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🏛️ 45Z Clean Fuel Tax Credit — New Guidance
The US Treasury Department and IRS released long-awaited proposed guidance on the 45Z Clean Fuel Production tax credit this week. Biofuel and agricultural groups largely welcomed the rules, citing improved clarity after years of delays.
Key takeaways from the proposal:
Fuels produced after December 31, 2025, must use feedstocks grown exclusively in the US, Mexico, or Canada
The 45Z credit is extended through 2029
The special SAF credit rate is eliminated for fuel produced after January 1, 2026
The indirect land use change (ILUC) penalty is removed
A 60-day public comment period is now open, with a public hearing scheduled for May 28

🧾 45Z — Important Context & Clarifications
45Z was enacted under the Inflation Reduction Act of 2022, but implementation has been repeatedly delayed
It is a clean fuel production credit, claimed by biofuel producers (ethanol, biodiesel, renewable diesel, etc.)
This is not 45Q, which applies to carbon capture and sequestration
In most cases, plants can claim either 45Z or 45Q—not both
Non-SAF fuels can receive up to $1.00 per gallon
Only a limited number of plants claimed 45Z in 2025
Plants are now preparing for 2026 production, though rules remain proposed
There is no direct payment to farmers—plants will decide how low-CI premiums are shared
Treasury plans to release a Feedstock Carbon Intensity Calculator (FD-CIC) to address farming practices

🚜 US Farmer Sentiment Slides
Farmer sentiment dropped sharply in January. Purdue University’s CME Group Ag Economy Barometer showed:
A steep decline in current conditions and future expectations
Nearly 60% of farmers expect bad financial times over the next year
Long-term pessimism rose meaningfully
Concerns about US agricultural exports increased
This highlights the difficult backdrop facing producers even as policy clarity improves.

🇧🇷 Brazil Ethanol Production Outlook
Brazilian ethanol production is expected to rise this year as-
Ethanol prices improve
Sugar prices weaken
New corn ethanol plants come online
A large sugarcane crop boosts output
StoneX projects strong growth, with corn ethanol production jumping sharply. This could push Brazil toward higher ethanol exports, and corn usage for ethanol may reach a record share of production.

🇨🇳 China’s “No. 1 Document” & Food Security
China unveiled its annual rural policy blueprint aimed at boosting food self-sufficiency. The plan emphasizes:
Higher grain and oilseed production
Diversified agricultural imports
Reduced reliance on traditional suppliers like the US and Canada
Expanded sourcing from South America and the Global South
New quotas on beef imports and tariffs on EU dairy
Increased investment in agricultural innovation

₿ Bitcoin Update
Bitcoin has fallen to its lowest level since November 2024, pressured by:
Liquidations of leveraged positions
Weak sentiment in crypto derivatives
Broader financial market volatility
Despite some institutional interest, everyday investor participation has slowed, leaving Bitcoin under continued pressure.