Market to Market (April 17, 2020)

Packing plant closures back-up the food supply

chain.

Closed signs hang in more windows, as the first

checks go out.

Experts push an old grid system in a new direction.

And market analysis with Shawn Hackett, next.

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This is the Friday, April 17 edition

of Market to Market, the Weekly Journal of Rural

America.

♪♪

Hello, I'm Paul Yeager.

With 22 million people out of work and emergency

small business loan money exhausted, Congress and

the White House are at work on another fix as

more data comes in.-- Retail sales fell a record

8.7 percent and without auto sales it dropped 4.5

percent.

The Creighton University Mainstreet Index slumped

to an all-time low of 12.1.

As CARES Act checks go out, predictions of damage

to the Heartland roll in.

A University of Missouri study predicts net farm

income will be $20 billion lower than 2019.

An Iowa State University paper shows $6 billion in

losses for Iowa farmers alone.

As the livestock sector continues to suffer,

farmers remain concerned.

Josh Buettner has our report.

The shuttering of meatpacking facilities

across the country due to cases of COVID-19

diagnosed among hundreds of workers, some fatal,

have led to livestock supply-chain warnings.

Tyson Foods' Columbus Junction, Iowa plant and

Smithfield's Sioux Falls, South Dakota facility -

among the higher profile closures in recent weeks -

on their own represent 2 and 5 percent,

respectively, of the nation's hog-slaughtering

capacity.

Dr. Jim Roth/Director - Center for Food Security

and Public Health/College of Veterinary

Medicine/Iowa State University:“It hasn't been

in any farm animals anywhere in the world that

we're aware of.” Dr. Jim Roth researches infectious

diseases and food security at Iowa State University's

College of Veterinary Medicine.

He says international studies have purposely

tried to infect pigs - to no avail.

While Roth zeroes in on bats as coronavirus'

zoonotic source from Chinese wet markets,

People for the Ethical Treatment of Animals

protested on the heels of Tyson's Columbus Junction

stoppage - citing past deadly disease jumps from

swine to people.

But Roth says the current threat to the viability of

U.S.

animal-based food sources is workers.

Dr. Jim Roth/Director - Center for Food Security

and Public Health/College of Veterinary

Medicine/Iowa State University: “It's very

difficult to social distance in any assembly

line operation because you'd have assigned spots

where you have to work and next to other people.”

Even with increased safety measures in place,

processors have continued to cease operations for

days, weeks or indefinitely.

Roth adds workforce demographics can be

another wrinkle.

Dr. Jim Roth/Director - Center for Food Security

and Public Health/College of Veterinary

Medicine/Iowa State University: “The

immigration laws have limited the number of

workers available and then as workers get

sick...we're really coming to appreciate how

important they are, and will continue to be.” Mike

Paustian/President - Iowa Pork Producers'

Association: “It's been a struggle to get enough

workers, especially in the rural areas where some of

these packing facilities are located.” Mike

Paustian is President of the Iowa Pork Producers

Association.

His family operation near Walcott brings 28,000 pigs

to market annually.

Mike Paustian/President - Iowa Pork Producers'

Association/Walcott, Iowa: “That is one of my

concerns is that, is that this, this workforce is

being stigmatized to some degree...because of, of

this, um, issue that we've had with, with positive

workers at some of the packing facilities.

There's a reason why they're there and why

they're working.” Paustian sees essential workers

like farmhands and meatpackers, along with

transportation and grocery laborers, on the front

lines of the pandemic.

He cautions that their perils ripple across the

food system.

Sec.

Sonny Perdue/ U.S.

Department of Agriculture: "I want to be clear, the

bare store shelves that you may see in some cities

in the country are demand issue, not a supply issue.

This week USDA sought to quell concerns over plant

closures and milk dumping with plans to seek $16

billion in direct payments for producers and another

$2 billion to buy up excess farm products for

food banks.

Corey Rozenboom/Owner-Operator,

Knoxville Regional Livestock

Market/Knoxville, Iowa: “We've got it marked out,

you know, for the six foot distance just to stay in

compliance with everything.

We are opening up our online bidding for anybody

that wants to view online and you can bid online.”

Corey Rozenboom has adapted his Knoxville,

Iowa cattle sale barn to a new reality.

A recent study by the National Cattlemens' Beef

Association predicted COVID 19 would cause over

$8 billion in losses for domestic cow-calf

producers in coming years without government

assistance.

Joe Wright/Owner-Operator, Knoxville Regional

Livestock Market/Knoxville, Iowa:

“We've never dealt with anything like this

before.” But Rozenboom's business partner Joe

Wright claims the industry knows a thing or two about

persevering in the face of insurmountable odds.

Joe Wright/Owner-Operator/Knox

ville, Iowa Regional Livestock Market: “I'd say

a cattleman is pretty resilient, you know, for

what we've went through in the last 20 years of price

decline.

We're going to get back to something that will be

near normal, but this has hit and it's going to be

an issue that we're going to have to deal

with...from here on out.” For Market to Market, I'm

Josh Buettner.

Years ago, when the unnamed road outside your

place became 270th street, there was some eye

rolling.

The first time firefighters unfamiliar

with the area made a rescue, the benefits

became clear.

Use of a decades old version to pinpoint your

location is gaining ground.

Colleen Bradford Krantz has more in our Cover

Story.

Lydia Mink, who had traveled from the Twin

Cities in January 2013 to visit her grandparents in

Silver Bay, Minnesota, headed out for some cross

country skiing on a particularly sunny

afternoon.

She had been skiing for nearly an hour, following

the trail maps she occasionally found, when

she became disoriented.

Lydia Mink, Shoreview, Minnesota: “I remember

going against my better judgment or my natural

intuition thinking that I would take a right ...And

that's where everything went wrong.” Her fear

increased when she saw prints in the snow she was

certain belonged to wolves, which are known to

live in the area.

Lydia Mink, Shoreview, Minnesota: “It was getting

pretty dark...

And it was really quiet and all the other animals

aren't around, you know.

Am I being followed?

And my mind started playing with me.” Mink

soon reached a wider snowmobile trail, where

she discovered an unfamiliar blue-and-white

sign.

Having a decent cell phone signal again, she was able

to answer a call from Lake County rescuers.

Audio from call: Rescuer: Is this Lydia?

Lydia: This is is.... Rescuer: ... I've got help

on the way and they are glad to come up there and

get you so I don't want you to move around too

much.... Lydia: Now I'm at, it's an emergency

location: 15T XN.

And then there's two big four-digit numbers.

It's 2766 and 3955.

Rescuer: That is perfect because you know what that

is?

That's a GPS coordinate for my rescue guys coming

in.

Of all the signs out in the woods right there, you

are probably at the best one.

Lydia: Okay.

Phew.

Lake County, along Lake Superior between Duluth

and Canada, includes nearly 2,000 square miles

of wilderness and 900 miles of trails.

In 2011, SharedGeo, a Twin Cities-based nonprofit,

worked with the county to create better location

markers.

The signs they created showed a series of numbers

representing a location under a system known as

the U.S.

National Grid, or USNG.

It was one of those blue-and-white signs, now

standardized for national use , Lydia Mink found that

day in the forest.

B.J.

Kohlstedt, Lake County (MN) Emergency Management:

““We often have people on snowmobile trails and if

they get lost or injured, they'll call 911 on their

cell phones.

And the dispatcher will ask them, ‘Okay, where are

you?'

And honestly, they say, ‘I'm somewhere between Two

Harbors and Canada.

You know, this is about a hundred miles.” he U.S.

National Grid is essentially the same

geolocation system the U.S.

Military has used since World War II .

Locations can be conveyed using just the last eight

digits instead of the 11 needed with latitude and

longitude .

Those also can be conveyed in three different

formats, as well.

While triangulating cell phone signals can help

locate lost callers, problems arise in rural

areas with few cell towers.

USNGApp.org keeps accurate location information even

without cellular service by using satellites to

establish your location.

B.J.

Kohlstedt, Lake County (MN) Emergency Management

Director: “The accuracy of that location marker could

be five or ten miles ...The app is 30 feet, the

size of this room.” Stephen Swazee, Sr., a

retired airline pilot and chair of a Minnesota

emergency preparedness committee, is a founder of

SharedGeo.

Swazee and others have spent countless hours over

the past decade trying to get federal, state and

local jurisdictions to use the U.S.

National Grid.

Stephen Swazee, Sr., SharedGeo: “Approximately

one-third of all response calls in the United States

at this time go to a location without a street

address...When you have a disaster, who shows up but

individuals from outside the community.

They don't have working knowledge of that area in

a way that they can respond to someone telling

them on a headset, ‘Hey you need to go down to

Joe's bar and hang a left.” In 2015, FEMA

issued a directive saying it would use USNG as its

standard geographic reference system.

The directive grew, in part, out of the

difficulties related to locating stranded or

injured people in the aftermath of Hurricane

Katrina in 2005.

Stephen Swazee, Sr., SharedGeo: “It would be

ridiculous to think that the lack of communication

about location did not result in people getting

injured or killed.” Still, many emergency response

teams have not yet trained their personnel to use

USNG.

Stephen Swazee, Sr., SharedGeo: “The U.S.

Fire Administration in 2013 did a survey to find

out how many entities out there were actually using

U.S.

National Grid in their response efforts.

Two percent was the answer.” The

Minneapolis/St.

Paul metropolitan area is one exception.

At the South Metro Station, emergency

responders primarily use street addresses, but have

had occasional incidents where it paid off to know

USNG.

Mark Erickson, South Metro Fire Department, chief of

operations: “It is a very simple, intuitive tool.”

In one case, a man, woman and young child became

lost while boating in the backwaters of the

Mississippi River as an evening thunderstorm

approached.

Mark Erickson, South Metro Fire Department, chief of

operations: “We checked with the cell phone

company and we were able to get his location to

within about an area of 10 square miles so it didn't

do a whole lot for us.

... I said can I sent you a text message with a web

address on it, and go to that web address and take

a screenshot of what comes up and send the picture of

that screen back to me...Within two minutes, I

had a picture back from him that told me where he

was within about 10 meters.” Despite such

successes, the nation has a long way to go before

the grid is widely adopted.

Stephen Swazee, Sr., SharedGeo: “This is like

planting a tree.

This is not like flipping a light switch.

Ultimately we need leadership from the top

.

.

.

Otherwise people continue to be off doing their own

thing.” For Market to Market, I'm Colleen

Bradford Krantz.

Next, the Market to Market report.

Yeager: The market had little to work with as

hopes for renewed Chinese buying evaporated and U.S.

Farmers dealt with another typical spring weather.

For the week, May wheat drop 23 cents and the

nearby corn contract fell a dime.

May soybeans decline 31 cents and the meal

contract lost $4.30 per ton.

May cotton shed $1.60 per hundred weight.

In the dairy parlor, April Class III milk futures

weakened another 15 cents.

Extremes again in the livestock sector.

June cattle rose $1.92, May feeders gained 33

cents and the June lean hog contract plummeted 10%

or $4.95.

In the currency markets, the U.S.

Dollar Index jumped 23 ticks.

May crude has plummeted $10 in two weeks with this

week's loss of $5.07.

COMEX gold decreased $37.10 per ounce.

And the Goldman Sachs Commodity Index fell more

than 24 points to finish at 271 even.

Joining us now to give us some insight is one of our

regular market analysts, Shawn Hackett.

Shawn, welcome back.

Glad to have you here via the power of technology.

Hackett: It's great to be here Paul and I really

appreciate you letting me kind of tap in remotely

here.

It's a really nice to spend some time with you

here today.

Yeager: Well, I don't want to rub it in.

It's not like it's 90 degrees there where you're

at this morning or anything like that, but

the commute home will be a little bit better.

But the thing is, Shawn, we're going to need you to

be commuting.

We need people to be out driving.

We'll get to that in a moment.

I need to start with the wheat market because in

the in the grains, it was one of the poor

performers.

You've got weather.

We had snow in a belt south of I-80 to I-70 but

there was cold weather over the weekend.

There's also Russia.

There's also Egypt importing.

What is the main factor in your eyes when it comes to

wheat?

Hackett: Well, the wheat market and the rice market

have gone up 10 to 15% since the virus took

place, while the other grain markets are down 10

to 15%.

This is primarily from a hoarding stockpiling

strategy that occurred because Asia and the

Middle East live off of wheat and rice.

And so as this panic set in the demand set in and

all of these exporting countries pulled back from

wanting to lose these supplies.

But now that we're starting, it looks like to

get on the other side of this virus and we might be

opening up the economy, we think that some of that

panic buying of wheat is going to relax.

This probably was the week when we saw the first sign

of some of that demand taking a breather and

saying maybe we've done enough for now.

Yeager: Well, and if wheat is always tied to corn

when corn is performing as poorly it is, it's not

helping matters either.

So right now in wheat, are you holding for another

week, two before you make a sale?

Hackett: Well, I mean we have been suggesting that

those that are on the producer side of wheat

consider making some cash sales.

We think that we've had a big rally.

We think prices are good.

One of the few markets who actually the balance sheet

works, you can actually pay your bills with and so

we don't want to look a gift horse in the mouth on

this one.

We do want to make sure we get this done because the

correction could last a little while, especially

if we start opening things up here.

Yeager: Shawn.

I think the airlines, the fuel industry folks need

you to start flying again.

They need you to start driving.

Is that really the only thing that's going to save

corn right now when it comes to chewing through

some of this demand?

Hackett: Well, we definitely need to get

energy up.

We definitely need to get ethanol prices up, you

know, there's no way you can lose that kind of

demand from the ethanol sector and think that

we're going to have a quick turnaround in the

corn market.

So the answer your question is, it's not the

only ingredient, but it's a key ingredient that we

definitely need to see.

Yeager: All right, well we have a question that came

in here from our audience and we always like to hear

from you via Twitter, Facebook, and Instagram.

You can always give us a question and reach any of

our analysts each week.

So this week, Shane in Bloomfield, Iowa is asking

corn looks way over sold along with livestock.

What are the chances of fund money buying in and

running the market higher based on money flow?

You just talked about one ingredient.

Is this the other?

Hackett: We, as you know, Paul, we specialize in

capital flow analysis in grain markets and we're

seeing some of the most positive capital flows

right now entering the corn market since late

last April.

So you know, we, the work that we do says that the

odds are improving, that we might see the capital

flows begin to turn this corn market around after a

brutal, brutal period since the beginning of the

year.

So we actually are getting more -- corn market based

upon these capital flows that we're seeing.

Yeager: So is $3.43 the bottom of this barrel?

Hackett: No one could say for sure if that's the

low.

I mean I wish I could say for sure because a lot

depends upon exactly when we open and how things

play out with weather and things.

But we have to believe that we're getting pretty

close.

I mean second cash basis off, we're almost sub $3

corn in a lot of places and that's starting to get

off the cheap.

Yeager: And we're a long way from $5 let alone $8.

We always have to check in with that prediction.

Is $5 realistic in 2020?

Hackett: We think that there's a possibility for

that.

One of the catalysts that we see, Paul, is that

South America is going into their winter season.

We know that the virus, the coronavirus is very

sensitive to cooler temperatures.

The community spread takes place when the

temperatures are cooler.

We're very concerned that there may be a rapid

escalation of the virus in South America and there

could be some strikes, some issues of workers not

going to you know, to the ports.

And so if we see any exports not going out of

the country or being delayed, it could create

some wild buying into our markets.

And that could certainly be something that can

penalize our markets and overcome the barrier of

not having ethanol demand right now.

Yeager: Well, you talk about South America,

that's a big impact when it comes to the soybean

market.

Is there going to be some of that carryover spill

over into soybeans with the South American issue

that you just discussed?

Hackett: Absolutely.

I mean, if they're not going to be able to get

corn out, they're not going to be able to sell

their soybeans.

So it's a grain market issue if they can't get

this done and we really think the odds are very

strong.

I mean, we know the coronavirus is there.

We know it's actually Brazil.

The numbers are already getting worse.

It's hard for us to imagine that everywhere

else in the Northern Hemisphere has had an

issue they're not going to have some disruptions to

their supply.

Yeager: Crush numbers were really good last month.

They're going to be really bad this month.

What is going to, I mean meal was a darling there a

couple of weeks ago.

Is there any darling coming up?

Hackett: Well, I mean I think the components, you

know, the bean meal and the bean oil actually look

pretty constructive to us.

Crush is way down.

We think demand is going to be fairly stable and

fairly good.

We have good capital flows that we've talked about

before.

Also in bean oil and bean meal could be a situation

where bean oil and bean meal outperform the

soybean market and actually maybe bring the

soybean market out of the doldrums.

So we're actually constructed with the

derivative markets right now in soybean complex.

Yeager: So quickly hold or make a sale now?

Are you saying make a sale or hold for a little bit

longer on beans?

Hackett: We think it's too late to make sales at this

point.

Yeager: All right.

Dairy another 15 cents down this week, Shawn, you

saw it in your area in the Southeast United States

dumping dairy.

Are we going to continue to see that scene play

out?

Are we going to continue to see a decrease in that

contract?

Hackett: It's hard for us to think that we're going

to get too much lower, Paul.

We're almost getting down in 2008, 2009 levels.

I mean the industry is completely upside down

financially.

Dumping milk, it's not available to make cheese

and butter and all these other things.

And we're pretty optimistic that the

economy, the food service sector is going to be do

better, doing better later on in the year.

And that should help, you know, put a floor under

this market for now.

Yeager: Quickly on cotton.

I need to say, is there any hope of turning this

bearish contract around?

Hackett: Well, we've already bounced a little

bit, Paul.

It's a very economically sensitive market, but

we're going to plant so few acres in the deep

South, you know, poor economics and heavy, heavy

rains.

We think that low supply, some weather concerns,

some better demand later in the season as we open

the economy actually could support some better prices

here.

Yeager: All right, something to watch there.

Cattle wise, we've been watching this one closely,

a Greeley, Colorado plant went offline this week.

If we see another 5 to 10% cut in production, is that

going to have any impact on this cattle market?

Is this all about, what's it doing to those plants?

Is there something else in play?

Hackett: It's really about the plant closure, but we

saw what happened with the Tyson fire late last year,

Paul and we had the crash market and then the

vertical market back up.

The only difference is this is not one plant,

this is multiple plants all doing it at the same

time.

That's the bad news.

The good news is they're all going to open up again

at some point later on in the season.

They're all going to want to buy animals to bring

through their facilities.

So one just looks at what happened to prices in the

fourth quarter, it looks to us like we could see a

repeat here later on in the summer.

Yeager: Well you have the USDA saying this week that

they're going to be doing some buying, but usually

that's not much more than say a hamburger or you

know, some of the choice cuts.

Is that just going to cause more problems in the

market if they're buying like the just the

hamburger to disperse?

Hackett: Yeah.

If you just, if the government is just buying

it in to support the market and it has no place

to go with it and it's not really doing, it's not a

real supply demand fundamental, it actually

creates an overhang later.

So it helps now and we're all for anything that can

help the farmer get over this bridge.

But it's not really something that we think is

polished in the market right now.

Yeager: All right.

So if you're not saying much in the bullish areas,

are you holding if you can on making sales in cattle,

even if you can make a sale?

Hackett: You really have to hold it if you can.

Yeager: For how long?

Hackett: I think that later in the summer you're

going to see much better prices.

Yeager: If you could make it to the summer.

Feeders, it's hard to resist putting those

feeders, I mean, you can't, you can't stop

genetics and nature.

It's already happened.

But do you try to hold repopulating some of these

feedlots?

Hackett: I think you do.

You know, I mean, the feeder cattle market has

always been the thoroughbred of the live

cattle sector.

It leads live cattle a lot of times and so if we're

correct about what's to take place with this kind

of a V situation, you know -- remains, you know, corn

prices remain as cheap as they are, you know, it

could really be a rocket ship coming out of this

thing.

Yeager: All right.

Rocket ship taking off when, when's the three,

two, one launch on this one?

Hackett: Well, if we open up the U.S.

economy or start opening up in May, that's a big

if, maybe it's June, maybe it's May.

But if it's May, we think most of the plants are

going to start opening up by July.

So we think post-July things look really, really

good for the livestock and the cattle sector.

Yeager: All right, let's talk quickly.

Hogs again, just as I mentioned in the lead in

again, brutal.

Is this still all production and problems or

is this a supply thing too?

Hackett: Well, it has been a supply thing as you

know, even when we had good demand and even

before the virus it was a supply thing.

But obviously you're having this plant shut

down, just like cattle, you know, just adds insult

to injury.

But once again, we still see the same dynamics.

Actually the exports going to China, were very, very

good so far this year.

So if we can get domestic demand going again we

think the hog market will right itself to the upside

here.

Yeager: All right, so hogs in 10 seconds.

Are we holding for how long before we make a

sale?

Hackett: We're similar to cattle.

We're holding for an idea that later summer prices

are going to give you an opportunity for better

prices.

Yeager: All right, Shawn Hackett, I appreciate the

time there from your home office.

Good to see you.

Hackett: Good to see you too, Paul.

Thanks.

Yeager: So, Shawn will come back in Market Plus

when we will answer questions about citrus.

That's an interesting one.

We'll also talk about large crop and bearish

trends that are happening and we'll have that in

market plus because that does wrap up the broadcast

portion of Market to Market.

But as I mentioned there's still more to talk about.

We'll cover it in that market plus segment where

we'll answer more of your questions.

You can find in many ways and one of them is on our

website at markettomarket.org.

It's also there on YouTube.

We also do a podcast and speaking of podcasts, the

M-to-M has reached a milestone.

The 200th episode drops on Tuesday.

Catch a behind the scenes look at this program with

our producers and you can find that on our website

and wherever you subscribe to podcasts.

Join us again next week though, we will continue

to explore the effects of COVID-19 on rural

America's bottom line.

So until then, thank you so very much for watching.

Have a great week.

♪♪

Market to Market is a production of Iowa

PBS which is solely responsible for its

content.

Pioneer Hi-Bred International is a proud

sponsor of Market to Market.

♪♪

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.