Market to Market - August 26, 2022

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Yeager: Coming up on Market to Market devastating. Drought gives way to destructive downpours. Native Americans take more control over how their food dollars are spent, that we've seen, but you would really and market analysis with Ted se. Next

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Announcer: This is the Friday, August 26th edition of Market to Market. The weekly journal of rural America.

Yeager: Hello, I'm Paul Yeager. Jackson hole is billed as a skiing, fishing and home to four, 2000 antler, arches, welcoming visitors to town for the federal reserve. The Wyoming location has served as a retreat host for decades. Friday. The fed chair issued a stark warning from the economic symposium about higher interest rates to come and tightening of credit as efforts to Pierce inflation. However, data release late this week indicates the worst may be behind us. As consumer prices dropped a 10th of a percent for the month. The core measures increased the same 10th of a percent amount even with declining gas prices. New orders for manufactured goods stayed flat for July. The census bureau reported the demand for durable goods may be cooling. There has been a major shift in weather patterns over the last few days in the deep south millions were in need of water. And in just a week's time, residents are saying enough is enough. Peter tubs hits lead off this week.

Tubbs: Heavy rain swept across the south this week. Flooding thousands of homes in multiple states, sparking both state and federal responses.

Abbott: But yesterday is the second worst rainstorm in flooding in Dallas since 1932 and the second worst on record. And so what people in the Dallas area as well as this entire region sustained, uh, was an extraordinary challenge

Tubbs: Early in the week. More than 10 inches of rain fell in a 24 hour period in the drought, parched, Dallas, Fort worth, Metro flooding streets and stranding motorists.

Johnson: Uh, we got hit pretty hard and we got hit in a historic way. The sky opened up and soon after our streets closed down, the storm was immense.

Tubbs: The same system dropped 15 inches of rain on east Texas, sending rivers out of their banks. 23 Texas counties were declared disaster areas from the rain system, activating state resources for the affected counties, the heavy rain won't help a drought damaged cotton crop.

Davis: You know, it's basically too late to help the cotton crop on the high Plains high Plains of Texas. That's the largest cotton growing area in the United States looks like a 10 to 12% crop. Even the, even the irrigated cotton out there is, it looks terrible. Cotton's gonna be, uh, short supply this time.

Tubbs: Mississippi also took heavy rain from the system, stranding, motorists and blocking access to rural communities.

Davis: When the water come down that fast and that quick, it has nowhere to go. And that's when the water back up

Tubbs: Further east flash flood warnings were issued across central and Southern Mississippi schools in the region are closed until floodwaters recede. The storms gave Jackson Mississippi, its wettest August on record.

Smith: The whole town is almost flooded. This is ridiculous.

Tubbs: A thunderstorm stranded 200 visitors and staff for several hours at the Carlsbad Caverns in Southern New Mexico. Due to flash flooding trails in the national park remain closed. The region has seen multiple floods this summer as pocket storms drop heavy rains over small areas. A levy was breached in Duncan, Arizona in the wake of the storms, the Gela river swollen by rains from the recent system overwhelmed the dirt barrier. Dozens of residents were evacuated ahead of the flood waters. More wet weather is predicted across the south and Southwest this weekend for Market to Market, I'm Peter Tubbs.

Yeager: Food prices have prompted sticker shock for all of us. For native Americans. The clamp was tight before the pandemic. When it came to food options, the 2018 farm bill helped indigenous consumers and producers have more influence in what they provide and eat. Colleen Bradford Krantz reports in our Cover Story

Krantz:

Under two century old federal treaties, the us government pays for the food given to certain displaced native Americans until recently, however, indigenous groups had little say on what was delivered by U S D a to their food distribution centers

Besaw: Slowly but surely we, we saw that those foods were we're heavily salted or processed. And we went from being one of the healthiest tribes and we start seeing that our bodies, the bodies of our, our ancestors then reacted negatively to those

Krantz: To address the problem. A provision in the 2018 farm bill provided 3.5 million for eight tribal nations to demonstrate their ability to purchase their own food. An idea known as self-determination

Hamdan: In our traditional model, the U S D a purchases, those foods and ship them to, uh, warehouses or facilities on the, on the tribal reservations with self-determination U S D a and the department of interior work together to collaborate on a demonstration project, which gives tribes more control over their food procurement.

Krantz: Many of the tribes awarded grants are using the added flexibility to support indigenous farmers, ranchers, and fishermen.

Besaw: We want to contract and decide where we get our ground beef from where we get our apples from where we get other products,

Krantz: Two Eastern Wisconsin, tribal nations, the Menominee and the Oneida nation of Wisconsin partnered on one of the self-determination pilot projects. Although the experiment is ongoing.

Gary Besaw the top agricultural official with the mono nominee nation says area native producers have begun to benefit from the self-determination project. And from another project known as the tribal elder food box program, the new food box venture provides fresh meat and produce directly from area producers to native Americans who are over age 55 at no cost. The program initially included just the Menominee Oneida and Red Cliff Band of Lake Superior Chippewa. But now it benefits all 11 federally recognized tribes in Wisconsin.

Besaw: So we are trying to slowly build our economy. We're trying to grow the vendors. We're trying to understand the system better so we can do, we can do that purchasing and create our own full localized food systems films.

Krantz: The changes in purchasing practices have benefited native producers. Some who have seen sales increase since the start of the pilot project, as well as non-native farmers who can be used as a source. If indigenous suppliers can't meet demand.

Besaw: We looked at, for instance, the, some of the catfish that we were getting, uh, in our food distribution for our clients. And we replaced that with some of the foods from Redcliff. So we were able to use lake trout FLAS, uh, white fish filets and caring.

Krantz: One community member says the tribal elder box program was particularly timely when some tribal members were struggling financially in the wake of the economic slump following COVID.

Boivin: Yeah. I've talked to several people and I get 'em and they like it. They, they think it's great. It's like probably two, three meals worth of food that they won't have to buy.

Krantz: However, bine says the biggest challenge may be in convincing high school and college students. They might enjoy a career farming, ranching or fishing.

Boivin: A lot of it was just, um, individuals, you know, do individual farming, drone garden, you know, but, uh, as a nation, the tribe, our tribe has that fell away from it in time. Far as I know, there's nobody in the last 15, 20 years that I know of that are interested in farming, you know, and that's unfortunate

Krantz: An hour to the Southeast, the O United nation has built a successful business, raising Angus and Buffalo, which puts more locally produced meat into the supply chain. The Andi also raised fruit in several orchards, five hours to the north near Bayfield, Wisconsin on lake superior. The red cliff band is seeing the benefits of a fish processing facility launched in the fall of 2020 because of the federal funds. The Red Cliff Fish Company has not only added more employees, but is paying native and non-native fishermen more for their catch.

Grooms: You know, it kind started off as a, an idea to, uh, provide a opportunity for Redcliff fishermen, who weren't always treated as fairly by, you know, other, other places that they would get again, different pricing because now that we're here, um, we technically have brought the market up in this area as early as 2018. It's kinda the last record I've seen most white fish prices around there ranged around 30 to 40 cents a pound. Um, currently, uh, with our buyers, we are at, um, a $1.25 to a $1.35 per  35 per pound with the, you know, government funding of these programs has been great because now it's meeting a need where we're providing a healthier protein alternative to, you know, some of those other process fishes or meats. Again, these are programs it's provided an opportunity for place like this to succeed.

Krantz: Hamden says an announcement about another 3.5 million for additional demonstration projects will be coming. Tribal leaders across the country are hoping these allocations allowing greater food sovereignty will become permanent with the next farm bill.

Hamdan: We visited the Oneida tribe in Wisconsin, as well as the Menominee Indian tribe. And, um, we did, uh, see some of the products. Uh, we saw the, the ground bison and the wild rice and the beef Chuck roast, and it just looked amazing. We are fully committed to supporting the restoration of indigenous food and empowering the indigenous agricultural economies and improving indigenous health, uh, through traditional foods

Krantz: For Market to Market, I'm Colleen Bradford Krantz

Announcer: Next, the Market to Market report

Yeager: Individual commodities struggle to move independently as a grain state tour provided further insight to the development or lack thereof of this year's crop. For the week, the nearby wheat contract added 30 cents while the September corn contract, while it jumped 43 cents or 7 percent. The window on timely rains as quickly closing in the soy complex. The September contract strengthened a dollar 17 or 8 percent. September meal improved $29. 40 per ton. December cotton expanded a $1.67 per hundred weight. Over in the dairy parlor, September class III meal futures gained $.47 cents. The livestock market was down. October cattle dropped $2.20.September feeders cut $2.55 and the October lean hog contract shed $2.48. In the currency markets, the U.S. Dollar index increase 66 ticks, October crude oil gained $2.66 per barrel. Comex Gold contracted by $11 per ounce in the Goldman Sachs commodity index added almost 19 points to finish at 688 even. Joining us now provide some insight as Ted Seifried. Ted's been everywhere. He's been up down in, out all over this grain belt. We're gonna go to wheat first and I would have put it behind us, but the wheat market is that moving in contrast in with lockstep, this crop tour of corn and soybeans,

Seifried: Wheat kinda has its own things going on. Right. Um, and you know, about midweek, there were reports that Russia is stepping it up or, or looking for a new initiative initiative in the Ukraine, uh, which is part of the reason why you had like crude oil sharply higher earlier in the week. Uh, but that certainly affects the wheat market too. Uh, because a lot of the areas that now Russia has, has gained control of. There's a lot of wheat there. So now is that Russian wheat, uh, either way, um, wheat is still very much looking at the global situation, the macroeconomics of everything, but then also, yeah, paying attention to what's happening in the, uh, in the crop tour. And, you know, when, when you start hearing really concerning corn numbers, you start saying, Hmm, wheat feed residual. Hmm. I wonder how much of that, uh, lower supply and corn means we're going to have to lean a little bit more on the wheat. So there's a always, uh, wheat being such a, a global entity. There's always a lot of things pushing and pulling wheat. Uh, but yeah, I think, I think, uh, the corn's reaction to the crop tour had something to do with, uh, wheat trading this week as well.

Yeager: You spent a lot of time in the Western corn belt, North Dakota, South Dakota, Nebraska, Iowa, parts of Minnesota. As you look at the corn crop, final number, 168.1 bushels to the acre crop of 13.759. Did the tour open your eyes one way or another?

Seifried: Are we specifically talking about corn? Corn? Yeah. Uh, yes. Uh, I would say in the now eight years that I've done crop tour, um, most of them when I come back, I think, you know, there, I saw some interesting things and, you know, it was a good experience. Uh, but also, you know, it was pretty much what I was expecting before I left. This is the year where I had an idea in mind and I think all of us did. Uh, and then we get there and certainly after the first day, we're like, wow, this is there's something going on here. It can't be, can't be the same when we get into the irrigated fields in Nebraska. And then you do, and it's like, oh no, yep. This is definitely much different than what we were expecting. Uh, I think some of the headlines on some of the bigger news agencies were shocking, um, it was fairly shocking. It was, uh, really eyeopening. Yes. For, for corn yields.

Yeager: You keep track of Twitter more than anybody does that comes on the show. You see pictures every year. Mm-hmm, <affirmative> from someone saying it's dry or it's wet, or it's something, yeah. This year, the dry pictures and the dry story. Mm-hmm <affirmative> is it for real? And what does a producer need to do given the data that you just helped harvest before they harvest their crop?

Seifried: Right. So you bring up a very good point, right? In years past we've said, you know, okay, here's pictures of dry crops and look in any given year. Even it's a really good year. We're gonna find some pictures of something that's not good. Somebody missed out, it's just a little tiny corridor or something like that. You're always gonna find those pictures. And then you're also gonna say, Hey, you know, we've had years, especially in Nebraska, where we've had a lot of stuff showing up on the drop monitor, but then we get into check yields. And it's really not that bad. A lot of that has to do with irrigation, but also, you know, with the, the tech, seed technology that we're using at times, we've started to say, you know, is corn Bulletproof at this point? And the answer to that after this year is a resounding no, but it's gotta be that combination of drought and heat.

Seifried: If you have one or the other, you you're still gonna have yields that are better, better than what you would think they would be. But if you have both of those at the same time, and in particular, the heat, that's the one that's really gonna have a negative effect on a corn crop. And we really, really saw that this year, uh, again, irrigated fields in Nebraska that you would expect to say, well, we know the dry, land's not gonna be great, but the irrigated fields they're irrigated, it'll be there. Maybe it's not gonna be their best year, but it'll be pretty consistently good. And you get in and you start looking around and you start pulling ears and you start, you know, doing your count. And you're like, wow, you know, this, this field should be a 210, and it's at a 168 what's going on here? And you move to the next one and you find the same thing and you say, wow, okay. There's really, there's really some issues here. And, and you can see just how, how the corn cobs have developed that heat had been a problem sort of throughout.

Yeager: We had two big batches of heat here and the dry has continued and it's missed and hit and missed and things turn on a dime. So I guess I'll try to help us consume this data. Mm-hmm <affirmative> and make decisions moving forward. Let's look at the December contract, uh, I mean, we're up $.41 cents. That's six and a half percent this week. Yeah. Is that thing headed higher?

Seifried: You know, here, the thing about that, Paul is that if we were at $4.30 Corn, the answer to that would absolutely be yes, but we already at some fairly high prices. And while we saw some soybean export sales through the week, uh, daily flash sales, we didn't get the actual export sales report this week. Um, we didn't see the corn flash sales, right? So personally I'm a little concerned about the export number that the USDA has on their balance sheet. And if, if you're gonna cut exports, uh, then then a yield reduction is less of a, a big shock to the market or, or, or a reason to go sharply higher. The amount that pro farmer lowered their yield, which I don't know if I'd be that aggressive on it. Uh, I, I, I'm still in the 170's, but anywho, um, that's a low enough number that yeah, you would say there, there probably is gonna have to be some price rationing, cuz you've got similar issues happening in China with the heat and drought that they're seeing there. Look at Europe, look at the issues with the Ukraine. There's a global tightness in, in corn. And so when we have an issue like this and, and a surprising drop of seven, eight bushel, an acre on a national scale, that's gonna cause some waves. Yes.

Yeager: Spend a whole bunch of time on corn. We can't ignore the soybean contract. That is a 4.5, three crop with a 51.7 bushels per acre. What stood out in beans to you?

Seifried: That was the big shock, right? I mean there were, there were both shocks in the opposite directions. Uh, as we started going through crop tour and I started saying it, uh, on, on my media interviews that I was doing on Tuesday, you know, the corn's really a lot worse than expected and the beans aren't great, but it's not as bad as the corn and that sort of transitioned to, you know, actually there's, the beans are, are not so bad when we're going through Iowa and then you get, so you see a, a soybean yield that at a 51.7, that's only slightly below the U.S. states's 51.9, just, just a hair. And that 51.9, by the way, nobody thought that was possible on an August report, there was one outta 16 analysts that had that, uh, soybean yield going higher from a 51.5. So we basically confirmed that the USDA's right.

Seifried: Uh, or the, at least the potential is there for the USDA's number more or less, you know, uh, when most people thought that was just not even a thing. So this was a tour that, that cut the corn yield very aggressively, but then also confirmed a higher soybean yield than what people had been thinking, uh, uh, three weeks ago. And that is a very interesting combination. That's not something you see very often. So now what do you say, because I'm gonna say that pro farmer number was a pretty bearish number for soybeans, but the corn number's really very bullish. So how do we rectify that Monday? Sunday night, Monday is going to be really very Interesting.

Yeager: Well, here's something else. I want you to discuss. Glen in Ohio. Mm-hmm <affirmative> hi Glen. I'm saying it for Ted's behalf. Uh, now that we have an idea of where the bushels are going to be grown and stored at harvest time, can we expect to see a huge change in historic basis levels in corn and beans in the coming marketing year?

Seifried: See, Glen's asking this because he is in Ohio. Yeah. And Ohio generally speaking, enjoys positive basises. That's just historically how that is. But if there's a whole lot of grain on the east, which by the way, I don't know if that's really the case it's really right down the heart is where the, the big grain is starting in Minnesota and go down any who, um, yeah, you can see that because you know, the guys out west are really gonna have much smaller crops than what they're, they're normally used to. Um, and so their basis is gonna be better. But I, if, if I'm Glen and I'm sitting in Ohio, I'm less worried about what the fluctuations in my basis are going to be than if you're Nebraska and specifically if you're a Nebraska end user.

Yeager: Okay. Let's talk about an end user in Nebraska. That's the cattle feeder right now. Yeah. They had a chance to buy some grain over the last two to three weeks. Wasn't a great deal.

Seifried: No

Yeager: Not as well. Has that window closed on the feeder right now?

Seifried: Uh, you know, I don't know. Um, like I said, you, you gotta, what I would think is a fairly bearish soybean number and, and, you know, you had been factoring in strength throughout the week. So if you have a, a healthy drop in soybeans early next week, maybe corn wants to retrace, but I would be, I'd be looking at dips and corn as, as buying opportunities for end users. I I'll say this, Paul right now, I think more than any other year in the last 10, since 2012, you have a tremendous amount of risk in either direction for both corn and soybeans. From a supply side, you have risk of a $3 rally from a demand side, you have risk of a global recession and a big slowdown, uh, and, and a big trimming of demand and exports in particular. So the amount of risk for both sides is higher than I've seen it again since 2012.

Seifried: And I think that is, that's gotta be a strategy. You know, you, can't just, uh, you can't be complacent for one, but if you're not gonna be complacent, you have to do something, but then you have to figure out a way and use a strategy that leaves the side open that you wanna see, right. For producers, you gotta, you gotta do something to, to, to manage your downside risk while leaving the upside open and vice versa for end users. But there's gotta be some protections taken in these markets because of the violent swings that could be possibly coming in either direction.

Yeager: All right. I we'll get to cattle in a moment. I need to talk about hogs quick. Yeah. Uh, again, lower this week, cash is lower. There's a negotiated run. That was a big sale. Any turn for the hog producer here coming?

Seifried: Yeah. You know, I think we found some pretty good support on the chart. Um, you know, if we are going ahead into a bit more of an eco, economic slowdown, you know, the recession talk comes back and domestically and globally, I think hogs find quite a bit of interest because of the cheaper protein potential and, and more, uh, uh, more demand potential for the cheaper pro protein. Um, I'm fairly bullish hogs because I think it is going to be a bit of a tough fall into winter. I think the Fed's gonna get very aggressive, even more so than what they have been. Um, and I think that, that conversation's gonna come back into the mix and I think there's, there's maybe some good news for hogs, the demand side of hogs further on down the line, uh, at least for now, I think we've broken enough off the highs that I don't see a whole lot of downside potential from here. Uh, you're at some very key support, but if you break that key support, obviously that's a problem. So you gotta, you gotta watch the charts pretty closely right now. Uh, but at the moment, and, and coming out of this week, I feel like the break has happened. I'm starting to feel like it might be time to turn and at least try to bounce back towards those highs.

Yeager: And we're gonna bounce to the exits now, Ted, thank you.

Seifried: Absolutely. My pleasure. Thanks for having me, Paul.

Yeager: Good to See you. All right. We're gonna put a pause on this discussion in this analysis, and we're gonna continue with Ted and answer more of your submitted questions in our Market Plus segment. You can find that on our website of markettomarket.org In both podcast form, and also on YouTube. All of these resources, they are free. The email inbox is now open. If you have thoughts on stories analysis, or you just wanna say hello, send us an email to market, to market@iowapbs.org. Next week, we look at the push to move data from analog to digital, to discover new opportunities. Thank you so very much for watching have a great week.

Announcer: Market to market is a production of Iowa, PBS, which is solely responsible for its content.

Announcer: What's the most complex industry on earth. It's not genetics or meteorology or logistics. It's a business that involves them all. It's farming. Thank you, farmers from pioneer

Announcer: Sukup Manufacturing company, providing equipment and buildings to store and condition grain to help farmers adjust to market swings. We build drying, moving and storage equipment designed to preserve the quality of their crops, Sukup manufacturing. Store now. Profit later

Announcer: Tomorrow for over 100 years, we've worked to help our customers be ready for tomorrow trust and tomorrow information is available from a Grinnell mutual agent today.