Market to Market (May 24, 2019)

May 24, 2019  | 27 min  | Ep4440

Coming up on Market to Market -- Farmers get more aid, as the trade war drags on. Tornadoes rip across the Midwest as the water creeps higher. The nation's attic lets “year of the tractor” roll on. And market analysis with Sue Martin, next.


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  


This is the Friday, May 24 edition of Market to Market, the Weekly Journal of Rural America.


Hello, I’m Delaney Howell.

Stalled trade talks between the United States and China signaled a deal may be farther away than rural America had hoped. The impasse triggered a second round of Market Facilitation Payments.

Farmers continue to face lower prices caused in part by the dramatic drop in sales to China. 

The payments will come from Commodity Credit Corporation coffers. According to Secretary Perdue, the CCC account will be refreshed with money from the U.S. Treasury that is, in turn, being filled by tariff payments from U.S. importers.

Peter Tubbs has more.

The USDA announced the broad strokes of the 2019 round of the Market Facilitation Program Thursday.

Tariff relief will total $14.5 Billion dollars using a pricing model that is changed compared to the 2018 version. Rather than payment based on the production volume of each operation, checks will be based on the tariff impact on the commodities produced in each county, and each farms acreage as a percent of the whole.

Bill Northy, Under Secretary for Farm Production and Conservation: “It’s going to be very understandable for a producer to be able to understand what that payment rate is in that county, and they won’t have to look at it from crop to crop across the county or different rates from different commodities.”

President Donald Trump: “We will ensure that our farmers get the relief they need, and very, very quickly. It's a good time to be a farmer. We're going to make sure of that. We'll be taking in over a period of time hundreds of billions of dollars in tariffs and charges to China and our farmers will be greatly helped. We want to get them back to the point where they would have had if they had a good year.”

Payments will be made in three segments, with the first expected in late July or early August. Acres that take Prevent Plant payments will not be eligible for MFP payments. Farmers must plant a crop to receive a payout.

Dairy producers will receive aid based on their production volume, and support for hog producers will be calculated by the size of their herd.

The USDA also announced $1.4 Billion in surplus commodity purchases to be distributed to school lunch programs and groups that address food scarcity.  Additionally, $100 million is being allotted for the development of new export markets.

The American Farm Bureau Federation says the payments will help. The Iowa Farm Bureau agreed and added their members prefer trade over aid.

Michigan Senator Debbie Stabinow, the ranking Democrat on the Senate Agriculture Committee, railed against the current plan:

Graphic: “Unfortunately, this complex scheme leaves them with more questions than answers. I have a number of concerns about whether this plan is fair and equitable to all farmers. Government checks are no replacement for lost markets, and this temporary support will only go so far.”

Secretary of Agriculture Sonny Perdue: “We would love for China to come to the table at any time. We had made great progress in that regard. When they decided to reneg on those commitments and relitigate tjhose commitments that we had, it looked like China was operating in the same way they had operated over a number of years. It remains to be seen, but it’s really in China’s court.”

For Market to Market, I’m Peter Tubbs.

Record low unemployment, lower mortgage rates and a solid job market wasn’t enough to inspire more home buyers to take the plunge. ---

New home sales sank 6.9 percent in April. Despite the decline, sales are still higher than a year ago.

Existing Home Sales slipped 0.4 percent as the pool of properties remains limited and prices are slightly higher than buyers are willing to pay.

Orders for durable goods fell 2.1 percent on plummeting autos and airplane sales.  Without the transportation sector - core durable goods declined 0.9 percent. ---

Congress failed to pass a $19 billion disaster relief package by one vote. Texas Republican Chip Roy was a ‘nay’ because the bill didn’t included money for a border wall.

Another round of wild weather will certainly add to the mounting costs associated with this year’s floods, fires and, this week, tornadoes.

Paul Yeager reports.

Another week, another round of rain washing over the Corn Belt.

Planters were delayed again, this time by severe weather as tornadoes touched down in ten states over a five-day period.

One of the hardest hit areas was the Missouri capital of Jefferson City. At least three people died in the overnight twister.

A repeating pattern of storms followed by heavy rain blanketed much of the country’s mid-section.

Some residents had to be rescued from their homes following rapid rising water in Oklahoma.  Three people were killed by flooding in the Sooner State.

The Cimarron River took out swathes of land around the northcentral town of Crescent.

Another sign of the power of water came when two barges broke free on the Arkansas River, finally smashing into a dam at Webbers Falls.  

The state’s governor warned of worse things to come.

Gov. Kevin Stitt, (R) Oklahoma: “So, the biggest concern is more rain. I mean, there's some more rain in the forecast for North Tulsa, for Northern Oklahoma, the Tulsa area. So, as Keystone gets more and more in flow, that's going to determine how much more water they have to let out into the Arkansas River.”

Some planters did roll this week as farmers tried to reverse the slowest planting progress since 1995.

Machinery was operational in parts of North Dakota which is nearing their five-year pace on corn.

The South Dakota situation is more serious. Only 19 percent of the state’s crop is in the ground, compared to the five-year average of 76 percent. Saturated fields remain in much of the state like this one near eastern town of South Shore.

Nationally, the wet weather pattern forecast continues.

The 7-day precipitation forecast from the National Oceanic and Atmospheric Administration calls for another 3-5 inches of rain over much of the same area as last week.

The weather has more than one farmer considering the prevent plant provisions in their crop insurance policy. Payouts can help defer the cost of inputs. Consulting an insurance professional can help with the decision.

For Market to Market, I’m Paul Yeager.

The transition from horses to tractors had farmers trading leather reigns for steering wheels.

The Smithsonian has acknowledged the switch by America’s farmers from hay powered beasts of burden to ones fueled by diesel or gasoline. The tribute by the nation’s attic is a testament to the life changing invention that supplements hard work, sweat and calluses - the basic building blocks of modern farming.

John Torpy has more in our Cover Story.

Shortly after the turn of the twentieth century, the introduction of the tractor to agriculture was a landmark innovation that helped farmers make a giant leap forward in reducing workload.

A century has passed since mechanical farming began reshaping the landscape. To mark this anniversary, the nation’s attic decided to honor one of the first widely used tractors.

Peter Liebhold, Curator, National Museum of American History: ”For the American Enterprise exhibition here at the national museum of American History, we have an entrance icon which we change every every year. And this year we decided to make it a year the tractor. Because the tractor is so important as a business story.  Not just a farming story for the business story to the nation.”

In the spring of 1918, the John Deere Company, looking to expand into a newly growing tractor market, bought the Waterloo Gasoline and Engine Company in Waterloo, Iowa, The introduction of the Waterloo Boy tractor was seen as the pivotal switch in farming, from animal power to mechanical power.

Peter Liebhold, Curator, National Museum of American History: “There had been tractors earlier but 1918 is when they really start to take off. And by taking off it changes the way that ag is done. It's an industrial revolution. Instead of having horses and mules to provide power, machine start to provide power. This is a fundamental change to rural America.”

Although the early machines seemed to be more work than farming with a team of horses, every new model plowed the way for farmers to do more with less.

Tractors named Avery and Advance were in the field before 1918, but they were large, cumbersome beasts that required a steep learning curve for operation. The advantage of a tractor working all day still set those farmers apart from their colleagues who remained committed to a culture of working animals.

Peter Liebhold, Curator, National Museum of American History:”Those big tractors in fact didn't work well for farmers. They were too big. They were too complicated and frankly they were too heavy, crushing the fields. But the lightweight tractors were simpler to operate. Much cheaper to build and turned out to be a different technological asmith and really began to be successful.”

Randy Riley, Creston, Iowa: ”Previously to this tractor coming along people were farming with horses and mules. And you were severely limit on how much you get done every day because the mules or horses got tired./These tractors came along. They made them fairly cheap where farmers could afford to buy them and they, this tractor would replace maybe a team of horses.”

The Waterloo Boy tractor was not a power house, having about the same horsepower as today’s standard riding lawn mower. It also lacked the comforts seen in later models.

Peter Liebhold, Curator, National Museum of American History:”It's clearly not as massive as a modern day tractor, the, the steel cleated steel wheels or are different and fantastic decals on it the seat hanging off the back. All these things make it look a lot different than a modern day tractor.”

The “N” was the first tractor model to carry the John Deere name, and the simplicity of the machine fit with the popular tractors selling at the time.

Peter Liebhold, Curator, National Museum of American History: ”Early on there were vast numbers of Manufacturers. Very little in sales. But in 1916 there were nearly a hundred different manufacturers of tractors. By 1918 Tractor sales, really start to begin to build and by 1920 the number of Manufacturers drops considerably. Really just a couple dozen and sales are up to a quarter million tractors a year.”

As the celebration for the Waterloo Boy continues, farmers are left to reminisce about the importance of what has grown from humble beginnings.

For Market to Market, I’m John Torpy.

Next, the Market to Market report.

The weather leads the trade war for dominance in the commodity markets. For the week, July wheat gained a quarter while the nearby corn contract rocketed 21 cents higher. The soy complex fought a see-saw battle as prevent plant, weather and the MFP decision pushed the market around. The July soybean contract gained 8 cents. July meal bumped up $6.20 per ton. July cotton gained $2.40 per hundredweight. Over in the dairy parlor, June Class III milk futures fell 16 cents. The livestock market had a down week. August cattle lost $3.33. August feeders shed $2.27. And the June lean hog contract cut $4.43. In the currency markets, the U.S. Dollar index dropped 36 ticks. July crude oil declined $4.22 per barrel. COMEX Gold rose $8 per ounce. And the Goldman Sachs Commodity Index plunged more than 16 points to finish at 426.15. Joining us now to offer insight on these and other trends is one of our regular market analysts Sue Martin. Sue, welcome back.

Martin: Thank you, Delaney. It's nice to be back.

Howell: So we have a very exciting week this week, got a lot to talk about. Let's start really quickly here the wheat markets. They have also seen a spark in their futures this week. Was it weather related or otherwise?

Martin: Well, I think it's a couple of things. Weather is a big one. You have the hard red winter wheat that was huge or very high in good to excellent ratings all through the season and now that it's heading towards home base, so to speak, towards harvest, all of a sudden it's just getting inundated with too much rain. And of course the rains keep following that path that the snowstorms did this past fall, or past winter, and that is kind of weighing on the market. It's causing quality issues, concerns over disease, fusarium, that type of thing, and it's also happening into the soft red as well. So that is part of it. But then you have Russia who has their domestic prices lifting quite strongly at 5 week highs right now and the exporter is not the one that is getting it, he is having to pay up to get it because it's the end users, the domestic end users that are buying the wheat. So exports are dropping out of Russia. And then you have the Volga River basin looking at heat and dryness and you've got Canada looking at a huge area of dry weather as well in the Canadian prairie. So it's kind of a weather issue more than not but not necessarily totally here.

Howell: Okay. Let's move on because I think the bulk of our time needs to be spent on the corn and soybean markets after the assistance package was released this week. There's a lot of questions about should I take prevent plant? Should I be planting corn? Should I force it in? But we're nearing final insurance dates. There's no argument about that. Does this latest round of assistance package change maybe in your mind some of those producers' decisions to plant corn or not plant corn and switch to soybeans?

Martin: Well, I think the one thing that is going to make decisions for them, first off, prevent plant isn't probably going to be the total cat's meow. So farmers may try to plant if they can. Will they switch over to beans? I don't think you're going to see much of a switch to soybeans. Prices on corn are going to have to move higher to entice that farmer to say I'm going to go ahead and keep trying to plant. They'll switch into shorter terms, shorter season varieties, which are a drag on yield. We are going to see some prevent plant acres, South Dakota is going to have a fair amount. Before I always was in the 3 to 5 million acre camp, now I'm kind of more like 8 to 10. The bottom line is by the time you have prevent plant acres and you pull the acres away from the total that we were talking, 92.8, and then you look at the drag on yield that we're going to see with the shorter season varieties, and the ponding, the plants per acre, plant populations are going to go down so yield is going to go down. Looking at at least 8 of the last late, late planted years, example in 1993 May to the final yield dropped 22 bushels to the acre. There were I believe 3 years, maybe 4, well there was one year unchanged, but 3 or 4 of the years, one thing I noticed was when the yields went down, or went from May to the final and dropped they dropped largely. When they went up, not so much, maybe 2 out of 3 years, less than 1 bushel to 1.1 bushel per acre increase. One year was unchanged. And the one year increased 9 bushels to the acre. I don't think you're looking at a year this year that we're going to see an increase. I think because in 1993 the crop was planted, it was just that June was the huge month of rain. So this year has been a struggle and the crop is going in very late and we're getting into June and the one thing that people need to keep in mind in this corn market, if we noticed it today in fact where the July, the old crop started gaining more on the new.

Howell: And why is that? That doesn't make any sense in my mind that old crop should be gaining because it has already been planted and harvested.

Martin: Well, what it is, is the elevators in a year where there's weather problems like this especially they'll start moving their bids out to December for corn and November for beans and then they work the basis to grab a hold of the old crop because they're starting to get worried too that they're thinking wow, how much are we going to have for a new crop supply because it's possible with the right situation we could see our stocks to usage ratio drop under 5%. That will be maybe next to the lowest on record and it might be the lowest on record when we're all said and done. I believe we're in a bull market that is, with the short crop probably one that is going to work its way higher into fall this year.

Howell: My question has to be, Sue, sorry to interrupt. But with all those bullish factors how high can the December new crop corn contract go here?

Martin: Well, first off December corn of 2019, the high that contract had last year was $4.23 and three-quarters. Now, we're fairly close to that. We've already taken December 2019's low out that it made in 2018. So if we take $4.23 and three-quarters out, you now are opening up the door for a key reversal year. And then the next one is taking out $4.29 and a half, which was last year's December contract high on May 24th. And so I believe that we have a market that is going to see higher highs in June and I think if we take out this $4.23 and three-quarters then I'm looking for a move over $5. I think that we've got to keep one thing in mind, and I've talked about it before on the show, we've got these huge gaps resting above the market. I think one of our more bullish markets will be the July contract of 2020. And we've got a gap on a lead contract that goes from $4.59 and a half, or $5.49 and a half, up to $7.09. That's a huge gap, the largest I've ever seen, and I've been in this business a little while. So I think that we've got potential here, it's a short crop and short crops sometimes have a long tail.

Howell: Absolutely, that they do. Sue, we've got to talk about the bean markets as well. I know you think maybe we're not going to see quite as many corn acres switch to beans, maybe market prices entice that to stay corn acres or prevent plant. But there will likely be some acres that transition from corn to soybeans. Has the market factored that in yet?

Martin: I think to some degree it has because if you notice beans aren't really the lively one. They are also the one that the shorts are still staying in. So the market is going to be interesting because it could be if we catch rain and they can't get anything much done this next week, which my forecasts that I follow are turning drier, but if that happens all of a sudden, and it's going to take almost a week to try out in some of these places, now you're getting into the second week, maybe past the 6th of June. That's going to be a concern. But you're going to go shorter varieties, again. And those will, and beans mature on daylight hours, so as they mature and you're now coming to the longest day of the year you're really cutting your window of hours of daylight and so the beans will shut down sooner. Beans don't like wet feet and from what I'm hearing we may come back with a wet August and possibly September. If that happens that's not going to help either. One thing I think we will see, and I want to just jump for a second back to corn, is the last two years or so we've had these accumulator contracts, $4 accumulator contracts. I think this year those are going to bite a bullet and I think they're going to be costly. In the beans I think beans could be a sleeper. If we continue into the month of June and we start to catch this moisture still into the first week of June then I think this market is going to start to come to life a little bit as the shorts start to cover a little bit in the beans.

Howell: Okay. Sue, let's take a social media question. Weather is definitely on the minds of many this week. We've got a question from Austin in Northwest Iowa. He said, is there any reason for the livestock markets to get bullish, to get a bullish reaction due to the delayed planting at any point?

Martin: Well, usually when you have grain prices going higher and enthusiastically, if anything it gives concern that it starts to cramp the style of feeding. And today the cattle on feed report showed placements on feed up 2% and placements not as high as they thought, up 9%, and then of course marketings was like everybody though at 7%. But, the bottom line is we've got plenty of mouths to feed. And same thing in the hog industry and the same thing in the poultry industry. So I think what it does more than anything, it says to them they really need to manage their feed costs because they have been spoiled for quite a few years and so they need to be watching ways to limit the expense and maybe call options is one way to go about that. But I think they need to be watching that. Now, I've heard some talk in past few years or whatever, whenever corn would rally, the feeder cattle would rally and the deferred contracts and they say, well it's because of the corn market. In the old days that didn't work that way. In the old days it was corn going up when cattle started to drop.

Howell: Okay. Sue, let me just get your quick 30 second synopsis here on the lean hog market. We had a limit down close day on Friday. Are we opening back up after the holiday weekend here? Are we heading further, are we pulling back further? Or are we heading up higher?

Martin: I think we'll be lower. It was a disappointment to see the close that we got here today. And I think we'll start the week out on the softer side. We'll have expanded limits of 450 points. But I think we'll start off lower. The product needs to catch here and firm up. I think the market is into a cleansing right now trying to basically it was so long and heavily long that the market is cleansing itself and pulling those longs back out. And there may be a lot of options in the markets and they're going to take them worth less if they can.

Howell: All right. Sue, we're going to continue that discussion in Market Plus. Thank you so much for being on today.

Martin: Thank you.

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 wait to get back into to the field, we have just the thing to keep you company, three weekly podcasts to stay on top of happenings in agriculture. Download where you get your podcasts. Join us again next week when we’ll explore changes to the 35 year old Conservation Reserve Program. So until then, thanks for watching. I’m Delaney Howell. Have a great week!




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.

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  


Grinnell Mutual Insurance