Coming up on Market to
Market -- Secretary Perdue
gets a firsthand look at
derecho damaged areas.
Adjusting an agritourism
business plan in the
middle of a pandemic.
And market analysis
with Elaine Kub, next.
♪♪
What's the most
complex industry on Earth?
It's not genetics, or
meteorology, or logistics.
It's a business that
involves them all.
It's farming.
Thank you, farmers,
from Pioneer.
♪♪
Tomorrow.
For over 100 years we
have worked to help our
customers be ready
for tomorrow.
Trust in tomorrow.
Information is available
from a Grinnell Mutual
agent today.
♪♪
This is the
Friday, September 4
edition of Market to
Market, the Weekly Journal
of Rural America.
♪♪
Hello,
I'm Paul Yeager.
With less than two months
remaining until the
election, rural America is
taking stock of what has
happened over the past
four years and the past
four weeks.
Only 1.4 million jobs were
created last month - the
fewest since hiring
restarted 4 months ago.
The increase helped drop
the unemployment rate
nearly two percentage
points to 8.4 percent --
the first time below ten
percent since March.
The Creighton Mid-America
Business Conditions Index
continued its rise above
growth-neutral even as the
COVID-19 pandemic
continues.
The move higher came
before USDA estimated farm
income which, if realized,
will be almost 22 percent
above last year but still
more than 25 percent below
the peak in 2013.-- Action
with biofuels, recovery
from recent storms and
the threat of a looming
drought are now directly
in front of rural
Americans.
This week, one of
President Trump's cabinet
came to the Midwest to
look over the damage and
offer some relief.
John Torpy has more.
On a windblown Iowa farm,
USDA Secretary Sonny
Perdue brought welcome
news for those affected by
the recent derecho storm
that raged across the
Hawkeye state.
Sec.
Sonny Perdue, United
States Department of
Agriculture: ”I'm here
to announce that Iowa is
qualified for a
Secretarial disaster,
which will unlock the,
uh, the USDA programs for
America for Iowa farmers.
So, I'm going to sign
that right here, now.
....”
With the stroke of a
pen, Secretary Perdue
designated 18 Iowa
counties as primary
natural disaster areas.
The move cleared the way
for farmers impacted by
last month's derecho storm
to apply for emergency
loans with the USDA.
The signing ceremony was
held after the Secretary
took a helicopter tour of
damaged fields and farms.
Secretary Perdue was
joined on the flight by
Iowa Governor Kim
Reynolds, U.S.
Senator Joni Ernst,
and Iowa Secretary of
Agriculture Mike Naig.
The new infusion of funds
is in addition to $4
billion in disaster relief
already allocated by
President Trump.
Sec.
Sonny Perdue, United
States Department of
Agriculture: ”I have the
heart of a farmer as a
farm boy.
Sad.
Somber.
Sobering, uh, and, uh, uh,
heartbreaking for people
who put their sweat, blood
and tears in the crop to
produce it.
Looking forward to good
harvest almost to the
point there, uh,
beginning of harvest.
And, uh, and then just,
just devastation.” Last
month's derecho ripped
through seven Midwestern
states inflicting
devastating damage on
farmers and ranchers
living along the storm's
770-mile path.
Iowa received the brunt
of the storm's wrath.
Overall, 14 million acres
were smashed by the
straight line wind storm
with nearly 6 million of
those acres either heavily
damaged or destroyed.
But the real numbers are
yet to be revealed as
farmers plan for the
upcoming harvest.
According to officials at
Iowa State University,
corn that was damaged in
the storm is susceptible
to disease which could
further cut yields.
Those crops that survived
the storm, along with many
other fields in the
Midwest, are now in a
fight with a drought.
According to the U.S
Drought Monitor, areas
experiencing abnormally
dry conditions have
decreased slightly, thanks
in part to heavy rains
brought in by
Hurricane Laura.
However, over the months
of June, July and August,
the number of affected
areas have expanded.
Strings of hot, dry
days with above normal
temperatures have denied
some crops rain that, in
the past, might have
averaged anywhere from six
to 10 inches.
For some farmers, the
storm damage and the
drought are piled on top
of issues in the ethanol
industry.
Corn growers and ethanol
producers continue to
press the federal
government to stop
granting small refinery
exemptions, or SRE's.
The exemptions allow
petroleum refiners to
bypass federal rules
requiring the blending of
biofuels into gasoline.
Petroleum refiners argue
the hardship waivers are
necessary as the global
pandemic has crushed
demand for fuel.
Sec.
Sonny Perdue, United
States Department of
Agriculture: ”The
obligation up here is
going to be 15
billion gallons.
Plus what's ever granted
to equal and net of 15
billion gallons.
That's what the
law calls for.
And that's what the
president's committed, and
that's what we expect.”
For Market to Market, I'm
John Torpy If you're
running a business that
relies on customers to
come in the door or past
the farm gate, the
pandemic has been
particularly hard
on your bottom line.
But one challenge can open
the door to opportunity.
Nathan and Talina Ryder
left the worlds of
television news and the
hospitality industry to
try their hand at farming.
The couple has had to
switch-up the business
plan on their CSA-style
operation and, along the
way, provided a much
needed service to their
down-state Illinois
community.
You can see the entire
interview with the couple
from Golconda via next
week's M-to-M podcast.
Tonight, we feature them
in our Cover Story.
Nathan Ryder: we are a
10 acre diversified farm
operation.
We're not organically
certified, but we try to
grow things as
organically as possible.
You know, and really, we
want to gear ourselves
towards agritourism.
Like we want to have
people come out and see
how their food grows and
visit with animals and
enjoy themselves and share
this kind of slice of
heaven that we have, you
know, with them, so.
Paul Yeager: So how did
agritourism look in 2018
and 2019?
If I would come out on a
Saturday for a visit What
did it look like
at your place.
Talina Ryder: Small
in the beginning?
Nathan Ryder:
Yeah, very small.
You probably have the
place to yourself and do
it have one on one
personal tour around
through the garden and to
see the chickens and you
know, you would get to
hang out for a long time.
So yeah, we're coming into
this this season, we're
expecting things to be a
little busier, we know
people have
been cooped up.
And there's a lack of
activities for people to
do, especially in COVID.
And so we're almost a
little like on edge right
now about influx of people
that we might end up with
at the farm.
And so like everything
will just roll with the
punches, and I'm sure
it'll be a learning
experience for us and
we'll grow from it.
Paul Yeager: So, well,
what were the big changes
for 2020 because of COVID,
or were they more because
of the lessons you've
learned in '18 and '19 and
knew you needed to move
the mums like you said,
from here to there.
Talina Ryder: I think
it's been a mix of both.
I mean, we learned a lot
of things that we wanted
to do differently.
Business wise like from
getting to know our
clientele better
who buys mums?
When do they buy them?
How do we get them ready
before the Walmart has
them ready, you know,
all of that stuff.
But then everything kind
of like changed when COVID
happened because
everybody needed food.
Like there were no eggs
in the grocery store.
People were nervous about
how how well farms were
going to do and they
didn't know if they were
going to have produce, you
know, is the grocery store
going to have produce
in the summer?
Like, I don't know.
Let me buy your CSA share.
Um, and so we use kind of
like, adapted as best as
we could to what the
clients were asking for
what the customers wanted.
We saw that we sold out of
our CSA shares, we were
like, Oh, well,
let's add more.
Can we grow more?
How much can we do?
Nathan Ryder: Definitely
pushing ourselves out of
our comfort zone in terms
of growing before we were
ready to grow, you know,
before we would have done
it ourselves.
And so for that that's
kind of been a silver
lining, I think in the
whole COVID pandemic for
our business model is that
it's forced us to rethink
things.
But you know, Talina had
to spend hours upon hours,
sort of retooling our
website and our e-commerce
platform and putting
products online and
setting it up so that
people could schedule a
time to pull up into our
driveway and pick up stuff
that they'd
already paid for.
We had all of a sudden
expand our refrigeration
capacity.
So we had the ability to
hold stuff for customers,
aside from our normal
pickup days, so yeah, it's
there been a lot of
interesting growing points
this year.
And I think that's part of
the reason why we're so
like, you know, exhausted
Talina Ryder: in a lot
early on.
Yeah.
Paul Yeager: So at what
month Did you notice that
you needed to make these
changes, I mean, March is
when a lot of the country
started to head into that
lockdown mode.
So was it late March,
April, May, when you
notice he needed
to make a change.
Nathan Ryder: It was
almost right away.
I mean, I think there was
probably about a week just
like everybody else.
There is a week of
sort of shock and awe.
Yeah.
Is this really happening?
Like what's going on?
And then, from that point,
I think, yeah, we knew
pretty quickly, like
we had to step it up.
Talina Ryder: Yeah, in
March, our soap sales went
through the roof.
And we were even offering
to deliver eggs and soap
to elderly people who
couldn't get mobile and
come to the farm and
get what they needed.
But I mean, our local
grocery store had no eggs
for weeks and
weeks and weeks.
And it's spring, chickens
don't lay a whole lot of
eggs when it's
that cold still.
So you know, we were
selling eggs as fast as
they were laying them and
delivering and getting
them ready for pickup and
it was just right away.
It was they were like
Where's the produce?
And we're like,
it's still cold.
You have to wait.
Paul Yeager: You m ight be
in southern, might be in
extreme Southern Illinois,
but it's not that warm.
They are growing
produce in March.
Talina Ryder: No,
it was not not okay.
I mean, we were putting up
a high tunnel to I mean,
we had just got all of
our materials for a high
tunnel and so well Nathan
was not working his off
farm job and we were like,
okay, let's get that high
tunnel up and see how
soon we can get the first
produce out of it.
And our first
thing was potatoes.
Yeah.
And but I mean, we just
keep adapting and keep
pushing in.
Next, the Market
to Market report.
Paul Yeager: The market
played give and take much
of the week in price
discovery over the impact
of dry conditions
and overall demand.
For the week, December
wheat improved 2 cents
while the nearby corn
contract declined a penny.
The soybean complex paid
closer attention to the
weather forecast.
The November soybean
contract continued higher,
this week by 18 cents.
December soybean meal
improved $7.50 per ton.
December cotton
contracted by 9 cents per
hundredweight.
Over in the dairy parlor,
October Class III milk
futures rallied again,
this time at a $1.21 gain.
A mixed week in the
livestock sector.
October cattle
fell 45 cents.
October feeders
declined $1.68.
And the October lean hog
contract jumped up $6.18
or nearly 12 percent.
In the currency
markets, the U.S.
Dollar index
rose 33 ticks.
October crude oil declined
$3.20 per barrel.
COMEX Gold sold off
by $30.70 per ounce.
And the Goldman Sachs
Commodity Index fell
nearly 12 points to
finish at 348.20.
Joining us now to give us
some insight is one of our
regular market
analysts, Elaine Kub.
Elaine, good to
see you again.
Kub: Good to be here.
Yeager: Let's start
with wheat, Elaine.
We talk about
price discovery.
First you're up,
then you're down.
Then you're up,
then you're down.
How much longer
does this continue?
And is it going
to go up or down?
Kub: Well, it's up overall
and I think one of the
driving forces of that is
shortcovering from the
funds.
You do sort of look at all
of these grain contracts
and a lot of the ag
contracts generally are
sort of drifting upwards,
that seems to be the
general direction.
And you think that might
be some bullish sentiment
but I think it's just that
shortcovering and the
removal of risk.
You mentioned the dry
weather, that dry weather
is there for wheat also,
so you could make a
bullish case here in the
United States right before
hard red winter wheat
planting season gets
started because of all
that dryness, particularly
the long-term
drought in Colorado.
But honestly I don't think
that's what it is, I just
think it's part of the
largest complex, and like
I mentioned, the risk
removal, people just don't
want to be short in
this environment when
everything else
is going up.
Yeager: So if you're $5.50
now on that December
contract does that have,
are you making a sale yet?
Kub: Well, sure, fine.
It's not a terrible price.
But I think the motivation
for selling wheat right
now is more logistical.
I think there's better
opportunities for storing
corn honestly past
December when you look at
the spreads, particularly
in the Chicago contract
you mentioned.
The spread from December
to March is only I think
8.5 cents so you've got
better opportunities to
put corn in your bins
and get rid of the wheat
before harvest.
Yeager: Well, corn was
actually pulled higher by
wheat on Tuesday, but you
mentioned some jitteriness
in corn.
There's concerns in China
among the people there at
least to one report this
week, it's food inflation.
It has climbed to its
highest in over a decade.
Is that pulling this
corn market higher?
Kub: I think a lot of the
rumors out of China are
the idea that they might
be moving their supplies
around or their
stockpiles around.
That food inflation is
more of a factor for pork
prices I think is still
lingering from the 2019
African swine fever issue
that they had there.
But it has been very
positive for the U.S.
corn market to see export
sales going to China.
That has been a huge
boost to corn and a big
fundamental story for
soybeans of course but
also for corn.
We just started a new
marketing year here on
September 1st and already
looking at the new crop
commitments, export
commitments of corn it's
at a record high level.
So we have nothing but
positive things to say
about exports right now
and China is the big
player there.
Yeager: So the question
then becomes, are you
selling right now?
We've talked about
counterseasonality for the
last couple of weeks.
Are you buying into that?
Or has that kind of
started to evaporate?
Do you sell going into
this harvest I guess is my
question?
Kub: I think looking at
corn sales for the 2020
marketing year you've got
to just look at the price.
$3.60 futures.
If this was February and
you knew that you were
going to have $3.60
futures going into harvest
you would not be
complaining too much, that
would not be a
terrible scenario.
And because we still have
such ample stocks, such
ample supplies, which
we're going to see again
in next week's WASDE
report, the market is
going to get a reminder
that there is not really a
shortage of corn or
feed grains globally or
certainly in the
United States.
Because of that it's hard
to get real excited about
hugely better
opportunities and if this
is a price where you
can make a profit yeah,
harvest you tend to
dwindle lower so maybe
it's not a bad idea.
Yeager: So this is more of
a grouping than a bullish
trend ahead?
Kub: Yeah, I think the
outlook for corn prices I
would say is neutral.
It's not perhaps urgent to
be locking in prices but
it's not a terrible
idea either.
Yeager: Do you like that
March price at all, $3.68
and a half today?
Are you selling that at
all or are you holding?
Kub: Well, again, there is
better carry opportunities
in corn than in some of
the other markets, so yeah
if you've got the
opportunity to store it
on-farm, capture some of
that carry, move into the
later marketing seasons
into 2021, yeah that's a
good way to capture that.
Yeager: Elaine, we know
you love basis questions
so we made sure that Aaron
in Ocheyedan, Iowa sent us
one.
Here's his question that
he gave to us via Twitter.
It's asking, what is grain
basis going to do once
combines roll/ One rule
of thought is harvest
pressure and farmer's lack
of prior selling will
really widen things out
while another thought is
at least here, he's in
Northwest Iowa, the
drought and derecho yields
will keep it tight.
What do you think?
Kub: Well, I have been
worried about weakening
basis throughout the
United States as we go
into harvest just because
we have such sort of
oppressive supplies
that are likely to come
certainly in some areas of
the Corn Belt, Indiana for
instance they're looking
at record high yields, we
could have just a lot of
corn to handle, you could
get into the gut slot of
harvest and really have
basis weakening.
But, all basis is local
and I think Aaron's
question is really
relevant to right there in
the center of Iowa right
now where it really is
that question where
you might not have the
supplies, you might have a
local scenario where the
market might really be
scrambling for corn and
you could start to
get a tightening.
But I think right now
what we're seeing the
expectation from the
elevators in Central Iowa
is more regular sort of
basis levels, something
right about close to your
studio there or maybe even
up by Boone or
thereabouts, those
elevators or 45 under
the December for
October/November delivery.
That's pretty normal and I
think it might be a little
bit wide, might be a
little bit of a reflection
of the struggles that the
elevators themselves had,
the damage they had
from the derecho.
So I think Aaron is right
to point out that it could
really go either way.
We're going to need to get
into harvest to see those
effects.
But right now my bias
would be towards weaker
basis or the danger of
weaker basis as we get
into harvest.
Yeager: Say we get an inch
of rain over the weekend
or Tuesday, Wednesday.
Corn it doesn't
really matter.
Is it going to save a
soybean crop that needs
saving in some parts?
Or is there enough acres
out there, Elaine, on
soybeans that are doing
okay and a rain is not
going to, they don't
need it as much?
Kub: Yeah, it depends, it
depends where that rain
falls.
I think some of the
soybeans were so dry
during August and they
probably, the plants were
shutting down to a degree
where it might be too
late.
We might certainly be
seeing early harvest going
on for soybeans
and for corn.
But at this point you look
at the pod filling there
is still the chance for
some of these soybean
fields to continue
to pod fill.
But my concern going
into next week is not
necessarily whether or not
the areas that need rain
get rain, but whether the
areas in the northern part
of the Corn
Belt get frost.
I think that was maybe
just, not a rumor, it's
part of a weather forecast
that may or may not
happen.
But I think that was a
motivator to some of the
higher prices we
saw here on Friday.
Yeager: It's like you were
listening into Phil and I
having a conversation
before we started, we were
just talking about that
frost if we were to get it
here.
It wouldn't matter in the
dry area but if you've got
a good crop you are
worried about that.
So, I guess I ask you on
soybeans, we talk about
price discovery, it was
up, it was down, there was
a huge swing, I think it
was 50 cent swing in three
trading sessions to start
the week and then we move
higher at the end.
So I guess my question,
Elaine, is are we going
higher?
Are we in a bullish trend?
Kub: I think yeah, we are
seeing some higher prices.
Apologies for the dog.
Yeager: It's like we're
on a Zoom meeting.
Kub: This happens
all the time, right?
She knows about higher
soybean prices.
But, we are going
higher and I think it's
fundamentally based on
these export sales that I
talked about, record high
soybean sales also at this
time of year.
And we see that and it
may or may not be able to
continue much higher than
where it is right now.
But it is based on
fundamentals and I
mentioned the feed grains,
the wheat are in a lot of
shortcovering, just
removal of risk.
But in the soybean
market it is fundamental
commercial traders
covering those export
sales, that is what is
moving the soybeans higher
on the days that you see
the double digit higher
days and it's also the
funds experiencing that
story about the exports
but also the damage that
we received during the dry
August and the potential
damage that we might
receive from this frost.
All of these are
fundamental stories that
are really legitimately
pushing that soybean price
higher.
Yeager: It's always not
what's happening in your
back yard but in many
other back yards across
the key growing area.
Good point there, Elaine.
Let's move to the
livestock complex.
In cattle this is usually
one of those slow down
times where the lots are
kind of slowing down, the
trade not real active this
week, except heading down.
Is that a cause of lower
volume or is there
something else under foot?
Kub: Well, it couldn't
have lasted forever.
We saw prices where I
think cattle owners and
cattle feeders were happy
when you had $111 live and
$150 feeders but it
couldn't go up forever and
it couldn't last forever
and it's pretty typical to
get a high put in there in
July or August, August in
this case, and we have
just been moving lower for
the past three weeks.
It's still not terrible.
I don't think that cattle
owners should feel
terrible.
The feeder prices
themselves are still
slightly higher than they
were last year at this
time.
And everybody is
kind of making money.
The market fundamentals
are still there to keep it
from perhaps
falling apart.
I don't think, for
instance, that we'll see
live cattle prices
fall below $100.
We saw cash cattle trade
this week at $102 and $103
and hopefully there's
just not enough room or
willingness from the
feedlots to sell much
lower than that.
Yeager: You stole
one of my questions.
I was going to ask you on
October 1st are we going
to be above or below $100
and you answered that one
right there.
So feeders we just showed
the chart while we were
talking.
Are we still feeling the
effects of that cattle on
feed report or is there
something else going on?
Kub: Yeah, and you
mentioned about the time
of the year also is that
we're just still about a
month out from the big
runs through the sale
barns, the calf crop just
isn't ready yet and we
haven't had a chance to
really test what the feed
yard's appetite is going
to be for those calves.
When we do test it there
have been a few sales here
and there, there seems to
be good demand, moderate
demand for steers.
So I think it should be
able to maintain this
level and not too
surprising that it has
fallen through the
past three weeks.
Yeager: In the hog market,
is $60 a reality next
week?
Kub: I think very
possibly, very possibly.
The fundamentals behind
that market is, again,
it's exports but you're
seeing the cutout values,
the ribs, the hams, those
kinds are really leading
big jumps this week.
So it wasn't just a fluke,
it was a speculative
bubble, it was a real
price appreciation for
pork and for
hogs themselves.
And I think it is possible
for that market to churn a
little bit higher, it
wouldn't have to get too
much higher to hit that
$60 level that you
mentioned.
Yeah, let's aim
for it I guess.
Yeager: Well, it's
not that far away.
I lost it here, $59.83 is
where we closed on Friday.
So it's without shouting
distance at least.
I'll close quickly here on
the cotton market, Elaine.
That is one that has been
waving at us and now it
looks like it's
waving lower.
Your best 30
seconds on cotton.
Kub: The chart looks kind
of mild, doesn't it, like
it's just moving higher
along with the rest of the
ag commodities.
However, I don't think
cotton has yet really
factored in some of the
dryness in the United
States, poor conditions,
only 44% good to excellent
and some of the exports.
The export story that has
been boosting soybeans and
pork, you could make the
same story for cotton and
the chart has not
put it in yet.
Yeager: Elaine, thank you
for allowing me to put
cotton in right at the
end and the rest of the
discussion.
Thanks, Elaine.
That will do it for this
installment of Market to
Market.
We will talk more in
Market Plus so you can
join us there.
Find it on our website
of MarketToMarket.org.
Now, the entire interview
with the Ryder family will
be the next
M-to-M podcast.
You can find it, along
with other extended
interviews, on
our website.
Next week, we'll look at
how ranchers are living
side-by-side with a
returning predator.
Until then, thanks for
watching and have a great
week.
♪♪
♪♪
♪♪
Market to Market is a
production of Iowa
PBS which is solely
responsible for
its content.
What's the most complex
industry on Earth?
It's not genetics, or
meteorology, or logistics.
It's a business that
involves them all.
It's farming.
Thank you, farmers,
from Pioneer.
♪♪
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