Market to Market - November 22, 2024

Paul Yeager: Coming up on Market to Market -

Text for a Farm Bill emerges - but to a lame duck environment. 

Having that uncomfortable financial talk with those on and off the farm.

And commodity market analysis with Sue Martin, next. 

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Announcer: “This is the Friday, November 22, 2024 edition of Market to Market - the Weekly Journal of Rural America.”

Hello. I’m Paul Yeager. 

Buyers are headed back into the housing market as they take advantage of lower interest rates.

This month’s existing home sales were up 3.4 percent.

As interest rates and inflation intersect, the newly elected have big ideas on how to improve both.

Those still serving are trying to close down with last ditch efforts at governing. 

Prior to 1933, lame duck sessions in Congress lasted until the old inauguration day of March 4. 

Since the 20th amendment passed, the post-election session only lasts a few days.

This week, retiring senate agricultural committee chair Debbie Stabenow finally released text for a farm bill that’s already expired, extended and expired again. 

The move is likely symbolic as democrats will soon be the minority in D.C. 

Peter Tubbs reports. 

Sen. Debbie Stabenow, D, MI: “The farm bill has always been the place where we put the power of the federal government at work in a bipartisan way to support farmers and families and communities. That is the coalition that has always been the foundation of a successful bipartisan farm bill.”

[Tubbs] This week, the Chair of the Senate Agriculture Committee released the text of her draft Farm Bill for consideration by the Senate Agriculture Committee in the lame duck session.

Observers of the Farm Bill drafting process believe the Senate version of the Farm Bill will be too difficult to reconcile with the House Agriculture Committee’s version with only 12 working days remaining in the 118th Congress. 

  The House Ag Committee passed its version of the Farm Bill in May, but it was never brought to the House floor for a vote. The Farm Bill expired on September 30, and more than 30 programs are suspended until Congress passes a new bill or another extension. 

Sen. Charles Grassley, R, IA: “The farm bill must be worked out in a bipartisan way and negotiated in committee, according to what we call regular order. It's clear there isn't enough time to do that before this year is up. So I expect Congress to pass another short term extension to carry farmers through the new year.”

 

[Tubbs] Among the differences in the two versions of the Farm Bill are the amount of increase in payments for the farm safety net, a push to link SNAP benefits to inflation, and limits to the Secretary’s Section 5 authority over the Commodity Credit Corporation.

The National Pork Producers Council were disappointed in the Stabenow text leaving out the language to limit or overturn Prop 12.

Congress returns to work on December 3rd. 

A Republican trifecta will take effect in Washington, D.C. in January.

For Market to Market, I’m Peter Tubbs

Paul Yeager: The holidays are a chance for families to gather together to catch up on happenings with each other but sometimes the conversation can shift in a hurry. The discussion over the future of the farm from what happens to the land, equipment and home place can be contentious - especially in times of stress. So much so we’d rather talk politics than finances with loved ones. 

Dr. Megan McCoy teaches undergraduate, graduate and even PhD students on personal finance, financial literacy and planning at Kansas State University.  

Part of our discussion on those topics is this week’s cover story. 

[Megan McCoy] Yeah, I think it's been such, I hate the word unprecedented, but I feel like every year I have been talking to people about this fear of what's coming next. When it comes to our finances. I think financial stress is a real thing. Families are facing that fear. The financial stress is about to hit is another really real thing.

[Yeager] Do you get the sense, though, that that was happening beforehand? 

[McCoy] I don't think that financial therapy, by field, really developed until 2008. And so I remember feeling that stress right after that crash, and people grieving the loss of their home or worried about losing their home. And then I feel like we had a period of peace or at least knowing what to expect. And then, since 2019, I don't think there has been such a steady fear of our financial safety since then. 

[McCoy] It really does make a unique situation. Then farm families may be more likely to experience financial stress. And I think also because farm families have such an emotional connection to their land, the finances, the job decisions all kind of get blurred between the financial decision and the emotional decision. So I think that financial health becomes even more key for our families. 

[Yeager] What does good planning look like in that scenario that you're laying out? 

[McCoy] Yeah, I think it becomes key to have someone, whether it's a professional to talk to or other farm families that you have met throughout your life, who can give you that support? Oh, say, do I have everything I can control in place? Do I have the right insurance? Do I have the right safeguards? Do I have the right savings in place? So if those external factors don't go my way, I'm not going to get lost on. 

[Yeager] In the family side of things when you're talking generational wealth or something like that, it doesn't necessarily have to be land, but how important is it that one generation reveals to another one? Or maybe it's not important that they reveal to the next one what they are wanting to have done with, with wealth in that transfer.

[McCoy] No, I think it's so key. So I only see a small handful of clients now because I do so much, research and teaching. But the last four cases I've worked with has been actually families fighting over an estate settlement. So the brothers and sisters fighting about like, what I'm getting and how it's distributed and what's fair and what's liquid and what's not liquid and all those conversations. And when we're grieving the loss of a loved one, anger is such a natural, empowering, like emotion that we naturally feel, so it can cause the conflict to get even more blown up. So the more we can have conversations when we are healthy and young about family succession planning and other dynamics about after we lose that person when we're happy and healthy, that it becomes easier to have those real hard conversations as we near the end. 

[Yeager] Is there a good time? You said healthy and you know, we're happy. But yeah, those at are those supposed to be at family gatherings at Thanksgiving or are they supposed to be in the middle of June? 

[McCoy] You know, I, I hope that it's not always around the holidays, but I think thinking about again, what do I want for you guys after I'm gone is a beautiful conversation that you can you don't have to focus on the death, but your wishes for your loved ones can be something that at Thanksgiving is actually kind of fitting to say, I'm so thankful for you, and I hope when I'm gone that you guys still have the bonds between you, that you don't experience, stress, that you can continue our legacy of this, you know, homestead or whatever your wishes are. 

[Yeager] Okay? And think about what you've just said. But I wanted to have you think about that transition side from someone who maybe doesn't want to have that conversation. The younger generation is wanting the older generation to lay out some framework, and you're getting resistance from those that have to those that might have someday. 

[McCoy] It is so difficult. And I think one of the first steps is for the matriarch or the patriarch of the family, the person, the older generation to come to terms with themselves, what they're giving, making sure that in their mind that they don't have anxiety about the distributions so that when they have this conversation, it is not, them processing out loud some of their anxieties. And so if you are lucky enough to be partnered with a wonderful wife or husband, having those conversations together before bringing in the younger generations can be a way to make sure that you process your own emotions before bringing it to the family. 

[Yeager] Do you get the sense that those tensions or pressures elevate at the higher dollar amount? When we're talking? Is that accurate? 

[McCoy] I think so, I think, I think when it becomes bigger numbers, I think that it becomes more emotionally laden. Like we were joking earlier about my kiddos being seven and ten. And so it's a lot easier for me to have a conversation about their $4 allowance than me saying, here's how much I make a year. You know, like, I think the bigger the number is, we project deeper into it. And it's fascinating. So there's some research that actually shows that the more finances you amass, the more scared you are of losing it. 

[Yeager] All right. Again, I'm going to go back to the commodity side of things because those are, you know, when you're talking millions of dollars in land or equipment and you've got people that will just take a family of four, one involved in the farm, three not involved. You've got voting power off the farm, not on the farm. Then, again, is that similar to any other dynamic that you've encountered in your career? 

[McCoy] Oh, yeah. So let's take it even further, too. You have one child who's going to take over the farm that on paper is worth so much money, and the other 3rd May be getting some kind of asset like cash or the house or some, I don't know, some kind of distribution. On paper, those numbers will look so different to those children. But the running of the farm is expensive. So even on paper you're getting a farm valued at $500,000 and the other person is only getting $10,000 in cash. They're like, that's so unfair. Not thinking about all the contributing factors of keeping the farm in motion, you know? And so I think that's where conflict can happen between sibling pairs of when you have a gift, a illiquid asset like a farm. The comparison is not apples to apples. And without conversations behind those decisions, assumptions can be made about jealousy or favoritism or a host of other factors.

[Yeager] Well, yeah, because you can be sitting in those rooms and you've probably sat in those rooms where someone says, I'm only getting ten grand and you're getting this. Yes.

[McCoy] And then the conversation about how do you split a farm fairly, or one person who wants to sell it becomes so much more conflictual, especially during the grieving process. So if those conversations had occurred earlier on, here is my reasoning behind these decisions. Here's why I'm getting this person this because I love you guys all. It is so much easier to navigate than after you're gone. And again, that mind reading that happens. That's because mom loved you more, or mom loved me less. You know? 

This MtoM podcast is available now. 

[Yeager] Global tensions and trade conversations dominated the trade.  

For the week …

The nearby wheat contract added 11 cents and the March corn contract was even. 

Predictions for an even bigger South American crop pressured the soy complex. 

The January soybean contract lost 15 cents while December meal fell 40 cents per ton.

March cotton expanded $1.86 per hundredweight. 

Over in the dairy parlor, December Class Three milk futures fell 29 cents.

The livestock market was higher. February cattle added $2.95. January feeders put on $7.07 and the February lean hog contract improved $2.78. 

In the currency markets, the US dollar index added 97 ticks. 

January crude oil found $4.13 per barrel. 

COMEX gold expanded $140 per ounce, and the Goldman Sachs Commodity Index gained almost 15 points to settle at 545 - 75.

Joining us now is one of our regular market analysts, Sue Martin....

Sue Martin: Hello there.

Paul Yeager: This wheat commodity, we talk about the issues with Ukraine and Russia, dominate political news, dominates the trade news. Is it still all about that issue, or is it the global supply, the dry weather? Which one's the biggest factor right now for you? And wheat.

Sue Martin: I think in wheat it's probably the global factor. You look at Russian wheat and, of course, their supplies are tightening and they've got controls on price levels that they can export at. And in the meantime, you've got Argentina, who is priced much cheaper than Black Sea wheat and also has a good production. And then you look at Australia, they have good production better than they expected. And then you look at Kazakhstan and they're selling wheat into China. So I think it's global. And you know, it's very good that we've had the moisture, but the market sort of ignored the moisture and continued to push higher. And I wouldn't be surprised as we go into like the holidays and whatever that may be, the wheat market tries to push a little more just on fear of what if over the holiday.

Paul Yeager: G20 countries met this week. President XI, President Biden, they were in Brazil. There's all these conversations. There's deals over sorghum between Brazil and China in that global stage. We know it's about to change. One of the chairs is going to be different. Does that impact wheat or corn more? What happened this week and say G20.

Sue Martin: I would say probably impacts corn. Maybe. For now, I think that when I look at, you know, you look at the production in Brazil, first off, Argentina's production is expected to be down there planting less, mainly because of the leaf hopper situation the last year. And then you look at Brazil and there, whether they're catching some rains like they should in their rainy season, they've got another 45 days to go to prove they're going to have a decent bean crop. I think that when it's all said and done, we'll look back and say, well, they didn't get everything they needed, but still. And what it does is it buys us time, to be in the world market and export. But we have another situation going here when it comes to the US exporting. I mean, I think we're having a hard time as producers in the US getting our expectations and our thoughts or our arms around the fact that we're no longer number one, we're competing to be number one. And, Argentina competes to be number two. And I think that when we look at our situation now, for example, the dollar had a 7% bounce that got to 107, maybe penetrated it here on Friday. And so you've had a 7% increase just since September. And that increases the cost of the foreign buyer for the dollar, not to mention interest rates on letters of credit.

Paul Yeager: Right. And on that strength of that dollar has been it seems to be a problem on all of the commodities. Yes, I guess on everything. It's on everything. But I mean, I guess I'll ask again for the third time, which is being impacted the most then by the dollar.

Sue Martin: The stronger dollar, I would say it'll be corn. Although right now our exports to Mexico are very, very good. We're seeing some unknown destination exports. They could be Mexico. It wouldn't shock me if it was Chinese. But yeah, for now, I would have to say it's probably still corn.

Paul Yeager: Speaking of corn. Pennant formation technically forming. Then you, you don't know higher or lower, but you have the longs long again. Speculators along. Well, what's that telling you right now? Are you in a hold situation or are you in a sell situation with corn?

Sue Martin: Well, when I was on the show on August 30th, I was friendly into the turn of the year, and I still am. I think that, the market, one thing I would look at is, is, as I think corn and beans both will still push higher wheat to probably lead us, higher as we roll the year over. And, maybe towards February, March, you know, the baseline acres showed that we should or they expect us to have about 2 million more acres this coming year. And so beans might feel compelled. They have to compete a little bit. But I think that the corn still has potential to go higher. One thing I would keep in mind as we go into 2025, first off, years of a five year, beans or corn do not normally tend to be a bull year. And they tend to be more traditional, where you'll see the last quarter of the year where your lows will be. And if I look at corn for a lead contract for this next year. So, like, when, you know, these goes off the board March is on that now as a new year March goes off, May goes on, that type of thing. If we look at this year a lead contract and I had to relook at it a second time because I couldn't believe it. The high for the year was 473, 476, excuse me, and a quarter and the low, of course, 360, which came in September. So when you look at that, taking that 476 area 474, 76 for 80 is going to be extremely important because if we can have a lead contract, push that out, then we can start the ball rolling and saying, okay, now what do we have? So I would have to say that limits, you know, we've had for what, 442 something like that on the March contract. You know, you're not talking an awful lot more

Paul Yeager: Let's go back to your August 30th appearance. Then. You were more bullish on corn than beans. Pretty much everybody's been very bearish on beans. Yeah. You're still in that boat.

Sue Martin: I, I think I was bullish beans too. And I'm still in that boat too. I haven't changed on all three. I still think beans. Now, it's not uncommon for beans to break into the week before Thanksgiving. And we've done that. And the market's a little bit on a traditional behavior. And then we turn and we tend to become more, price positive as we get into late December. And I think it'll carry on forward. So that is why I think South American weather is so important because, Brazil. Yes, they're starting to catch some rains. And when they start looking at a new crop, of course the yield projections are going to be high. You know, you always start off with the best and then work it down. So I think that the next 45-60 days are very, very important. And also in a year of a five on soybeans, you tend to put your highs in early. It could be January. If it is that's a very bearish year. And again, I would have to say, looking at like say the March contract resistance probably comes in around 1080 to 1113 and support around 922. There should be extremely good support. I don't think we see an eight in front of beans.

Paul Yeager: Well, and we do have a quite we're going to quickly show the November 25th contract there. It has declined. It's still above $10. We have a $10 question we’ll answer in  Market Plus in a little bit. But I want to get into the livestock market. Cattle on feed came out just before we rolled here today. And there's significance of that. So let's see. I think you told me, placements 105, marketing 105 and on feed 100. Which number stood out to you and why?

Sue Martin: The placements? First off, the marketing at 105.2. We have. That was right. Almost on what they were expecting. And one thing we have to remember is I think we had an extra marketing day in the month of October, which meant you also had an extra day to place. And so but placements coming at 105, much higher than what the trade was thinking. My way of thinking is that's probably your highest placement you're going to see now for the next year. And so I would have to say, the, and also when I looked at the weight breakdowns for the feeders being placed, it was the lightweights that had the highest number of placements, the heavyweights. Not so they were the lowest number. So it's probably less positive to deferred contracts. But then we look at the moisture we've had in the plains, and I think we've already started to see a hold back. In fact, we're killing less beef cows and more dairy cows lately. And so I think we're starting to hold back some heifers and I think we're going to start holding back some, you know, beef cows from coming to market as well for the thought of breeding and going out on pasture.

Paul Yeager: But to that note, though, I mean, the weather kind of turned in the western plains a little drier this week, and the forecast doesn't look very optimistic. Can you change courses so quickly when you're not going to put them on pasture. You're going to have to slide them further east.

Sue Martin: Well, I think the wheat pasture looks good. And so I think we'll see cattle go out. I think what's going to affect them more, I think they're just getting a start on this. So it would be more important. Where are we in March, April. Right in through there. That's when wheat breaks dormancy and they pull the cattle off. And, and I think that's we also have to keep in mind this winter feels like it's going to be a little different than, uh, last winter we had.

Paul Yeager: That's just today it's, it's much colder today. We were talking about that before. I need to get to hogs because it's tied back into a discussion we had earlier. Again, China and Brazil having conversations impacting beef and pork. Yeah, pork though as you look at the chart, that thing has been on a trajectory. Did it finally break out of the range that it's in and are we headed higher?

Sue Martin: Well, I think we are. I think we're going to get a chance here. When I look at the Elliott waves and what have you, it looks to me like we might have stuck a low here this week. If the market is down on Monday, I'll bet you turn around and you take off on Tuesday. I look at the hogs and there's a lot of purrs happening in the Western Corn belt. Iowa, Nebraska, South Dakota into Minnesota. And so that's a concern. And we already are seeing less numbers coming to market anyway, before purr started. And so I think the hog hogs and pigs reports have not been on target. I think they've been wrong. Another thing, I think the eating habits people have missed the various generations of how they eat. And I think the younger generation goes for quicker stuff. You know, it can be chicken wings. It could be burgers, yes, and what have you. But then you get into the millennials and they maybe are going towards the pork chops and, and what have you. But the, but the older people, the baby boomers, they like steaks.

Paul Yeager: And they like big turkeys. Have a good Thanksgiving. Thank you, Sue, good to see you. We are going to pause this analysis 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 also offer a third podcast, the MtoM. Each week we have three options to take us on the go. Subscribe today at your preferred podcast provider. 

Next week, checking economic conditions on Main Street and in the fields of America. 

Thank you so much for watching. Have a great week.

Announcer: 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.

Announcer: 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 the world. 

Announcer: 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.

Announcer: Tomorrow. For over 100 years. We've 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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