Huge WIN for Farmers?? 45Z Proposed Rules Finally Released

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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

One major unresolved issue remains: Treasury has not yet released a revised 45Z GREET model, which will be critical for calculating greenhouse gas scores and final credit values.

Industry reaction:

Pete Meyer commented that farmers should be pleased with the proposal, noting that it includes most of what producers were hoping for. While regenerative ag provisions may be missing, the overall tone is positive. Ultimately, how much money reaches farmers will depend on ethanol plants, but estimates suggest a ~26-cent-per-gallon incentive for ethanol production.

🧾 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

Foreign feedstocks are not eligible after December 31, 2025 (Canada and Mexico are allowed)

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.