The proposal also defines key terms to improve predictability, shifts the burden of proof from landowners to the federal government, and reinforces cooperative federalism by allowing states to regulate more stringently if they choose. Farm Bureau argues this narrowing would reduce compliance costs and legal risk tied to permitting, consultants, delays, and mitigation—risks that can carry steep civil and criminal penalties under the Clean Water Act.

Still, the analysis flags implementation challenges, notably determining whether a feature has sustained flow during wet seasons, which could slow jurisdictional determinations and impede farm operations. Overall, Farm Bureau frames the proposal as a major step toward durable clarity for everyday farm decisions — from drainage and tiling to fencing and ditch maintenance — while cautioning that practical hurdles could persist as the rule is applied on the ground.

ENERGY MARKETS & POLICY

—Thursday: Oil prices hold steady as Russia sanctions and Venezuela blockade risks loom

Markets balance fresh sanctions threats against limited near-term supply disruption, with Brent near $60 and WTI just under $56

Oil prices were little changed on Thursday as investors weighed the prospects of tougher U.S. sanctions on Russia against uncertainty over how a threatened U.S. blockade of Venezuelan oil tankers would be enforced. Brent crude edged down 1 cent to $59.67 a barrel, while U.S. West Texas Intermediate rose 5 cents to $55.99.

Analysts said prices have found support from rising geopolitical risk. Analysts pointed to U.S. signals on Russia sanctions and Washington’s warning it could block sanctioned tankers carrying Venezuelan oil as key bullish factors. Bloomberg reported that the U.S. is preparing another round of sanctions on Russia’s energy sector if Moscow fails to agree to a peace deal with Ukraine, though a White House official told Reuters that President Donald Trump has not yet decided.

ING analysts said additional measures against Russian oil could pose a larger supply threat than the proposed Venezuela blockade, even as Europe and the UK moved to tighten pressure on Moscow. The European Union added 41 ships to its list of sanctioned “shadow fleet” vessels, bringing the total close to 600, while Britain imposed sanctions on 24 individuals and entities, including Russian oil companies Tatneft and Russneft.

On Venezuela, ING estimates a U.S. blockade could disrupt about 600,000 barrels per day of exports — mostly destined for China — though roughly 160,000 bpd shipped to the U.S. would likely continue. Chevron cargoes have kept flowing under a prior U.S. authorization. Most other Venezuelan exports were paused midweek, although state oil company PDVSA has restarted some loadings after a cyberattack-related suspension.

Questions remain over enforcement. The U.S. Coast Guard last week seized a Venezuelan tanker — an unprecedented step — and reports say further interdictions are being prepared. Even so, Venezuelan crude accounts for about 1% of global supply, tempering the immediate market impact as traders await clearer policy decisions.

—Wednesday: Oil prices bounce on Venezuela blockade, but inventory builds cap gains

Geopolitical shock lifts crude off recent lows, even as swelling U.S. fuel stockpiles underscore lingering supply pressures

Oil prices rebounded more than 1% on Wednesday after President Donald Trump ordered a blockade of all sanctioned oil tankers entering and leaving Venezuela, injecting fresh geopolitical risk into a market that had just slid to near five-year lows. Brent crude rose 76 cents to settle at $59.68 a barrel, while U.S. West Texas Intermediate gained 67 cents to $55.94, easing some fears of an expanding global surplus.

The rally was tempered by bearish U.S. inventory data. According to the Energy Information Administration, gasoline and distillate stockpiles rose more than expected last week, adding downward pressure on prices. Gasoline inventories jumped 4.8 million barrels to 225.6 million barrels, while distillate stocks increased by 1.7 million barrels to 118.5 million. Crude inventories, however, fell by 1.3 million barrels to 424.4 million barrels.

Markets had been under pressure a day earlier as signs of progress in Russia/Ukraine peace talks raised the prospect of eased Western sanctions on Moscow, potentially allowing more Russian oil back into global markets. That outlook helped push prices to their lowest levels in nearly five years before Wednesday’s rebound.

Trump’s Venezuela move follows the recent U.S. seizure of a sanctioned tanker off the country’s coast and Washington’s designation of the Maduro government as a foreign terrorist organization. Key details of how the blockade will be enforced remain unclear, including whether the U.S. Coast Guard will actively interdict vessels. Analysts caution that while the action adds short-term uncertainty, it is unlikely on its own to significantly tighten global oil supply.

China remains the largest buyer of Venezuelan crude, which represents roughly 1% of global output. Venezuela’s state-run PDVSA said it has resumed terminal operations after a cyberattack disrupted administrative systems, and ship-tracking data show at least two tankers carrying petroleum byproducts recently departed the country’s main port.

For now, oil markets are balancing headline-driven geopolitical risks against hard supply data, with both factors continuing to shape near-term price movements.

—Iowa GOP leader signals new carbon pipeline fix for 2026 session

Senate Majority Leader Mike Klimesh says widening approved corridors could ease eminent domain disputes without blocking projects

Iowa Senate Majority Leader Mike Klimesh said carbon sequestration pipelines and other utility projects will be an early focus of the 2026 legislative session, signaling a renewed GOP effort to resolve last year’s bruising fight over eminent domain, according to the Iowa Capital Dispatch. Speaking to Republicans at the Westside Conservative Club in Urbandale, Klimesh said he plans to introduce legislation in the first week of session that would give pipeline developers greater flexibility to deviate from state-approved routes by seeking voluntary easements from willing landowners outside the original corridor.

The proposal is framed as a response to the collapse of a 2025 eminent domain bill that was ultimately vetoed by Gov. Kim Reynolds. That bill — driven largely by opposition to Summit Carbon Solutions’ CO₂ pipeline — combined multiple House-passed measures, including changes to the definition of a common carrier, expanded intervention rights at the Iowa Utilities Commission (IUC), and higher insurance requirements for pipeline operators. Reynolds vetoed it in June, arguing the legislation mixed valid concerns with vague standards and overly broad mandates.

Klimesh pointed to a failed amendment by Sen. Mike Bousselot (R-Ankeny), as the basis for a new approach. Under Klimesh’s concept, the IUC-approved corridor would be widened by up to 10 miles on either side, allowing developers to bypass resistant landowners and instead negotiate voluntary easements elsewhere—without invoking eminent domain. “I think the fix is simply allowing that corridor to be widened, and allowing the utility companies or constructors of infrastructure to find willing landowners,” Klimesh said, arguing Iowa is unusually restrictive compared with other states. He said the approach would protect property rights by allowing landowners to refuse access while still letting neighbors voluntarily participate.

Environmental and landowner advocates sharply criticized the idea. The Sierra Club and landowner attorney Brian Jorde argued that widening corridors does nothing to protect property owners as long as eminent domain authority for CO₂ pipelines remains intact, calling instead for outright removal of that power.

The debate also reopened lingering intra-party tensions from 2025. Audience members questioned whether GOP leadership punished dissenting senators by stripping committee assignments. Klimesh responded that “loyalty” is a core principle of the Senate Republican caucus, a stance that has drawn criticism amid reports that at least one Republican who backed the vetoed bill was left without committee assignments for 2026.

The comments underscore that while Republicans agree the pipeline issue must be addressed early next year, sharp divisions remain — both within the GOP and between lawmakers and landowner advocates — over how, or whether, eminent domain should be used for carbon capture infrastructure.

TRADE POLICY

—U.S. flags dairy access and streaming rules as leverage in USMCA review

Greer tells lawmakers Canada’s supply management and digital laws are top irritants as Washington prepares to renegotiate — while keeping withdrawal threats in play

The United States will press Canada to open its protected dairy market and roll back elements of its Online Streaming Act as part of the upcoming review of the U.S.-Mexico-Canada Agreement, U.S. Trade Representative Jamieson Greer told closed-door congressional briefings this week. The presentation, later released publicly, outlined Washington’s priorities as it moves toward renegotiating the pact rather than abandoning it outright — though the option to walk away remains on the table.

Greer identified Canada’s supply-management system as a major barrier that “unfairly restricts market access for U.S. dairy,” reviving a long-running dispute over how USMCA dairy provisions are interpreted and applied.

He also criticized Canada’s Online Streaming Act, arguing it discriminates against U.S. tech and media firms by subjecting platforms like Netflix, YouTube and Spotify to Canadian content mandates.

Beyond dairy and streaming, Greer cited additional frictions with Canada, including the Online News Act, provincial procurement preferences, provincial bans on U.S. alcohol tied to tariff retaliation, and Alberta’s treatment of electricity imports from Montana. For Mexico, he pointed to concerns over labor practices and the government’s push to re-nationalize parts of the energy sector.

Notably absent from the presentation were specifics on how President Donald Trump’s tariffs — on steel, aluminum and autos — will factor into the talks, even as those levies have strained relations with both Canada and Mexico. Greer said the administration will “keep the President’s options open,” recommending renewal of USMCA only if key issues are resolved.

Greer acknowledged that USMCA has delivered gains, citing rising U.S. exports and near doubling of Mexican wages, and said most stakeholders participating in public consultations support the deal. While separate bilateral agreements have been floated, he emphasized that some goals — such as boosting North American content in industrial goods and securing critical minerals — may require a trilateral approach.

—EU/Mercosur safeguard deal signals tougher stance on South American farm imports

Automatic trigger on import surges underscores political pressure in Europe and foreshadows stricter SPS scrutiny

The European Union reached a safeguard understanding tied to its Mercosur negotiations that would automatically trigger investigations if agricultural imports from South America exceed 8% of the rolling three-year average. The mechanism reflects mounting resistance within Europe — particularly among farm groups and several member states —t o lower-priced beef, poultry, sugar, ethanol, and other commodities entering the EU market at a time of weak margins and heightened political sensitivity ahead of national elections.

The safeguard is designed as an early warning system rather than an immediate quota or tariff, but it gives Brussels a faster pathway to probe market disruption claims and, if warranted, impose temporary measures. Trade officials frame the threshold as a compromise meant to preserve the deal’s commercial upside while acknowledging domestic pressure to protect EU producers from sudden volume spikes.

Beyond volumes, the agreement is widely viewed as a signal on standards. EU officials have emphasized that any investigation could expand beyond price effects to include sanitary and phytosanitary (SPS) compliance — an area where European regulators retain broad discretion. That raises the prospect of tighter enforcement or evolving requirements on traceability, deforestation, animal welfare, and residue limits, which could effectively constrain flows even without formal quotas.

For Mercosur exporters, the safeguard injects uncertainty into forward sales and investment decisions, especially for products that compete most directly with EU output. For Europe, it offers political cover: demonstrating resolve against import surges while keeping negotiations alive. For global markets, the move reinforces a broader trend — trade openness paired with faster, more automatic defensive tools — that could shape how future agricultural agreements are structured and enforced.

CONGRESS

—Farmers warn of a Brazil land-conversion squeeze — Congress orders U.S. intel review of China’s role

NDAA language — championed by Senate and House intelligence leaders — targets Chinese ambitions in South America and their impact on global agriculture

U.S. farmers and ranchers say they are increasingly caught in a “great squeeze” driven not only by domestic cost pressures, but by intensifying global competition — especially from Brazil, where continued conversion of natural areas into cropland is expanding export capacity. Producers argue that this expansion is being aided, directly or indirectly, by Chinese Communist Party (CCP)–linked investment, amplifying price pressure in global grain and oilseed markets and eroding U.S. market share over time.

Those concerns gained new traction this week as Congress passed the FY 2026 National Defense Authorization Act (NDAA) with language directing U.S. intelligence agencies to examine China’s role in Brazil’s agriculture sector, including land associated with crop production. The provision reflects a broader, growing alarm in Washington about China’s strategic ambitions in South America, particularly where food security, land use, and supply-chain control intersect.

Intelligence committee leaders drive inclusion. According to congressional sources, Sen. Tom Cotton (R-Ark.) was instrumental in securing the NDAA language, with Rep. Rick Crawford (R-Ark.) also playing a key role. Cotton and Crawford chair the Senate Select Committee on Intelligence and the House Permanent Select Committee on Intelligence, respectively — positions that gave them leverage to frame the issue not simply as a trade or environmental concern, but as a national-security matter.

Their involvement underscores how the issue has moved beyond farm policy circles into the intelligence and defense arena, where lawmakers are increasingly scrutinizing whether Chinese investment abroad is commercially motivated—or part of a longer-term strategy to shape global commodity flows and geopolitical influence.

What the NDAA directs agencies to examine. The NDAA provision instructs the Director of National Intelligence, in coordination with the State Department and USDA, to assess the scope and intent of People’s Republic of China investment in Brazil’s agriculture sector. Importantly for producers, the definition of agriculture explicitly includes “any physical infrastructure, energy production, or land associated with the production of crops.”

The assessment is required to evaluate:

• The extent and structure of China-linked investments and joint ventures

• Strategic intent behind those investments

• Impacts on global agricultural supply chains, markets, and food security

• Broader geopolitical implications for U.S. interests in the Western Hemisphere

An unclassified report is to be delivered to Congress, with a classified annex if necessary, giving lawmakers a clearer factual baseline for potential policy responses.

Why Brazil and South America are in focus. Brazil’s rapid expansion of cropland — often involving conversion of natural ecosystems — has already reshaped global grain and oilseed trade. The added dimension of Chinese capital and demand deepens concern that South America could become a cornerstone of Beijing’s long-term food-security strategy, with implications for pricing power, environmental standards, and geopolitical leverage.

For U.S. farmers, the NDAA language does not promise immediate relief. But it does mark a significant shift: the competitive pressures they face are now formally recognized as a strategic issue, not just a market outcome. The intelligence review mandated by Congress could become the foundation for future debates over investment screening, trade policy, and how the U.S. responds to China’s expanding footprint across South America’s agricultural frontier.

POLITICS & ELECTIONS

—Alarm bells before the midterms

Karl Rove warns in the Wall Street Journal that Trump’s rallies and rhetoric risk undermining GOP prospects in 2026

Republican strategist Karl Rove argues that President Donald Trump is steering his party toward a damaging 2026 midterm election by prioritizing rallies, grievances, and online outbursts over disciplined governing and voter reassurance. Writing in the Wall Street Journal, Rove notes that with Trump’s approval ratings underwater — especially on the economy and inflation — the White House should be focused on rebuilding trust, not indulging campaign-style theatrics.

Rove points to Trump’s recent rally in northeastern Pennsylvania as emblematic of the problem. The event delivered what Trump and his base enjoy most: music, crowd energy, improvised attacks, and what Trump calls “the weave.” But Rove argues that this style, while entertaining, does little to address voters’ central concerns about affordability and economic security. Trump declared that making America affordable again is his top priority, yet quickly moved on, blaming Democrats and mocking the issue rather than laying out concrete solutions.

The critique draws a parallel to President Joe Biden’s political missteps, noting that dismissing voters’ lived experience with inflation is politically toxic. Rove contends Trump is repeating that error—telling Americans, in effect, not to believe their own “lying checkbooks.” With approval ratings already weak, Rove says Trump should be relentlessly focused on persuading undecided or uneasy voters, not energizing only his core supporters.

Instead, Rove writes, Trump’s rallies meander across unrelated topics — from foreign policy boasts to immigration crackdowns, attacks on the Federal Reserve, health care, and tariffs — without sustained focus. The White House’s decision to send Vice President JD Vance to follow up with a more empathetic economic message in Allentown is portrayed as a sign of internal concern and poor coordination at the top.

Rove is especially critical of Trump’s social-media behavior, highlighting a Truth Social post attacking Rob Reiner after Reiner and his wife were brutally murdered. Rove calls the episode grotesque and self-defeating, arguing it horrified the public and diminished the presidency rather than Trump’s critics. Such episodes, he warns, squander precious time in a narrow window before voters decide the balance of power for Trump’s final two years.

The column concludes with a blunt warning: unless the White House reins in Trump’s impulses—both onstage and online—and adopts a disciplined, voter-focused message, Republicans risk a midterm backlash. In Rove’s telling, the alarm bells are already ringing, and time to change course is rapidly running out.

FOOD POLICY & FOOD INDUSTRY

—Farm labor crunch pushes up produce prices, farmer group warns

Grow it Here report says shortages are hitting fruit and vegetable growers hardest, with costs increasingly passed on to consumers

Farm labor shortages are driving up production costs for fruits, vegetables and other “labor-intensive” crops, adding to upward pressure on grocery prices, according to a new report (link) from Grow it Here, a farmer-led advocacy group. The analysis argues that persistent difficulty in finding reliable workers has become one of the most significant cost drivers for specialty-crop producers, eclipsing even fertilizer and fuel in some regions.

Grow it Here says growers are facing a tightening workforce just as demand for fresh produce remains strong. Many farms report higher wages, increased overtime, and rising compliance costs tied to the federal H-2A guest-worker program, which has become a primary labor source for fruit and vegetable operations. While the program provides legal access to workers, the group says escalating wage floors, housing requirements, and administrative complexity are inflating per-acre costs.

The report warns that specialty crops are uniquely exposed because they rely far more on hand labor than row crops. Harvesting, pruning, and packing often cannot be fully mechanized, leaving growers little flexibility when workers are scarce. As a result, farms are either absorbing losses, reducing planted acreage, or passing higher costs through the supply chain — ultimately showing up as higher prices for consumers.

Grow it Here also cautions that prolonged labor shortages could reshape U.S. agriculture, encouraging more imports of fruits and vegetables from countries with lower labor costs. The group urges policymakers to prioritize workable farm-labor solutions, arguing that without reform, affordability and domestic production of fresh produce will remain under pressure.

—DOJ unseals SNAP fraud case as administration sharpens crackdown

Boston shop owners accused of trafficking nearly $7 million in food aid, highlighting heightened scrutiny of benefit abuse

The Justice Dept. on Wednesday charged two men with food stamp fraud, accusing them of trafficking nearly $7 million in Supplemental Nutrition Assistance Program (SNAP) benefits through small businesses operating out of a single Boston storefront. Federal prosecutors allege the defendants exchanged SNAP benefits for cash and kept the proceeds.

U.S. Attorney for the District of Massachusetts Leah B. Foley said the stores showed red flags inconsistent with legitimate retail activity. One location redeemed roughly $300,000 per month in SNAP benefits beginning in May 2024 and recorded more than $500,000 in transactions in September alone — extraordinary volumes for a shop with minimal inventory. Prosecutors said the businesses relied almost entirely on USDA-funded SNAP redemptions to mask the scheme.

The case comes as the Trump administration intensifies its focus on rooting out fraud in SNAP, an effort that gained momentum amid recent disruptions that left millions temporarily without access to benefits. USDA Secretary Brooke Rollins has pressed states to share more applicant data and has signaled broader program changes ahead, underscoring a tougher enforcement posture toward misuse of federal nutrition assistance.

WEATHER

— NWS outlook: Dangerous wind gusts and heavy snow to produce hazardous travel and infrastructure impacts from the Northwest to North-Central U.S…. …Heavy rain likely over portions of the Pacific Northwest while heavy snow continues for the mountains of the Pacific Northwest and Northern Rockies… …Above average temperatures across most of the country to end the week with numerous possible record-tying/breaking temps in the Western U.S. and Northeast/Mid-Atlantic.