January 20, 2017
Perdue to Head USDA
On Wednesday, then-President-elect Trump named the final member of his Cabinet, selecting former Georgia governor Sonny Perdue as Secretary of Agriculture. If approved by the Senate, Perdue will take lead of the USDA, a government agency that oversees farming, ranching, forestry, food safety, nutrition, and development of rural communities.
For some Midwestern farmers, the appointment of someone from outside the Corn Belt was a disappointment, although Perdue, a veterinarian, does come from a farming background and has managed businesses involved in grain trading and trucking.
Thus far, his nomination has been met favorably by industry groups involved in grain farming, livestock raising, and biofuel production. Perdue could play a major role in shaping farm policy, something that is near and dear to many of our readers.
For agricultural producers, this week brought favorable price action as well. Corn, wheat, soybeans, and cattle all reached multi-month highs on concerns of smaller global grain supplies and stronger beef demand.
British Pound Swings on Brexit Talk
The British pound fell to a 31-year low on Monday, touching $1.20, as markets nervously awaited Prime Minister Theresa May’s plans for how Britain will leave the EU. Markets especially feared a “hard Brexit” where the British were forced to cut nearly all legal, economic, and political ties to the EU, resulting in a massive upheaval.
Instead, May announced that she would seek a negotiated deal that is approved by the British Parliament, a factor that could result in far more concessions to the EU and less harsh financial results. Currency traders were elated by this news, rebounding the pound near $1.24, the biggest one-day rally since 2008.
Orange juice prices fell over 25% in the last three months as the market comes to grips with falling consumption. Demand for OJ has been in a long-term decline as Americans shift toward alternative fruit juices and lower-sugar options, reducing demand in 14 of the last 15 years.
OJ supply has also been falling drastically as Florida’s orange groves are devastated by a disease that kills citrus trees. Since the disease arrived from Asia over a decade ago, production in the Sunshine State has fallen by two-thirds. As of midday Friday, the futures market for frozen concentrated orange juice traded for $1.66 per pound.