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Latest Regarding Trade Negotiations & Arrival of the Polar Vortex

Update for January 17th, 2019


Crop markets seem to have lost their direction but this sideways type of market is quite normal when supplies are big. Adding to this is the lack of vital information from USDA reports and CFTC position data which are both unavailable during a government shutdown. U.S. Secretary of Agriculture, Sonny Perdue announced that about 50% of Farm Service Agency offices will be temporarily reopened Thursday, January 17th, Friday, January 18th and next Tuesday, January 22nd to perform a limited number of assigned tasks. The specific services include:


· Process payments made on or prior to December 31st, 2018

· Continuing expiring financing statements

· Assist agriculture producers with existing farm loans

· Ensure the agency provides 1099 forms to borrowers by the IRS deadline

· Open mail to identity priority items


A list of reopened offices is available on this link: https://www.farmers.gov/sites/default/files/documents/OpenFSAServiceCenters.pdf?utm_campaign=shutdownupdate011719&utm_medium=email&utm_source=govdelivery


What seemed to be promising trade negotiations held earlier in January in Beijing don’t appear to have made much progress on the main issues. The Reuters report referenced a statement from U.S. Senator Chuck Grassley regarding the situation Tuesday, “U.S. trade Representative Robert Lighthizer did not see any progress made on structural issues during U.S. talks with China last week.” Grassley also stated that plans have now been made for higher-level discussions at the end of the month. The hopes of everyone involved with agriculture in the U.S. is resting on our leaders being able to negotiate some type of a deal with the Chinese. At this point most inside the trade are estimating that the Chinese have purchased around 5 million tons of U.S. soybeans from the 2018 harvest. This is nearly 80% less than this time in 2017 when the Chinese had over 23 million tons of U.S. soybeans booked. And now that soybean harvest in Brazil is underway the market is wondering if we may have somewhat missed our window of trade opportunity. Soybean demand here at home has shown significant strength over the past several months. The National Oilseed Processors Association (NOPA) released their monthly crush number for December of 171.759 million bushels. This sets the record for the highest crush level for the final month of the year while also being the 3rd highest monthly level on record.


Weather concerns are fading as Brazil received some much needed rainfall over this past weekend. Eastern Mato Grosso, Santa Catarina and Rio Grande so Sul received most of the beneficial precipitation while hot and dry conditions continued to increase stress on crops in the central and northeastern growing regions. Rio Grande do Sul is also forecast to receive up to an additional 5 inches of precipitation this week. Temperatures are expected to reach +100 degrees in parts of Mato Grosso and Mato Grasso do Sul for the next several days.







The Polar Vortex is a rotating area of cold air which sits 10 to 30 miles above the surface of the North Pole. During early December a sudden stratospheric warming occurred over Siberia which split the Polar Vortex apart into 2-3 pieces. This event created high pressure in the Arctic which disrupted conditions at the Arctic Circle and pushed cold air out of the Arctic Circle and towards the mid-latitudes where we live. Since the original warming started over Siberia there is a lag of 20 to 40 days before any weather effects arrive due in part to our distance from where the split occurred. Given the timing of the split forecasters warn we will soon begin to see the effects.


Arriving right on time we see that the coldest air of the season so far is heading into the central and eastern U.S. which will be accompanied by a series of snowstorms as they move across the mid-section of the country this weekend. The long-range 8-14 day forecast shown in the maps below call for much colder air to move in later in the month. In addition to the cold blast, above-average precipitation is also expected for a majority of the country during this same time period. Due to the Polar Vortex it’s very possible that these cold temperatures could stick around for several weeks.





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