Market to Market (May 8, 2020)

Coming up on Market to Market -- “Keeping the

packing house door open.

Trying to pass it on as markets evaporate.

Spinning up a grocery store in the middle of a

pandemic.

And market analysis with Ted Seifried, 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.

♪♪

Accu-Steel, offering fabric covered

buildings specifically designed for the cattle

industry since 2001.

The next generation of cattle buildings.

Information at accusteel.com.

♪♪

This is the Friday, May 8 edition of

Market to Market - the Weekly Journal of Rural

America.

♪♪

Hello, I'm Paul Yeager.

Late this week, Secretary Perdue told consumers he

believes meat processors will be up and running in

the next 7 to 10 days.

As pathways for protein and other food items are

sorted out, many animal producers are still angry

about the backup at the packing plant door and the

appearance that processors are receiving higher

profits.

Colleen Bradford Krantz reports.

This week, U.S.

Secretary of Agriculture Sonny Perdue declared that

any packing plant that has yet to comply with federal

safety guidelines related to COVID-19 must quickly

come up with a written plan as to how and when

they will do so.

He also clarified, state and local officials are

not to interfere with the reopening of plants that

have implemented the required safety measures.

Perdue's announcement comes on the heels of the

executive order signed last week by President

Trump that delegated additional emergency

powers to the secretary under the Defense

Production Act.

The National Cattlemen's Beef Association applauded

the move.

Ethan Lane, Vice President of Government Affairs,

NCBA: “We were incredibly grateful for the president

stepping in and putting out an executive order on

this.

This is the most important issue out there for our

cattle producers right now: to get those cattle

moving through the system.

(cut to) I think we've seen a lot of state and

local governments with the best of intentions but

perhaps not the most accurate information or

the most current information dealing with

this in different ways.” Lane said the OSHA and CDC

checklist of safety measures for packing

plants, a critical industry struggling with

workers at some locations becoming infected with the

virus, should mean decisions are based on

science rather than emotion.

Ethan Lane, Vice President of Government Affairs,

NCBA: “If they are walking the walk and meeting those

obligations, let's make sure we're keeping the

road clear for them to keep meeting that critical

national need of getting meat to the store

shelves.” As consumers grow nervous about a

potential meat shortage, some grocery suppliers,

such as Costco, Hy-Vee, Kroger and others were, as

of mid-week, were limiting how many packages of meat

costumers could buy in at least some stores.

Ethan Lane, Vice President of Government Affairs,

NCBA: “We continue to remind people there is no

shortage of beef.

There will be beef available in the grocery

store for everybody (cut) as long as people are

buying an appropriate amount when they go to the

store.” Lane says cattle producers were already

facing a tough situation before COVID-19, with the

small number of beef packers making competitive

pricing a challenge.

Now, hog, cattle and poultry producers are also

dealing slow-downs or shutdowns at processing

plants.

This week, attorneys general from 11 states

joined cattle industry groups and some members of

Congress in asking for an investigation into

possible price collusion among the four major meat

packing companies.

Ethan Lane, Vice President of Government Affairs,

NCBA: “What they're getting paid for their

cattle right now is as bad as anybody has seen it in

as long as anyone can remember.

And that's a tremendous burden for our producers

.

.

.

especially as they are seeing this conversation

about supply issues in the grocery stores and meat

flying off the shelves.

It really pours salt in the wound for them because

they are struggling to cover expenses and taking

a loss on their cattle.” For Market to Market, I'm

Colleen Bradford Krantz.

COVID-19 brought 11-years of economic growth to a

screeching halt but there may be some bright moments

ahead.-- Last month, unemployment hit a record

high 14.7 percent as 20.5 million jobs evaporated.

Officials with the Labor Department say the number

should be closer to 20 percent due to

misclassification of workers.

In February, the unemployment rate was a

record low 3.5 percent.

Wall Street rebounded on the news believing this

might be the bottom for unemployment.

--- Even with jobs gone and supply lines

disrupted, American ingenuity is helping

divert some of the time sensitive goods to new

destinations.

As restaurants try to stay afloat with curbside

pickup options, most of the food heading home is a

main meal - leaving appetizers on the shelf.

This puts Idaho onion and potato producer Jarom

Jemmett in a pickle.

He started planting this season's crop on his 350

acres in early February.

By harvest time, COVID-19 had cut-off access to

restaurants - his largest customer.

Jarom Jemmett/Parma, Idaho Farmer: “Once you're

planted, it's, you know, you're kind of sunk to

that point.

And so then you have to start really figuring out

what is, you know, what makes the best business

sense?

Do we continue to raise the crop?

Do we abandon the crop?

And, and so that's, that's created some, some

headaches and a lot of sleepless nights at

times.” Some producers may have to disc under a ripe

crop in a few months if those markets fail to

reopen.

Jemmett contributes to Idaho's more than 13

billion pounds of spuds produced annually.

Most potatoes end up in storage after harvest if

not bagged immediately for sale.

But when the food service sector began cancelling

orders in March, piles like these were made as

sales to arenas and entertainment venues

evaporated.

Frank Muir, President/CEO, Idaho Potato Commission:

“That represented about 60 percent, 6-0, 60 percent

of of our potato business.

So all of a sudden those potatoes now have to find

a home somewhere, and we've done everything we

can at the Idaho Potato Commission to redirect

those into retail through various creative

programs.” When images of raw milk being dumped down

the drain and green beans being plowed under were

showing up on social media, those in the

food-insecurity community noticed.

Feeding Tampa Bay covers a 10-county area where more

than 4 million Floridians live.

Calls for assistance went from 600,000 to more than

900,000 as workers were furloughed or laid off in

the wake of the pandemic.

With an excess of produce in the pipeline and needs

at food banks surging, local food pantries

organized a way to change the direction of the

supply chain.

Thomas Mantz, President/CEO Feeding

Tampa Bay: “Organizations like ours, my peer group

in the state of Florida, the other food banks, we

tried to step into that as much as we can.

Sometimes that's a financial issue.

Can we raise the money necessary to do that?

Sometimes it's just a logistics issue.

Nobody wants to see food go into the ground.

No one, not a farmer, certainly not us as a food

relief organization, and certainly not a family

sitting at home who could have used it.” Regional

supermarket Publix bought a million pounds of

locally grown produce for food banks.

So did local producers who likely have already lost

$500 million in revenue.

The Florida Department of Agriculture threw its

resources behind the problem and created

another venue for the oversupply.

Nikki Fried, Commissioner of Agriculture - Florida:

“So what we were able to do is create our online

commodities marketplace.

We could have a new website web page on our

website that allows our agriculture industry to

upload all the commodities that they may have

available.

And then all of our local, whether it's consumers or

other food banks and go right on to the website,

see where that local produce is.

See where the farmers markets are there you

picks and it really is an opportunity to connect the

consumer directly to our ag producers.

It's been a tremendous Success.

But unfortunately that half a billion dollars

worth of losses is already going to be lost.” Going

to the grocery store can be an ordeal especially if

it's an hour away.

The balance between having enough people in town and

making a profit has spelled the end to more

than one local establishment.

But at least one town has found a way to put its

buying power behind solving the tough

equation.

Peter Tubbs has more.

In Gowrie, Iowa, the old grocery store is now the

new grocery store.

During a month-long transition, the town had

no grocery store at all, but the nearly 1,000

residents saw it coming.

Marcie Boerner, Gowrie Grocery Board Member: “So

at that point there was a group of us that kind of

got together and said, Oh, we see the writing on the

wall.” In January, the former owner was closing

several of his grocery stores that served small

towns in central Iowa.

Gowrie was on the list.

Community members asked if they could help.

Marcie Boerner, Gowrie Grocery Board: “Reached

out to him and said, would you be willing to sell it

if we could raise funds?”

In ten days, the citizens of Gowrie raised over a

quarter of a million dollars to buy the

building and everything inside.

Marcie Boerner, Gowrie Grocery Board Member: “And

so that's when we kinda got together and said, how

does this gonna work?

What does this look like?

Um, is it a private company?

LLC?

Is it a cooperative?

Is it a community nonprofit?”

Now named “The Market on Market”, the grocery has

over 100 owners who purchased a share of the

store for $2500.

Each share in the grocery is a bet on the long term

viability of Gowrie.

But opening in the middle of the COVID-19 pandemic,

the Market has seen the same customer shopping

habits that are stressing the supply chain.

The change is challenging the new manager.

Larry Roper spent the last 20 years as a produce

manager for grocery stores and box stores that are

now his competition.

Larry Roper, Store Manager: “Yes, a lot of

it's a demand, high demand items like, you know,

everybody knows the toilet paper thing, the paper

towel, the napkin, you know, those sort of

things, the cleaning, sanitizing chemicals that

are used for to keep your hands sanitized, all that

sort of stuff.

It's very, very slim and rare for the customer to

be able to buy off the shelf.” Some meat items

have been hard to stock, but customers are adapting

to what is available.

During the ownership transition, the store was

closed for a month-long cleaning and renovation, a

month that meant shopping for groceries in other

towns.

The return of local store was not lost on residents.

Marcie Boerner, Gowrie Grocery Board Member: “...

in retrospect, I think that was a good thing

because people really did understand what it meant

to lose the store and not have it here.

So I think there is a whole new appreciation for

having that right here to be able to, to go there

and find all of the things that they need and to have

those store shelves stocked full of the

supplies that we need.” The Market on Market is

now an LLC and the board members are looking to

make a profit.

The next step will be to expand the store size, and

return the deli to operation.

But the emphasis today is on customer service and

the revitalization of the 3,000 square feet of

grocery space.

Larry Roper, Store Manager: “And I've always

believed in, uh, the grand opening look in a store

every day, just the way I was trained in the past.

So when the customer comes in, they can say, wow.

And then at the end result, we want them to be

able to say, this is my store.

And that's our ultimate goal.” In a business

known for tight margins, volume is the key to

profits regardless of size.

Larry Roper, Store Manager: “We are more in

believe in a fast nickel is better than a slow

dime.” And nickel by nickel, Gowrie is keeping

its grocery options open.

For Market to Market, I'm Peter Tubbs.

Next, the Market to Market report.

Sales to China and predictions of bad weather

in the U.S.

moved the commodity markets slightly higher.

For the week, July wheat gained 6 cents and the

nearby corn contract improved a penny.

Pressure by the Trump Administration on China to

live up to the Phase 1 deal and threats of

freezing weather helped move the July soybean

contract higher by a cent.

July soybean meal weakened $1.70 per ton.

July cotton increased 43 cents per hundredweight.

Over in the dairy parlor, June Class III milk

futures rallied $1.53.

Another volatile week in the livestock sector.

June cattle jumped $7.40.

August feeders put on $9.30.

And the June lean hog contract declined $1.

In the currency markets, the U.S.

Dollar index declined 133 ticks, actually make that

71 ticks.

June crude skyrocketed higher by 27 percent or

$5.14 per barrel.

COMEX Gold gained $1.60 per ounce.

And the Goldman Sachs Commodity Index added 19

points to finish at 269.90.

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

regular market analysts Ted Seifried.

Ted, welcome back.

Seifried: Hey Paul, thanks for having me.

Yeager: Good to see you even though it is afar.

I know you'd like to be here and I know you'd like

to start moving around.

We'll talk about what life is like in Chicago in

Market Plus.

But I want to start today in the wheat market.

Weather was the story a week ago, weather might be

a story this week, corn and soybeans for what has

been planted.

But what is keeping the lid on any rallies here?

Is it the strong dollar or is it that nobody wants to

buy U.S.

wheat right now?

Seifried: Sort of all of the above.

But also look at the relative strength that

we've seen in wheat prices compared to the row crops.

Do we really need to see wheat that much higher

from where we are right now?

The weather story really at this point might almost

be more on the spring wheat because yes, we're

really far behind planting, with the cool

temperatures and the rain, everything we've got going

on up in the Dakotas, we're going to struggle to

see that spring wheat crop advance.

We could also see some damage on the winter wheat

crop as well.

So I think Monday is going to be an interesting day

for wheat.

Yes, we've got weather for all different kinds of

things going on and yeah, personally I think wheat

is at a very value area right now.

And if we look at Kansas City wheat trading at a

very tight range over the past week and a half I

think that is because we've kind of found an

area where everything kind of makes sense here.

We've seen a bit of a correction in the spread

between Kansas City and Chicago.

But in my mind Minneapolis is the one that has to

gain across the board.

Yeager: Real quick, are you making any sales or

are you holding right now on wheat?

Seifried: Chicago I think we can bounce back up

toward the higher end of the range before I get too

aggressive on making sales.

Kansas City I like selling here or slightly higher

around the $4.87 level or so.

Minneapolis I'm looking for higher prices.

I'd like to see a 15 to 20 cent bounce there.

Yeager: We talked about weather just a little bit.

We've got a whole bunch of corn in the ground.

It's moving at a ridiculously fast pace.

Perfect conditions for some, but yet east of you

they're still trying to get something in the

ground.

There's a mix going on right there.

What is the major player in this market because you

also have oil that rallied a bunch?

Seifried: Yeah, as far as planting is concerned we

are off to a really fast pace of planting.

However, it is more centered on the west side

of the Corn Belt than the east side, which might

actually be a good thing for this weekend where

we're looking for some very cold temperatures on

the eastern half of the Corn Belt.

So it actually kind of works out.

That being said, when we talk about fast paced

planting we have to talk about acreage.

Generally speaking when we see this fast paced

planting we usually get very close to the USDA's

planting intentions number.

97 million acres of corn, that's a lot of corn.

Honestly I don't think we're going to get 180.5

combined acres in the row crops, I just don't think

this is the right time to see that, especially with

I think the amount of PP acers that are going to

happen in the Dakotas and up north.

But you have to imagine that we're going to see a

lot of corn acres, maybe more than we need.

So that is a bit of a problem there.

As far as the biggest feature for the corn

market, wow, there's a lot of things going on.

We've got China buying, we've got coronavirus,

we've got just ethanol issues, across the board

there's a lot 5f different things.

But I think right now we've factored in a lot of

the negative news.

Generally speaking when we get between 40% and 60%

planted in corn, seasonally we start to see

a bit of a bounce.

You look at the board, the spreads are looking good,

the chart looks like a classic cup and saucer

formation which is a bullish feature for a

chart.

I think we're due for a bit of a bounce.

But with the USDA report coming up on Tuesday, it

could be a big bearish number.

Yeager: Hold that thought.

Hold that for just a moment because I want to

ask Mark in Nebraska's question that he submitted

to us via Twitter.

@MarketToMarket is how you can find us.

Mark is asking, how likely is it that USDA

will report even more corn acres when planting is

done?

Seifried: Yeah, great question Mark.

You're not the only one thinking that.

I don't think we're going to see that.

As I said, 180.5 combined row crop acres would be a

record number.

I don't think this is the climate for us to be

planting record acres for row crops.

I don't think wheat acres are going to decline any

more because relatively speaking the prices are

really good.

At one point I thought maybe our corn acres would

be as low as 93, 94.

But with the fast pace of planting that we've got

going on right now, I'm thinking more like 95, 96.

More than 97 I just don't see that.

Yes we're planting corn very fast, but I don't see

over 97 million acres.

Yeager: So say it does go above 97 million.

Is that a bullish signal then or is it a bearish

signal?

Seifried: It would be really bearish.

97 million acres of corn, look, you look at the

trade estimates for our carryover -- the USDA

report that we see on Tuesday is the first look

that we get at the USDA's WASDE balance sheet of

next year's production and carryover, everything like

that.

So the new crop balance sheet for the first time

we will see on Tuesday.

The average trade guess is for about a 3.4 billion

bushel carryover for corn.

That is at 97 million acres.

If you see that go higher than that we're going to

have to start adding more to that ending stock

number and it just becomes really burdensome at that

point.

So we really don't want more than 97 million acres

of corn unless we have a major weather catastrophe

this year.

Yeager: Let's talk about what it impacts on the

soybean market.

We have the thought that you talked about China

buying some U.S.

corn, is that pulling soybeans along?

Or what is playing here?

Seifried: This week we saw, towards the end of

the week, Thursday night into Friday we saw some

better indications that the trade deal might be

getting back on track.

We had our trade delegation talking to

their trade delegation late Thursday, night.

Apparently those talks went well, we don't really

know for sure, we didn't hear the details that

much.

But it sounds like China wants to fulfill that

Phase 1 trade deal.

And that means they've really got to get going

very soon.

So yes, the soybean market really wants to embrace

that, wants to believe that, but again we've got

a lot of doubters out there, we've had a lot of

doubters since that has been signed and for good

reason.

So we need to see the sales start to happen.

But if they do, yes, it could be very bullish

soybeans.

We don't have that big of a carryover going into

this marketing year, but if you look to next year

even if we do get the 83.5 million acres planted,

which I'm not so sure we will because of the fast

pace of corn planting, we could have a fairly tight

balance sheet for next year and if China starts

buying aggressively we could really have a story

in soybeans.

Yeager: And then we have to start looking at crush,

although there was a report this week about

that.

I've got to move on.

I've got to get to these livestock markets, Ted,

because cattle you've got processing that has

started back up, you saw earlier here in this

broadcast.

You have a jump for cattle of $7, that's 8.5%.

Does this thing have more upside to go?

Seifried: Yeah, in the longer term, yes.

In the short-term I'm not so sure.

We are getting facilities back online sort of slowly

and a lot of this is coming from comments that

have been made by Sonny Perdue and Trump echoing

the same comments that we're going to be up and

running in the next 7 to 10 days.

I don't know about that.

I think we will be up and running more so than what

we are right now, but with the distancing that we're

going to have to do there's going to be a lot

of changes that have to be made to these facilities

and that's going to take some time.

The profit margins that are being offered to

packers right now eventually will get us to

and maybe even above last year's production numbers

but it might take some time.

Now, that being said, cash is getting stronger like

you said.

I think the board will start to lead the way.

I wouldn't be surprised to see a bit of a pullback

after the three limit up days that we saw

Wednesday, Thursday, Friday.

Friday's close was disappointing to say the

least.

Could start off the week under a little bit of

pressure.

But over time I look at December cattle, I could

see us trading $120 and that is a long way up from

where we're at right now.

Yeager: And the feeder issue gets to be a

discussion of if you're holding them in the lot,

if August, it's kind of are you buying cash right

now or are you buying the futures when it comes to

feeders?

That's a tough decision.

Seifried: We're trading at discounts to cash.

I like the futures better.

I think futures have more potential because, again,

we don't trade todays, we trade futures.

And where do we see the potential for things to be

good again?

IT's in the future when we get further on into the

end of the summer into fall, it's not the

immediate term.

We know that demand is really good right now but

we can't satisfy that demand because we don't

have the processing capabilities at the

moment.

I like the futures.

Yeager: We had a little bit of movement in some

lots in Texas and Kansas, some activity in the

auctions there.

Are you hearing the same thing?

Seifried: Oh yeah, it's been all over the place

this week.

And a lot of producers are crying foul because of the

packer margins that we have and the huge, huge

volatility that we're seeing in the cash market.

But this is a function of the times that we're

having right now.

You can see mainstream media reporting on this

every day, that doesn't happen, we don't talk

about meat on a lot of these business news,

television, but this is what is being talked about

all day every day and it really depends on where

you're at, it really depends on what plants are

up and running on that specific day and

volatility is really off the charts.

So yeah, cash cattle is a very difficult thing to

get a good indication on because it's a day-to-day

thing.

Again, we trade futures, not todays, I think the

market itself, the board itself is going to give us

a better indication of what the optimism is and

what we think is going to happen and what price

direction it's going to go.

Yeager: All right.

Last few seconds, the hog market.

They could be the lowest processing speed in a

decade.

This had rallied going into the last couple of

days and now we've tabled off.

Where are we going, up or down?

Seifried: Well, it had gotten overbought and I

think we needed to pull back and I'm focusing on

December hogs and we pulled back to where

support was there on Friday, I think we find

that support and I think we bounce back.

Over time I think hogs are going higher.

Yeager: Okay.

Ted, we'll ask you about cotton.

We have a lot of questions.

And I think you've got some props there that

we're going to see.

So if that's not a tease to get you to watch Market

Plus, I don't know what is.

Seifried: Yeah, lots of props.

Yeager: Ted Seifried, thank you so much.

That does wrap up the broadcast portion of

Market to Market.

But there is still so much more to talk about.

We'll cover that in Market Plus where we'll answer

your questions.

You can find that segment on our website at

MarketToMarket.org.

Facebook allows you to keep track of your

favorites from rural America.

You'll find behind-the-scenes pictures

and a few stories on our feed.

We still have that great story of racing tractors,

the Audubon 250.

You've got to check that out.

Find us at MarketToMarketShow.

Join us again next week when we'll explore the

effects of the finding labor during this COVID-19

pandemic.

Thank you so very much for watching.

I'm Paul Yeager.

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.

♪♪

Accu-Steel, offering fabric covered

buildings specifically designed for the cattle

industry since 2001.

The next generation of cattle buildings.

Information at accusteel.com.