Market to Market - May 12, 2023

Coming up on Market to Market - The Supreme Court upholds Prop 12 impacting the hog industry. New approaches for mental health emergencies in rural America. And market analysis with Naomi Blohm, next.

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This is the Friday, May 12 edition of Market to Market, the Weekly Journal of Rural America.

Hello. I’m Paul Yeager.

Two different gauges on inflation were released this week - both still revealed pressures on prices at the wholesale and retail levels.

The Consumer Price Index added 0.4 percent in April and 4.9 percent in year-over-year readings. Gas and food prices have stayed at elevated levels. 

When the two sectors are removed, the core reading was also up 0.4 percent as rents and vehicles were higher.

Wholesale prices ticked up in April, but at a much more standard level of 0.2 percent. The annual reading was up 2.3 percent, the tenth consecutive slowdown.

Core PPI also registered a 0.2 percent gain last month.

The Supreme Court issued a ruling Thursday in a case heard back in October. The distance between arguments and decision could lend insight into the gravity of the case - pitting what some legal experts label as a states right case between the National Pork Producers Council and the California Department of Agriculture.

California’s Proposition 12 was upheld and reaction came quickly.

Peter Tubbs reports.

One of the most common production practices in animal agriculture is due for a massive overhaul.

The United States Supreme Court, in a 5-4 ruling, upheld California’s right to require pork sold in the state to meet minimum humane standards.

Proposition 12 was originally passed by California voters in November of 2018 with 63 percent support, and has been challenged by industry groups as violating the Commerce Clause of the Constitution. Multiple courts have disagreed.

The National Pork Producers Council, which brought the suit, maintains the policy should have been struck down. It argued California produces far less than 1 percent of the nation's pork, while maintaining a large appetite for the end product thus placing a heavy burden on out-of-state pork producers. 13 percent of the country’s pork is consumed in California.

The Court’s opinion argued that as the Prop 12 rules applied to all pork producers, both in and outside Golden State, and did not create any unfair protectionist schemes, it was constitutional.

The NPPC maintains its case.

NPPC statement: “We are very disappointed with the Supreme Court’s opinion. Allowing state overreach will increase prices for consumers and drive small farms out of business, leading to more consolidation.”

The United States Humane Society, which promoted the proposition in 2018, celebrated the result.

Kitty Block, president and CEO of the Humane Society: "We’re delighted that the Supreme Court has upheld California Proposition 12 - the nation’s strongest farm animal welfare law - and made clear that preventing animal cruelty and protecting public health are core functions of our state governments.”

Pork processors now have decisions to make.

Jennifer Zwagerman, Drake University Agricultural Law Center: “It's really packers that are going to have a lot of decisions to make here right now. I mean, think of our contract system. You know, individual producers are really sort of at the direction of whoever they're contracting with. And so, the contractors are really going to have to decide quickly, are we going to segregate some plants for right now so that we know. Everything going forward to conform to compliance with their regulations? Are we going to keep that segregation quiet? Everyone plays a role and are we going to set a precedent rules? I think a lot to say right now to sort out.”

For Market to Market, I’m Peter Tubbs.  

May has been recognized as Mental Health Awareness Month since 1949.

The National Alliance on Mental Illness is celebrating the month with a campaign called More than Enough highlighting the inherent value we all hold.

Research has found 46 percent of people who die by suicide had a known mental health condition.

In rural America, health care comes from many sources - including more options to those sworn officers of the law.

Colleen Bradford Krantz looks at how communities are working to take the stress off 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 Woodbury 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.

Video: [shows man being pulled safely inside]

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.

USDA’s Friday report sent the grains higher as lower domestic wheat supplies were not enough to overcome global factors in the Black Sea and Turkey. For the week, the nearby wheat contract sold off 25 cents, while the July corn contract shed a dime. The soy complex traded news the Brazilian crop keeps getting bigger. The July soybean contract lost 47 cents, while the July meal contract added $6.80 per ton. July cotton shrank $3.37 per hundredweight. Over in the dairy parlor June Class three milk futures dropped 44 cents. The livestock market finished higher as June cattle improved $2.47. August feeders put on $7.55. And the June lean hog contract expanded by 32 cents. In the currency markets, the US dollar index was up 153 ticks. June crude oil lost $1.30 per barrel. COMEX gold cut $3.70 per ounce. And the Goldman Sachs Commodity Index fell a little more than 5 points to settle at 540-even.

Yeager: Joining us now is regular market analyst Naomi Blohm. Hi.

Blohm: Hello, Paul.

Yeager: A couple of things going on this week?

Blohm: Oh my goodness, it has been a big week, yes.

Yeager: I was thinking about this week, as I always do, that there's always, it seems that the swings that happened in days now seem to be extended over weeks. But this week changed that script again. What's going on in wheat?

Blohm: The USDA report today was friendlier than what trade was thinking. Trade was thinking we were going to see U.S. production numbers increase. So, we were anticipating some bearish activity today, prices over the week trying to find a low but just didn't have any news to take it higher. So, the report today was friendly because all of the expectations for everything for U.S. wheat between ending stocks and production in each category was smaller than what the trade was thinking and pretty much unchanged from the month of April. So, that was quite friendly to the market. And when you look at how the Kansas wheat crop is only 11% good to excellent and 68% poor to very poor and the Kansas Wheat Tour is next week, trade is starting to wake up a little bit and we saw that with the Kansas wheat market just ratcheting higher this week. At one time on Friday Kansas wheat was trading 50 cents higher because that market really still had been so undervalued. Now, there's a few things starting to kind of ignite around the world and trade hasn't picked up on it yet. So, today's USDA report for the old crop ending stocks for world ending stocks, no big changes on it because we're still tight on global supplies. But here is what has been happening around the world, we've got news this week that the Australian crop is going to be about 25% smaller than a year ago. The Canadian crop is really still suffering under drought and has dry conditions. We have now the Black Sea agreement that did not get agreed upon and I think that was significant because the last two times that those countries came together to talk, yep they figured out a deal and something happened, but this week it didn't. And Putin is digging in his heels and part of that is because the President of Turkey is up for election on Sunday. So, Putin knows what is going on. Plus, there's a G7 meeting late next week and the grain corridor deal is done in the middle of next week. So, there is no resolution there. Now, cue China. China came in and they have been negotiating with Australia because they have been wanting to buy some Australian wheat. China this week and America, there was a secret meeting in Vienna that happened over two days and they met for eight hours over two days, U.S. and Chinese negotiations. So, we're talking. And I think part of that is because the El Nino pattern is happening, it's at 90% odds now and when that happens in Asia they have extreme heat in the summer and extreme dryness. So, you have the Russian wheat crop at risk, you have the Chinese crop at risk, the Indian crop at risk. China grows 17% of the world's wheat. Everything they grow they use. And they have to import some. India, everything that they grow they use and they are at the verge of maybe will they have to import because they have been dealing with these dry conditions as well. So, now you have Russia who is kind of putting up a fight about this Black Sea trade issue and potentially going to be seeing these terrible conditions this summer and the wheat market is starting to wake up. The funds are still short over 100,000 contracts. And I think next week we are going to finally see some fireworks in that market.

Yeager: Okay, so what do I do then?

Blohm: Well, if you are a producer who has wheat to price I would hold off because I think you're going to see this market again finally wake up. A lot of times the wheat market will ignite higher into the last few days of May and into early June. So, just take advantage of what is there and really be in tune of global news this week. It is such an important week and weekend to be hearing about all these factors.

Yeager: A whole lot on wheat. There's a little bit of spillover into the corn market on some of those factors. To me stands out the China news because they were buying corn from South Africa. What does that do to us here?

Blohm: Well, China learned last year that they can't just rely on the Northern Hemisphere to grow their corn because they did not have a great crop last year, obviously we didn't either and then the whole Ukraine thing messed everything up. So, they are trying to get their paws into the Southern Hemisphere so they can get corn year-round whenever they need it. I think that's all that was with South Africa, it's just making sure they can secure more product, again, because this El Nino is coming in and they're at risk of not having a great crop. And right now, who knows if the United States is going to be having a wonderful crop this summer or not. And what a benefit to them that Brazil did. In the first quarter of this year, China was able to import about 7 million metric tons of corn, a third of it from U.S., a third from Brazil and a third from Ukraine. And now with this grain corridor still not fixed, China is suddenly willing to cooperate and talk with people around the world again.

Yeager: It's amazing what happens when you're faced with those challenges that you are. So, Doug in Michigan, I stole your question, I'm sorry. But what does that do for the impact moving forward then because it seemed like China had removed from anything we were watching here. We're always watching China. But it didn't seem to be the dominant factor. So, as we're putting this crop into the ground right now, I'm sitting on the tractor, what am I thinking about that crop that's going in right now, the new crop?

Blohm: So, with the new crop what you're thinking of is you're probably going to have a two to four-week window of one kind of a price increase and you've got to move on it. That's what you need to be thinking about. 12 out of the last 15 years the December corn futures will take out whatever the March price high was for December corn earlier in that year. In the three years that it didn't, one year was COVID, nothing worked that year, the other two years the market came within a nickel of that price high. So, what we're looking at is about the $5.75 price area. So, that is a significant potential rally that we have here. But I need to emphasize, again, when it comes, if it can come, you've got to be ready to move on it. I would even encourage you to have orders in with your elevator ahead of a time, have orders working that if the market does go up that maybe you have an open order for a put to buy so when it comes back down you have that price floor established. So, keep an eye on that along with China. Brazil crop we just heard yesterday it's getting toasty down there so things may not be perfect and that crop was planted late. So, there's a few things starting to stir in this market that should be good for the American farmer and for better prices.

Yeager: Same with beans, you're talking a little bit of the second crop there with corn impact. But the bean impact is Brazil still? Is that the big thumb on the scale?

Blohm: So, Brazil, yeah, it was truly a benefit to the world that they had as big of a crop as they did. The USDA acknowledged that on the report today. They increased the Brazil crop. But what was interesting they did not make any changes on the Argentina crop and everybody is still assuming that the Argentina crop is getting smaller yet. So, the USDA for new crop on the report today, they increased demand for crush for next year, which we figured was going to be happening, and as far as exports they did not make any big jumps for exports for next year, which makes sense because we might be exporting maybe more soybean meal or soybean oil or potentially Brazil is going to get a little bit more of that business. But we're not out of the woods yet. The USDA put in record yields for corn and beans today matching what they put on the February Outlook Forum. So, I think in the biggest picture sense we've priced in this record crop and corn is holding $5 for the new crop. Those November beans got below that $12.50 support area but I think can come right back up next week, especially if wheat is rallying, corn is going to rally and the beans are going to follow. One other thing with soybeans too, remember, is that with that El Nino happening in Asia, Malaysia who makes most all of the palm oil is already suffering production issues and their rainfall amounts has been 40% less than normal. So, if they suddenly have issues with palm oil production then that means we're going to see our soybean and our soybean oil market really ratchet higher also.

Yeager: We need to get to livestock. Let's start with hogs. The Prop 12, you saw the case this week. What does -- the market did not seem to respond to it dramatically. Should they?

Blohm: It's trying to figure out what to make out of it. It's two-part. So, if this really is going to be going down, which it sounds of course like it is, now you have hog producers who have to figure out how to reroute how they're doing all their sow production. 24 square feet is what each sow now needs to be required, that's bigger than my bedroom. They have to make birthing suites for these sows at these farms. And so, to do that you're going to have to go to the bank, you're going to have to get a loan, you're dealing with higher interest rates, you have to really redo everything in your barn, maybe even build a new barn. So, in some instances you're going to see the sows maybe go into slaughter and you're actually going to see a reduction on the breeding herd size because some farmers might not want to deal with it or it takes a while to figure out how to do it. So, I think that's why the market wasn't sure how to respond because in some regards you're going to have more production for the short-term with more coming to slaughter, but in the bigger longer-term picture you also have less production coming because there's going to be less sows out there available until they get this figured out. So, short-term maybe a little bit of negativity. But the long-term it's going to be less production down the road. So, that's why the market I think is not sure what to make of it.

Yeager: What do you make of feeders? Another $7 higher this time, not lower like last week.

Blohm: Yeah, so the feeder market is sitting right on support levels for charts. They had a nice correction lower and they too are in the waiting game. You've got fat cattle at the higher end of trading ranges, feeders on the lower end and I kind of really think that the biggest thing that we're going to see for cattle in the short-term is just to trade sideways a little bit. We know production is going to be down. We're waiting to see what the grain prices do. We're waiting to see how pasture conditions are. And waiting to see consumer demand as we get into summer more and grilling season. So, I'm not looking for anything substantial for the cattle market. But it's not bad news either.

Yeager: You did cover fats just a little bit. Do you still see there's that connection, economy, live cattle market like there has been for so long?

Blohm: Oh, for sure we're watching that, with domestic demand we're watching the export market and with domestic consumption so far it seems like it's hanging in there okay but we have seen boxed beef values this past week just edge a little bit lower. So, we're wondering if the short-term Memorial Day demand has been met or going into 4th of July. But it is still expensive at the grocery store. And so, we're going to start to see if the end user, if the consumer is going to be making a lot of bigger changes or not and now we might have cheaper pork at the grocery store, so a lot of things to be keeping an eye on.

Yeager: Take a breath. Excellent work.

Blohm: Thank you.

Yeager: Naomi Blohm, we're back here in a moment as we are going to pause the analysis and continue our discussion about these market in our Market Plus segment. You can find both analysis and Plus on our website of MarketToMarket.org. These resources, by the way, are free. We do love hearing from you on story ideas, comments and general conversation. Drop us an email via markettomarket@iowapbs.org. Next week, we look at how the new Farm Bill may affect industries that sprouted from hemp farming. Thank you so much for watching. Have a great week.

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

What's next doesn't happen by chance. It happens when researchers and farmers work together to solve tomorrow's agronomic challenges. We're committed to creating what's next because at Pioneer, our name is our mission.

(music)

Sukup Manufacturing. Celebrating 60 years of innovation as a family owned and operated manufacturer of grain storage, drying and handling equipment out of Sheffield, Iowa. Learn more at Sukup.com.

(music)

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.

(music)