Market to Market (April 30, 2021)

Published May 31, 2023, 11:20 p.m. by Jerald Waisoki

President Biden addresses Congress and tax policy. Replanting crops and canopy with the future in mind. Market analysis with Dan Hueber.

most popular hybrid.

And it excelled with the derecho.

We have side-by-side documentation of some of

our own other taller hybrids and our

competitors' material where it stood perfectly

and the competitors - it was flat.” Stine has

growing competition on condensed varieties as

well.

International agri-giant Bayer unveiled their own

short-stature commercial strain in Mexico last

fall, and reportedly will be available in the U.S.

by 2023.

Both companies say tweaks to current production

models will allow denser planting of short-stalk

corn and less susceptibility to erosion.

Dell Lawrence/Marion, Iowa: “You can still see

there are some really large trees here that

have, uh, their tops taken out or, you know, knocked

over.” Farmland wasn't the only rural icon decimated

by straight line winds.

According to the Iowa Department of Natural

Resources, around a quarter of the state's

nearly 3 million forest acres also were

compromised.

Dell Lawrence/Marion, Iowa: “As far as the nut

production, it came through on August 10th and

that's before black walnuts or hickory nuts

were mature enough to be harvested.

So it just wiped out the crop for that year.” Dell

Lawrence is a retired landowner in eastern

Iowa's Linn County who normally sells specialty

fruit and nuts at area farmers' markets.

Dell Lawrence/Marion, Iowa: “I spent time

recovering and restaking everything.” Post-derecho,

as a member of the Iowa Nut Growers Association,

Lawrence volunteered an unused section of his land

to take part in a joint USDA-academia effort

across several states to accelerate hazelnuts as a

viable perennial cash crop.

While fruit and nuts may account for less than 1

percent of Iowa's total farm acres, advocates see

a future where marginal farmland could be

diversified with nut trees to serve burgeoning niche

markets.

Brad Hart/Mayor - Cedar Rapids, Iowa: “From the

day of the derecho, for the next two weeks, our

fire department and police department responded to

almost 10,000 calls for service.

Normally in a two week period, we might have

900...1100.” Nearby Cedar Rapids is the seat of Linn

County and the state's second largest urban area.

As the epicenter of the storm, Mayor Brad Hart

says local businesses reported $165 million in

losses.

Most of the city was without power for weeks as

an estimated 100,000 trees gave way - 65 percent of

the urban canopy.

Streets were blocked, and some 6000 homes were

damaged or destroyed - leaving 4 dead.

With peak wind gusts of 140 miles per hour, the

city was dealt conditions familiar to Gulf States -

save one lumbering distinction.

Brad Hart/Mayor - Cedar Rapids, Iowa: “The

disaster recovery teams that came here said they'd

never seen anything like this because they go to

communities mainly after hurricanes and those

communities, at least once every 10 years have a

tropical storm and the weak trees go down then.

Not here.

We've never had a land hurricane in Cedar Rapids.

So all kinds of species, but primarily the Oak

trees that have been there for 80-150 years, couldn't

sustain 40 minutes of 100 plus mile an hour winds.”

City officials expect a recovery price tag up to

$80 million from what has been labeled the worst

thunderstorm cluster in U.S.

history.

But the mayor touts robust financials and resilient

citizens who've encountered other

extremes, like flooding, in recent decades.

Brad Hart/Mayor - Cedar Rapids, Iowa: “We will

recover from yet another disaster because that's

just who we are.” Cedar Rapids has committed up to

$1 million annually for 5 to 10 years on a massive

urban design replanting effort, selecting a

variety of native and steadfast trees in the

face of extreme weather, disease and invasive

species.

Shannon Ramsay Founding President & CEO - Trees

Forever: “We're not here to plant trees.

We're here to grow trees.” Coordinated efforts kicked

off across the metropolitan area on Earth

Day.

Shannon Ramsay/Founding President & CEO - Trees

Forever: “I had planned to retire and the city of

Cedar Rapids asked Trees Forever, and me

personally, to stay on to help lead a new plan.”

Shannon Ramsay is the founder of Trees Forever,

based just up the road in Marion, Iowa.

The renowned, grassroots non-profit is dedicated to

replanting, habitat protection and positive

environmental impacts in both urban and rural

areas.

Shannon Ramsay/ Founding President & CEO - Trees

Forever: “Trees in the right spots along with

grasses and shrubs will filter up to 75% of

sediment and chemicals as they run across a farm

field and enter the buffer of trees, roots and

grasses and really do a great job of cleaning the

water.” For decades, Stine Seed Founder - Myron's

father - Harry Stine has been deeply involved with

Trees Forever, which helped fund Dell

Lawrence's hazelnut project as well.

With a family history in the lumber industry,

Ramsay celebrates Iowa's high quality hardwoods,

and applies locally, inspiration from

communities who've bounced back from other natural

disasters Shannon Ramsay Founding President & CEO -

Trees Forever: “After Katrina hit, people were

out in the neighborhoods saying, you know, we're

going to come back here and live and we're going

to plant hope.

That really inspired me to think about it after the

derecho we are planting hope.

That's what it's all about.

Hope for the future.

We're planting these trees for future generations.”

For Market to Market, I'm Josh Buettner.

Next, the Market to Market report.

Grains traded in 8 year highs as the same

components of weather, demand and China stayed

fused.

For the week, July wheat added 23 cents while the

nearby corn contract leaped 41 cents higher or

6 percent.

It is not clear if the bulls have pulled an

“Irish Goodbye” in the soybean complex, but the

technicals spent part of the week possibly

signaling their quiet departure.

July soybeans improved 19 cents.

July meal added 30 cents.

July cotton shrank by 72 cents per hundredweight.

Over in the dairy parlor, May Class III milk rose 31

cents.

A mixed week in the livestock sector, June

cattle added 85 cents.

August feeders shed $3.15.

And the June lean hog contract gained by $4.

In the currency markets, the U.S.

Dollar index increased 40 ticks.

June crude oil expanded $1.34 per barrel.

COMEX Gold decreased $8 per ounce.

And the Goldman Sachs Commodity Index improved

almost 13 points to finish at 505.50.

Yeager: Now here to provide insight is regular

market analyst Dan Hueber.

Hello, sir.

Hueber: Hello.

How are you?

Yeager: I'm all right.

Hueber: Very good.

Yeager: That's pretty much all I've got.

Hello.

Hueber: It was kind of a boring week so there's not

much left to talk about.

Yeager: There's nothing to talk about anymore is

there?

I mean, have you ever, Dan, you've done this a

couple of years, seen a period of time like we've

had since August, we just reference a piece in

August.

Have you see six to ten months like this?

Hueber: Not in this kind of veracity or this kind

of volatility.

Generally you would associate this kind of

move with a summer rally and even then summer

rallies four or six weeks are done and over with and

that's just it.

But truly this is demand based.

Granted it started with supply issues but with

China stepping into the market and some of the

production problems we ultimately found that we

had last year this has just grown and grown.

Now, interestingly enough it has been very orderly

and again, one of the main purposes when you get into

a market like this is the market has to discourage

demand, help promote production which we've

done a pretty good job there.

As far as the acreage we're looking at

additional acreage for corn and soybeans this

year.

But not up until recently have you kind of seen that

panicky type of buying that would be associated

with boy we've really got to kind of squeeze the

noose around the demand out there.

And I wouldn't necessarily say we've got the job done

yet but at least we've started the process.

Yeager: We could talk about buying acres in corn

but let's start with wheat where there was a big

supply a year ago at this time.

All of a sudden some demand has come to feed

livestock with what.

Is that the big fuel to this?

Hueber: I think absolutely.

And granted some of it is just there's always a

certain amount of people that look at it, well corn

is a little high priced and beans have maybe kind

of capped off what they can do so let's just go

over and buy wheat.

But certainly on a worldwide basis beginning

a few weeks ago here the Chinese government put out

official recommendations to the livestock industry

and how you can rebalance rations with heavy

emphasis on feeding wheat and you're seeing that in

Vietnam, you're seeing that in South Korea, some

of the major -- if you take South Korea, Vietnam

and China there's 23%, 24% of all the corn export

business in the world and if they're starting to

look at alternatives to using corn or soybean meal

it's going to show up and I think that is what has

shown up in the wheat here in the last week or so.

Yeager: It's the question for all the grains though

right now.

Are you making any sales?

Specifically let's start with the old crop.

We're almost to the point of having some winter

wheat getting close to coming onto the market.

Are you making sales in either nearby or deferred

contracts?

Hueber: Again all the way around of course when it

comes to old crop corn and soybeans there's really

not much inventory left out there.

But nobody has the crystal ball that is going to

allow you to pick the top on this, we just don't

know how insane it could get or maybe we've already

priced in a lot of forward thinking here as far as

weather and demand and that type of thing.

So to sit back and think I can hold out until I'm

going to get that final penny is usually kind of a

fool's errand.

So yes, we continue to recommend on a scale up

basis use your business acumen and start locking

in the profitable levels that are out here.

Yeager: You mentioned the old crop corn.

There's not a lot left.

I got an email from somebody just before we

taped today who said I've still got 90% of my grain

to market.

Now that's not a lot.

Last week we talked about maybe 5% of the old crop

still was in a farmer's hand.

Do you subscribe to that theory?

Hueber: Well I think so.

Of course the difficult way when you conceive that

though is we're still going to look at 1.4, 1.5,

somewhere inventory of corn, maybe it's 1.3 if

the demand doesn't really back off, but that is not

a critically tight supply of corn.

It's probably in the wrong locations and you're going

to have to see basis move from areas of shortages or

areas of excess into areas of shortage.

But it's not that we have a true supply problem in

the corn, unlike the beans where yes we know it's

going to be nip and tuck to make it to new crop

beans this year.

But here again, that said, I don't know if it's some

of that is probably pre-priced waiting to

deliver into the later months, although with the

inversion in the spreads in the cash market there's

probably not a lot of incentive to carry for any

amount of time but could have been booked early on.

But yeah, I think the majority of it is already

moved into or is passing ownership to those who are

going to use it.

Yeager: That's the old crop situation.

I've got a new crop question that came from

Phil in Dresden, Ontario via Twitter.

Thank you, Phil, and everybody else who submits

their questions each and every week.

Dan, with December corn closing at approximately

$5.46, November beans at $13.18 on Thursday are we

beginning to see demand destruction at these

levels?

Or are new crop prices still about new crop

weather in July and August?

And how will we cope with the volatility this

summer?

Hueber: Of course I would say yes on both.

I think we are starting to see demand destruction.

A great example I think, granted this pertains more

to the old crop at this point, but look at the hog

numbers when they came out.

Shocked everyone that we were not seeing expansion

in that industry.

And I think one, they've had a rough several years

so they didn't really have the economic incentive.

And yes we've seen a phenomenal hog rally along

with the rest of the ag sector here at this point

in time.

But all you're doing is keeping pace.

So if anything yes I think we're starting to back

down the demand and with little incentive why would

you want to take the risk of expanding six months

down the road when those markets are really still

well within where we've been within the last three

or four when it comes to fall months.

The one place we haven't seen it -- granted new

crop and old crop are two different stories here

this year -- but one thing we haven't seen yet is in

the ethanol industry.

Good margins yet so they have all the incentive in

the world to continue to grind as much corn into

ethanol and of course the DDG market is going to

remain substantial for the feed side of it.

So not happening yet but again, even in that

industry all it would really take would be for

Saudi Arabia to maybe kind of turn up the nozzle just

a little bit and pushing more onto the world

markets and you've put a cap on that.

Yeager: Crude oil finished at $63.51 this week.

So anything above $50 is usually seen as positive

for the ethanol industry.

All right, new crop corn though, the volatility

that happens right now is very hard to, you'll be

down 11 and finish up 30.

That's about to get worse come Monday and we'll kind

of talk about the volatility that is even

going to expand in Market Plus.

But how does someone who is trying to plant a crop

right now market that crop, specifically corn,

while they're out putting it in the ground?

Hueber: Well, number one, again this really comes

back to why you need to have a plan in mind, sit

down and put it on paper and offers put into place

because your job as a producer is not to be

watching the market every minute it is trading.

That said, if you've done your homework you know

what it's going to cost you within reason with

what production is going to be this year, you've

got crop insurance in place to cover some yield

losses.

And if you're at the point where the return on

investment is exactly what you're shooting for or

within the range that you're shooting for

there's no sense to not continue to sell into it,

ideally on a scale up basis, and just on the

fact that when it turns -- markets just like bottoms,

bottoms never occur in markets because the news

got bullish, it's always the most bearish news when

you're at the bottom and ready to turn up.

Same thing on the top.

It's going to peak when everything looks the most

bullish and it will come as a surprise and at some

point we're just going to run out of the capital

coming into the market.

It's a little bit curious right now.

For the last two weeks now we've had large specs

exiting the corn market even though we've

continued to push higher which I would tend to say

-- they still have a massive long position in

the corn market -- but I think it would be

indicative of saying we've probably committed as many

dollars as we need to at this point in time and if

anything we're starting to rebalance a little bit.

Yeager: Pull the cord.

Is Dan Hueber bearish about the bean market?

Hueber: Bearish outside of weather is the wild card

of course at this point.

Old crop beans though it's just difficult to see much

bright in there, not that we're going to come apart

because we have got to continue to ration demand

the best we can.

But even in South America you've seen basis levels

start to slip in Brazil at this point in time.

So I think China has maybe backed away or maybe have

secured the needs they have to have for beans at

this point in time which opens up that whole other

discussion about is there really a major

reoccurrence of African swine fever in that

country and if there is -- the news is sparse at best

out of there.

Some of the privates that we've had contact with say

it's as bad as it was two years ago.

But you certainly don't get that from the popular

press and even the U.S.

ag attaché said, well if they get beyond these

problems yes they could be back up to where they were

a few years ago.

But nobody has a great answer on exactly what is

happening there.

Yeager: Well let's stick with hogs and go into the

U.S.

hog market.

The hog producer who has maybe taken a shipment

this week is he in a good position?

Hueber: Absolutely.

I think right now you can future them off.

Granted your feed costs it's nice if you want to

lock those in as well if you really want to keep

the margins there.

But I think for the time being certainly.

But here again too we've no expansion in the

domestic hog industry and we're still seeing, even

though the exports to China were down this last

week, they were still importing pork from the

U.S.

and the total numbers had a nice rebound.

So we're still putting a lot of pork out of this

country.

Yeager: Got to get this on the record.

Thursday was the first time in 56 days that the

lean hog index is down.

So take that for whatever you want.

But in the livestock, in cattle, let's start with

live cattle, cash and futures have been

different, cash has been dramatically different.

But a lot of people are asking me about packer

margins.

Is that going to be the big story in keeping a lid

on the cattle or is it a drought story I'm selling

so many cattle right now because I've got animals

on dry conditions?

Hueber: Well, you're probably bringing some

animals off a little premature and have to move

them out because they're not looking at adequate

amount of hay out there.

But there is no simple answer to what is going on

in the packer industry.

We do not have enough packers in this nation.

It is controlled by too few people.

But how do you -- they're making phenomenal margins

here at this point in time.

But beyond that how does a community welcome a new

packing plant?

And I think that is just as big an issue as

anything else.

Nobody really wants those sitting in their back

yard.

Yeager: Not in my back yard.

Hueber: Exactly.

So you can push and say all you want as far as the

economics are there.

But if it came actually to push and shove are we able

to construct it someplace?

That's a whole other challenge that may be

insurmountable.

Yeager: If you're ready to take order on a shipment

of feeders this week are you in a good position?

Hueber: That's a little more questionable.

And granted we're still looking at a pretty decent

fat market out there but with the unknown being in

the feed sector at this point in time that is

usually a little bit of pressure into the feeder

market.

But yeah, not that we're going to see a collapse in

the meat markets this summer.

Granted we're just starting into what should

be our grilling season, our peak demand.

But that said we have run up pretty well into these

in anticipation of that, in anticipation of the

COVID rebound or the post-COVID rebound.

So we might have factored a lot of those things into

these prices already unless it comes in the

export side.

Yeager: Dan Hueber, thank you, sir.

Hueber: My pleasure.

Thank you.

Yeager: Time goes fast.

Hueber: It does.

Yeager: That's Dan Hueber and that will do it for

this installment of Market to Market.

We'll keep this conversation going in

Market Plus so join us there.

Find that on our website of MarketToMarket.org.

The beauty of planting season is in full display

via Instagram.

We have shared many of your posts in our stories

section of our own feed of MarketToMarketShow.

Follow today to see those pics.

Next week, we look at the push and pull of

agriculture with China.

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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