Market to Market - January 24, 2025

Paul Yeager: Coming up on Market to Market -

Donald Trump returns to the White House.

The nominee for Secretary of Agriculture faces Senate confirmation. 

Making the farm transition to the next generation in a new way. 

And commodity market analysis with Naomi Blohm, next.

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[Announcer] “This is the Friday, January 24, 2025 edition of Market to Market - the Weekly Journal of Rural America.”

Hello. I’m Paul Yeager.  

The number of economic reports looking back at 2024 are shrinking.

Existing home sales in December increased 2.2 percent and was a 10-month high. However, higher interest rates and house prices will likely keep immediate gains muted in the new year. 

Donald Trump returned to the White House this week as 45 is now also 47. 

Trump took the oath of office on Monday from inside the U.S. Capitol as sub-30 degree temperatures were forecast. 

During his inaugural address, Trump opted for specifics on many topics. 

Following the speech, the president went down the street to Capital One Arena to sign several executive orders including rescinding 78 actions taken by president Joe Biden. Trump withdrew the U.S. from the Paris climate accord, froze most federal hiring and ended what he calls the weaponizing of government.

Once back in the Oval Office, the president addressed immigration – declaring a national emergency on the U.S. / Mexico border calling for more barriers and an increased crackdown on undocumented immigrants. 

The issue was a major one on the campaign trail and is reaching into many of the Senate confirmation hearings.

This included the Agriculture Committee where Brooke Rollins sat for several hours Thursday in her confirmation hearing. 

Peter Tubbs reports.  

This week, President Trump’s nominee for Secretary of Agriculture appeared for questioning by the Senate Agriculture Committee. 

Questions on plans for deporting undocumented immigrants and Trump’s tariff plans were popular topics. 

Senator Richard Durbin, D- Illinois: “But when we are talking mass deportation we have gone beyond dangerous criminals. I’m just wondering if we should be giving fair warning to farmers and ranchers across America that if you have immigrant labor, you can expect government agents to come and inspect your property. Is that in the future for farmers and ranchers under the mass deportation plan?”

Brooke Rollins, Nominee for Secretary of Agriculture: “Sir, I have not been involved in that, the President’s current plan, that one way or the other. I do know that my job, as those conversations are ongoing, if confirmed, that I am part of that data collection and understanding, and that the President understands what this means to the agriculture community, and I believe, sincerely, that he will execute his agenda, that he has promised the American people, but will never forget the ag community in so doing.” 

Senator Tommy Tubberville, R - Alabama: “There’s a $45 Billion dollar trade deficit in ag. $45 Billion! And the only way to get commodity prices back up is to handle that trade deficit. So, that being said, we need dialogue. If confirmed, will you commit to doing dialogue with President Trump, and the people around ag, to get our farmers to have an opportunity to ger a better price for their crops?

Brooke Rollins, Nominee for Secretary of Agriculture: “Yes, I will, Senator, and I so look forward to that opportunity. I think one of the things I read recently is that only 43% of our ag producers are net positive, net income positive. That is unsustainable. We have to find a better way, and it can’t always come through government subsidies. We’ve got to expand the market, we’ve got to figure out input costs. One of President Trump’s top priorities was food inflation, well, this comes before food inflation because this itself will drive the cost of food down if we do our jobs and we are able to produce for our ag community the way I believe, Coach, that we can, working together.”

Senator Elissa Slotkin, D- Michigan: “And when you get confirmed, and it looks like you will, you will swear an oath to the Constitution of the United States, not to President Trump. So can you say, I know you’ve said it, but for the Michiganders watching, that you will throw your body in front of the bus, to make sure that any political talking point on tariffs that may sound good, has been truly tested against how it will impact our farmers, like it was not last time around.”

Brooke Rollins, Nominee for Secretary of Agriculture: “Senator, I appreciate your passion. I share it, and I think we are similar in a lot of ways. Yes, my commitment is that there will be no sleeping, that we will work around the clock, to ensure that the ag communities across the country are represented in those discussions at the table, and I will do everything in my power, elevate, preserve, honor, conserve that backbone of America.” 

For Market to Market, I’m Peter Tubbs.

Paul Yeager:  Passing land from one generation to the next is complicated more times than not.

When there’s no family option the next best thing may be to sell everything.

One Minnesota producer was facing retirement in just this scenario and went in a different direction. 

He turned to those around him.

Tim Dufault’s action is our Cover Story.

[Dufault]  “You can't farm forever. Although when I did say I was retiring, people were saying, well, geez, farmers never retire. Well, this one's going to retire. yeah. It just, you know, none of the kids were going to come back to farm. And, so I keep going, I farm with my older brother, and he's ten years older than I am. So, it's just getting to be more work for both of us. and then, like I say, the last three seasons with the late spring, you just never had a break during the growing season to get away for a vacation or a weekend even. And after a while, it's just like, why am I doing this? It's time to hang her up. Let somebody else try it.

[Yeager ] So is this, you're holding on and going to rent, or are you going to sell everything? 

[Dufault] No, no, no, no sense in selling just yet. So we're renting it out. I've kind of had an X on my back for several years from the neighbors. But so I rent it out to six different young guys, and I try to make everybody happy. You know, just give everybody a little bit. But, you know, I wish I had more land to help these guys out with, but they're all getting a good start, and, yeah, yeah, it's good for the community. 

[Yeager] So was there a process that you had with these farmers? 

[Dufault] I had one guy ask me, he's, smaller farm, works in the bank full time. And, he was asking about land, and I said, well, I hate to upset you, but, you know, he's 41. You're too old, you know, I wanted to keep it as young as I could or the smaller operation was, you know, I had one guy pull in the yard. He's older than I am, and he was asking for his son, and I'm thinking, well, why isn't your son here? And, well, they lost a few hundred acres, and they could really use some more. And I said, well, how many acres area farming now? Well, 5000. It's like, yeah, you're probably okay, you know, but, so the ones I've rented to, you know, they're from, the small cattle herd, he's renting 60 acres for alfalfa to, well, I don't know if there's anybody. Yeah, the the one they might be at 2000 acres would be the biggest, you know. And and he's the neighbor coming in to start with the other farmer. He's taken him under his wing. That's what I really wanted to do. if I could have a, like, a turnkey a few years ago with someone, bring someone in and say, you know, here. Have worked with me for a few years. but it was hard to find somebody like that. 

[Yeager] So the goal is always to do kind of what you did and find land farmer partner. 

[Dufault] Right, right. Yeah. Somebody that wants to give it, you know, give a next generation a chance. Someone that doesn't have land but has a passion for agriculture. but then that's a, tough hill to climb too, because it's so capital intensive. Unless that young person's got some, good banker behind them, it's tough to buy into an operation. But, you know, I was willing to see what we could do, but I just couldn't find anybody.

[Yeager] Because I'm guessing. Tim, you could have. You may have left some dollars on the table. If you would have gone with a larger farmer who might have been able to pay more for rent. But you are taking it as an opportunity to get someone started. Was that part of your motivation as well? [Dufault] Yeah. Yeah, yeah. I mean, yeah, I could have turned it over to one of the mega farms in the area and rented it out for top dollar and moved to Florida. But that's not us. That's not what my wife and I want to do. So, you know, you look around and the churches or the school district, you know, the stores, the storefronts downtown, you know, let's keep as many farmers as we can going. That's what I want to do. And, you know, we're at a good point in our financial situation that I can afford to leave a few dollars on the table. 

[Yeager] Commonality – everybody's under 40. Is that what I gather? 

[Dufault] One that just graduated college here about a year ago. yeah. It was a couple of them that are under 25, you know. So it'll be fun to watch these guys grow and mature. 

[Yeager] Absolutely. Did you put parameters on, you know, checking in with you or running, plans, by you, like when you said one cut into alfalfa? but were there any rules, I guess, that you put in on these guys? 

[Dufault] No. Not really. I did offer everyone, so I've gone to, I'll call it, no-till, everybody's got a different definition of no-till. Depends on what area of the world you live in. But I've pretty much gone to minimum to no-till. And I told each one of them that, you know, if you go to no-till if you, you know, if you want to do that, I'll cut your rent by 10% because I'm protecting my asset, like I told them, I, you know, this is my asset. If I had an apartment building, I wouldn't want to rent to people with pets or smokers. And so I'm going to be protective of my land and we're going to work together on that. so I've got two of them that are taking me up on that. They're, and part of the other thing is, once you get started in No-till, it takes a few years before that land really starts to show the benefits of it. And I'm just getting to that point. So I told these guys, you know, if you go ahead and work it up this fall, and you decide two years down the road what, you just lost five years of No-till. So let's try it now. And so they're going to do that and I, I hope it works for them. You know it's a mind change.

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Paul Yeager: Tariff talk and less rain in South America provided plenty of volatility in the trade. For the week …

The nearby wheat contract added a nickel and the March corn contract gained 2 cents. 

Argentina announced lower export duties on all grains adding another element to the soy complex picture.

The March soybean contract found 22 cents while March meal improved $7.70 per ton.

March cotton expanded 12 cents per hundredweight. 

Over in the dairy parlor, February Class Three milk futures declined 82 cents.

The livestock market was higher. February cattle added $8.03. March feeders put on $8.53 and the February lean hog contract increased $1.17. 

In the currency markets, the US dollar index subtracted 189 ticks. 

February crude oil cut $2.86 per barrel. 

COMEX gold expanded $35.30 per ounce, and the Goldman Sachs Commodity Index fell almost six points to settle at 571 - even.

Joining us now is market analyst, Naomi Blohm.  Welcome, Naomi.

Naomi Blohm: Hi.

Paul Yeager: The dollar. That's the one thing that's really kind of stood out to many of us for weeks. Loses almost 200 ticks. We have a heavy, heavy frost cold snap in the south and weak country in the United States. I can only put on a nickel.

Naomi Blohm: Yeah. The wheat market just continues to focus on, the fund position staying short, and they just continue to be relentless about holding that short position. So to your point, you're right. They're ignoring the fact that the dollar was actually able to move a little bit lower this week. We didn't really see anything exciting in weekly export sales. The market is not really trading anything happening with the wheat crop in the Southern Plains. You know, it's not perfect there. So you would think that there would be a little something to entice it. U.S. wheat ending stocks are at comfortable levels and we're seeing global ending stocks. Of course. Still tight. What the market decided to trade this week was that the Chinese crop, the Chinese wheat crop, is now estimated to be 3.5 million metric tons more than before. And China even was said to have started to export some of the wheat that they had previously imported because they were saying, now we're okay, we have enough crop here. So we can pass some wheat off to the world. It almost feels like we're waiting to see also how President Trump works with Russia and Ukraine. We're still waiting to see how, in general, the world is going to work with all of the trade, potential wars, tariffs and things like that. So that's been the focus. And wheat just continues to suffer. And about a 30% trading range.

Paul Yeager: So if you're someone sitting there trying to decide if you need to do something on wheat, are you at a time that you should be doing something on?

Naomi Blohm: We actually, I would say it's okay to be patient and it's okay to wait because we are trading so much negativity in place right now that if the funds finally get a reason to exit those hefty short positions. Wheat is the cheapest grain right now and the funds are going to, you know, want to step out of that. And I think the speculators would want to come in as buyers. We're just waiting for some type of fundamental or technical signal.

Paul Yeager: In the corn market, we had been on, I should say, a little bit of a streak higher. And then all of a sudden we've kind of backed off some of those highs. We've tested some resistance levels. Why?

Naomi Blohm: So ever since the January report, corn has had every single reason to rally, with ending stocks now being at 1.5 billion bushels. That was a game changer. That was justifying of a reason for corn prices to rally the 30 to $0.40 that it has rallied recently. Now, this week, the market is stuck. It's been stuck for three different trade sessions. The May contract. The July contract tested the $5 price area. It was able to climb above it for a little bit, but just couldn't stay above it. So $5 is definitely for three days now. Significant resistance and the market is very well aware that really to go higher from here we need to have no trade war drama. We need to have really bad weather happen in South America with a second crop production in Brazil, and we're going to need to have really good biofuel news come in the United States quickly. So if we don't get those things, I think we're going to see a price setback where the market takes about $0.20 off the price, and we start to trade sideways until we know a little bit more about some of those upcoming fundamentals that are so important.

Paul Yeager: We've had four years of the volatile headlines that drive the market when President Trump is in office. We're back to having some of those headlines just this week. I can't even keep track half the time. Traders on a tariff here, a trade war there. It's different countries at different times. How do you make sense if you are a corn producer right now looking at, say, a new crop or even I've got corn in the bean, what do I do?

Naomi Blohm: Yeah. So your question, your point is valid. And we're kind of equally balanced right now between bearish and bullish news. And I think that's part of the reason why the corn market has stayed where it's at. So on the, on the negative side coming down the road, here's my thought process. If, if we're looking to have lower energy prices, lower crude oil prices eventually that's something where if that comes to fruition, that means ethanol prices work lower. That means corn prices are going to be working lower. The biggest thing for next week coming up February 1st, is a Saturday. It's a few things. So not only is it the deadline for the tariffs to begin, China, Mexico or Canada, it's also the beginning of the Chinese New Year. So they naturally start to purchase less commodities because they're on holiday. It's also the first day that we start price discovery process for crop insurance for the month of February. So next week, if we don't have any big bullish news to take prices for a fundamental reason to work higher, I think we just see that pullback until we know more for sure what the trade spring. So if I'm a producer, sell the crop, make some cash sales here. We don't think we would ever see $5 futures on a long time. The USDA report gave us that. It gave us that blessing. And now we're here. And again, for prices to go higher than these levels, you need a perfect series of events of bad things happening with weather and no trade war in order for prices to go higher from here. So make some sales and reward the rally.

Paul Yeager: All right. Let's talk beans because Argentina's decision also impacts the corn market. But I put it in front of beans for a reason because their crop is looking to be less. I think there's I think you wrote this morning lower production this offset some of that. But Argentina is still a major story but so is Brazil. What is driving beans in your eyes? Okay, so a couple things are  happening. So with the Brazil crop we know it's a wonderful crop. There's some quality issues there. China use that as an excuse in a sense to say we're going to just kind of put a pause on imports. But most of the industry feels that's because China is backlogged at the ports right now, and they just need to buy a little time to get the grain from the port inland, and then they'll be back in the marketplace. Plus, they're getting ready for their Chinese New Year. Plus, they're trying to get ready for the trade war. So the news out of Brazil is a record crop. No one is disputing that. And that's going to be taking away from American exports very soon. Now in Argentina we know that the crop is a little bit smaller. But because global carry out is record large, we can absorb a little bit of a smaller Argentina crop. What I thought was interesting today was that Argentina came out and said, we're going to do a reduction on our export taxes as a way to incentivize their farmers to get selling more grain out under the marketplace. So that was a little bit of a shock to the market because we weren't expecting that. So if the Argentine farmers are going to be doing more exporting, that means that, darn it, the American farmers are going to lose a little bit of export business. So now you have two South American countries really trying to stay in the spotlight and trying to stay gold and shoulder in to China to make sure that they are not forgotten about during this time of tribulation. That might be coming on February 1st with the trade wars. So just like corn, soybeans traded up to some extreme resistance levels this week, the 200 day moving average.  And it's the same story. We need either more bad weather to happen in South America. We need to see no drama at all with a trade war. And we need immediate, friendly news on the biofuel front to get prices to go higher from here. But just remember, with the biofuels, with the new administration, they put a 60 day pause on the 45 initiatives. So 60 day pause takes us into the end of March. And that is plenty of time for us to understand what's going to be happening or not happening with a trade war. It's all very calculated. It's all coming together. The crescendo is going to be next week as we head into the end of January and February first.

Paul Yeager: Let's get to one of the two livestock reports. One was on dairy today.

Naomi Blohm: Yeah. So the dairy report came in with lower production numbers, about 0.4% lower than the previous year, December. So now we've had two production reports in a row that showed production was down. So it's been a balance here. The milk market has lost about two bucks in the last 2 to 3 weeks because we've seen lower cheese prices. Also concerns about trade wars and tariffs. But now with milk production coming in a little bit lower, that should give us some supportive news to start the week. Next week.

Paul Yeager: Cattle on feed report came out just before we recorded on feed December 1st, 100% placed on feed 97% fed cattle marketed 97%. Disappearance at 101. Which number stood out to you?

Naomi Blohm: The placement number? The placement number came in a little bit even lower than the average guess within the range of estimates. So the report supportive overall, but we already had a blast higher this week because cash sales were 6 to $8 higher. So I don't know if the report is enough to keep this momentum going or if a lot of it's priced in. That's going to be a wild ride next week.

Paul Yeager: We just showed you the live cattle chart. We're going to show you the feeder chart. Same thing. Another $8 run up there. At some point this party has to end, right?

Naomi Blohm: Well, you'd think so. And what we're starting to see in the consumer is that they definitely are opting for cheaper cuts of beef. we're not seeing anything really robust in the export market right now. So it's going to be up to cash markets to decide. And then of course, February 1st with the Mexico Canadian border and tariffs. That's going to be the next piece of the puzzle. So we'll see if the funds who are record long and cattle, if they decide to take their ball and go home. And we start to see the market sell off. A lot of that I think will hinge around the trade issue.

Paul Yeager: Did any of them enter the hog market this week with that rally?

Naomi Blohm: Well, I think the funds are still long, about over 100,000 contracts, but it was a pretty quiet week for hog markets. What I think is interesting is that production, U.S. hog production is up 17% year over year. So that is significant. but the hog markets also kind of seem to be in a little bit of a holding pattern. I think it also goes back to the trade, potential trade wars and tariffs.

Paul Yeager: Do you see, though, as a percentage of farmers being impacted, is the hog the hog going to stand to lose the most in this scenario? You've been talking about, or is that more grains.

Naomi Blohm: Well, I think it would definitely be more with the grain market. But the hog scenario, of course, it's going to be affected because of our exports to Asia. you know, and it's going to be interesting to see how this administration unfolds things, because they've been clear that they are willing to come in to help, financially support if there is a trade war. So that's nice to know, but that doesn't really help our export demand at all in the short term either. nor do we have answers right away about any of the other policy issues that have come to light as well.

Paul Yeager: And we have come to the end of our time together. Naomi, thank you so much. Thank you. I appreciate it. Naomi Bloom, everyone.

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.

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Next week, making sense of the expanded highs in the livestock market. 

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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: 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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