Last week was loaded with lots of news stories with no real direction. Traders spent much of their time focusing on Brazilian weather, Chinese trade negotiations and the nonexistent USDA report.

The federal government shutdown was most obvious last week with the absence of the major USDA report scheduled for Friday. The January report is always a major factor in market moves, as it gives us insight into final production numbers and total stocks as of Dec. 1.

Without the updated numbers, direction will likely remain lacking as traders are unsure of whether a surprise will be hidden in these numbers when they are released.

The government shutdown is impacting other portions of agriculture as well. The signup for the Market Facilitation Program has been extended. The original deadline was Jan. 15, but with the shutdown farmers have been unable to enroll. Officials determined early in the week that the signup period would be extended beyond the deadline by as many days as the government remains closed.

The EPA has also been impacted by the shutdown, but made it clear they are continuing to work on the rule making behind year-round E15, something they claim will be ready to be rolled out by June.

Though the government is shut down, export inspection numbers have been made available. Last week we saw final numbers released through the first quarter of the marketing year. While soybeans and wheat saw a disappointing quarter, corn was quite surprising, coming in 61 percent higher than last year.

In addition to negotiations taking place surrounding the government shutdown, traders were monitoring preliminary trade talks between the U.S. and China taking place last week in Beijing. Talks were mostly among mid-level government representatives, though China’s top trade representative did stop by on the first day to get things started on the right foot.

Both countries were clear the talks were “positive” and “beneficial to the process,” with China reiterating its promise to purchase U.S. agricultural and energy products and the U.S. restating the issues the administration and others feel need to be resolved.

Both parties were clear that close contact and communication will continue, with the Chinese hoping to see a resolution in place by the Feb. 4 start of their New Year’s holiday.

In addition to positive talks, reports surfaced that China was in buying more soybeans Jan. 7. Rumor is three cargoes, or around 180,000 metric tons (6.6 million bushels) was sold, though we will not see actual confirmation of purchases until they are shipped or the government reopens and announces them.

China also made moves to approve several genetically modified traits for import. The first such move of its kind in 18 months was described as a “goodwill gesture towards the resolution of the trade issue.”

What could impact China trade the most going forward would be how the South American crop continues to fare in the coming weeks. A recent stretch of hot and dry weather in Brazil has forced analysts there to scale back relatively significantly on their production estimates.

It was just a few weeks ago that talk of a 130 million-metric ton crop was relatively common – much larger than the 119 million produced last year – because of higher acres and a relatively decent start to the growing season.

The shift in weather has prompted many private analysts to drop their estimate closer to 116 million tons, which would be about 220 million bushels lower than the current USDA estimate. CONAB, Brazil’s version of the USDA, put production between the private guesses and the USDA last week, coming in at 118.8 million tons, down 1.3 million from their last estimate.

Forecasts over the next week have introduced more rain than initially seen earlier last week, taking some of the worry over crop potential down a bit, but the situation will definitely have to be monitored closely, especially when it comes to second crop corn potential.

Angie Setzer is the Vice President of Grain for Citizens Elevator in Charlotte, Mich. Her market commentary can be found on Twitter by @GoddessofGrain and online at www.citizenselevator.com

The opinions and views in this commentary are solely those of Angie Setzer. Data used for this commentary obtained from various sources are believed to be accurate.