Market to Market - Apr. 15, 2022

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Coming up on Market to Market --

President Biden opens the door to E15.

Spring weather intensifies from wind gusts to

snowdrifts.

Acreage debates are more than just price at the

market.

And market analysis with Angie Setzer, next.

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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

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This is the Friday, April 15 edition

of Market to Market, the Weekly Journal of Rural

America.

♪♪

Hello, I'm Paul Yeager.

We know the moves in the economy over the last two

years have been massive swings low then high.

If we follow the properties of gravity,

what goes up, must come down.

Now the question will be at what time and pace.

Wholesale prices pushed up 11.2 percent, a

record from a year earlier.

The Producer Price Index is the measurement of

inflation before it hits consumers.

The Consumer Price Index rose 8.5 percent in March,

the highest year over year gain since 1981.

When the volatile food and energy sectors are

removed, the core CPI annual gain jumped 6.5

percent.

Even with higher prices, consumers are still

shopping.

Retail sales added 0.5 percent last month as

shoppers had more money in their pockets from rising

wages and more money in the bank.

Demand for gasoline has dropped in the last

month as drivers have taken their foot off the

accelerator and pump prices topped $4.33 a

gallon.

This leaves alternatives like ethanol in a bind.

Inventories of the home-grown fuel are at

near-record highs with demand for bi-products

remaining strong.

This week, the White House added a new factor to the

equation.

Peter Tubbs reports.

President Joe Biden traveled to Iowa this week

to announce a waiver to the ban on the sale of E15

in the summer, delivering a temporary peace in the

battle over the higher ethanol blend.

President Joe Biden: “But the environmental

protection agency is planning to issue an

emergency waiver to allow E 15 gasoline that uses

more ethanol from homegrown crops to be sold

across the United States this summer in order to

increase fuel supply.

The waiver comes at a time of both high gasoline

prices and an inflation rate that households

haven't seen in 40 years.

Summertime sales of E15 is intended to give consumers

a cheaper fuel option during the high travel

season, but the industry hopes year round sales

will give retailers reason to install more E15 pumps.

Geoff Cooper, Renewable Fuels Association:

”They've told us they're not interested in making

that investment.

So this, I, I think, sends the right signal to the

retail sector to go ahead and make that investment

in E 15 in the, that will have a modest bump, a

modest impact on both ethanol demand and corn

demand this summer” Less than 2 percent of the fuel

stations in the United States have an E15 pump,

while 95 percent of the fuel sold nationally is

E10.

While E15 is often 10 cents cheaper than E10,

its limited availability is expected to do little

to lower gas prices as a whole.

Jordan Fife, Biourja Trading: “So it's a big

headline, that's for sure, unfortunately, by my math,

in my analysis, it's not that big of a deal for

ethanol.

You can extrapolate that down to probably about 25

to 40 million additional gallons of ethanol demand,

and that's just not a huge number unfortunately.

It's a good political feather in the cap, but

it's not going to solve a lot.” The added

availability of E15 in the long term will mean higher

ethanol demand in rural America, and a path to

reduce the usage of foreign oil, which the

White House argues is a national security

liability.

President Joe Biden, D: “I'm not gonna wait to

take action to help American families.

I'm doing everything within my power by

executive orders to bring down the price and address

the Putin price spike.

In fact, we've already made progress.

Since March inflation data was collected your family

budget, your ability to fill up your tank.

None of it should hinge on whether a dictator

declares war and commit to genocide in a half a world

away.” For Market to Market, I'm Peter Tubbs.

Snowfall totals from 20 to 30 inches were common in

North Dakota this week.

Another round of tornadoes swept the South and the

Midwest.

The city of Lincoln, Nebraska added a

non-mandatory water conservation plan for the

summer as dry conditions appear to be settling in

for the summer.

Josh Buettner leads off our weather wrap this week

beginning with another dry region - the West.

Robert Arguelles, Bernalillo County Fire

Department: “Right now weather is our biggest

factor on this fire.

We have crews in place determining containment

lines, and where we can possibly place those, but

as the wind continues to push the fire, those lines

continue to get pushed progressively back a

little bit further.” This week, a batch of weather

extremes broke-out across the nation - beginning in

the drought-stricken west.

Wind-whipped wildfires in Colorado and New Mexico

destroyed hundreds of homes and downed plans for

an aerial attack on the flames.

According to the National Interagency Fire Center,

five new large fires were reported on Tuesday alone.

North Dakota was blanketed by a blizzard forcing the

closure of schools, roads, and the state capitol.

Warnings lingered there for days as farmers

elsewhere in the Upper Midwest looked to thread

the needle between spring field prep and more

seasonal storms.

Nearly two dozen were injured, and at least one

person died as twisters swept through central

Texas midweek.

Winds kicked up in Nebraska, Iowa and

Minnesota, where severe thunderstorm gusts leveled

9 semi-tractor trailers travelling along I-35

south of the Twin Cities.

The gale force winds kicked up at least 7

cyclones in Minnesota and further south into Iowa.

Cody Bunda/Pocahontas County, Iowa: “We lost a

combine head over there.

Thankfully it's not fall, because it's really hard

getting pieces of equipment now anyways.”

The National Weather Service confirmed an EF-2

tornado ripped through Humboldt and Pocahontas

Counties, where locals remember a similar

touchdown, not far away, just over a decade ago.

Cody Bunda/Pocahontas County, Iowa: “You know,

it sucks to have to go through it again, but on

the flipside, you know...You can replace

things.

You can't replace people.” Farmers expect to get back

on track with planting as soon as remaining wreckage

is removed from surrounding cropland.

For Market to Market, I'm Josh Buettner.

Buying acres is a topic we've covered extensively

in our Market Analysis segment.

For producers who have more than one crop option

the decision is a tough one.

This week's MtoM podcast is with Cameron Peirce, a

farmer near Hutchinson, Kansas.

Peirce is a member of the Kansas Sunflower

Commission's board of directors and the decision

for him is more than just the price at the Board of

Trade.

Our conversation is this week's Cover Story.

Cameron Peirce: “I want to be right honest with you,

we bumped our wheat acres because at the time we

were thinking, you know, six and a half dollar $7

wheats pretty good.

And so we thought we're gonna, we're gonna bump

the wheat acres, it takes a little bit a little bit

fewer inputs for, for, wheat.

It's not as high management of a crop.

And then all of a sudden, I mean, you know, what

happened with fertilizer and any inputs?

I mean, everything just skyrocketed.

And, and luckily, the prices has not matched.

But I mean, you know, fertilizer has gone up

fourfold, and the price of wheat is, is up to about

1050.

So it's gone up $4 In the last six months, but, you

know, you're still relying on Mother Nature.

I mean, it's still going to rain.

Or I don't know if you look the drought map

lately, but we're not in a good situation.

Western Kansas, I don't know if their wheat has

even come up from when they planted last fall.

Our wheat looks good right now.

And we have a, I'd say barely adequate supply of

moisture, we had an inch, an inch and a quarter

inch.

About a week and a half ago, that really gave it a

give it a boost.

But we're just kind of live in rainfall, the

rainfall, which is what we did all year last year, so

we don't really have a huge supply built up into

subsoil.

Paul Yeager: Give me a little information tell me

about educate me on this sunflower, Cameron Peirce:

Two kinds of sunflowers oil and confectionery

confectioner is what we eat.

The oil flowers are what we either make into

birdseed, or crushed for cooking oil.

And so those primarily what we raised because the

confectionaries require a contract with a company

like Frito Lay or somebody like that.

So do you have a place to go with them.

And from what I understand, I've never

I've never raised confectionary fliers

before, and I could try it sometime.

But they they're worth more money, but they yield

less.

And so I think, I think maybe it's a little bit of

a trade-off there.

But I'd like to try it sometime anyway.

But I won't do it without a without contract.

Because insects and other things have become much

more important.

And seed size and all those all those good

things.

But the oil type is what we raise, we've got

several, several drop off locations.

And we, as of yet, we've raised a few for oil, but

primarily ours go for bird seed.

And you know, especially during the pandemic, the

bird seed market just took off.

And in my past, I mean the highest price I've ever

seen for sunflowers is and they price them by the

pound.

And so it's cents per pound.

So 32 cents per pound is was the highest I've ever

sold sunflowers for and that was 20 years ago,

currently, like we sold sunflowers this last year

for 31 and a half cents per per pound for a lot of

flowers.

And the price I think is only going to get better

just because of a what's happening in Ukraine and

Russia right now.

Because Russia and Ukraine are number one, number two

and sunflower seed sales.

Worldwide, United States is down the list of ways

number 16, number 17.

Somewhere like that.

And so they're they're not a big player in this and

so can the United States make up the difference?

Absolutely not.

We would have to plant a lot of sunflowers and and

to be honest with you guys.

Just don't.

I mean, and that's part of our job as on the

commission is to educate people about sunflowers,

you know that it's another viable option, especially

in a drought situation.

You know, they don't take a lot of they don't take a

lot of moisture, which is what I like about him.

If he had limited irrigation, it's a good,

good choice.

Paul Yeager: How do you decide right now this year

as we sit here in April of 2022, what you're going to

plan if you've got open acres,

Cameron Peirce: So I don't like to I don't like to

put all my eggs in one basket so to speak.

I'm told that I did increase wheat acres a

little bit because I'm pretty I feel pretty

confident about, about that one.

But as far as deciding between sunflowers,

cotton, soybeans and corn, they're about equally

split.

So the fields that I chose to go to cotton are they

could have gone to sunflowers, but there was

a few more weed.

Again, they weren't as clean as I would have

liked to have seen.

And so I those fields are gonna go to cotton, and

they had just been beans, so I don't want to do

beans on beans.

And corn is a little bit risky, just in light of it

takes a lot of moisture.

Cotton doesn't take as quite as much fertilizer

as corn.

Sunflowers don't take as much fertilizer as corn,

then soybeans, obviously, you could get by with just

planting soybean out there with nothing.

You wouldn't have any starter out there.

If you don't want to we don't typically do that

but you know those are some of the thoughts that

go through my head.” The full conversation with

Cameron Peirce is available now wherever you

get your podcasts or on our YouTube channel.

Next, the Market to Market report.

The weather had two stories, drought and cold,

impacting the holiday-shortened trade

week.

For the week, the nearby wheat contract

strengthened 45 cents, while May corn improved 22

cents.

Renewed Chinese buying stabilized the soy

complex.

The May soybean contract fell 7 cents.

May meal dropped by $6.80 per ton.

July cotton jumped $9.65 per hundredweight.

Over in the dairy parlor, May Class III milk futures

gained 52 cents.

The livestock sector was up.

June cattle expanded $2.60.

May feeders added $2.40.

And the June lean hog contract increased $3.90.

In the currency markets, the U.S.

Dollar index rallied 54 ticks.

May crude oil jumped back over $100 with a gain of

$8.47 per barrel.

COMEX Gold strengthened $26.50 per ounce.

And the Goldman Sachs Commodity Index improved

almost 42 points to finish at 756 even.

Yeager: Joining us now to provide some insight is

Angie Setzer.

Hello, Angie.

Setzer: Hello.

Thanks for having me.

Yeager: Good to have you back.

I don't know if you were paying attention to that

story before but I want to start with wheat and

Cameron's piece specifically.

He says, I'm going to plant more wheat.

He can't get much more in the heart of the Wheat

Belt where he is.

Are more people going to be like Cameron and plant

more wheat this year despite what USDA is

saying?

Setzer: I think if they can, all you have left is

spring wheat, so if you can I guess you may try

but everything else is such a good price out

there I don't know if people are going to really

push the envelope on wheat necessarily.

So what we have for winter wheat is what we have and

maybe the market can still work to kind of

incentivize some spring wheat planting.

But I'm not sure it's going to be able to do so

or compete as well as what you're seeing between corn

and soybeans and other crops.

Yeager: I'm going to rewind to another piece

earlier in the program and that was the snow in North

Dakota on winter wheat crops.

It's also going to slow their corn and soybean

process.

But let's talk about moisture specifically on

that winter crop.

Is that what is driving this rally right now?

Setzer: The moisture you mean in the -- Yeager:

Any of the moisture or lack of it.

Setzer: I think so.

I'm in the eastern Corn Belt so I'm sitting here

like you mean the excessive moisture that

we're experiencing and the fact that it's been highs

in the mid-40s here in Michigan, which of course

we're early yet, but to the south of here in the

eastern Corn Belt to see this continuation of cold

and wet isn't necessarily wanted.

I read someone say today that you could erase or

use White Out on the argument of early planting

taking place.

And so there's a lot of talk the folks in North

Dakota where you've seen two feet plus of snow,

it's going to be the first of May before they're able

to get back in the fields without another storm

system.

So there's talk that there's other storm

systems further out as we work into next week.

And then of course you go south and it's the lack

thereof.

And your heart really goes out to those folks simply

because they're watching everyone else complain

about getting too much moisture and so it adds

insult to injury.

So yeah, the moisture story is definitely going

to be the one that we pay the most attention to here

over the next four weeks, six weeks and beyond

because that's really going to be what is key in

determining what our crop sizes are.

Yeager: On Tuesday I made a little road trip in

Iowa, went a few places different ways, I saw in

the 250 miles I drove one field planted.

You mentioned early planting, that just

doesn't seem to exist in certain areas.

Again, weather, is that the big driver in corn

right now?

Setzer: Yeah, well weather and then of course we saw

some Chinese buying interest, we've seen some

decent export sales.

Ethanol got a decent story even though my friend

Jordan as he highlighted you're really looking at

25 to maybe 40 million gallons of ethanol

produced, which is going to be around 9 to 17, 15

to 17 million bushels of corn demand, so not a huge

amount but still more demand.

Exports have been good and then of course, yeah,

you're looking at the concern over not only are

we starting with reduced acres but now we're

talking about could we see some losses in these areas

that we're planning on those that we're going to

put corn in, will they be convinced to go in a

different direction if they have to wait too long

to get rolling here?

Yeager: Really I asked you more of a new crop

question than an old crop.

Let's put a bow quick on old crop.

IF you have any left should you be selling

right now?

That trendline sure looks like it keeps going up.

Setzer: It sure does.

I guess it depends on your level of risk exposure.

If we're talking your last 10%, 20% of the bushels in

the bin honestly let's see what happens.

I know that that's a bad piece of advice to come

from a risk manager and most folks that have

watched the show for an extended period of time

are probably trying to call their grain buyer

right now to sell because my track record hasn't

been the greatest on telling you to hold off.

But at this point I think the easy bushels, as a

farmer for one in the quarterly stocks numbers,

which those are old news at this point, but the

lowest on-farm stocks since 2013 or the lowest

percentage, excuse me, of on-farm stocks out of

overall stocks.

And so the easy bushels have been bought.

Now it becomes a basis traders game because

they're sitting in the hands of the commercials,

the spreads have been a little bit crazy.

And so honestly if you're not sitting on the lion's

share of your corn, yeah you could kind of use

those as your gambling bushels.

Your gravy bushels is what I've called them in the

past.

If you're sitting on a good portion we need to

start making some sort of plan.

You've done great, yay.

Could the price go higher?

Sure.

But you're getting into where we're in rare Earth.

We settled today's highs the highest or today

closed the highest that we've seen since September

2012.

And so if you are sitting on a large amount of old

crop corn you have to ask yourself what you're

waiting for.

If it is $8, cool, put in a target order.

You don't have to sell it all and you won't.

You're not going to nail the high by any means.

But it's a matter of how much you have and there's

a huge difference between livelihood and rolling the

dice.

And so just make sure you know where you fall in

that department.

Yeager: You're not supposed to read all the

Twitter comments about you being on the show and the

rally.

Sorry, Angie.

All right, but speaking of Twitter we do have a

question from there that I do want to ask you right

now that came in this week.

This one is from Charlie in Ohio.

And he's asking you, with the bullish news recently,

he's citing E15 for summer use, the export sales to

China, Ukrainian planting intentions, and no large

bounce, had the positive news been priced in

already?

And, are we running out of news to feed the bull

market?

Setzer: I think we get a little bit slower.

Yeah, the bull needs to be fed every day.

I was talking to someone earlier this week and I

said the most bearish piece of the market,

insider market info that we have right now is that

everyone is bullish.

And so that tends to be what scares us the most.

How many times have you seen a rally die when

everyone is calling for $10 corn?

Maybe this time is different.

But yeah, eventually you price in, not only do you

price in your worst case scenarios when it comes to

a lack of supply, but you also start to price in a

value high enough to where you're discouraging

demand.

And so a lot of folks right now are like well,

we have no signs of demand destruction, and that's

good, because once you see signs of demand

destruction it's too late.

We're constantly in an ever-swinging pendulum of

trying to find that happy equilibrium between the

right amount of supply for the right amount of

demand.

And once you recognize that we've gone too far,

it's too late.

So we can still kind of get ourselves back in with

a good size crop.

Yeager: Well, then let's look at the soybean market

because this week we're down and there's, it's

been a bearish story a little bit since the

report but we bounced but then this week we didn't.

What's going on?

Setzer: Yeah, on the soybean side of things it

had been bearish and then we had seen a recovery.

We were really just kind of watching to see what

happens there.

We got that ratio out of whack, the corn bean

spread should be in that 2.5 to 2.4 range give or

take in a normal time period.

I think we got down to just right above 2.

So beans got quite a bit cheaper than what you

would normally see compared to corn.

And so we're going to kind of swing back and forth

because we don't know what's going to happen

with beans.

We hit that point with export sales to where

we're within shouting distance of the USDA

numbers already, now we're waiting on shipments,

carryouts looking like it will probably go down even

a little bit more here in the months ahead.

And so we won't know what bean production looks like

until August.

So it's even more risk premium we've got to throw

in and then toss in a couple of other inflation

trade ideas and things like that and here we are.

Yeager: I'm going to move you to let's go hogs

first, they had the biggest rally this week.

What is driving that?

Setzer: We've been down.

Everything anymore right now from a commodity

standpoint if you see a big selloff you're going

to eventually get to a point where people are

going to buy that dip and bring us back in.

And so everything is going to kind of maintain some

level of support.

Maybe we don't see hogs make news highs or

anything like that.

But there are some concerns over reduction in

the younger end of the herd and some of these

things that we've seen with some disease concerns

and some other factors at play.

And so I think you'll see hogs remain supported.

There's always going to be a little bit of a headwind

that we're going to run into because we don't

really have those Chinese imports that we can get

excited about and Chinese hog margins are definitely

something to keep an eye on.

So that is going to keep a lid on any major rallies.

But just inflation trade in general, just that sort

of energy of oh anything that looks cheap we've got

to buy, is going to help to kind of support these

markets even if fundamentally they don't

necessarily look like they need a huge amount of

support.

Yeager: Does the beef market need any support?

Live cattle first.

Setzer: Yeah, we always do.

We've kind of seen that market ebb and flow as of

late, move kind of high, move up really well and

then all of a sudden kind of drop off a bit and

we've kind of recovered a little bit.

We are starting to see some concern over demand

destruction.

Obviously we are seeing some worry over what's

going to happen.

On the feeder side we've got drought conditions,

we're moving into lots quite heavily there.

And so the same thing as what I said, the inflation

trade is going to kind of keep things supported, but

there's obviously this concern that when you're

making decisions at the grocery store with your

family and you look at a roast right now, a round

roast last week was like $22, I am fully encamped

in team beef and I still thought twice before I hit

add to cart.

And so that is a factor at play, especially when the

general population is struggling maybe with

filling that gas tank and filling that grocery cart.

And so that is going to keep us with that sort of

cap on any real high side when it comes to the fat

side of cattle.

But that support is still going to remain in the

sense that we have demand and we have inflation and

we have all of these other factors at play.

Yeager: All right, Angie, I appreciate it.

We have a few questions, you've kind of touched a

little bit, I think maybe you peeked at what we

have.

But we'll talk about that in a moment.

Thanks, Angie.

Setzer: Thank you.

Yeager: That will do it for this installment of

Market to Market the TV show.

We're going to talk more in our web show called

Market Plus so you can join us there.

Find that free on our website of

MarketToMarket.org.

Social media platforms have their ebbs and flows

but our Facebook presence has remained constant with

links, pictures and videos aimed at informing you

about our program.

Follow along at MarketToMarketShow on

Facebook.

Next week, pushing through the potential pitfalls of

urban farming.

Thank you for watching.

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.

♪♪

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.

♪♪