Market to Market (November 20, 2020)

Nov 20, 2020  | 27 min  | Ep4614

Coming up on Market to Market -- The survey says bankers are cautious in 2021. Why? Bringing rural, urban and downstream parties together on nutrient exchange. And market analysis with Matthew Bennett, 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.  

Sukup Manufacturing Company, providing equipment and buildings to store and condition grain to help farmers adjust to market swings. We build drying, moving and storage equipment designed to preserve the quality of their crops. Sukup Manufacturing, store now, profit later.     


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 20 edition of Market to Market, the Weekly Journal of Rural America.


Hello, I’m Paul Yeager.

A stroll down the aisles of a physical store would lead you to believe Christmas time is here. Retailers are trying to get back some happiness and cheer as October’s numbers appear to be signaling a cautious consumer.  --

An increase of 0.3 percent was reported by the Commerce Department – but was slower than September’s gain.

Housing starts jumped almost 5 percent as this sector remains hot. Low interest rates continue to be a driving factor.

Tyson Foods reported the company’s net income nearly doubled in the fourth quarter. Later in the week, the corporation was served with a lawsuit over employees betting on the number of coronavirus cases at the Waterloo, Iowa plant.

The November Rural Mainstreet Index declined for the first time since April as it retreated below growth neutral. --

This and other surveys are snapshots mixing data and sentiment.

The American Bankers released their look at 2021 for rural America.

Peter Tubbs looks at the findings.

Multiple years of low farm commodity prices have compressed the profitability of America’s farms, according to the 2020 Agricultural Lending Survey, and joint project of the American Bankers Association and the Federal Agricultural Mortgage Corporation, commonly known as Farmer Mac.

Jackson Takach, Federal Agricultural Mortgage Corporation: “I think the ag lenders, uh, all across the country are really tuned into the performance of their borrowers. And I think, uh, several years of lower commodity prices have really impacted ag lenders, uh, um, attitudes and expectations about the performance of both the loan portfolios, as well as the ag economy.” 

A majority of U.S. agricultural lenders saw a profitability decline among farm operations, and are estimating only 51 percent of farm borrowers will be profitable in 2020, down six percentage points when compared to last year. Nearly half of all agricultural lenders aren’t expecting any kind of improvement in 2021, and believe grain, dairy and cattle sectors are under the most pressure.

Those banks participating in the survey noted 87 percent of borrowers increased their dependence on government subsidies. Lenders stressed that the loss of cash support from Washington would reduce farm profitability.  

Farmer Mac sees taking the long view with farm borrowers in 2021.

Producers looking at their 2021 budgets may see tight margins, and some are exploring restructuring their financial situation. Twenty percent of borrowers asked for loan modifications in 2020.

Jackson Takach, Federal Agricultural Mortgage Corporation: “So lenders are seeing that uptick in demand. A lot of that has to do with, uh, restructuring the balance sheet, uh, taking some of the equity out, putting it back into working capital. So all that is happening.” 

The survey was conducted in August and early September before the recent run up in commodity market prices, and may have an overly dark view of the agricultural economy in the short run, but long term concerns about farm profitability remain. Lenders believe the demand side of the market equation offers the most hope for improving profitability.

Jackson Takach, Federal Agricultural Mortgage Corporation: “How are we going to increase demand for agricultural products and how are we going to support that demand all the way through the markets. That's really where you get long-term growth in, in an increase in, in the, um, uh, profitability levels, long term. It's going to be those broader questions that ag lenders are definitely tapping into throughout this survey.” 

For Market to Market, I’m Peter Tubbs.

Presidential transitions are filled with last-minute efforts to address campaign promises or leave final edicts on priorities.

Environmentalists are watching the White House for changes to protections currently on the books.

The health of rivers and streams are key to those making a living off the water.

Josh Buettner has more in our Cover Story.

Charlie Cretsinger/Owner – Catfish Charlie’s – Dubuque, Iowa:  “The boat has been slow.  My catering operation is pretty much non-existent…you don’t have the corporate events.  You don’t have weddings and things like that.”

Charlie Cretsinger’s Dubuque, Iowa business was hit hard by the economic side-effects of COVID-19.  Income streams like river cruises are anchored to his restaurant, Catfish Charlie’s, located on the banks of the Mississippi River - which specializes in fresh river-caught cuisine.

Charlie Cretsinger/Owner – Catfish Charlie’s – Dubuque, Iowa:  “You got the fillet on the back here, right around the front, we call them collars.  So we’re going to sauté some of that up in a white wine clam sauce….Obviously we shut down the restaurant for what, six, seven, eight weeks…but we did to-go orders and that was slow.  I mean, it was a lot of to-go orders compared to what we normally do, but you can’t do that type of volume.  You’re selling food now.  You’re not selling a drink with it.”

Cretsinger works with local fishermen who catch carp and catfish under a commercial license permitted by the Iowa Department of Natural Resources. 

Charlie Cretsinger/Owner – Catfish Charlie’s – Dubuque, Iowa:  “That’s our Cajun catfish with a Cajun shrimp creole… We take catfish to another level and we’re proud of our catfish.”

While a fresh Iowa catch matters to local economies-of-scale, state officials estimate the value of all fish and their eggs along Big Muddy’s Iowa coast at just $600,000 annually. That’s a drop in the bucket compared to the $320 million the Hawkeye State rakes in licensing half a million anglers every year.

Iowa DNR says around 180 Iowa-licensed commercial fishermen and helpers work the Mississippi River every year, though few as their sole means of employment.  But their profits, and Cretsinger’s, are tied, in part, to the health of the river. 

Eric Schmechel/Watershed Program Director/Dubuque County Soil & Water Conservation District:  “In Dubuque County, we have a lot of highly erodible land…streambank erosion…  The more sediment we can keep out of our streams, it’s huge for aquatic life, the Mississippi River and so forth.”

Northeast Iowa farmers and conservationists have joined forces in the past to address land-related water quality and habitat issues.  An ambitious new approach looks to build on that heritage by dovetailing into a larger proactive environmental framework.

Eric Schmechel/Watershed Program Director/Dubuque County Soil & Water Conservation District:  “The city of Dubuque was the first city in the state of Iowa to enter an MOU with the DNR, as it relates to kind of the process of how the nutrient reduction exchange would work.”

Eric Schmechel is Watershed Program Director with Dubuque Soil and Water Conservation District.  Through a first of its kind agreement, the district has teamed-up with city, county and state government to implement the Iowa Nutrient Exchange project.  And officials in Dubuque say a handful of other Iowa cities and towns would like to adopt a similar approach.

Eric Schmechel/Watershed Program Director/Dubuque County Soil & Water Conservation District:  “It is not a law.  It’s a voluntary approach…a partnership with point source and non-point source water permits that look at how we can work together to improve water quality.”

Dubuque’s urban/rural pact builds upon the state’s Nutrient Reduction Strategy or NRS.  First enacted in 2013, the guidelines are designed to combat Iowa’s alleged disproportionate contribution to the weather, chemical, land and water-use cocktail downed by the Mississippi River and delivered into the Gulf of Mexico.  The resulting oxygen-deprived or hypoxic region, more commonly known as the Dead Zone, has been plagued by seasonal runoff-fed algae growth.  This year scientists measured the area, incapable of supporting aquatic life, at over 2,000 square miles.

Environmental critics say Iowa’s goal to reduce nutrient flows by 45 percent has no teeth.  But Schmechel says his NRS-aligned conservation work with upstream farmers goes further with an alternative to expensive environmental compliance for municipal utilities tasked with shaving wastewater output of nitrogen and phosphorus to 66 and 75 percent, respectively.

Eric Schmechel/Watershed Program Director/Dubuque County Soil & Water Conservation District:  “Let’s say he wants to convert a field to no-till or he wants to put a buffer in along a stream.  We then model those practices on his field stream using what’s called a nutrient tracking tool.  We get the outputs of what those reductions are as for both phosphorous and nitrogen.  We enter those outputs into a federal database that the DNR then checks and then the city of Dubuque can claim some of that credit back into their permit.”

Eric Miller/Cascade, Iowa:  “So I got 17 different species going in here to try to stimulate my biology.” 

Cover crops have become an important piece of the financial puzzle for Eric Miller who raises row crops outside Cascade, Iowa. 

Eric Miller/Cascade, Iowa:  “The longer you can keep a living root in the soil, the quicker it’s going to change the soil.”

His plants sequester carbon, build beneficial bacteria to boost traditional commodity yields, and in some cases, bring value-added returns from niche markets.

Eric Miller/Cascade, Iowa:  “Just this past year, we started malting our own grains – growing and malting barley here for local breweries. It’s almost like a side effect, the better water quality.”

Miller says the deeper roots scavenge for nutrients corn and soybeans can’t reach and during rain events, his soil now sponges up and slows down stormwater runoff.  He tracks the field data and says he’s been able to slice pest and disease control expenses as well.

Eric Miller/Cascade, Iowa:  “Any time there’s nutrients leaving our farm, that’s money leaving our farm.  So this is a way for me to kind of take control of my input costs and improve my bottom line.”

Considering the sheer volume of regional agricultural products that move down the Upper Mississippi corridor, Miller says Iowa’s number one export is still topsoil, and endless work remains.

Charlie Cretsinger’s primary bounty of bottom feeders might be at home in the muck downstream, but the former farm kid deeply appreciates Dubuque County’s stewardship strides.

Charlie Cretsinger/Owner – Catfish Charlie’s – Dubuque, Iowa:  “Anything we can do in the United States to keep things cleaner and better is a beautiful thing.  And farming is big business.  So when you take ground away from them guys, it hurts them, you know?  We’re asking them to do things to keep our world a better place.  They should be paid for that.”

For Market to Market, I’m Josh Buettner.

Next, the Market to Market report.

The return of curfews and shutdowns for Main Street businesses to stem COVID-19 spread weighed on the trade. For the week, December wheat dropped a quarter cent while the nearby corn contract added 13 cents. The South American weather report turning wetter tempered some of this week’s soybean rally. The January soybean contract jumped 33 cents. December soybean meal increased $5.60 per ton. March cotton gained $2.56 per hundredweight. In the dairy parlor, December Class III milk futures declined $1.70. A mixed week in the livestock sector. February cattle lost $1.58. January feeders declined by 90 cents. And the February lean hog contract improved 77 cents. In the currency markets, the U.S. Dollar index shed 37 ticks. December crude oil improved $1.98 per barrel. COMEX Gold decreased $12.40 per ounce. And the Goldman Sachs Commodity Index increased almost 8 points to finish at 372.20.

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

Bennett: Hey, it's good to see you, Paul.

Yeager: Good to see you, Matt. I want to start with wheat just for the sense of we talked about weather in South America, we're also watching weather in the Plains, there's forecasts for rain this weekend there but there is also a global story going on here in wheat. Which one is winning out do you think and keeping the market at bay, weather domestically or a bigger global story?

Bennett: Well, I think the wheat market probably would had more excitement if Australia had had weather issues like they have the last three or four years. They finally caught a break this year and they had a pretty good crop. Putting wheat out on the world export market is tempering prices a little bit. But $6 wheat out to July is actually fairly priced I think, in my opinion, if you would rally corn and beans sharply from this point forward, which some people feel like that could happen, I could see wheat trending higher. But by all means, we have to keep an eye on what is going on in the Plains states. I have talked quite a bit lately about the fact that the national drought monitor looks fairly similar right now as it did in the fall of 2011. So I'm not saying we're going to have another 2012, but certainly if you go into the winter dry a lot of times you can really struggle to break out of that pattern. And so we've got to keep a very close eye on that moving forward.

Yeager: There's also folks that get concerned in other areas that if they are dry, and that would have been a bigger problem this year had we been dry going into the growing season. So right now are you holding on some, let's say nearby on wheat? Are you making a sale? And what is your price target?

Bennett: In my opinion, like I said, I feel like we're fairly priced. If we sell some wheat at this level my opinion would be to go long, a limited risk position would make sense, especially given the angst that we have about the corn and bean markets because I feel like wheat at this stage of the game, this point in the year is probably going to be more of a follower. So I wouldn't say I'm bearish wheat necessarily, but if I'm selling I probably would put something out there in a limited risk scenario.

Yeager: Sounds like something that some are maybe going to do as wheat closed today at $5.95 and a half on that March contract. Let's go December corn right now and this corn market, you alluded to it twice there, the relationship between corn, soybeans and wheat. What is the wheat story into corn? What is the biggest connector? Which one is pulling the other one right now? Is corn leading wheat?

Bennett: I've got to think that corn is actually, there for a long time corn was following soybeans in my opinion and then corn basically decided to get an identify of its own. And I think a couple of different things are going on. Certainly dryness in South America is weighing into both the corn and bean market. Whenever you see the Ukraine crop was downgraded the way that it was in the November report and then you continue to see things like we saw Friday morning with over 300,000 metric ton of sales, some of those were to wink, wink, unknown. And we've got to think that that's probably China. And there's a lot of rhetoric out there just guessing how much is China going to purchase. Some of the people we're talking to are thinking it could be that 22 million metric ton or even in excess as the FAS said. So it will be very interesting moving forward. I think corn is kind of working on something at this stage of the game and if you watch the wheat market probably won't fall dramatically as long as the corn market stays supported.

Yeager: It's got a little bit of support there as you said. Yes. What about that carryout number for corn? Is that a big factor? Or is it still just about China?

Bennett: Well, Paul, whenever you look at the fact that in August the USDA was 2.75 for this marketing year. Right now we're 1.7, in three months we dropped 1 billion bushels. Obviously we lost some bushels due to the quarterly stocks number getting adjusted lower, something I was calling for, for quite some time. Me and my team felt like USDA might have been a little heavy on the 2019 crop. You can call it what you want but regardless we're a billion bushels less than what we were three months ago. How heavily does that weigh in? Well, in my opinion I still think there is some work to do on the export front. I don't think the crop is going to get any bigger as far as this year is concerned. And so 1.7 might be a tough rich. I know the last time I was on here, whenever I was on with Naomi and Ted and Elaine, I suggested that we would be below 2 billion on this November report. And a couple of them were like, what? But I think they also agreed and that we would get there, it's just nobody really thought it was going to happen this quickly.

Yeager: Right, and you bring up a couple of points there. Acreage battle. We've got some great questions that we're going to get to in Market Plus and also some Twitter conversations that you've been having since we recorded here. So I want to get into the acreage battle in the Market Plus, the podcast or the video form there. But I need to ask real quickly on corn before we move on, are you selling right now or are you holding out for a little something more? And what is that target?

Bennett: The corn market, in my opinion, we've had such a good run. You get up above $4.35 and it seems like we've kind of bumped up on a little bit of resistance here. As a producer I've got to ask myself with a really strong basis what I'm waiting on. I have no issue with a producer selling. If they do I want to retain ownership though. If the corn is in the bin at home I kind of like the physical commodity. I think it has got a lot of value. I think people are really going to be hunting for the corn. But as far as if it's in the elevator I'm probably going to be a little bit more of a seller there, reown that with a limited risk strategy, because I've got to think corn ownership is a good thing for the time being until we figure out what South America is going to look like and just how much the Chinese are going to purchase.

Yeager: How much more are the Chinese going to purchase in beans? And what is that impact on the trade going forward?

Bennett: The interesting thing on beans is you come in here with a 190 carryout, you drop 100 million bushels and exports weren't even touched and some people feel like if you drop that number down enough that some of that was going to be due to exports. So whenever you lost it all due to production and no export adjustment it's kind of exciting. How much more are the Chinese going to purchase? I think that is part of the reason why this South American weather is so important. If the Brazilians are not able to export as much as what China would like to see there's no doubt in my mind if this weather doesn't change significantly in the next few weeks the Chinese are going to just continue to purchase U.S. soybeans. So in my opinion I think moving forward it's a tight situation that is probably going to get just a little bit tighter yet.

Yeager: We have a question from Phil in Dresden, Ontario, Canada and you kind of alluded to it a little bit about looking backwards and if we knew what we talked about then what we know now -- Phil is asking, the upper grain price levels have defied logic in some ways. Take me back to July 30. Was it clear as a bell then? What were we thinking? What was missed? Will it be beans in the teens in January? And I'm going to let you off the hook just a tiny little it, Matt, because you were last with us in October and we were, you said the panel was like oh I can't believe that number, below that number. So even harder going back to July, what were the signs? Were they there at that time?

Bennett: You wouldn't have thought that we were going to rally $3. We have to be completely honest about the situation. If we're going to talk a 2.75 carryout in August you're looking over 600 million for soybeans and you cut that thine basically you're less than 20% of that right now. And so Phil makes a great point, a lot has changed though. Whenever you look at the fact we had an extremely dry August and start to September it definitely robbed bushels for both corn and soybeans, nobody would have thought the Ukraine was going to be exiting the export market like it had to due to the weather issues they had and while we all felt like China was going to step in with massive purchases they had not manifested themselves by the time July 30 rolled around. So you top all that off with dryness in South America, getting the crop planted late and you've had a lot of things go right for us if we're totally honest. One or two of those things would have gone the other way we probably wouldn't have had such a massive rally. But it has certainly been nice to see.

Yeager: Real quick, how much more rally is in that tank? Are we talking teens?

Bennett: If we are, from a producer standpoint, I see no reason, I don't think it makes sense to get super bullish at $12 beans. I like selling the beans and keeping ownership, once again, with some sort of limited risk. I don't want to put much on the table because, you know what, three months ago if you would have told me $12 beans everyone would have sold all of them and now we've got angst about selling $12 beans.

Yeager: Oh how quickly things change. And it has also changed in the livestock market. Cattle on feed report today, that has been an absolute up and down ride, COVID has been an impact, went away, now you're dealing with feed input costs. What did cattle on feed, quickly, 101%, placements 89%, marketings 99.9%. What did that report tell you?

Bennett: 89% in my opinion has got to keep me pretty hopeful on down the road. I think it would be very interesting to see. Obviously you've got to balance this whole COVID fear and if people are going to be going out to eat or what not. What we found back in the spring is that when people didn't go out to eat I think they bought even more beef to cook at home because they can afford more steak. But bottom line the demand has been pretty darn good. Placements allow me to be pretty friendly Q3 and Q4. Up front obviously we've got some supplies to wade through. But I guess we're kind of in the middle of a range in my opinion. Back to that low, we saw the last cattle on feed in October down around $105 and then you raced up to $116. We're kind of right in the middle of that. I can't get super friendly in the front months but by golly I think later on down the road you could be seeing some real excitement, especially if this vaccine comes through and you start to see people get a little more excited about being able to get out and about and go out to eat and things like that. I do think that this beef demand is going to be very strong on down the road.

Yeager: What is later for you? February? March? April?

Bennett: For me you get into May, June timeframe I think you could really see some strength there.

Yeager: Last week Shawn Hackett and Sue Martin disagreed on the direction of the hog market and one up, one down. This week it kind of did both. It went up and then it went down. That trend on the chart that we've got on the TV screen right now is headed down. Is that line going to continue lower or higher?

Bennett: That's a pretty tough call. In my opinion, last time I was on we were looking at some of these 70s and mid-70s that we were talking about, the areas we could hit on resistance, I thought boy I'd be a seller in there and I felt that way. But mid-60s I don't know that I'm too bearish at this stage of the game. I feel like we've gone down enough for the time being but at the same time I guess I'm not going to go out and be buying, speculating on hog prices going higher. I can't get super friendly at the same time. So similar to the wheat market I guess for me I'm fairly priced at this point in the game.

Yeager: Do you buy some of the China coming back online, maybe not as much interest in the U.S. product? Is that weighing on our market?

Bennett: Yeah, you know what I'd like to see, this week I guess going back to cattle, beef export sales were at an all-time record and if we saw more of that as far as pork was concerned then I could get maybe a little more friendly. You've seen flashes of it here and there. It's just we haven't seen enough consistency.

Yeager: Real interesting there, Matt. I know I didn't tell you I was going to ask dairy but maybe we'll talk dairy in the Market Plus. And, like I say, we've got some great questions coming ahead. So, Mr. Bennett, thank you so much for your time, appreciate it.

Bennett: Thanks for having me, bud.

Yeager: That will do it for this installment of the TV show we call Market to Market. You can watch the full show again or Market Plus on our website, that's And we do have a teensy tiny request. We'd like some space in your podcast feed. We have three different offerings, the Market Analysis, which you just heard, Market Plus, the program that you won't see on TV, that's online only and the M-to-M, that's discussions with the voices of agriculture. Subscribe today to all three wherever that you download podcasts. Next week we'll look at the economic health of rural America. For all of us here, thank you so very much for watching and have yourselves 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.  

Sukup Manufacturing Company, providing equipment and buildings to store and condition grain to help farmers adjust to market swings. We build drying, moving and storage equipment designed to preserve the quality of their crops. Sukup Manufacturing, store now, profit later.     


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