Market to Market (November 6, 2020)

Nov 6, 2020  | 27 min  | Ep4612

Coming up on Market to Market -- The votes are tallied across the U.S. What’s next for the committees dedicated to rural America? How local ballot initiatives could reshape the landscape. And market analysis with Naomi Blohm, next.


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.  


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.


This is the Friday, November 6 edition of Market to Market, the Weekly Journal of Rural America.

Hello, I’m Paul Yeager.

And the winner is? We’ll get back to you.

As the vote counts that normally happen after polls close drags on, the mechanism of the economy keeps moving.

October’s job market showed a burst of strength. Employers added 638,000 jobs as recession losses are still being soaked up.

The unemployment rate sank a full point to 6.9 percent. The nation is still down more than 10 million jobs since March’s peak.

Purdue’s Ag Economy Barometer set an all-time high for the index. October’s reading rose 27 points.

As vote totals kept climbing following Tuesday’s election, the word gridlock is likely to become commonplace, again.

Any legislation will take compromise as the Senate is likely still a majority of Republicans.

Peter Tubbs leads off our coverage.

Republicans are likely to maintain control of the United States Senate. Right-wing control could create a high hurdle for initiatives from an incoming Biden administration to clear.

Of five races for members of the Senate Ag Committee, few will lead to new faces in the group with Republicans winning the day.

Senator Pat Roberts, the longtime Ranking Chair of the Agriculture Committee, is retiring at the end of the session. Senator John Boozman of Arkansas is expected to take the gavel.

Senate Majority Leader Mitch McConnell won re-election to the Senate. The senior senator from Kentucky will begin his sixth senate term in January.

Senator Joni Ernst of Iowa survived a well-funded challenge from Iowa businesswoman Theresa Greenfield. Ernst was the target of negative ads questioning her support of ethanol and her votes to repeal the Affordable Care Act.

Cyndi Hyde-Smith of Mississippi returns to the Senate after a comfortable win over Clinton-era Secretary of Agriculture Mike Espy.

The Committee’s newest member, Senator Kelly Loeffler, faces a January runoff for her Georgia Senate seat. Senator Loeffler was appointed to the Senate in late 2019.

On the Democratic side of the Committee, only Tina Smith of Minnesota and Dick Durbin of Illinois faced voters this cycle, and both were re-elected.

When the 117th Congress convenes in January, additional cash support for America’s farmers will be on the table. Subsidies to farm country for losses due to the Trump Administration's trade war with China and disruptions to the food supply chains due to COVID-19 have become a significant percentage of income for rural America.

The Ag Committee will begin work on the 2023 Farm Bill in January. Among its priorities will be bolstering the food supply chain including an examination of disruptions in the cattle supply and an alleged lack of competition across the industry.

For Market to Market, I’m Peter Tubbs

Washington, D.C. has been split before but the combination of a Red Senate, Blue Congress and White House hasn’t been experienced since 1900.

More recently, with a party difference on Pennsylvania Avenue and the Senate, any policy will be slow and steady - if even at all.

John Torpy looks at the shake out in the House as a major leadership change is set for the Agriculture Committee following Tuesday’s vote.

While Democrats will retain control of the U.S. House of Representatives, election night wasn’t quite what leaders of either party had in mind.

Gains that Democrats were hoping for failed to materialize as seven incumbents were ousted on election night. The highest profile loss was in Minnesota’s 7th District, as 15-term Representative Collin Peterson, a Democrat, was defeated by former Minnesota Lieutenant Governor Michelle Fischbach, a Republican.

Peterson, chair of the House Agriculture Committee, is a member of the Blue Dog Democrats and is considered to be one of the most conservative Democrats in the chamber, but his seat had been under pressure as the district he serves has steadily moved to the right. Residents in the rural Minnesota district helped President Donald Trump win by 31 percentage points in 2016. The Western Minnesota district is home to several commodities Peterson has long championed including sugar beets.

Potential successors to the leadership role are split between three committee members - Rep. David Scott of Georgia, Rep. Jim Costa of California, and Rep. Marcia Fudge of Ohio.

Representatives Scott and Costa have both announced interest in the Chairmanship for the House Agriculture Committee.

Across the aisle, House Minority leader Kevin McCarthy noted strong wins for republicans.

Rep. Kevin McCarthy, House Minority Leader: “"As of right now, we have seven GOP pickups. We also have 11 outstanding races that I feel very confident that will continue to grow and win. We'll likely have an additional 14 to 19 Republican women. This will break the record for the most Republican women coming in at any one time, will double the number, and will set a record for the most women ever in the Republican Party." 

As of Friday, several U.S. House races were yet to be decided.

For Market to Market, I’m John Torpy.

If all politics are local, then ballot initiatives embody what the people want, when legislatures have yet to tackle an issue.

The issues of oil, taxes and marijuana played out across the country.

Josh Buettner looks at items approved and sent away in several states.

A blue wave stalled on Election Day, wiping out Democratic hopes to kick start a unified progressive legislation push next year.  But a handful of states did go green in 2020.

Voters in South Dakota, Montana, Arizona and New Jersey passed ballot measures legalizing recreational marijuana – making it possible for adults to consume cannabis without a medical reason in 15 states and the nation’s capital.

South Dakota went red but shocked some pundits by voting recreational and medical marijuana to victory on the same ballot – the first state to ever do so – giving the Rushmore State legislature an April deadline to draw up regulations around both programs.  South Dakota joined Mississippi this year as the 37th and 38th states to approve medical use in some form.

Shifting attitudes on illicit substances were evident across the electorate as Washington D.C. decriminalized psychedelic mushrooms and Oregon approved them for mental health treatment. 

The Beaver State also passed a measure decriminalizing possession of small amounts heroin, cocaine, methamphetamine and other hard drugs.  Instead of possible jail time, offenders would have the option to attend “addiction recovery centers” funded by millions of dollars in tax revenue from Oregon’s previously legalized and regulated marijuana industry.

Voters across the country also approved ballot measures raising the minimum wage in Florida to $15 and new redistricting rules for Missouri and Virginia. As of Friday, ballots that will decide the fate of various property tax reform measures in California were still being counted.

In America’s Last Frontier, a citizen-led effort to increase taxes for oil producers on Alaska’s North Slope appeared to be losing ground amid a protracted vote count. 

Oil giants BP, Conoco Phillips Alaska and ExxonMobil were part of a coalition urging voters to reject the FairShare Act claiming it would increase taxes on oil production by 300 percent, threaten new development and cut jobs.

Those in favor of the measure argued the higher taxes would apply only to the state’s largest and most profitable fields - those with an output of 40,000 barrels per day and reserves of at least 400 million barrels. 

Final results could remain in limbo for at least another week as over 100,000 Alaska absentee ballots won’t begin being tallied until November 10. For Market to Market, I’m Josh Buettner.

Next, the Market to Market report.

The hot and dry weather reports have returned to South America along with strong exports sending the trade higher. For the week, December wheat added 4 cents while the nearby corn contract improved 8 cents. The soybean market reverted back to 2016 levels heading north of $11 as strong exports keep well ahead of the predicted pace. The January soybean contract jumped 45 cents. December soybean meal increased $3.80 per ton. December cotton expanded 30 cents per hundredweight. In the dairy parlor, December Class III milk futures declined $1.74. A mixed week in the livestock sector. December cattle grew by 35 cents. January feeders added $1.80. And the December lean hog contract sold off 68 cents. In the currency markets, the U.S. Dollar index declined 181 ticks. December crude oil improved $1.60 per barrel. COMEX Gold gained $72.30 per ounce. And the Goldman Sachs Commodity Index increased more than 10 points to finish at 353.10.

Yeager: Joining us now to give us some insight is regular market analyst, Naomi Blohm. Hello, Naomi.

Blohm: Hello, Paul.

Yeager: Normally I'd like to start with the market that's the hottest, soybeans, but soybeans was actually beneficial to the wheat market this week. So was a continued dry weather report in Russia and in the Plains. So is wheat only beholden to weather reports right now?

Blohm: That is primarily the factor for the wheat price action this week. Definitely you hit the nail on the head as far as the weather concerns that continue to perk up around the world. Australia is actually going to be having a large crop this year. But as far as demand right now the United States has just kind of our average export pace going. And in an ironic change of events, China is now in a little bit of a trade war with Australia and China bought a large amount of wheat from France this week. The United States continues to get snubbed on those big export sales and that is why the wheat market, even though we kind of started out with some excitement earlier in the week, finished with kind of a little bit of a whimper. Prices for the December Chicago contract staying around $6 with Minneapolis wheat and Kansas wheat futures staying near the $5.50 area.

Yeager: You said whimper. And whipsaw was the word of the week earlier in wheat, up, down, up, down. Really all the markets today were weaker. IS that just we were tired or sell off or position or what?

Blohm: Definitely, yeah Friday's position squaring into the weekend plus we just didn't have any fresh news to get prices for soybeans to go above and continue through $11. And we didn't really have any news for corn to get out of the range that it has been in between $4 and $4.25 and with wheat it didn't have any news to make it go south of $6 so between election fatigue and just market fatigue overall the markets just were very quiet for finishing out a Friday.

Yeager: Real fast on wheat, are you making any sales right now?

Blohm: We've been doing some sales along the way here just because between the complex wheat is still the follower in all of this. Global carryout numbers for wheat continue to be the largest and even if there is a reduction in supplies in the United States or in parts of the Ukraine at this time it doesn't do any big drawn downs for the ending stock situation. We’ll be keeping an eye on our exports. But for right now just making some sales at these higher levels that we've seen probably the past few months. These are some of the better prices we've had.

Yeager: You mentioned in the corn market $4.25, $4.24, kind of in that area. We did get above $4 this week. It's a psychological thing saying that we'll see in the soybean market over $11. I saw you say something yesterday about export news in corn. Why is it that that is such a big deal right now for corn?

Blohm: So corn has been of course a market where we've got 2 billion bushels going towards exports even a little bit more of that and we were keeping an eye on how much China has been buying from us. And for almost a month the industry has been saying that China has been buying more than what the USDA thinks, China has been buying a lot more and finally this week the USDA attaché in Beijing said they think China is going to be buying 22 million metric tons of corn from us, more than the 7 that has been on record with the USDA reports. Now, will we see that news shift on to Tuesday's report or not? That has yet to be seen. But corn exports this week were fantastic, really, really big numbers and that has been supportive to the market overall. Corn last week I thought maybe it was going to falter, it posted a bearish key reversal on a weekly chart and I thought boy, if we don't have a lot of news here prices could work a little south for the short-term on a correction. But it really dug in its heels this week with prices staying as you said $4 support on the December contract. In general the $4.25 area is a resistance point and then we'll take our cues next week from the USDA report on Tuesday. 

Yeager: Always got to have some direction there. We just showed you some video, Naomi, and it's going to lead into a question here. Ken in Johnston stopped by and asked me this one today, he was asking, how much of an impact did the derecho have on harvest yields?

Blohm: And we are finding that out. It is a great question and what I'm hearing consistently from clients out of Iowa is that yields are down more closer to a five year average and consistently I'm hearing that yields are about 20 bushels less than a year ago. So between the derecho storm and just the extreme heat that we saw throughout the mount of August and the lack of rain and the drought that is in Iowa, yeah, we're seeing it start to hit on the yields and I'm very curious to see if the USDA puts that into print on Tuesday. So on the report on Tuesday we could see potentially lower yields. We could see stronger export demand. We could see global carryout numbers shrinking because the crop in Ukraine is getting a little smaller. So corn has a few things going for it that are going to be supportive going forward. But corn needs to continue to have positive news from exports and also the South American weather is going to be the next piece of market mover for the corn market.

Yeager: All right. Well, you just kind of stole what I Wanted to ask. So, with those factors that you just mentioned are you selling corn right now or are you holding?

Blohm: Well, I sold corn last week when I saw that bearish key reversal on the weekly chart. That really spooked me. I thought we were going to see a correction. So we've been making some sales and now it's to the point where you have to manage both the risk in this market and the opportunity for upside. If South America has bad weather, meaning dry conditions because it has been so dry there, this market is not done yet going higher, especially because you have to remember that that second crop corn in Brazil is 70% of the corn that they grow and there's rumors that Brazil is going to be needing to import corn from the United States just like they did soybeans this week.

Yeager: We've held off long enough on this soybean story. You mentioned South America. It is dry. They got some rain, then it turned hot, kind of delaying getting that crop in. IS the U.S. soybean market still tied already to South America? We always say that it is but are we already there on that January contract?

Blohm: Yes, we are there and yes, it has been priced in. But there is a trifecta going on in soybeans right now. So the trifecta is of course the continued dry weather that South America is seeing. Their crop is slow to get planted. They have been getting caught up but it is not what they thought it could be and already Argentina is saying that their overall yields are going to be down. The world is essentially needing South America to have their record yields because that is what they have had for four or five years and now that they're on the cusp of not having that, that really sinks into the world ending stocks. The other thing that happened this week was that we did shift 38,000 tons of soybeans to Brazil because they have oversold themselves on their sales to China. And now the last thing that has been going on with the soybean market is something that happened a few years ago, I think it was maybe 2014 or 2015, the palm oil market started to erupt. So here's what is happening with palm oil. In Malaysia they have been affected by the La Nina, production is down and they don't have the amount of workers like normal because of COVID. So production is down and that is a market that sells its palm oil of course throughout Southeast Asia. So this week we had soybean oil export sales, large amounts, to both India and also into South Korea. So that is a new demand that could be for the soybean market above and beyond the South American weather story, above and beyond how much we have been exporting to China. So next week the USDA report, I'm very curious are they going to lower any yield here in the United States because consistently between the drought and the early frost in North Dakota we are hearing that the yield numbers can come down. If we get a friendly report on Tuesday with that USDA report along with any continued additional export sales and more dry weather conditions in South America this market might still be able to work higher. The $11 hurdle is the first one to clear. $11.50 is the next upside. And ultimately you could argue for $12 futures. So be mindful of what you have for sales, be thinking of reownership possibilities, because this market is not done.

Yeager: You answered the question that I've been asking, are we going higher, you say $11.50, maybe $12. How soon could we see something like that? Is that a month? Two months?

Blohm: That is an awesome question. And that is so important to remember we don't need to necessarily have immediate gratification because the bulk of the South American growing season, they're just getting it planted now so that is our equivalent of essentially the month of May. So it's not until maybe into December or January when the big, big scary weather could emerge for South America. But the longer it stays dry the more support it gives to the marketplace. So between watching what is happening with the palm oil, watching South American weather and watching our exports it could be a gradual move higher with a lot of volatility along the way too.

Yeager: You mentioned protection, the dairy market if you are someone out there that is trading Class III right now you absolutely I would think need some of that. Why?

Blohm: So with milk futures the front month contracts have had a really nice run higher, $24 November futures, the December contract was in the low 20s earlier this week because of the cheese buying program which has been so supportive to those front month contracts. Those are lofty levels. I think a lot of producers have been able to capitalize in some capacity in participating in capturing those values. But what is different is the front month contracts were higher and they had bigger corrections this week with the December contract losing close to $2. But the deferred contracts going into 2021 they have already priced in that the cheese buying program is going to be done at the end of the year. And if you look at where those contracts are trading into 2021 they are in the mid-$16 level. So they already know the cheese buying program is going to stop, they already know that production is really, really large for milk right now with a 2.3% increase on the most recent milk production report and large production. So the deferred contracts are, they have already handled it, they know that it has been right now a demand-led market. So yes, we should be looking at ways to protect but leave upside open because if the cheese buying can continue into December the December contract needs to start to work a little higher and we'll be watching the cheese cash prices for the cues on that in the future.

Yeager: So I look at the inventory of cheese, I also look at the meat counter on Saturday morning and I notice that, or apparently I'm in charge when it comes to this cattle market. Do you buy that the consumer is really pushing this market right now or is there another factor at play?

Blohm: There's a few things going on. The perception is that because of COVID and restaurants still not being able to be at capacity that demand might be down or holiday demand might be lower because people aren't having the big holiday parties. But when I'm at the grocery store there is still a variety of meat being purchased and people are still buying the nicer cuts of meat. So just because you're stuck at home doesn't mean you want to eat well and I'm wondering if we're going to see smaller holiday gatherings this year and maybe people don't do the traditional ham because if you're not feeding a room of 20 people, you're only feeding 10 or less, maybe you do a better cut of meat because in a way you can somewhat afford it. Export markets for the beef have been fantastic, up above five year average levels, higher than a year ago and what we're going to need to be watching is the cash market going forward, cutout values improved this week and I think that there's some potential there but it's going to just be a sideways grind for the short-term. Looking into 2021 we're looking to anticipate having less cattle around because we didn't have a lot of breeding this spring with COVID affecting things and then some of the cows were slaughtered and we didn't have that breeding stock that we had before because of the drought out west this summer. So I think we're going to see some smaller numbers for cattle and cattle production in 021. Right now it's just the battle of really truly understanding is the domestic demand there or not, but the export demand sure is.

Yeager: You mentioned about some of the younger, the feeders, that market seems to be a glutton for punishment, especially when corn keeps rallying like it is. But it still rallied this week, the feeders.

Blohm: Yeah, feeders had a nice move higher. I think part of it was just with the cattle market hanging in there and corn prices not really doing too much of anything so the feeder market was able to gain a little bit of strength. But right now it’s up against some short-term moving average when you're looking at technical charts and the daily charts. So next week is going to be interesting. The USDA report is probably going to be a factor for the cattle prices. But again, keeping an eye on cash cattle, keeping an eye on cutouts and box beef values and just trying to anticipate where that holiday demand might fall.

Yeager: Speaking of holidays, you mentioned the hog market a little bit, if we're going to be buying that ham. They look like they're going to be celebrating in China. That seems to be good news for U.S. pork. Do you agree?

Blohm: Absolutely, our exports still overall are really fantastic. But the market is very much aware that the hog prices are going to maybe be suffering because of the Chinese herd being rebuilt. And so the marketplace has already priced some of that in, it's expecting to lose the export demand. So we're trying to have this rebalance of are we going to eventually reduce our herd here in the United States because we now know that China is not going to be ending as much of our exports and just trying to understand where the domestic supply will be. So that is something that is probably going to take a few weeks or months to work through and that is why you're seeing that in the hog prices, just starting to falter a little bit on the expectation that demand will be down.

Yeager: Naomi, I appreciate your time. Good to see you. We'll have a little more discussion in Market Plus. Thank you.

Blohm: Thank you.

Yeager: We will talk with her as we just finish up here this installment of Market to Market. As I said, we'll talk Market Plus. That's that thing where you can watch it, you can find it on our website at And also a reminder, learning never stops, and so does the updating of our Market to Market Classroom project. Now, we have collaborated with vocational agriculture teachers to help with the basics of commodities, the government, as well as the history of agriculture. Visit Just go to, we've got all sorts of stuff there. Next week, we'll look at more weather implications on U.S. grain stocks. We have a double header analyst there. So for this week and all of us here at the crew, thanks for watching. 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.

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.  


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.


Grinnell Mutual Insurance