Market to Market - November 15, 2024

Coming up on Market to Market - Representatives from 195 countries meet to fight climate change. The competition for bragging rights in the world of the giant pumpkin. And commodity market analysis with analyst Shawn Hackett, 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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This is the Friday, November 15, 2024 edition of Market to Market, the Weekly Journal of Rural America.

Hello. I’m Paul Yeager.

Inflation was the talk of the election and remains a constant in our reporting on the economy.

Retail sales were up 0.4 percent this month on higher auto sales. Some of the gain was on higher prices, but mostly on increased purchases.

The monthly look at the Consumer Price Index saw an increase of 0.2 percent.

The year-over-year perspective put an additional 2.6 percent on the costs of goods and services - the lowest since February of 2021.

The Producer Price Index - the cost to cover goods before they reach consumers - added 0.2 percent in October putting the yearly view up 2.4 percent.

Inflation is indeed a global issue and so is the climate. 

Record temperatures in 2024 are setting this year up to be one of the hottest on record. Climate scientists believe this is due to increased levels of carbon dioxide in the atmosphere trapping heat. The Paris Climate Agreement is one way that the nations of the world are working to reduce CO2 levels. President-elect Trump has stated he will withdraw from the Paris Climate Agreement once he is in office. Despite incumbent parties around the world suffering electoral defeats, delegates from 195 countries met for this year’s global climate talks, also known at COP29, in Azerbaijan this week.

 Peter Tubbs has our report.

The United Nations annual climate conference was held this week, with countries noting their progress in reducing the carbon emissions released by human activity that are believed to be amplifying climate change.

John Podesta, U.S. Climate envoy:  "That's why President Biden and Vice President Harris have marshaled unprecedented climate resources over the past four years because of historic private sector investments made possible by the Inflation Reduction Act. The United States economy will continue down the path of decarbonization, reducing emissions for years to come, and we are on track to meet President Biden's ambitious international public finance commitment of $11 billion per year by the end of 2024."

But some participants complained that their nations were bearing the brunt of climate change accelerated by wealthier economies. Others charged that more can be done to bring green technologies to developing economies.

Sec. Musalia Mudavadi, Prime Cabinet Secretary, Kenya: "The world is setting new records in renewable energy deployment, leaving Africa behind. Our continent accounted for just 0.5% last year. So, if we are to translate our ambition, commitment and vision to impact on the ground, we must look for innovative solutions that can help drive new capital into green industries, create jobs for our youth and strengthen Africa's infrastructure for the next level of growth."

Scientists who track carbon emissions reported this week that the world population is on track to put more carbon into the atmosphere than last year, but the rate of increase has slowed compared to 2023.

The world’s carbon emissions are double the amount measured in 1974, and 50 percent higher than 1999. Carbon emissions from the United States have declined over the last decade, driven by reductions in the use of coal.

Negotiators are wrestling over multiple options that nations can pledge to meet over the coming years, but any agreement that is reached is non-binding and holds no enforcement mechanism.

For Market to Market, I’m Peter Tubbs

Steve VanGrunsven of Forest Grove, Oregon won the National Wheat Yield Contest with an average yield of 170.63 bushels per acre for the winter wheat dryland category.

The National Corn Growers contest winner was Kevin Kalb of Indiana with a yield of 425 bushels per acre in the 2023 contest.

A watermelon topping 246 pounds was grown in Virginia this year.

Getting larger harvests takes genetics, patience and some luck.

But growing a pumpkin to nearly 3,000 pounds makes even Charlie Brown say good grief.

Here’s Josh Buettner with our Cover Story.

Cameron Palmer/Emcee – Half Moon Bay World Championship Pumpkin Weigh-Off: “Alright, are you guys ready?  Travis Gienger, of Minnesota, here you go! What do we got? Two-four-seven-one!”

After another cross-country haul, the current giant pumpkin world record holder fell short of his 2,749-pound feat from 2023, but still managed to top the scales again at the annual Half Moon Bay, California World Championship Pumpkin Weigh-Off.  It’s a meticulous feat he’s achieved 4 of the past 5 years competing with mostly west coast growers.

Travis Gienger/Anoka, Minnesota/1st Place - 2,471 Lbs: “I’m using a lot of biologicals.  Mycorrhiza, bacillus blends, when I’m burying these vines – and a special blend of potting soil…and then the roots just scream out the side.”

Often referred to as the Superbowl of giant pumpkins…

Cameron Palmer/Emcee – Half Moon Bay World Championship Pumpkin Weigh-Off: “He’s going to get a check for 22-thousand…”

…Half Moon Bay touts big prize money.

Cameron Palmer/Emcee – Half Moon Bay World Championship Pumpkin Weigh-Off: “Come on up!”

Nine dollars per pound for 1st place, and up to 30-thousand dollars for setting a new world record.

Travis Gienger might have a NASCAR look - decked out with logos from companies that sponsor his journeys - but no one grows as a full-time job.  So, what is the driver?

Brandon Dawson/Sonoma County, California/2nd Place - 2,4765 Lbs: “You’re not going into it thinking, hey I’m going to make a profit or something like that, but if you do, that’s a bonus, right?  It’s really for the camaraderie of the community of growers.  Everybody shares the secrets and shares the growing tips and shares seeds.”

Leonardo Urena/Napa, California/3rd Place - 2,390 Lbs: “Trading seeds is important and we always prepare for…to invite new growers.  It’s like me, you know… We always carry them and just hand them out.”

Decades ago, in Mexico, University of Michigan archaeologists unearthed the earliest known proof of western agriculture – pumpkin-related squash seeds.

When Christopher Columbus arrived, they were a common indigenous crop, with several varieties native to the Americas. Shipping them all back to Europe resulted in various cultural connotations – and larger tropical and subtropical specimens began to realize further potential when unleashed in northern soils.

But it was William Warnock, of Goderich, Ontario, Canada, who kicked the door wide open – growing World’s Fair world records in 1893 and 1900.  Long before the gateway arch graced the city’s skyline, lighting struck a third time, as Warnock notched his final world record in St. Louis

Adam Kloppe/Public Historian – Missouri Historical Society: “This is an exhibit that explores the history of the 1904 World’s Fair.  It’s one of the largest events in St. Louis’ history.  Over 19 million people came to St. Louis to visit the World’s Fair and to see people, products and ideas from all over the world.”

Missouri Public Historian Adam Kloppe says Warnock’s crowd-pleasing 403-pound mammoth squash, or giant pumpkin, was a record that held for over 70 years.

Adam Kloppe/Public Historian – Missouri Historical Society: “After the fair, it was bought by the Rennie Seed Company, of Toronto, for $10, and then they sold the seeds for 25 cents under the name ‘Goderich Giant’.”

Though Pennsylvanian Bob Ford grew a 451-pounder in 1976, it was another Canadian, Howard Dill of Windsor, Ontario, who broke the dam for the modern era. 

Dill’s father had given Goderich Giant seeds a whirl, and passed the torch to Howard.  After logging 459 and 493 ½ pound world records in 1980 and ’81, respectively, Howard patented his selectively bred “Dill’s Atlantic Giants”- the genetic basis for all world record giant pumpkins today.

Howard Dill/Windsor, Nova Scotia - Canada: “You never know who’s out there that’s going to come up big. And with the seeds, there’s no limit to what the potential of these things may grow to.  If somebody has a little bit of luck and a good growing season…who’s to know?” 

Growers jumped on the bandwagon, associations formed, and standards were drawn up to coordinate Columbus Day weigh-offs at sites in the U.S., U.K. and Canada. 

Tom Norlin/Founder – Ryan Norlin Giant Pumpkin Weigh-Off/Hopkinton, Iowa: “Howard was a really nice fella.  He would always take the time to talk to you.  I know he was a busy man.  He told me once – everybody was constantly reaching out to him.  The phone never quit ringing.”

Infighting gave birth to a new standard-bearer, The Great Pumpkin Commonwealth, or GPC.  Anamosa, Iowa’s memorial Ryan Norlin Weigh-Off, named in honor of co-founder Tom Norlin’s nephew and helper, was one of the early sanctioned sites.

Tom Norlin/Founder – Ryan Norlin Giant Pumpkin Weigh-Off/Hopkinton, Iowa: “We were always told that we were probably not going to be able to grow as large of pumpkins as they were growing in southern Canada, New England, Minnesota…but that has proved really not to be the case.”

Norlin has since stepped aside, but his brother Greg and family have continued to build and honor their son Ryan’s memory.

Pete Caspers/Treasurer & USA Central Region Representative – The Great Pumpkin Commonwealth/Pesota, Iowa: “This is one of the original 4 sites.  I mean, winning Anamosa, that’s like…top-notch right there.”

Sanctioned sites, grower methods and plant genetics have grown exponentially since the 1980’s.  World records have been broken almost 30 times. 

Don Young/2009 Half Moon Bay Winner – 1,658 Lbs./Des Moines, Iowa: “This is all just witchcraft anyway, but…There’s a little bit of vibration here, but it’s going to weigh more than it estimates.”

Iowan and GPC Hall of Famer Don Young, who fell short of an official 2007 world record by just 27 pounds, says he was the first Midwesterner crazy enough to venture out and win Half Moon Bay.  That 2009 milestone was a calculation based in-part around the kind of bluffing and misdirection some growers are known for.

Pete Caspers/Treasurer & USA Central Region Representative – The Great Pumpkin Commonwealth/Peosta, Iowa: “It’s chess.”

On Young’s heels, Pete Caspers holds Iowa’s state record: 2,424 pounds.  He regularly captures top spots at regional weigh-offs - which promote unique festivities and help boost local economies.

Pete Caspers/Treasurer & USA Central Region Representative – The Great Pumpkin Commonwealth/Peosta, Iowa: “Don Young, he was Mr. Iowa.  Then before Don Young it was Bob Ruff, from Garnavillo, Iowa.  I mean they’re both in books, and it’s like…It’s kind of my turn, I think.”

As Caspers claws his way up the food chain, Half Moon Bay is on his bucket list.  Database technology may have made simultaneous, same day, worldwide weigh-offs go by the wayside, but the prestige remains.

Reporter: “So what now? What’s the giant pumpkin equivalent of ‘I’m going to Disneyland’?”

Travis Gienger/Anoka, Minnesota/1st Place - 2,471 Lbs: “Yeah, this IS the giant pumpkin of I’m going to Disneyland.”

For Market to Market, I’m Josh Buettner.

Next, the Market to Market report.

A one year high in the dollar provided stiff resistance to commodities. For the week, the nearby wheat contract lost 36 cents and the December corn contract fell 7 cents. The soy complex fell through a major support level Thursday on news forecasting a record-large 2025 South American crop. The January soybean contract declined 32 cents while December meal tumbled $6.60 per ton. December cotton shrank $4.16 per hundredweight. Over in the dairy parlor, December Class Three milk futures fell 28 cents. The livestock market was mixed. December cattle decreased 75 cents. January feeders put on $5.80. And the December lean hog contract shed 93 cents. In the currency markets, the US dollar index improved 155 ticks. December crude oil lost $3.06 per barrel. COMEX gold decreased $121.40 per ounce. And the Goldman Sachs Commodity Index cut more than 18 points to settle at 530.80.

[Yeager] Joining us now is one of our regular market analysts, Shawn Hackett. Hi, Shawn.

[Hackett] Hey, Paul. How are you? I was here last time in August, things were crashing. I'm back here, things are crashing.

[Yeager] We need an optimist to get us through some of these days. Do you have any optimism in the wheat market because the market did you no favors this week, or anyone really?

[Hackett] Well, I kind of feel that we're putting the cart before the horse. Every time in my experience that we have traded a future defined clarity event like a Trump victory and an end to geopolitical risks and a strong dollar and we crushed the market, we price in that negativity very, very quickly and we usually overprice it. What I see longer term, however, is a very, very poor Russia crop. Their exports are clearly starting to pull back. Their ending stocks are down 10 million metric tons from last year at the same time. They're destocking. And the current crop that is just going to dormancy is looking like it's going to be another small one for next harvest, which means they're going to be out of the export market the way they've been. That is a major change in the wheat plumbing that I'm optimistic ultimately brings prices back up from where we're currently at.

[Yeager] Are you anticipating that Russia then is going to hold onto more of its crop just to handle its own people and not put that cheap product on the market because they don't have the excess to put on is what you're saying? Okay, so let's also then talk about the dollar. You mentioned, before we started taping, I said something about the dollar being stronger, I just mentioned it right there. What is that doing to wheat? Is that being impacted the most?

[Hackett] Wheat is the most impacted grain market to the dollar because it is grown so many places in the world. If you look at when the wheat market topped it was exactly when the dollar bottomed and started to surge. So, when you have a parabolic rising dollar, it's disproportionately bringing selling into the wheat market, another short-term effect of the Trump election and what people think it means to raise tariffs where the capital comes flowing back in. It's an overreaction. But what's interesting is the last time Trump was President, the dollar topped out in December after his election. And I think we could be looking at a repeat of that strong dollar and then rolling back over and that's another reason to be more optimistic on wheat prices in the U.S. going forward.

[Yeager] How optimistic are you on wheat prices then?

[Hackett] Well, when I look at what happened last spring and we went up north of $7 a bushel and I look at what I think is going to happen with the Russia wheat crop coming out of dormancy, with frost risks majorly on the table again for a second year in a row and I look at the much tighter fundamental global situation, I don't see any reason why we couldn't get speculators excited again this coming spring to provide a similar type of move higher. That would not be out of the realm of reasonability here.

[Yeager] So, if I'm someone who needs to buy wheat, now is my chance?

[Hackett] Absolutely. If you think what we did, we went right down and tested the August lows and today we bounced. I think for physical buyers of wheat this is an opportunity to gain coverage, get yourself clean. I think it's one of the best opportunities you're going to get for a while.

[Yeager] In corn, how is it that that has been immune from a lot of the soybean and wheat weakness this week?

[Hackett] Well, we don't have a weather situation in corn that has been affecting soybeans because we've gotten some rains where it counts and wheat has gotten some rains where it counts. Corn is a traditional demand-driven market. The cash basis has been surging the last two to three weeks domestically. The spreads have been, they have been bullish spreading the nearbys against the deferreds. All of this showing that just too much demand, not enough selling at these prices for corn and that is why it has been the strongest, most impervious market to going down during this panic cycle post-election.

[Yeager] We just showed the crop, or the price on Friday, which kind of sets up this question from Luke in Iowa who texted it to me. If you can make $4.25 December futures, can we expect good upward trends? Am I crazy to hope for some $4.50 sales before the end of the year?

[Hackett] I don't think it's crazy. It's not a lot of time and it's always hard to predict those things on a short-term basis. But what I would say is this, we went from having a 2.3-billion-bushel carryout expecting it to be higher when we first started to figure out what we thought crop production and potential would be, and now we went down to 1.9 billion and change. We think we're coming down to 1.718 billion and change based on stronger demand and supplies coming down. When I look at that ending stocks with the risks going forward, a $4.50 market is not unthinkable at the end of the year for a farmer to sell.

[Yeager] And really corn has been insulated from a lot of this and they have more of a bullish outlook. So, are you more bullish wheat or corn in the next six months?

[Hackett] At this price level --

[Yeager] As we sit here tonight --

[Hackett] At this price level, I'd have to sway that I'm a little more constructive on wheat, not because I think the fundamentals are better there, I just think the price is more out of whack of what I think fair value is.

[Yeager] In soybeans, that has been -- you get this report from South America, a big crop, then there's the discussion of no more rain for us -- but then all this pasture land is going to be turned. It's a whole lot more acreage coming onto the play, onto the field in play. What does the American farmer do now with this harvest behind us with that news in South America?

[Hackett] Well, first of all, it's a projection. We don't know what the production is going to be at. The most critical point for weather in South America is right now into the early part of January at least for Brazil to determine what crop yield is going to be. Our work says we're going to get a significant drying out and we'll have to see if those projections start coming back down. But more importantly, while everyone has been negative about Trump tariff policy going forward, one beneficiary could be soybean oil. And the reason for that is that a lot of imported soybean oil has competed for bean oil to make renewable diesel. It would seem reasonable we may be able to not see those supplies come in and anything we lose from outside vendors we have to then buy more bean oil and increase the bean crush. And we've been seeing the oil and meal spread blowing out, meaning covering in the oil and selling in the meal.

[Yeager] But didn't we have a pretty weak week in soy oil? That was a big driver in the low price for the majority of the week.

[Hackett] I would say there's a lot of factors. From the low we've had a big surge. But crashing crude oil here this week has started to impact the psychology of the bean oil market because there's other factors that go in. Longer term, however, I think this bean oil story is one that if we're looking at a way for the soy market to override and maybe run through some of these bearish overhead supplies, getting that going again could be a significant help to getting that fundamental situation better.

[Yeager] Do you feel that $10 is still that both psychological and technical dance that we're going to have for a while?

[Hackett] I think the November contract came down near $9.50 if I'm correct at harvest lows. If I look at the March contract, we came right down to those harvest lows in August and now we've bounced. If you think about it, all this bearishness as you just mentioned, and we couldn't break the August lows. That sounds like technically the market is acting more bullish than the outward fundamentals would suggest.

[Yeager] Don't look now, there's optimism in soybeans. Is that what I just think I heard you say?

[Hackett] I think there is optimism in soybeans, I really do. I don't think that we're going to be taking out those harvest lows in August any time soon.

[Yeager] Any optimism for cotton?

[Hackett] Cotton is a little bit of a tougher story because we sell so much to the Chinese and so much of the demand for cotton is relative to synthetic fiber, which is crude oil based. When crude oil falls, we lose the competition to synthetic fiber. Having said that, China has decided to print and spend as much money so the Chinese consumer can start buying things again and getting their economy going and getting their stock market going. I believe ultimately that is going to be successful and that is going to bring buyers back into the U.S. cotton market from China. So, I'm optimistic. Once again, we have not broken the harvest lows in August and I don't think we are going to do that. I think we're going to dig our heels in here and find some demand.

[Yeager] That's not going to mess with global inflation if they put more currency in the market?

[Hackett] Well, China is worried about China. They have a deflation problem in China itself so they're trying to reflate a deflating economy there and they should be successful at doing that for a little while and commodities react to those kinds of things in China and we really need that to get a little tail wind here for commodity inflation.

[Yeager] We had finally in live cattle, it looked like the chart keeps, the retracement is trying to not fall. Do you see a sideways dance here for a while? Or is this thing now the way the chart finally looked at Friday? We are headed down.

[Hackett] We're still in these triangular formations in both feeders and live cattle going back to last fall. One big thing that my contacts are starting to tell me and that JBS just announced in their recent report this week, herd rebuilding is starting to show up from them and from my contacts, one thing that has been a missing ingredient to suggesting we're at a final high. If that is in fact the case, and some of these rains that came into the Midwest helped, that to me says we might actually see one more price surge before it's all over.

[Yeager] So, then why did feeders rally in the face of that news unless that just came out after the trade on Friday?

[Hackett] This news from JBS came out last night. I'm not sure how many people listen to JBS. I certainly do because they would know more about the market than I do. And for me, for them to see they're seeing retention of animals says 2025 could be a little more exciting than many people might suggest.

[Yeager] '24 was pretty exciting in the cattle market.

[Hackett] It was but I'm talking about potentially breaking out of this sideways trading pattern and providing one good final selling opportunity for livestock producers.

[Yeager] In hogs there was a talking head who had a good statement on Smithfield. Was that the reason for the run up in hogs this week for a while?

[Hackett] I think this whole run up from hogs has been simply this, the USDA said that we were going to grow production by three to five percent and we haven't grown production at all for the year and the market mispriced hogs based upon that and had to quickly surge to reflect that. We've now done that. We reached 90 on the April contract. I think that is going to be a very good place for the market for the producer to get some sales on the books, lock in that price. I think we've done probably overreacted or overdid some of this concern over lack of production. I would be a cash seller here in the hog market right now.

[Yeager] So, we see herd expansion likely happening in the cattle market and in the hog market?

[Hackett] Well, but remember in the cattle market that's not next year you see the expansion, it's the year before.

[Yeager] Right, yeah, okay.

[Hackett] Well, think about it, we have bean meal prices at COVID lows --

[Yeager] I'll have to pick you up on that in a minute. Thanks, Shawn. Appreciate it. Shawn Hackett, everyone. We are going to pause this Analysis, continue our discussion about these markets in our Market Plus segment. You can find both Analysis and Plus on our website of marketomarket.org. Those two segments are 66% of our podcast offerings. We also have the MtoM, which is released on Tuesdays, so you can take us along throughout the week. Subscribe today at your preferred podcast provider. Next week, having that uncomfortable financial talk with those living on and off the farm. 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)

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.

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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.