Market to Market - September 9, 2022

Coming up on Market to Market -- A heatwave continues to roll over the West. A

new study calls ethanol’s carbon footprint into question. New approaches to

managing mental health emergencies in Rural America. And market analysis with

Elaine Kub, next.

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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.  

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Tomorrow. For over 100 years we have worked to help our customers be ready for tomorrow. Trust in tomorrow. Information is available from a Grinnell Mutual agent today.

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This is the Friday, September 9 edition of Market to Market, the Weekly Journal of Rural America.

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Hello. I’m Paul Yeager.

Weekly precipitation maps were a story of the have and have nots.

From South Texas to Maine, the Eastern Corn Belt was dealing with several rainstorms.

West of the Mississippi River, rural Americans were stuck in hot and dry loops. The last 30 days have been full of reports of reduced crop yields, poor pasture conditions and the need for supplemental feeding for livestock.

And the heat is only increasing the pressure entering harvest.

Peter Tubbs reports.

California baked under a record heat wave this week, as temperatures soared to 116 degrees in Sacramento on Tuesday.

The state's electrical utilities requested customers conserve energy during peak points, and the voluntary cutbacks reduced demand enough that the use of rolling blackouts was avoided. Tuesday’s 52,000 megawatts of electrical demand set a record for the state.

Gov. Gavin Newsom, (D) California: "27 million of those text messages went out. And within 45 minutes, we saw roughly 2600 megawatt reduction and uses had that not happened, we would have had some episodic load reduction."

Gov. Gavin Newsom, (D) California: "The state ISO, which is the Independent System Operator did not direct any load reductions, period, full stop. So there were localized decisions as a relates to issues related to extreme heat and extreme utilization of resources, which are not a typical, "

The hot and dry weather drove animals at the Orange County Zoo into the pool to find relief from the heat. Workers on outdoor projects were taking more breaks to avoid heat related illnesses. 

The record temps aggravated the effects of the multi-decadal drought in the region which helped spread wildfires throughout the state. A fire in the mountains of Riverside County killed two people (day) and has burned over 20,000 acres. The fire was only X percent contained on Friday.

Hurricane Kay is complicating the weather in the Southwest. The closest hurricane to near California in 25 years could bring flash flooding to portions of California and Arizona and moderate rain to a large portion of the region. 

On a global scale, the  World Meteorological Organization (WMO), the U.N. weather agency, is warning that there may be a third La Nina in a row. La Nina events often lead to more Atlantic hurricanes, less rain and more wildfires in the Western U.S., and agricultural losses in the central U.S. 

Wilfran Moufouma Okia, World Meteorological Organization: “For instance, when you have La Nina, West Africa -- an area going from Senegal to Sudan -- normally is struck by floods; East Africa by drought; Australia, Indonesia with floods, and so forth. So knowing the evolution of La Nina helps us anticipate."

 The recent floods in Pakistan are believed to have been worsened by the current La Nina event. 

For Market to Market, I’m Peter Tubbs.

Greenhouse gasses have been targeted for reduction by governments and environmental groups.

Biofuels were introduced as a way to combat climate change.

However, this week, analysis of emissions data puts that idea in question.

Dave Miller has our coverage.

According to an analysis of Environmental Protection Agency data by the Reuters News Agency, ethanol production plants put more than double the carbon, per gallon of fuel production capacity, into the atmosphere than the nation’s oil refineries. The Reuters examination focused directly on processing and utilized EPA emissions data from more than 240 of the country’s 250 ethanol plants.

In response, ethanol industry groups took issue with the study due to what they referred to as its single focus on one aspect of the biofuels production profile. Officials at The Renewable Fuels Association, the nation’s largest trade advocacy group, says ethanol offers significant and immediate carbon savings. In a press release from Growth Energy, the country’s leading trade association, they stated the study ignored the entire production cycle and the amount of CO2 taken out of the atmosphere from crop production, tailpipe reductions, or CO2 captured for reuse in beverage and refrigeration.

For Market to Market, I’m David Miller.

The signs in those thinking about attempting suicide are usually most visible after it is too late.

Caregivers, parents, educators and law enforcement are attempting to open the conversation earlier to provide some help before it is too late.

PBS is working on a larger effort during September, which is National Suicide Prevention Month.

Colleen Bradford Krantz looks at how some rural communities are working to take the stress off of law enforcement and bring more help to the scene during a mental health crisis.

[Police body cam video:] “This door is open.” “This door?” “Yeah, I’m just going to stick my head in. Sioux City Police. Sir? Hey, buddy. It’s the police department. Can we talk to you?”

A number of studies estimate up to 12 percent of calls to police, like this one in Sioux City, Iowa, are for mental health-related problems.

“Hey, buddy, can we talk to you for a second?” “Is it okay if we step in?”

Although these Sioux City police officers had some training to help people with suicidal thoughts, many around the nation have little to none.

“Can we do that? Hey, sir, my name is Andrew. Can we step in here and talk to you?” “Okay.” “Okay, what’s your name?” “He said okay.” “Hey what’s your name, partner?” [Video of man sitting in window.]

 

These calls can take officers off the street for hours at a time.

Nicole Skaar, Educational Psychology Associate Professor, University of Northern Iowa: “Police officers I’ve talked to have said, ‘You know, this is not our job. We would love to see more training for us and mental health providers …to help us intervene in those situations.’”

Some city, county and state governments – including Sioux City – are providing officers with additional training as well as adding mental health professionals to police response teams. In Iowa, every county is now required to have an on-call mental health crisis response team that must be able to arrive on-scene within 60 minutes.

Andrew Dutler, Police Officer, Sioux City Police Department: “I’ve seen things change rapidly. It’s a breath of fresh air to be able to show up to a call and have MCAT… a mental health professional there that’s willing to show up.”

The teams are often located in the county seat which can put those who live on the fringes of the county at the outer edge of the 60-minute time limit.

If the situation is deemed safe, the team member can stay behind while law enforcement officers move on to other calls.

Melissa Drey, crisis services coordinator, Plains Area Mental Health, Sac City: Our Sac County Sheriff’s Department, which patrols all of Sac County, has two officers. This is very similar in every single one of our counties…So if you take those officers out to, say, deal with that situation for four to five hours, it does take somebody off.”

Drey, who oversees the mental health team 75 miles east in rural Sac City, says the stigma related to mental health is beginning to fade, especially among younger generations.

Melissa Drey, crisis services coordinator, Plains Area Mental Health, Sac City: Having them understand about their mental health, about their feelings, their emotions and making it okay as a child will morph into adulthood.”

Some experts say even an hour can be too long, especially when it comes to children. The 2021 Iowa Youth Survey of 6th, 8th and 11th graders found a little more than 20 percent reported having suicidal thoughts in the previous 12 months - a 60 percent increase from five years earlier.

Nicole Skaar, Educational Psychology Associate Professor, University of Northern Iowa: Our rural people have the same incidence of mental health difficulties as our urban people. The issue that leads to higher suicidality rates in the rural areas is lack of access to services.”

Rural areas typically have fewer resources and mental health professionals within a reasonable driving distance.

All of the additional help has been viewed as a positive development, particularly in light of a nearly 20-year rise in suicide rates that has only seen a limited reversal in the past few years.

Nicky Eaton, crisis services director, Siouxland Mental Health Center, Sioux City: I was super excited from the standpoint of it’s not just a hospital situation, a hush-hush situation anymore. We are truly trying to help people be successful in their communities and be happy where they work, live and play, you know, instead of being locked up in a unit…I would also say that…it’s been really difficult, you know, to try to make all these pieces fit, especially in smaller, more rural area.”

Eaton, whose territory covers both urban and rural locations, says rural communities tend to be closely knit, with mental health support coming via churches, social groups or friends, but access to professional help – even if delivered by video conference – is key.

Nicky Eaton, crisis services director, Siouxland Mental Health Center, Sioux City: Some people are more nervous to actually walk into a mental health center and you know, ‘I don’t want to be seen’…and so being able to do that by telehealth kind of gives them that mask.”

In northwest Iowa’s Sac County, population 9,700, local authorities say mental health crisis teams have helped but there is still a shortage of beds for in-patient care.

Kenny McClure, Sac County Sheriff, Sac City, Iowa: “The state transitioned from the four or five mental health institutes they had across the state to privatization of the mental health care system. So now these hospitals are - I’m going to call it ‘cherry picking’ who they take for patients.”

McClure says those facing a mental health crisis may instead end up waiting in a rural hospital’s emergency room, most of which don’t have security guards. When hospital staff feel like they are in danger, they call the local sheriff or police, which, in turn, takes officers away from other calls.

Kenny McClure, Sac County Sheriff, Sac City, Iowa: “We don’t have the resources, we don’t have the bed availability, we don’t have the manpower. And in some places, we don’t even have the cell phone coverage to communicate…. You can’t put a mental health patient in jail… That’s not where they belong. These people need help. And I believe the system, for the most part, is a failure.”

In nearby Woodury County, home of Sioux City, population 82,000, the mobile crisis unit has saved officers an average of 30 minutes per mental health-related call.

Officer Dutler, who was a mental health counselor before becoming a police officer, and three others responded to this call where a man was sitting on the windowsill of his multi-story apartment, considering ending his life. The man told Dutler he was upset about a close friend who had killed himself the week before.

Andrew Dutler, police officer, Sioux City Police Department: “Every single human being on any given day is dealing with some level of mental health.

Video: “We have a group that will come talk to you and set you up with resources”

Andrew Dutler, police officer, Sioux City Police Department: And maybe it hasn’t elevated to a crisis for you at that point in time, but we’re all dealing with life’s little quirks and situations and so bringing that awareness and having the partnerships has brought us a long, long ways.”

Video: [mental health professional walks in:] Would you be okay if I talk with you instead? I’m going to sit here. Thanks, guys. Thanks for coming out… See you later.

For Market to Market, I’m Colleen Bradford Krantz.

If you are thinking about suicide or if you or someone you know is in emotional crisis, call or text 988 any time for confidential, free, crisis support.

Next, the Market to Market report.

Russia rhetoric on Ukraine cast a shadow over the trade that was making moves ahead of a USDA report coming Monday. For the week, the nearby wheat contract jumped 59 cents, while the December corn contract added 19 cents. The bean bears and bulls are doing rock, paper, scissors over whose turn it is to drive the soy complex as the November contract dropped 8 cents. December meal shed $7 per ton. December cotton expanded $1.63 per hundredweight. Over in the dairy parlor, October Class III milk futures improved 87 cents. The livestock market was higher as October cattle gained $1.13. October feeders put on 63 cents. And the October lean hog contract rebounded with a $3.15 move up. In the currency markets, the U.S. Dollar index fell 49 ticks. October crude oil lost 42 cents per barrel. COMEX Gold added a $1 per ounce. And the Goldman Sachs Commodity Index moved lower by almost 12 points to finish at 645.75.

Yeager: Joining us now to provide some insight is Elaine Kub. Hi, Elaine.

Kub: Hello, Paul.

Yeager: The wheat discussion it would be pretty easy just to say wheat (?) because it's hard to make sense with Australia having a large crop, it's still dry as we're getting ready to plant a winter wheat crop, there's possible rain and cooler temperatures coming for some of that same area and then there's this Vladimir Putin saying Ukraine is not doing enough exports to Africa. What is your take?

Kub: You're right, there's a lot of subtle little things and you could kind of go one way or the other. Russia has a nice big crop. North Dakota and Minnesota are late harvesting the spring wheat crop. So there's lots of little stories. But the overall impact of each of them together is kind of nothing. That chart is pretty flat at the moment and that may be about as good as we can hope for. Honestly some stability is better than the wild volatility that we experienced earlier this spring.

Yeager: So you're saying stability is a winner over the instability of before?

Kub: Yeah, I mean it's hard to get very bearish for wheat because there is always going to be this threat that something new may happen to disrupt those shipments across the Black Sea. Actually during the month of August that grain corridor was kind of working and somewhere in the range of 1 million metric tons theoretically made it out of Ukraine and there's the possibility of lots more coming out of Russia because they had such a big crop and the ruble is weak, etcetera, etcetera.

Yeager: They stole crop. That theory is out there too that that's what Russia is putting on the market. Is that in the discussion too?

Kub: That it's available to the worldwide market. So there's sort of in my opinion a bearish tilt to the supply thing. Here in the United States you look at the futures spreads and the story is that there is bearish ample supply of wheat despite the drought that we have experienced in this country in wheat country for years now. Nevertheless, we have plenty of the stuff. So you have sort of a bearish tilt but you can never get too bearish because something strange may happen geopolitically.

Yeager: Real quick, what are you doing then? Are you hanging tight?

Kub: That's tricky, yeah. You want to sell to avoid the potential problems or to take advantage of this while you can. It would be tempting to do some sort of an option strategy to keep a little bit of ownership.

Yeager: This U.S. dollar is impacting wheat, also impacting corn. Which one is it impacting more?

Kub: Wheat, wheat is typically more sensitive to the dollar. But let me tell you about the dollar this week, we had a reaction based on what was going on in the European Union. They raised interest rates, the Euro goes up, the dollar goes down, wheat goes up. That's great. That's all fine. But that's sort of a short-term thing until the U.S. Federal Reserve does their own interest rate raise in two weeks. So you have sort of a mismatch in timing between these two central banks and I wouldn't get too worried about this being a longer term phenomenon.

Yeager: Let's move around DC to another government agency. USDA is going to release something on Monday, highly anticipated because we haven't had as much data from USDA. What do you make about what is to happen on Monday in corn specifically?

Kub: Yeah, I should have started this whole show with a disclaimer that anything we say here today kind of just goes out the window at about 11:00 a.m. on Monday. We can say what we want but until you see those numbers who really knows. The expectation for corn is that they're going to cut the yield to 172.5 or something. So that sounds reasonable in comparison with the crop tours that we've seen this summer. But like you say, there could be a lot more that they could do. This time around in September they may actually change some acreage numbers taking in some FSA data, which would be unusual. So they could make all kinds of adjustments. I think they can still make adjustments to exports even though we haven't had weekly export data. They probably have access, we still certainly see the daily export sales reports and they seem to be seasonally appropriate. So there could be all kinds of changes and some sort of big reaction on Monday. But again, that's not going to be the longer term reality two weeks down the road.

Yeager: USDA has a history of not making big changes on non-big reports until this year when they have been making more changes incrementally. So if you want to stick your neck out a little further on what you think is a big move? Or has the market already factored in what might happen Monday?

Kub: No, I think if they change corn yield and certainly if they change corn acreage in the September report on Monday, if nothing else you've got the funds, the algorithmic traders that go through and scrape this data and trade based on the USDA data, even if other fundamental traders already have priced it in based on crop tours or if they're waiting for more certainty from harvest reports, which are going to be late this year. Nevertheless, there will be some sort of just sort of automatic reaction from computer traders if nobody else.

Yeager: All right, so we're looking at the March contract there at $6.89. Is this an opportunity to do something?

Kub: I don't know, Paul. If somebody offered you the change to sell $6 corn two years ago, three years ago, would you have jumped at that chance?

Yeager: Especially close to $7 corn.

Kub: Yeah, so yes, in my opinion, yes. Sell your grain, make some money, lock in some money.

Yeager: Okay, let's move to beans. Again, Putin, dollar, USDA. But the bigger more mystery is the weather. I see a lot of green beans still out there, not much turning leaves. If rain would fall, it fell in North Dakota, South Dakota, Minnesota, it's supposed to fall in Iowa, Kansas and move east, too little too late or will it help?

Kub: No, it's still doing some good on soybeans. And ordinarily we'd be panicking about an early frost with the late planted soybeans. But my understanding of the weather forecast so far is that we should expect to see a nice long warm late summer, end to the summer year and no current threat of early frost that anybody is talking about. So knock on wood, it might all work out and yeah, then this weather, as you mentioned, the rain that comes through and falling on these late planted soybeans is still going to do some good bearishly to production.

Yeager: In Iowa I actually saw a bean field being harvested yesterday.

Kub: Really?

Yeager: Yeah, it was the only one. I only saw some turning in a big circle that I drove, a couple hundred miles. And it just shocked me coming over, I'm like look at the dust. So that was early. But I guess my question becomes, did the heat that we had in June accelerate the crop and so that's why we haven't even discussed this early frost business?

Kub: You may be right in some portions of the Corn Belt. But when you were talking about North Dakota, Minnesota, those areas, Michigan even, there was so much late planting and that is true of most of Iowa, certainly there were some fields that got planted early but generally our worry is of the late development. And you see that in the crop progress report, everything is about 3 to 4 percentage points behind average pace of progress.

Yeager: All right, real quick the Brazilian crop, are we paying attention to what it's doing to us market wise?

Kub: Yes, especially because there could be considerable volatility from the Brazilian real in their currency. When we're talking about the dollar's effect on things and Russian ruble's effects and the Brazilian currency's effect on things, that could be very volatile in October with their presidential elections coming up. So it pays to pay attention to that. Their planting season will probably be nice and fast because the current forecast is for good rains to get started here.

Yeager: Coming out of left field, cotton, rallied last week. Really it's just been kind of on an up and down.

Kub: Yeah, super hard to trade, very up and down. That range is so wide from about 82 cents to $1.20 that it could go anywhere in there. Everything is very dry, very drought stressed but it sort of depends on what the rest of the economy does too, what that market trades from day-to-day. If you're speculating in cotton I think your only play is to be selling options to get that volatility premium. There's just so much volatility and potential for ups and downs.

Yeager: Dry in a lot of the cotton area which is also cattle area, live cattle. You hear these stories of liquidations. When will we get a good handle on that impact on the market for live cattle?

Kub: I don't think that the packers are necessarily seeing any reason to be worried about that yet. We actually saw some cash cattle prices come down on a dressed basis, only $226 this week, only $226, but that's only because it can't go up every week. And yeah, the boxed beef is sort of moving lower. But overall this is a very strong market and everybody knows it. As you say, the herd has been diminishing because of the range conditions are so poor. None of that has gone away, none of that has changed and seasonally we're going into a stronger season.

Yeager: So who wins when cash is king in cattle?

Kub: The cattle producer, the feeder to some degree if they're able to find calves at a bargain price, which is not typically possible.

Yeager: Well, let's flip over to feeders then. What is available out there for purchase for anybody that thinks that I should be expanding right now?

Kub: Right. Well, so as we're going into the October season sort of these big fall runs I suspect you'll see lightweight calves that are going to get that $2 mark. That is probably still going to be out there for folks. Right now we're not seeing it yet and that seems crazy but when you look six months out and you can sell the live cattle contracts, you could hedge that live cattle contract at $155, so particularly for folks who are feeding their own corn, I believe there is a reason why this market is still chugging along here and able to make this work.

Yeager: Well, we rallied I believe in livestock to start the week -- people are very attune to that. There was a time where we weren't reacting to a selloff in grain. But now do you think that some of those people buying grain or feed have said, oh I have to take advantage because they see grain moving higher?

Kub: Yeah, maybe you're right that folks are actually locking in some prices. But again, this is going to go back to sort of a pass if we just say that the feeder cattle always react the opposite direction of corn. That is just sort of an algorithmic trade, just what the markets do from a day-to-day perspective.

Yeager: All right, the hog market. It has been -- there's the stories of China, big cities locking down. Is that an impact? But have we really been at the mercy of exports in hogs lately?

Kub: I think yes, actually pork exports may be the driver of why we've seen this market sort of fall apart lately. And there was a forecast that going into 2023 China's imports of U.S. pork would continue to fall into 2023. So that is just sort of a bearish tone all the way across the months for lean hogs. And yeah, I think that's true. And it's hard to say specifically because we don't have weekly export data in the last couple of weeks. But that in my opinion does seem to be the long-term driver.

Yeager: Real quick, dollar. Are we done marching higher?

Kub: No. I think in a couple of weeks we're going to be looking at a Federal Reserve interest rate bump. I don't want to say certainly, but that certainly seems to be the expectation from the market. And when that happens again, it's still the world's reserve currency.

Yeager: All right, Elaine Kub, thank you. I've got a whole bunch of questions for you in Market Plus so stay with us please.

Kub: Sounds good.

Yeager: All right, that's Elaine. And as I said, we're going to put a pause and continue and answer more of your submitted questions, I'm not kidding when I say a whole bunch there, in our Market Plus segment. Find that on our website of MarketToMarket.org. It's available in both podcast and YouTube form. All of these resources, by the way, they're free. Harvest is at hand and as you grease the bearings and prep the head we are looking forward to your pictures from the field on our Instagram feed. Let us share your view by tagging us with MarketToMarketShow. Next week, we look at the uncovering of clues that might lead to a COVID-19 treatment derived from pig cells. Thank you for watching. Have a great week.

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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.

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

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.  

(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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