Market to Market (August 17, 2018)

Aug 17, 2018  | 27 min  | Ep4352 | Transcript

Coming up on Market to Market -- Roundup herbicide loses its case in court. The White House waits for China at the negotiating table. The price of dicamba damage continues to grow. And market analysis with Don Roose, next.

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This is the Friday, August 17 edition of Market to Market, the Weekly Journal of Rural America.

Hello, I’m Delaney Howell.

Despite the threat of higher prices from a trade war, U.S. consumers have yet to curtail trips to their favorite website or local retail outlet. --

Retail purchases rose 0.5 percent last month.

When the price of new cars and the fuel to power them are removed, core retail sales rose an equal amount.

The housing market remains in flux but July witnessed a 0.9 percent rebound after a dramatic plunge in June.

Lower grain prices have started to pull on the Creighton Rural Mainstreet index. The economic indicator shows signs of growth even as the farm economy remains under pressure. -----

Earlier this week, President Trump tweeted this country was built on tariffs and that they are now leading us to great new trade deals. Many farmers have said they’re willing to wait out the trade skirmish while others are left wondering how long they can hold out.

John Torpy kicks off our coverage.

Tariff tensions between the world’s two largest trading partners eased a bit this week as negotiations between the U.S. and China are set to resume later this month.

White House Economic Advisor Larry Kudlow, who has been on the front lines of trade negotiations with China, was optimistic about the upcoming talks, praising them as a step in the right direction.

Larry Kudlow, White House Economic Advisor: "You know, my mantra is not talking, I mean, talking is always better than not talking. We haven't really had a sit down with them in quite some time at any level. So who knows. But it's gotta be a good thing."

The announcement comes on the heels of Kudlow’s report to President Trump on the current state of the Chinese economy.

Larry Kudlow, White House Economic Advisor: ”Business investments collapsing in China according to the numbers. Industrial production has fallen and now is plateauing at a low level. People are selling the currency, there may be some manipulation, but mostly I think investors are moving out of China because they don't like the economy and they're coming to the USA because they like our economy.”

Echoing President Trump’s sentiments, U.S. Ambassador to China Terry Branstad blasted Chinese officials for hurting their own economy.

Ambassador Terry Branstad, Ambassador to China:” Well, I think it's very unfair what the Chinese have done. Focusing on agriculture. You know they've not been fair in terms of their trading relationship for a long time. And so what we're trying to do is restore fairness and reciprocity.

We have a goal of doubling exports over the next five years and we're hoping that the Chinese will realize right now they're hurting their own consumers. Because the Chinese consumer wants safe reliable food and medicine. And they've had problems in both of those areas. And we have the ability to supply them with very safe reliable food.”


The American Farm Bureau Federation praised the invitation the White House extended to China.

Will Rodgers, American Farm Bureau Federation:” We are encouraged that discussions are set to resume between the US and China regarding trade concerns. We have been clear all along that we prefer negotiations to tariffs. It’s our hope that the talks will lead to the removal of tariffs that are impacting US agricultural exports and a better deal for everyone.”

Despite overtures of resolving the trade dispute, China launched a formal complaint with the World Trade Organization over U.S. tariffs on solar panels. The Chinese claim the 30 percent tax inappropriately helps U.S. manufacturers.

For Market to Market, I’m John Torpy

The Trump Administration’s Waters of the U.S. rule was delivered a legal blow this week when a South Carolina federal judge issued an injunction. The decision leaves the country with a patchwork of laws governing the nation’s streams, lakes and rivers.

Agricultural giant Monsanto has been embroiled in a court case over its popular herbicide Roundup. Glyphosate, the active ingredient in the mix, has come under increased scrutiny which was been capped by a high-profile court case.

Josh Buettner has the story.

Judge Suzanne Bolanos/San Francisco, California Superior Court: “I will now read the verdict in the matter of Dewayne Johnson, plantiff vs. Monsanto company, defendant.”

Last week’s California court decision awarding $289 million in damages to a dying man who claims Monsanto’s Roundup weed killer gave him cancer rocked the agritech industry.  Shares in German-based Bayer, which recently acquired rival Monsanto for $63 billion, dropped to their lowest level in 5 years on the news. 

Legal analysts say the jury’s decision could bolster thousands of similar pending lawsuits involving a product once labeled a “probable carcinogen” by the World Health Organization, and considered as such by the state of California.  The U.S. Environmental Protection Agency and the European Union view Roundup as safe.

Judge Suzanne Bolanos/San Francisco, California Superior Court: “Was the Roundup Pro, or Ranger Pro, design a substantial factor in causing harm to Mr. Johnson. Answer: Yes.”

Glyphosate is a broad spectrum herbicide widely utilized in agriculture, landscaping and consumer applications.  The chemical’s use has dramatically increased since the introduction of Roundup resistant genetically modified crops like corn and soybeans.

Another bombshell dropped this week as The Environmental Working Group, an environmental advocacy organization, said testing revealed a number of breakfast foods like cereal, oats and granola contain potentially dangerous amounts of glyphosate.  The group states more than 250 million pounds of the chemical are sprayed on American crops annually.

Judge Suzanne Bolanos/San Francisco, California Superior Court: “Would ordinary consumers have recognized the potential risk. Answer, No.”

Monsanto responded stating that even at the highest level reported by the EWG, an adult would have to eat 118 pounds of the food item every day for the rest of their life to reach the EPA’s limit.

Plaintiff Dewayne Johnson’s case was the first filed against Monsanto by a cancer patient to reach trial.  Johnson was exposed to Roundup as a school groundskeeper.  He was diagnosed with non-Hodgkins lymphoma in 2014. 

Judge Suzanne Bolanos/San Francisco, California Superior Court:  “Did Monsanto fail to adequately warn of the potential risks, answer Yes. Was the lack of sufficient warnings a substantial factor in causing harm to Mr. Johnson. Answer, Yes.”


In response to the verdict, France’s Environment Minister declared “the beginning of a war” against glyphosate, setting EU farm interests on edge.

Monsanto denies Roundup is carcinogenic and will appeal the jury’s decision.

For Market to Market, I’m Josh Buettner.

The agribusiness giant also faces dozens of lawsuits related to its dicamba herbicide. In 2017, drift during application damaged more than 3.6 million acres of soybeans and other crops in 25 states.

In 2018, damage from the herbicide continues to be seen across farm country. The issue has hit home for one southern farmer.

Colleen Bradford Krantz has more.

Joe Gardner immediately knew something had gone wrong when he walked into one of his North Carolina tobacco fields last month.

The unnatural cupping on the leaves was similar to curling he had seen last summer, after which he received a settlement for crop damage due to suspected dicamba exposure. But, this time, almost 100 acres - nearly a third of his tobacco crop - showed signs of exposure.

Joe Gardner, Gardner Farm, Macclesfield, North Carolina: “When I saw it that Monday – that Monday night – I couldn’t hardly sleep a wink not knowing what I was going to lose if I couldn’t sell it.”

Gardner already knew, no tobacco buyers would accept leaves from a crop with signs of dicamba exposure. His federal crop insurance would only cover losses from natural occurrences. The field of tobacco - typically valued at $4,000 to $6,000 an acre - would likely be a complete loss.

Joe Gardner, Gardner Farm, Macclesfield, North Carolina: “If I can’t settle, it’ll break me – probably somewhere between $400,000 and $500,000. No need for me to keep investing my time in something I can’t get rid of.”

A visit from North Carolina Cooperative Extension agents did little to allay his fears. They told Gardner - and confirmed to Market to Market - the damage was consistent with dicamba exposure.

New formulations of the weed-killer dicamba, approved in 2016 by the federal government for post-emergent use on genetically engineered soybeans and cotton, have relatively narrow application guidelines. Farmers in multiple states have reported damage to their crops both this summer and last after neighbors applied the herbicide.

Gardner called the owner of an adjacent soybean field, who confirmed a commercial applicator had recently applied dicamba. North Carolina Extension experts suspect the applicator failed to comply with required minimum distance between fields.

Several Midwestern states have tightened rules for dicamba application. The Environmental Protection Agency toughened labeling requirements in October, and the agency has said it may announce more changes after the 2018 growing season.

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

Next, the Market to Market report.

The commodity markets struggled with trade tariffs and weather doldrums. An outbreak of African swine flu in China moved the hog market sharply higher. For the week, September wheat rose 14 cents, while the nearby corn contract gained 7 cents. News that a Chinese delegation was coming to the trade table helped push the September soybean contract 31 cents higher. December meal led the way gaining $9.10 per ton. December cotton shrank $3.84 per hundred weight. Over in the dairy parlor, September Class III milk futures fell a quarter. The livestock sector finished in positive territory as the October cattle contract put on $1.63. October feeders added $2.37. And the October lean hog contract rocketed $7.42 higher. In the currency markets, the U.S. Dollar index fell 24 ticks. Crude oil dropped $1.73 per barrel. COMEX Gold melted $34.80 per ounce. And the Goldman Sachs Commodity Index lost more than 7 points to settle at 451.20. Joining us now to offer insight on these and other trends is one of our regular market analysts, Don Roose. Don, welcome back.

Roose: Thank you.

Howell: Don, we certainly have a lot to talk about again this week and I want to start here right off the top to talk about China and the trade delegations that they have announced moving forward. How should producers be looking at this news?

Roose: Well, one, it's a positive because the Chinese delegation, it's a low level delegation but it's a group that is going to come and see if we have further talks can initiate down the road. So it most definitely is a positive and it really did spark not only the grain market but it sparked really a lot of the commodity markets to the upside.

Howell: Yeah, definitely on Thursday's reversals we saw quite a bit of strength there. I think the big question on a lot of producer's minds and my mind included is do you think those tariffs are going to go into effect on August 23rd?

Roose: Well, right now it feels like it, there's no doubt about it. But the Chinese, I think they feel under pressure because typically they buy a large amount of soybeans in the fall from the United States. Fall is coming up and the big opportunity for them to buy soybeans from the U.S. is really not going to be there. So from what we pick up it was the Chinese Crush Association that really requested the delegation to come, see if we could get some talks moving forward. So it appears that at least we've got something happening. But it looks like it's going to be slow. It looks like the negotiations in Mexico are probably on the front burner first.

Howell: Realistically, Don, I was at the Iowa State Fair this week and I talked to quite a few producers who were in the mindset that this was going to be something that was wrapped up here within the next couple of months to the end of the year. Do you think that's possible? What are you looking at for a timeline to get these trade negotiations kind of filtered through?

Roose: Well, we're most definitely in a politically traded market so it's dicey all the time. And you can see what happens just when we have talks it looks like we're going to initiate we go up sharply on soybeans. So if something would turn out positive from the tariffs we'd probably be up sharply. But I think you have to be careful from a producer's standpoint and continue to do timely marketing and do some risk management that gives you the upside but still protects the downside because you just don't know what the real climate is. But I think the push is on and it feels like it's optimistic but we'll see.

Howell: Okay. Don, I want to transition here into some more optimistic news. When we look at the wheat markets they had some stellar export sales last week. What is going on there? Why did we see those strong export sales?

Roose: Well, the wheat market is the one that is really the bullish class of all the grain markets. We've got a very tight world situation, stocks to us is the lowest we've had since 2013, we've just had too many world problems with weather. Argentina had a problem with the drought, then we had Australia in a drought, then the former Soviet Union in a drought, the Europe and now even Canada has some issues. So the bottom line is the world production has just shrank enough that the U.S., only 7% of the world market is, we're trying to shift the export market as much as we can to the United States. But at the same time we can't run too fast to the upside in the wheat market or we lose the business. Russia just picked up Egypt's business last week. But we were very close, we're only $5 a metric ton under the cheapest wheat in the world and that is Russia.

Howell: Russia also announced today that they are going to limit their exports and that was after USDA increased their production by 1 million metric tons. Do you think that could really happen? Will Russia cut their exports?

Roose: I think it would be, I think that is very much iffy yet because there are some reports that they're going to, others not. I think it's a last choice actually because who wants to cut the exports because then you lose the business to the competition. But I think one thing it does signal, it says that their production is short and that their supplies are tighter and so they're watching it very closely and that's a good sign from the market standpoint.

Howell: With all of these factors being said, do you think the U.S. is positioning themselves to I guess fill in the void of some of these export markets that might get cut like Russia, like EU, like the Australian market?

Roose: Yeah, most definitely. I think that is really what is happening. If you look at Europe, for example, they have made new yearly highs on both corn and wheat so you've got a market over there that is tight and the United States most definitely has a chance to pick up that void. And from a U.S. standpoint the positive is it looks like we're going to have some solid moisture in the Southern Plains to start our wheat production here.

Howell: All right. Let's switch over here and talk a little bit about corn. Does corn have the potential to rally if the bean markets continue to show some strength or if beans and wheat don't follow the corn market?

Roose: Well, the corn market is right behind the wheat market. It's not a bearish situation. Our world stocks to use ratio are at multi-decade lows. A lot of people don't realize that. Our world supplies ending stocks are down 1.5 billion from last year. So it's not that we have a real negative situation, it's that we're carrying, in the world, we're carrying the lion's share of the ending stocks. So it's one that I think it's hard to go up right now because it's harvest time. Typically it's very hard unless the yield is getting smaller. We don't know. That's going to be a big question going forward and that is really what the debate is going to be, is the yield getting smaller or not? And that will probably give us our direction.

Howell: I want to come back to the yield question here in a second. But, Don, from where you sit today are you more bullish the wheat market or the corn market moving forward?

Roose: Well, I think you have to be both bullish on the wheat market because typically the wheat market seasonally moves higher from now really into February and we have too many world problems and so the world does have to produce a decent crop this next year. So demand is too high, supplies are too tight and it's a dicey situation.

Howell: With Thursday's reversal have we broke through any key resistance that you were watching?

Roose: In the wheat market?

Howell: I'm sorry, in the corn market.

Roose: In the corn, yeah I think when you look at the corn market we're in a big trading range. The supplies most definitely can push Dec corn down to $3.50 to $3.60, don't think you could go much lower than that and that is if the yield goes up like it has, for the last five years the yield has gone up so that's a big question mark. We have the Pro Farmer Tour next week, the trade is going to watch that very close. It's I guess now we call it the Farm Journal Tour. But they're going to watch it very close to see what the yields are. But the top side because it's harvest time, still big enough supplies, big carryover from last year, $3.85 to $3.95 is also going to be tough but there's big carries in the corn market also and those are big opportunities.

Howell: You mentioned the crop tours there that do start this coming week. What is the market going to be paying attention for there? Do you think it's going to be the yield is what is going to come out of the crop tour and could affect the markets?

Roose: Yeah, I think the big debate on the corn is the government, if you remember, they really did ear counts and pod counts and it's all up to the weight. I think the trade is going to look very close to see what they have for factors on the wheat, on the weights because we're running into too many areas where they think that the weight is not there and that is really what we sell is weight, not kernels.

Howell: Let me ask you this, Don, we have low level trade talks with China next week and the crop tour. Do you think, which of those two is going to get the bigger story in the markets next week?

Roose: Well, it is going to be a big news week next week there's no doubt about it. We're going to start out Monday with the crop tour. I think that will be a headline to start out with and then I think right behind it we'll have the talks. We don't expect a lot out of the talks to be honest with you, so that would be a big surprise. So it's really probably going to be the yield tours more than anything else. But then right behind that we're already starting harvest down South and so we're going to listen to real yield results from down South to give us direction. And remember, for a market to go up into harvest you usually have to have the crop getting smaller, not bigger, so it's a key time right now.

Howell: It definitely is. Don, I want to talk about soybeans. We talked a little bit about the trade news going on there. I want to talk about South American production. You're a world traveler. Have you heard any increases in South American production in bean markets and in bean production for next year?

Roose: We have and because that is the next crop up to bat is South America. And the early estimates are up 3.1% on soybean acres and up 7.5% on corn acres. So most definitely I think you get a prelude to what the world is trying to do, they're trying to take advantage of some of these prices. Remember that the soybeans in Brazil, for example, are about $1.80 higher than we are. So while our prices are a bit lower because of the tariffs they have still strong prices.

Howell: Okay. Don, I want to talk to you really quick here about a strategy question we got in on Facebook from Shane. He said, what would be a good time for a fall soybean strategy for a producer that has to store all beans in commercial storage? Would it be the same for corn and beyond?

Roose: Well, I think we have a very good one that we think you can implement and that is give yourself some upside because we don't know what is going to happen with these trade talks for sure but protect the downside. You can buy some $8.20 January puts, sell some $8.40 January puts and sell some $10 calls above it. So you have a range up to $10 and you're still protected at $9.20. $8.40 is probably low enough for right now. And remember, the soybeans have a tendency to bottom that first week of October.

Howell: Okay, because of harvest and what not. Let's talk a little bit here about the cattle markets. Live cattle is what I want to start with here. We've had the highest boxed beef price since July 3rd right around the big grilling season time. Why are we continuing to see such strong domestic demand?

Roose: Well, that is the case because it's the supply-demand balance table right now, the supplies are large, but it is really the demand that has been a surprise. And I think the demand you have to say is really because of the economy. The economy is so strong. When you look at the cattle market in the fourth quarter we're still going to have supplies 4.8% over a year ago. Our supplies are going to go up into the fourth quarter where typically they go down. And then next year we look at supplies going to be up 2.3% again. We've had liquidation out of Australia with the dryness, we've had liquidation in the Southern Plains. At the same time the big suppliers were literally eating through them from a domestic standpoint, exports also strong and exports up 19% versus a year ago. So I think it's just that combination of strong domestic demand, strong economy and strong exports.

Howell: If the economy continues to keep up here in the fourth quarter with that large supply do you anticipate the demand to continue as well?

Roose: Well, I think it's really iffy if the demand is going to stay this strong because the economy has been very strong for so long. So I think you have to be a little bit careful. But also the Chinese negotiations there was some hope, China basically doesn't take any beef from the United States, and so maybe there's a little bit of optimism there. But the government has cash prices in the fourth quarter $109 to $115 so we're not that far off of pace at that.

Howell: Okay. Let's talk really quick here about feeders. Where do you see October feeders going from here?

Roose: Well, I think that feeder cattle market is really caught in a range. The feeders can't push up too far because you have some of the feeders right now break-evens get around $118 on cattle already. So the feeder cattle market is probably caught. But I'd say it's a $145 to $160 trading range on the feeder cattle right now.

Howell: Okay. We have to finish with hogs. They had an exciting day on Thursday with a limit up close. Was it because of the trade talks?

Roose: Well, I tell you, the hog market has been an amazing market because you had these huge supplies. We had a key reversal seven days ago, we had a weekly reversal last week, the technical start of it. Then we had the trifecta, we had hopes that the Mexican trade deal is going to be done sooner rather than later. We had the African swine flu, the trade is very concerned with that. It is coming on the radar all the time, disease is always a great equalizer for the hog market. So those two things really propelled us up along with the fund buying that also gave us a lift to the upside. So it's a market that is still supply bearish but we have some of these factors that lifted us. From a basis standpoint if you look at October hogs they should be $42 right now and we're close to $59 so it tells you the trade most definitely is banking that all of these things are going to come together in a positive way. We go home Friday very overbought, $12 run in just short order and at risk management territory.

Howell: All right. Don Roose, I certainly appreciate your insight today.

Roose: Thank you.

Howell: That wraps up the broadcast portion of Market to Market. But we will keep the conversation going on Market Plus where we’ll answer more of your questions. You can find it on our website at Harvest will soon be upon us. Send your harvest prep photos to post on our Facebook page. You can check out the entire photo collection by searching Iowa PBS Market. Join us again next week when we look at how processors are bumping-up shackle space to handle more hogs. So until then, thanks for watching. I’m Delaney Howell. Have a great week!


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

Wherever your operation takes you, or who you share it with, we'll be where we've been all along, with you from the word go. 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