Market to Market (April 12, 2019)

Apr 12, 2019  | 27 min  | Ep4434

Coming up on Market to Market -- another bomb cyclone pounds the Upper Plains.

African swine fever cuts into a national gathering. Sidestepping stereotypes for a shot at a career in agriculture. And market analysis with John Roach, next.

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

Hello, I’m Delaney Howell. The wish for a one-armed economist has re-surfaced. 

-- On one hand, the 2017 Census of Agriculture revealed a 3 percent drop in the number of farms since 2012. On the other hand, the same number of acres are being farmed.

The consumer price index rose 0.4 percent. Without food and energy in the mix, Core CPI bumped 0.1 percent higher. On the other hand, inflation appears to be in check.

The Fed is planning to leave interest rates unchanged for the rest of the year. On the other hand, the FOMC will raise rates if inflation gets out of control. -- 

U.S. hog farmers are among those who have watched as import duties cut into their top export markets. They would like to sell more to China, an area hard hit by African swine fever. Currently, A-S-F is in 20 provinces and has affected a herd 30 percent larger than the annual production in the United States.

As producers wait for a trade deal, the disease has caused more international fallout.

Peter Tubbs reports. ---

Citing “An abundance of caution”, the National Pork Producer’s Council this week cancelled the 2019 World Pork Expo, which had been scheduled for the Iowa State Fairgrounds in June.

The Expo attracts 20,000 visitors each year from around the globe, some of whom come from regions with herds infected with African swine fever.

African swine fever does not affect humans, and requires the destruction of both live hog herds and meat harvested from the infected farm. There is no known treatment for ASF. The industry currently lacks a vaccine but biosecurity measures are holding the disease at bay.

China reported the first recent case of ASF in 2018, and has documented over 120 outbreaks of the disease. Officially over a million hogs have been culled, but experts believe that number is propaganda and grossly underestimated.

Preventing a jump of the virus across the Pacific is a priority for the U.S. pork industry.

Jim Monroe, Senior Communications Director, National Pork Producers Council: “An outbreak of African Swine Fever in the United States would be devastating to our farmers, they are already facing challenges on the trade front due to trade disputes with Mexico and China, two of our largest export markets, and if we contracted African Swine Fever here, it would immediately close our export markets.”

According to USDA data, China, Mexico and Japan cut pork imports during the last 10 months of 2018 by over 200 million pounds – a drop of seven percent from 2017s sales.  

Reports are beginning to surface that Chinese consumers are losing confidence in all pork regardless of where it originates. Even if consumers maintain demand for pork as the local supply declines, tariffs are expected to continue to limit imports from American producers.

For Market to Market, I’m Peter Tubbs.

Vice President Mike Pence visited Iowa to observe flood damage downstream of the latest spring storms. Disaster aid packages are being put together even as the weather refuses to acknowledge that the seasons have changed.

Josh Buettner reports.

This week, the second “bomb cyclone” weather system in less than a month prompted blizzard warnings from the Rockies to the Upper Plains – restricting air travel and raising the prospect of renewed flooding in the already drenched Midwest.

Heavy snow in South Dakota, Minnesota and Wisconsin created life-threatening conditions.  While the storm’s intensity was forecast to wind down near week’s end, authorities say several more inches of snow and relentless winds would be expected across the region.

Man (unidentified)/Faribault, Minnesota: “I was coming south.  It was getting pretty bad.  Everyone was going 35-40 mile an hour.  If anybody’s smart, they won’t drive.”

Before the weather event hit, an ice jam caused a bridge collapse in Norman County, Minnesota as portions of the Upper Plains readied for more flooding. Rising water forced several road closures in neighboring North Dakota midweek.

Master Sergeant Michael Knodle/North Dakota Air National Guard: “We got a call about a homeowner needing some sandbags.  We arrived on the scene, assessed their situation, noticed that they could use a couple extra hands…so we volunteered to help them fill their culvert and get their water situation under control.”

As the storm was brewing, two EF1 tornadoes slammed into northeast Alabama destroying homes and farm buildings.

The weather system will leave heavily saturated ground in its wake and is expected to hamper the start of spring planting in some sections of the Corn Belt.

For Market to Market, I’m Josh Buettner.

Viewers of this program know that there are more careers in agriculture than just production. Occasionally, the number of openings exceeds the number of applicants. Colleges and universities are working to fill the gap by recruiting yet another slice of the population.

Colleen Bradford Krantz has more in our Cover Story.

Pop quiz: What year did women first represent half of the U.S. college students earning bachelor’s degrees in agriculture and natural resources? It was 2012.

Next question: What year did African Americans first begin earning bachelor’s degree in ag and natural resources at a rate matching their percentage in the overall population? It has yet to happen.

But there has been an increase in the total number of students earning agricultural degrees, and university faculty are optimistic about the growth.

Dr. Antoine Alston, North Carolina Agricultural and Technical State University: “No matter what your background is or where you’re from, everybody has a place in agriculture… it’s important to get these young individuals with these bright aspiring minds.”

As of the 2016-17 school year, North Carolina Agricultural and Technical State University – also known as N.C. A&T – was sending more African Americans into the world with these degrees than any other U.S. university. The numbers graduating from the Greensboro-based school are still relatively small -- only 41 African Americans earned degrees at N.C. A&T that year – but many universities discovered that having even a handful of minorities studying agriculture at the same time can make a difference when it comes to retention.

Dr. Antoine Alston, North Carolina Agricultural and Technical State University: “The only barrier usually is trying to get over some of the stereotypes if the parents have not had that exposure to what agriculture truly is … As African Americans, we have had a greater history in agriculture than just the stereotypical slavery, Civil War times.”

Dr. Ralph Noble, North Carolina Agricultural and Technical State University: “You don’t have a lot of parents maybe encouraging their children to go to work on the farm. The farm was used as a resource to get away from the farm, to pay for college education to find another job.”

The list of U.S. universities that sent more agriculture and natural resources bachelor degree holders into the world is topped by Texas A&M, which also graduated the greatest number of Latinos. The University of California-Davis had the most Asian Americans earning four-year degrees in these fields while Oklahoma State University graduated the most Native Americans.

But considering how few young people of any ethnicity now grow up on farms, most arrive on campus having had little to no previous exposure to livestock or crops. North Carolina A&T’s Animal Science Department, where 82 percent of the fall 2018 students were female, has a farm that allows students to handle a wide variety of livestock and other animals.

Dr. Ralph Noble, North Carolina Agricultural and Technical State University: “You go from maybe a poodle dog up to handling a cow that might be a thousand pounds, or a bull over 2,000 pounds, so sometimes there’s a certain amount of impression you can make on a person when they handle something that big.”

The department also talks with the many students who plan to become veterinarians about other careers in animal science.

Dr. Ralph Noble, North Carolina Agricultural and Technical State University: “The agriculture industry is very, very broad and very, very large and everything doesn’t require you driving a tractor. Right now, I think for maybe a dollar for a hamburger, the farmer only gets about 25 cents. We train the students to go after the 75 cents, and that’s where the careers are right now.

Although he had little exposure to agriculture as a child, Durham resident Kamal Bell loved animals and being outdoors, and decided to study animal science when he attended N.C. A&T. He also earned his teaching certificate, and now teaches agriculture at a Durham middle school.

Wanting to provide an option for his students beyond the school’s basic agriculture program, Bell obtained grants and loans to purchase 12 acres about 30 miles from the metro area. In 2016, he launched an academy specifically for African American middle and high school boys called Sankofa Farms Agricultural Academy. All of the current members, who must be invited by Bell to participate, are from urban neighborhoods in Durham.

Kamal Bell, Sankofa Farms: “When we look at African American boys, I hate the fact that when I asked a young boy or young man, ‘What do you want to be?’ and they say basketball or football player. That’s not a career that is solving issues in our community, but agriculture is…I think this is a way that we can reconnect and it starts to heal from a lot of the negative experiences we have had that have taken us away from the farm.”

The academy, which will eventually invite African American girls, currently has seven boys, who are responsible for growing vegetables, raising poultry and taking care of bees. At least twice a week, Bell loads the boys into a van for the trip to the farm.

Kameron Jackson, who is 16, and Jazon Graham, 15, are both in their second year working and learning at Sankofa.

Kameron Jackson, Sankofa Farms Agricultural Academy: “When I told my mother I first wanted to come to the farm, she really didn’t believe me at first because she just thought I was playing around. But as I told her about Mr. Bell, she started to grow a liking to it as well. And then she thought it would be really good for me because I have anger problems. And since I came to the farm, I’ve learned to control my anger a lot better than before.”

Jazon Graham, Sankofa Farms Agricultural Academy: “Mr. Bell was my teacher, and I used to get in trouble a lot. So as a way for me not to get in trouble, he would bring me out to the farm and then he would talk to me about learning about agriculture, understanding biotechnology, animals, and the life of the plants. And I just liked it.”

Both boys want to study agriculture in college, and Bell plans to help them accomplish their goal.

Kamal Bell, Sankofa Farms: “I think agriculture has a really bad stigma about: ‘You’re just going to be a farmer’ because I got that all the time in college. But through me being out here on the farm, I’ve learned so much about other industries, and there are so many career opportunities in agriculture that I think a lot of people overlook.”

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

Next, the Market to Market report.

Midwestern weather, a potential trade deal and a WASDE report did little to move the commodity markets. For the week, May wheat lost 3 cents while the nearby corn contract dropped 2 cents. Lower than expected export sales, a large South American crop, and reduced Chinese buying pulled the May soybean contract 4 cents lower. May meal lost a dime per ton. May cotton declined 14 cents per hundredweight. Over in the dairy parlor, May Class III milk futures lost a penny. The livestock market ended mixed. June cattle added $1.10. May feeders put on 27 cents. And the June lean hog contract shed 48 cents after clawing back from a $3 midweek loss. In the currency markets, the U.S. Dollar index lost 41 ticks. May crude oil gained 61 cents per barrel. COMEX Gold dropped a $1.60 per ounce. And the Goldman Sachs Commodity Index added a little more than 4 points to finish at 452.05. Joining us now to offer insight on these and other trends is our Senior Market analyst, John Roach. John, welcome back.

Roach: Thanks, Delaney. Great to be here.

Howell: John, we had a pretty boring week in the grains markets this week as you look at the closes compared to last week. Corn, soybeans, wheat, what's going on? Are we just waiting for some Chinese trade news?

Roach: We're waiting for something. We're right at a crossroads. We have a battle going on with your biggest customer and we have a weather situation out there that is very unusual. And so we have both the demand that is uncertain and we have the supply that is uncertain and the supply situation of course becomes more critical as we move into the next week and the week after because it's planting season and the weather is not cooperating just yet.

Howell: I want to talk about planting from a wheat perspective. Obviously hard red winter wheat we've got some of that in the fields. Spring winter wheat planting is trying to happen at the moment. Are we going to see a shift in acreage here because of all the wet weather and awful weather we've seen across the Western Plains?

Roach: We sure may. There's no doubt that farmers are still making up their mind what they're going to do when they can finally get into the field in the wettest areas. The problem with spring wheat is there's so much competition coming out of Canada increasing their acreage as they move away from rape seed because of the Chinese situation. So the competition for spring wheat has pushed the price clear to, it's the weakest market we have right now.

Howell: The spring wheat market?

Roach: Correct.

Howell: Are we going to see weather add any support to the markets here longer-term as we watch to see acreage shift around?

Roach: I was at a meeting in Ogden, Iowa today, or yesterday I guess, with about 100 farmers and I asked how many of them were worried about the crops right now and how many were planning on maybe changing their acreage mix a little bit and most of them really did not raise their hand. They're really not overly concerned yet. Maybe next week that would be a completely different response. So we're right at the critical part of the weather. Our planting progress as of last Monday was right on target so we really weren't behind. But the progress this week and then the following week will become very important to the market. And it may very well give us a lift in the price. We have everybody leaning on the downside of the market. Commodity funds are holding record short positions in several markets, and near record in the others, and so they're all leaning on the side of markets going down at the same time that we might be ready to get a deal with China and we might have a problem with weather. And so the market is going to have to make adjustments if in fact we have those issues develop.

Howell: And one of the markets that is record short positions is the corn markets. John, we touched a new low this week in the July contract, $3.64. Are we going to hold here at this low or do we have the potential to head lower?

Roach: Well, we have the potential certainly to do anything. All we would have to do is talk about African swine fever in the United States and we're going to rewrite the whole demand picture. And so there are things on the horizon, and I don't mean that they're coming at us, but they are certainly being identified as something we have to watch, that could be devastating to us. And so certainly you could have that. But let's take that away for a second and just talk about what is probably likely to happen if we don't have something really abnormal. And what's likely to happen is the market should bottom in this timeframe and we should have some recovery as we start to worry about the size of the crop we're going to be able to raise and that should start at any time. We have a buy signal on corn right now that I think is four days old and it has three of the four boxes that we follow checked. And so that says it's really a fairly reliable kind of a buy signal, not that it will work always, but it's one of our more reliable indicators. And so we're telling livestock people use this weakness in the corn market to accumulate your corn needs out into the summer on into almost to the fall.

Howell: You mentioned you have three out of the four boxes checked. John, what is the last box you're kind of waiting to see if it gets checked in the corn markets?

Roach: It's what we look at with the commodity spec funds. When we get the spec funds all on the long side of the market it's a great sale. When they're all on the short side of the market frequently it can be a great purchase. And so that's where we have them right now, it's the money flow, we call it, is at completely the opposite side of where it should be in order to check the fourth box.

Howell: Okay. What is the story in the soybean market, John? We got some news that maybe we've got an enhancement mechanism put in place here with China, but we also had the WASDE report. Did those just kind of balance each other out for a fairly neutral week in the soybean markets?

Roach: Well, the WASDE report really gave us very little news as far as beans were concerned, there were very little changes made there. But the China news keeps coming in as positive and then negative and then positive and I had to define for some millennial people in my office what Chicken Little, the Chicken Little story and we're continually ready for the Chinese but then they didn't appear. And so that is the dilemma we're facing right now and we've heard it so long that we're a little bit, believe it a little like we believe Chicken Little.

Howell: Okay, I like that analogy. When you look at the WASDE report we keep hearing this one billion bushel carryout in the soybean markets, or we're nearing it. Is the market past the point of caring about that number, John?

Roach: That's a really good point. We've been dealing with that number for months now. I like to tell people that this market is battle tested. How many times have you seen a market where you lose your number one customer and then you have record surplus supplies and the market is dealing with that for a period of months and maybe even something worse coming along in some horrible hog disease. And so that is battle testing a market. And so we're down on the bottom side of all of this and it's certainly, we could get worse, we could have some of these bad things happen. But typically what happens is the market anticipates the bad things and we overreact the market and it's never quite maybe as bad as we thought it was going to be and then markets recover. That's the history of how futures markets trade. And so we've been trading the situation with the African swine fever in China now for how many months, it has been several months that we've been trading that, so it's not a new thing to the marketplace and in all likelihood a lot of it is dialed into the market unless there's something new on the horizon that comes in.

Howell: John, since we're talking about African swine fever I'm going to switch things up because sometimes our pork producing friends get the shy end of the stick here. Let's talk about the African swine fever situation. We saw a huge export sale this week to China, 77,000 metric tons, maybe a little bit more than that. How much does this really change the African swine fever picture in your eyes?

Roach: Well, I think that the picture is bleak and we don't know if we know for sure how bleak it is. We had reports earlier on the show about the loss of the herd. And so we don't know how tough it is. The reporting out of China is somewhat suspect. And so we're really uncertain. But when we saw the Chinese business come for our pork this week that is what really lit the market back on fire. And if you look at January through February we supplied about 5% of the pork China imported. Germany supplied 20%. Spain supplied 20%. The Dutch put another 8% in. So they're buying pork from around the world in sizeable quantity. And so I'm not sure that their population yet is walking away from pork as a diet item or they sure wouldn't have paid all those extra levees and premiums in order to get that pork delivered to them at these high prices.

Howell: When you look at maybe the spillover effect that the hogs are having then on the cattle, are we seeing some strength in feeders and live cattle because of pork prices being maybe at a higher level?

Roach: Yes I think we are. I think the right way to look at the situation as far as pork is concerned we have a protein shortage that has come on in the last six months and so that is going to impact protein prices worldwide for probably quite a few more months. I don't think that this is something that is solved in weeks, this is months that it's going to take to solve. So protein demand in general is going to be rising. And one of the things that is also interesting is that the Chinese are back in buying meal, sorry, back in buying beans in the export sales report even though with the tariffs and so forth and then their livestock, there's all the reasons in the world for them not to buy any and instead they are. Now, they're not buying as big as what they were last year, but they're still buying a little bigger than what people would anticipate if they have the problems that we think.

Howell: Okay, John, we've got a good question here I think really sums up maybe some questions a lot of producers have when we look at the cattle market in particular. We've got Ethan in Dows, Iowa. He said, with the mud in the north are cattle feeders sending them to the packer at a lighter weight? And if so, will that lead to lower placements in the next cattle on feed report and a rally in the fat cattle futures?

Roach: Well, he's certainly right about we're moving cattle at lighter weights. Our weights for the cattle going to packers are running lighter than where they have been. The only exception to that is the formula cattle where they're running a little higher. So what the packers is doing is they are trying to get, take as few of their own cattle into the slaughter mix and try to build as much weight as what they can. So the anticipation is that beef prices are going to be stronger out forward because of the tight supply situation that we’re in. But we have to be careful, that is going to cross with the placement numbers, which show bigger numbers that are coming in the latter part of the summer. And so we really have to be careful that there's a seam in here where the lighter weights are going to help us with the positive prices followed by more cattle coming that are probably going to put pressure back on our market.

Howell: So longer-term the outlook is more pressure on the markets.

Roach: Pressure on the market, in general from the cattle business. But I don't want to put too much pressure in because, again, this is a protein shortage that we have in the world right now.

Howell: Okay. John Roach, you summed it up quite nicely. Thank you so much for your time today.

Roach: Thank you, Delaney.

Howell: That wraps up the broadcast portion of Market to Market. But we will keep this conversation going on Market Plus where we’ll answer more of your questions. You can find it on our website at While you’re there, check out the Classroom. Our virtual schoolroom gives you a chance to explore the science, technology and business of agriculture. Join us, again, next week when we explore the life of aerial applicators who dance in the sky while taking care of nature’s bounty. So until then, thanks for watching. I’m Delaney Howell. Have a great week!



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Pioneer Hi-Bred International is a proud sponsor of Market to Market. 


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.  

Accu-Steel, offering fabric covered buildings specifically designed for the cattle industry since 2001. The next generation of cattle buildings. Information at 


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