Market to Market - May 24, 2024

Coming up on Market to Market - a violent week of storms leaves a major trail of destruction. Congress moves into the markup stage of the Farm Bill. Trying to get a better handle on the stressors of agriculture. And commodity market analysis with Don Roose, next.

What's next doesn't happen by chance. It happens when researchers and farmers work together to solve tomorrow's agronomic challenges. We're committed to creating what's next because at Pioneer, our name is our mission.

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Family owned and operated for more than 60 years, Sukup Manufacturing is a full-service provider of grain handling, storage and drying equipment, helping farmers feed and fuel the world.

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For over 45 years, Steiner Tractor Parts has shared your love of antique tractors. New parts for old tractors. Learn more at steinertractor.com or at 877-559-7887.

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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.

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This is the Friday, May 24 edition of Market to Market, the Weekly Journal of Rural America.

Hello. I’m Paul Yeager. Another round of intense storms swept the country as millions prepared to venture out for the first unofficial weekend of summer. Thousands of others will be doing clean up duty after high winds, heavy rain and tornadoes touched down in the Heartland this week. David Miller recaps some of the hardest hit areas including at least five fatalities directly attributed to the storms.

This is an EF4 tornado. It was captured in real time by a member of the team headed up by extreme meteorologist and storm chaser Reed Timmer. The video shows the power of the system as it devastated this southwestern Iowa farm and surrounding countryside.

The twister continued along its route of destruction, moving through a series of wind turbines - shredding the blades and toppling the 245-foot towers.

One of the areas hardest hit by tornadoes was Greenfield, where a tornado touchdown killed four, injured 35 and destroyed a good portion of the small Iowa community.

Sgt. Alex Dinkla, Iowa State Patrol: "It is still a search mission as far as we're looking to make sure all residents are accounted for when we have this many homes that have been destroyed and, just fully demolished. We want to make sure that every resident, every person is accounted for."

Debris ranging from cars to furniture to parts of houses was strewn across the countryside. In the hours and days that followed, the citizens of Greenfield worked to recover their belongings, many of which had sentimental value.

It took more than a day to account for all the residents in the town of 2,000. A fifth person was killed nearby when the car they were driving was blown off the road.

Iowa Governor Kim Reynolds declared 31 of Iowa’s 99 counties disaster areas, allowing residents to apply for grants that can defer some of their recovery costs.

Through Tuesday, 859 tornadoes have been confirmed this year, 27 percent more than the average, according to NOAA’s Storm Prediction Center in Norman, Oklahoma. Iowa has recorded the most in 2024, with 81 confirmed twisters - 21 were part of the storm system that struck at the beginning of the week.

Flash flooding was a problem immediately following the storm. A few places in the Hawkeye State had water over the road stopping traffic well into the next few days. The high water could be seen in some farm fields where corn has already started to emerge.

The same storm system also pummeled parts of Illinois, Minnesota and Wisconsin, knocking out power to tens of thousands of customers. Severe weather also hit sections of Arkansas, damaging buildings and bringing down trees.

Colorado's Eastern Plains felt nature’s wrath as heavy rain, hail and flooding hit the region. Cars were trapped in floodwaters and windshields were smashed under the softball sized hail stones.

Rainfall amounts across the country have ranged anywhere from half an inch in the Northwest to deluges that put seven inches of precipitation on portions of the nation’s midsection.

A smaller amount of the country remains in some form of drought this week. According to the Drought Mitigation Center, the total percentage of drought across the nation is at its lowest since 2020. The recent rains helped pull the Midwest further out of drought and helped reduce long term soil precipitation deficits.

For Market to Market, I’m David Miller.

The amount of ‘for sale’ signs posted in April hit a two and a half month high - but that wasn’t enough to help the sector as a whole. Existing home sales dropped by 1.9 percent in April adding a second month of fewer properties sold. Mortgage rates and listing prices also were up - weighing on the market. New home sales also moved lower - by 4.7 percent - and were plagued by the same factors as the existing market. Durable Goods orders added a third month of gains by moving the marker 0.7 percent higher. Most of the rise for long-lasting items came from the defense sector. Shortly after the clock ushered in Friday morning, the House Agriculture Committee moved their version of the Farm Bill forward. Thursday’s session highlighted the challenges ahead for the $1.5 trillion dollar plan. Peter Tubbs reports.

This week, the House Agriculture Committee began the markup process of the 2024 Farm Bill. The markup process is the final step before a bill is presented to the House or Senate for debate.

Rep. Tracey Mann, R - Kansas: “The Farm Food and Security Act does that. It strengthens the farm safety net and protects crop insurance. It adjusts reference prices and it modernizes the livestock indemnity program. Dairy supports in the Conservation Reserve program. I've long said that America is the freest country in the world, in part because we've never had to rely on another country for our food supply.”

Rep. Abigail Spanberger, D - Virginia: “This bill puts new limits on enrollment into these programs, despite the fact that in the Commonwealth of Virginia, 51% of the applications submitted by Virginians for Conservation and technical assistance programs created by the Inflation Reduction Act were rejected due to insufficient federal funds, and only 39% of Virginia's applications to equip in KSP were successful in 2023. We know that these vital conservation programs are already oversubscribed and underfunded.”

Rep. Ronny Jackson, R - Texas: “The number one issue I hear from our producers in my district when I'm at home is the need to increase reference prices in 2 to 1. This bill does that. The current reference prices were set in 2014 using production agriculture data that was finalized in 2012. U.S. farm income is projected to drop 23% this year due to falling commodity prices worldwide. Yet the cost of production are expected to finish at the third highest level in history due to the Biden administration's failed economic policies and record inflation. The agriculture sector is vastly different, is a vastly different industry today than it was in 2012.”

The current language of the House Farm Bill limits the growth of the Supplemental Nutrition Assistance Program, known as SNAP, to a cost-of-living adjustment in each of the next five years. The Secretary of Agriculture would no longer be able to adjust SNAP eligibility or benefit schedule in response to economic conditions.

Rep. Andrea Salinas, D - Oregon: “Frankly, I was shocked to learn that Chairman Thompson's proposal would effectively cut SNAP by $30 billion. Using SNAP as a pay for was never on the table for me or any of my Democratic colleagues, and the majority has known this since the start of this process. Yet they still chose to push forward. You cannot simultaneously claim that the $80 billion cut is just a budget gimmick and simultaneously use it as a pay for. This proposal takes away up to two days of food per month from hungry veterans, children and seniors.”

Rep. John Rose, R - Tennessee: “Now, I would also like to take a moment. Thank you, Mr. Chairman, to dispel any rumor that this legislation cuts benefits to those in need saving and cutting are not the same By reining in executive overreach and preventing future circumvention. The 27 billion in nutrition savings is reinvest it into the farm bill. These savings originate from establishing guardrails on the Thrifty Food Plan and ensuring any future administration cannot abuse their authority by increasing or decreasing benefits unless cost neutral.”

The proceeding was briefly interrupted by a protest of the poultry industry.

For Market to Market, I’m Peter Tubbs.

May is Mental Health Awareness Month. The moments of stress that those in agriculture face can be intense. Right now, there is a lot of effort going into pinpointing the most vulnerable as well as what can be done to provide resources and assistance for those who need help. Josie Rudolphi is an assistant professor at the University of Illinois and is still involved with her family’s farm in Iowa. Her perspective on physical health and mental health was captured in a recent MtoM podcast.

Josie Rudolphi: So since about 2017, I've really been focused in the farm stress and mental health space. There's been a lot of conversations around the experience that farmers have the sort of very unique stressors that they experience. And unfortunately, the really high rates of suicide and increased prevalence of things like anxiety and depression in our population.

[Yeager] Does it correlate with the general population?

[Rudolphi] What we see, the research is a, there's some caveats. We don't have perfect research, like we'd love to have a sample that includes farm and nonfarm. But oftentimes we sample farm and we have to make relatively general comparisons to the general population. But what we see is we do surveys of farmers in the Midwest, and that's where I focus a lot of my work. We see farmers experience, in our sample, we might see like 70, or even, like 75% meet the criteria for depression. Whereas in the general population, we might see closer to 20-22%. So, we're seeing a much higher or more prevalent situations of depression in the farm community.”

“988” is the three-digit, nationwide phone number to connect directly to the Suicide and Crisis Lifeline. Call or refer someone you know to be connected with mental health professionals any time of day or night.

Next, the Market to Market report.

Global weather pushed wheat to nine-month highs while corn earned a repeat and a new customer in the sales department. For the week, the nearby wheat contract jumped 46 cents and the July corn contract improved 12 cents. The speculation on the size of Brazilian crop played out in the soy complex. The July soybean contract added 20 cents while July meal strengthened $17.70 per ton. July cotton expanded by $4.63 per hundredweight. Over in the dairy parlor, June Class Three milk futures declined $1.54. The livestock market was mixed. June cattle gained $2.65. August feeders put on 38 cents. And the June lean hog contract cut $2.22. In the currency markets, the US dollar index added 26 ticks. July crude oil lost $1.66 per barrel. COMEX gold shed $81.90 per ounce. And the Goldman Sachs Commodity Index was off almost five points, to settle at 580.95.

Yeager: Joining us now is regular Market Analyst Don Roose. Hi, Don.

Roose: Great to be back, Paul.

Yeager: Especially when you have all that green on the board.

Roose: Exactly, it was a good week.

Yeager: Let's start with wheat. This is a rally that has been going for two, three, maybe even four weeks if you look deep enough in the signals. We still got some more steam in that engine?

Roose: Well, you know, you're right. The leader was the wheat market, but the real leader was the oats market even before that. But back to the wheat market is we put an awful lot of risk premium back into the market. One problem after another. Of course, our largest wheat exporter, producer, Russia, had problems. Eastern Ukraine is dry. We had the freeze damage in Russia. We just had a lot of things that put the premium in the market. But the other side of it right now, Paul, is you're going to start, next week you'll start wheat harvest down south, Texas, and it will be north, you'll probably be into Kansas I would say the first week of June. So, you've got the other side of the coin coming at you at these prices that are overbought and stretched out a bit.

Yeager: Overbought, so I guess I'll ask my other question then. Are we at that point where there's no more buying to be had and $7 is nice but it's in the rear view?

Roose: Well, I think when you look at it, the funds on all these grains got caught short, too confident being negative the market, and then the weather changed, the great equalizer. So, I think where we're really at is now that you've got harvest square in front of us we're still uncertain how much of this bull news is dialed in. So, for producers we're seeing a lot of catch up risk management going on going into the harvest, Paul.

Yeager: Mexico is buying U.S. corn. Spain buying some corn. That's the new one in the market. But does that even matter? Or is corn just going along with wheat's pull?

Roose: No, I think corn is very much like the wheat market, it got caught short. And so, it is balancing back up after the key reversal that we had February 26th at $4.22 and a quarter on July. But you talk about Mexico, Mexico is in a dry drought condition and they have jumped to our largest corn client right now. And the balance table on corn from an export standpoint has improved greatly and it does, we have other issues around the world. So, it puts earnest on what is going to happen with the weather in July and August, Paul.

Yeager: We'll get to the weather in a minute because I have a couple of new crop questions. I want to go back to the old for a moment. Are you in a position to say tonight, this thing is, it's time to sell? Because there's plenty of people who do what you do are saying this is a great opportunity. Is it?

Roose: Well, let's look at it. One, you've added some risk premium to the market. The producer is still sitting with a lot of stocks. We're coming into a three-day weekend. It probably doesn't get enough press as it should. We talk about the 4th of July. But if you look over history it's a dangerous time coming into Tuesday, historically 70% of the time the wheat market has gone down 60% corn and soybeans. But how big? The corn market last year down 10 cents, the year before it was down 24 cents, beans were down almost 40 cents last year and the year before almost 50. So, it's one of these that I think you're going to look at what the weather did over the three-day weekend, particularly in Russia. But you reach a point where you dial in these problems and we have a lot of problems in some of these wet areas, Paul.

Yeager: The new crop folks who are planting right now, there were good adjustments made forward, good progress I should say. Then it just rained and rained. There's those who are getting rain and those who are not. If you're one of those getting the rain right now looking at gosh, May 31 is approaching rather quickly. Am I going to still think I can pull off a corn crop this year?

Roose: Well, I think where we're at is there's just been these spotty rains and I think what happened is these little windows opened up. So, at one time we thought maybe a million, million and a half acres of corn wouldn't get planted. But I think a lot of people just decided to go these little windows. Last week the Eastern Corn Belt planted pretty aggressively. The Northern Plains planted aggressively and Nebraska. But it's some of these emergence problems, how this crop is, the shallow roots, just some issues I think going forward for the summer, Paul.

Yeager: It's still raining in South America too and that is giving us a sense that maybe that Brazilian crop might not be as big as we thought.

Roose: Well, there's still that big disconnect between the Brazil agency that gives the reporting, CONAB and our USDA, just huge differences. They're like 240 million bushels on the soybeans and 400 million on corn, so big differences and then on top of that, you're right, southern Brazil, Rio Grande do Sul last 5% of the harvest wet, problems with it, but it looks like that is going to dry out. But maybe it dries out the wrong time, damage done.

Yeager: Does that give me pause if I have old crop beans at home to maybe hold and just see what unfolds down there?

Roose: Well, I think what we've seen the producer do in a lot of areas, Paul, right now is they know they have cash to move, but with all these weather issues that turn the tables I think there's more people, particularly if you're in a problem area, just kind of on hold. We know that seasonally this is the timeframe where you should be picking up the pace on marketing, but then the emotion from the weather really changes that attitude.

Yeager: And it also is the emotion of what comes in via social media. Let's go to Adam in Michigan if we could here. He's asking, will grain exports be the determining factor in driving price of soybeans and corn for new crop '24? Or will weather be the story of the growing season?

Roose: Well, my experience since I've been at this is the weather is the dominant issue and then the one that can kind of make a little bit of a difference is the export pace. And he's right, the exports are picking up on corn. If you look at it, Brazil corn doesn't come into play until more into the middle of the summer, although along that line we've got wheat harvest coming at us and early Brazil corn harvest coming at us. But exports are picking up, but I think it's still all about weather, Paul.

Yeager: Give me a little advice here on the new crop with my November contract. Are you in a position tonight to advise us one way or the other what we should be looking at for signals?

Roose: Well, what we have producers looking at is there is a gap area on November soybeans up around $12.44 and a half. So, we're off of that not that far. But that is probably the area that we're seeing people want to get more aggressive. But at these price levels, Paul, you have to respect the time of the year. When we go forward, these aren't maybe the prices you want, but they're the prices that you have at a timeframe when you should be looking seriously at marketing because when you go forward, we're going to soon start to talk about rain makes grain. We flip it fast. Some people tell me it also makes mud. And it's a dud when you plant in the mud. And I know. But the crop ratings are square ahead of us and they're going to be lofty when they come out in June, I think.

Yeager: Cattle on feed came out, we'll get to that in a moment. Let's go to live cattle first before we get to cattle. What in the cattle market is giving you a sense that we have room to grow? Roose: Well, I think the thing if you look at the time of the year, we're at, this is the time of year that we have our best demand timeframe, it's the time where you catch up where the market can stall out and drop. If you put it into a historical perspective anyway, from the spring high to the summer low, you usually drop about 10%. If you put those into numbers, you're saying that there's probably an $18, $19 drop on the cash going forward into the gut slot of summer. We'll see.

Yeager: Cash has been that story in livestock way more than the futures have lately. Do you see that trend continuing?

Roose: Well, the cattle numbers aren't going to be there going forward. We just don't have the feeder cattle. But short-term it's more about the demand. You get back these peak timeframes. So, I think the seasonalities are going to come into play and probably at some levels where we're seeing people pick up risk management here, Paul.

Yeager: Cattle on feed came out shortly before we recorded today. On feed April 1 at 102%, placed was at 94 and then marketed 110, the disappearing 110. What number stood out to you?

Roose: Well, that 110 is a little bit deceptive because you had two more marketing days. So actually, if you calculate it out, you're probably about one percent behind on marketing versus a year ago. But I think the thing that really stands out is three-day weekend, it's going to be more about what the clearance is. The report was pretty much neutral. It's too historical I think, Paul, to make a difference. So, I think it's going to be the clearance and can the cash move higher next week or not.

Yeager: Feeder wise inventory, that is the number that always gets talked about and seems to be the easiest one to track. Are you getting any sense that inventory is growing in feedlots?

Roose: Well, I think if you look at it, the feeder cattle outside of feedlots is down about 400,000 versus a year ago. And by the way, the government, we're not going to get the semi-annual cattle inventory report from a budget standpoint. But are the number growing in the feedlot? I think that we have plenty of cattle for the summer. But they're going to get really tight as we go forward into the fourth quarter and actually going forward from there, Paul.

Yeager: Hog market, again, it can't seem to get its head above water. Another couple of dollar loss. Is that a trend? Or are we stuck still falling down?

Roose: Well, it's just the opposite in the cattle. Usually if you calculate from the winter low to the summer high, we should put up somewhere around $103, $105 on the hogs. The big problem with the hogs is that the slaughter numbers just don't come down. We have a lot of liquidation. I think what happened is the liquidation, we liquidated the poorer sows and so you're left with more efficient. So, efficiencies are making up for it. Slaughter numbers still too big. But the demand and the summer seasonals should still kick in, Paul.

Yeager: Real quick, 30 seconds, curve ball coming here at the end. Cotton. It finally broke the 20-day moving average. I think today it opened four sessions in a row it had gone higher. Any trend there that you like?

Roose: Well, I think the big thing with the cotton market is what's going to happen with the Chinese market? And then what happens from an import standpoint? What happens at the retail level from the consumer buying? We've had a big drop down. We're kind of at support. It actually kind of looks like the soybean market, you're just kind of sitting here waiting to see what the next move is, what the next catalyst is.

Yeager: What is the next move in oil?

Roose: In crude oil?

Yeager: Crude oil.

Roose: Well, I think the crude oil, if you look at it down at these levels, it's down at support here also. And we should have some driving that increases the demand.

Yeager: Holiday thing again. Happy holiday weekend to you as well, Don. Good to see you.

Roose: And the same to you. Thank you, Paul.

Yeager: Don Roose. We are going to pause the Analysis that we just were doing and continue our discussion about these markets in our Market Plus segment. You can find both Analysis and Plus on our website of markettomarket.org. We still keep the email machine on and ready for you in case you've ditched the social networks and you still want to reach us. Fill our inbox with more than just press releases. Drop us a line anytime at markettomarket@iowapbs.org. Next week, connecting the dots on HPAI in the dairy parlor. Thank you so much for watching. Have a great week.

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Market to Market is a production of Iowa PBS which is solely responsible for its content.

What's next doesn't happen by chance. It happens when researchers and farmers work together to solve tomorrow's agronomic challenges. We're committed to creating what's next because at Pioneer, our name is our mission.

(music)

Family owned and operated for more than 60 years, Sukup Manufacturing is a full-service provider of grain handling, storage and drying equipment, helping farmers feed and fuel the world.

(music)

For over 45 years, Steiner Tractor Parts has shared your love of antique tractors. New parts for old tractors. Learn more at steinertractor.com or at 877-559-7887.

(music)

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.

(music)

Trading in futures and options involves substantial risk. No warranty is given or implied by Iowa PBS or the analysts who appear on Market to Market. Past performance is not necessarily indicative of future results.