Market to Market (March 26, 2021)

Mar 26, 2021  | 27 min  | Ep4632

A new Congress tries to get traction on an old issue. Major trading partners could gain new access under a proposed deal. Cattle producers embrace electronic IDs in their herds. And market analysis with Ted Seifried, 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, March 26 edition of Market to Market, the Weekly Journal of Rural America.


Hello, I’m Paul Yeager.

There’s a quandary in the housing market - the supply of realtors is higher than properties available for them to sell.

The existing home sales market cooled last month by 6.6 percent as shortages and higher prices dropped listings to just over one million units.

Orders for durable goods snapped a nine month streak - falling 1.1 percent. The big-ticket items were hit by weather and supply-chain issues.

The colder February slowed consumer spending by 1 percent.

Those in need of food assistance got some extra help this week as USDA added $100 per month to SNAP payments for a family of four. The extension runs through the end of September.

The signing of USMCA was touted as lifting all North American boats for those who both buy and sell goods.

This week, a proposed merger could connect the three trading partners in a major way.

Peter Tubbs reports.

This week, the Canadian Pacific railroad proposed a $25 billion merger with the Kansas City Southern railroad, which would complete a system of routes that would service all three members of the USMCA trade agreement.

The integrated railroad would simplify the movement of cargo from Canada to Mexico via reduced inspection and paperwork requirements. Trackage and facilities in the deal will create an “end-to-end” merger, as the two systems only intersect in Kansas City. For U.S. row crop producers, the new Canadian Pacific Kansas City Railroad will create a simplified route for Midwestern grain to reach ports along the Gulf Coast.

The new entity would be the fifth largest of the six U.S. Class 1 railroads while servicing around 20,000 miles of track. The two companies generated over $8 billion in revenues in 2020.

The merger comes amid a recovery of supply chains thrown into disarray by the COVID-19 virus. Railroads, like so many parts of the economy, have been coping with shifting consumer purchasing habits which have caused a disruption in production and distribution systems.

For Market to Market, I’m Peter Tubbs.

The issue of race discrimination in agriculture has been debated for decades and continued, again, as the Secretary of Agriculture was called into the House Agriculture Committee to discuss the topic.

John Torpy has more.

Secretary Tom Vilsack, United States Department of Agriculture: “Let me be clear. There is no place for discrimination at the USDA. None, nor for that matter anywhere. This historic moment to advance equity must not be lost. And I intend to do everything I can to ensure that it isn't.”

With those opening remarks, USDA Secretary Tom Vilsack laid out his plan for addressing decades old claims of discrimination by the United States Department of Agriculture as he appeared before the House Agricultural Committee.

Rep. David Scott, Chairman, House Agriculture Committee: “We all are very pleased to have the opportunity today, to examine this topic, which is deeply imbedded in each of our hearts, both Democrats and Republicans here, about the plight, of our Black farmers.”

The virtual hearing was held to learn how the Biden Administration will use the $4 billion allocated for the Emergency Relief for Farmers of Color Act. As part of the $1.9 trillion dollar coronavirus relief package, these funds were set aside to relieve some of the debt being experienced by socially disadvantaged farmers and farmers of color. One of the motivations behind the infusion of cash is to help to level the playing field for a shrinking number of Black farmers. According to USDA’s 2017 Census of Agriculture, only 1.4 percent of all farmers in the U.S. are Black.

The committee heard testimony from a variety of witnesses who related their experiences of racial bias at the hands of a few USDA officials.

Dr. John Boyd, President, The National Black Farmers Association: “Black farmers don't trust the United States Department of Agriculture, which has really hurt us in participation. And it's because of all the discrimination that I and others have, have faced.”

Dr. John Boyd, President of the National Black Farmers Association, has been speaking out about inequality and racism by USDA employees since before the landmark Pigford v Glickman discrimination case was decided in the late 1990s. Despite the settlement, accusations of discrimination continued to be leveled at the department.

Secretary Tom Vilsack, United States Department of Agriculture: “At the end of the day, this whole purpose is to try to get this done as quickly as possible, as effectively as possible, and to provide, uh, farmers enough information and outreach so they can make informed decisions about their direct loan and the tax implications. And we can settle up their guaranteed loan without any further disruption.”

An additional $1billion has been set aside to create a racial equity commission that will address longstanding discrimination across USDA. Among the multiple uses for the money is to provide assistance in overcoming barriers to accessing programs that many farmers of color have experienced in the past.

Among those testifying were members of the next generation of farmers working to carve their own path.

Mr. Sedrick Rowe, Owner, Rowe Organic Farm: “Nothing has changed since the past. And, um, here my granddaddy, you know, older people talk about farming back in the day and how they wasn't able to access land and equipment. I'm going through that person to myself. Um, I applied for, um, beginner farmers program, microloans. Um, the reason I didn't get funding, I don't know. Um, I have legit reasons why I need the assistance and now, so the red flags are still there because I'm giving them all of my information, all of my life, just for them to tell me no again.”

For Market to Market, I’m John Torpy.

At one time, a trained eye was able to identify individual animals in the field. Ear tags have made a big difference in day-to-day management. But the increased demand for specific genetics and disease tracking has some farmers investing in an upgrade. 

Colleen Bradford Krantz looks at improvement to identification in the feedlot in our Cover Story.

This newborn bull calf has been given his identification. He is now Number 5 at this Winterset, Iowa farm.

His number will be used to track his birth date, vaccinations and weight as he grows. But when he is sold, and leaves his home farm, many of these records will likely be left behind.

Sixty miles away, at the JDH Wagyu farm near Villisca, Iowa, this newborn bull will be identified with a small button-like tag that includes a radio-frequency transmitter. When read using a hand-held wand, the radio-frequency tag will reveal his nationally unique electronic identification - or EID - number. His records, pulled into a spreadsheet, could easily travel with him to a new home.

Callahan Grund, U.S. Cattle Trace: “From back in the day when we hot branded cattle with the old cowboy wrestlers….we’ve identified cattle throughout history in different forms and fashions. And really started to incorporate electronic IDs in recent years, within the last 10 to 15 years.”

The 15-digit EID number would not only be associated with a birth date, birth location and health information, but could also be shared with USDA through a database to rule out or pinpoint affected cattle in case of a serious disease outbreak.

Callahan Grund, U.S. Cattle Trace: “Of the top 10 beef-exporting nations in the world, only two of them don’t have a disease traceability system in place today. That would be us and India. And India mainly exports water buffalos….That does limit some of our markets from an exporting perspective, but, you know, even more importantly, I think is being proactive here to build a system, a tool that can be used to limit the spread of a potential disease outbreak. That’s really important when we look at not only our food supply, but really our livelihoods as producers.”

The federal government has, in the past, planned to require the use of electronic identification tags. It announced this week it will again delay the most recent plans, but will likely return to the idea in the future.

In the meantime, U.S. Cattle Trace, the Kansas-based nonprofit where Grund is executive director, is trying to establish a voluntary national system for disease traceability.

Cattle producers have been concerned about the additional cost. The tags cost more than the standard ear tags, but the large investment is in the wand and associated computer gear. That equipment can begin around a thousand dollars and move quickly upward.

Dr. Marty Zaluski, Montana State Veterinarian: “There is also some legitimate concerns from ranchers that are afraid that having electronic IDs would just perpetuate and perhaps exacerbate their concerns over lack of competition in and consolidation in the cattle slaughter and processing and marketing environment.”

Dr. Marty Zaluski is more focused on the benefits that EID tags provide to nation’s livestock herd.

Dr. Marty Zaluski, Montana State Veterinarian: “It allows me to rule out producers and ranchers that maybe involved in a disease event. An example in the state of Montana is we were trying to find the source of a cow that was diagnosed with tuberculosis at slaughter… and because of the way that cattle are…co-mingled and sold, that animal came out of a feedlot where there was a possibility of 99 possible sources where that animal could have come from… But if that animal had a tag that was able to be read at slaughter and then correlated to… her birth premises… you would have been able to hassle and trouble one premise instead of 99. ”

JDH Wagyu president Joe Hoye says although it took a little time to adjust to the EID tags, he now can’t imagine getting by without the system.

Nate Orwick, manager, JDH Wagyu: “As we scan it all that information comes to our computer. It has the weight on them and their tag number and any of their previous information we put in… It’s an investment in whatever you are doing, but the cost of the machine and wand versus spending hours typing up information and hand-writing information in and not typing in the correct numbers and weights, that can be costly mistakes down the road.”

Hoye raises Wagyu, a Japanese breed where verifying age, birth premise and genetic line is particularly important to buyers. The American Wagyu Association, as well as organizations that support other breeds, retain much of this data, but the EID system allows for weight and pen location to be added to inventory spreadsheets. Hoye points out that hand-written records can sometimes be inaccurate.

Joe Hoye, president, JDH Wagyu: “There’s lots of opportunity for error…You can’t see it properly or mud or who know what but at the end of the day, it’s much better with that electronic approach because it’s so positive that you know exactly what you do have. ”

Hoye doesn’t lose sleep over the fear some producers have of being liable if their cattle are proven to be the source of an outbreak.

Joe Hoye, president, JDH Wagyu: “I think there’s a little bit of grace there but maybe I’m wrong. I could be wrong but at the end of the day, I think most people, most producers, try to do the best they can to make sure they know what they are selling. There’s always diseases that come up.”

Through U.S. CattleTrace, producers will continue to test the systems, weighing the pros and cons.

Callahan Grund, U.S. Cattle Trace: “We don’t want to mandate anything upon anybody that doesn’t want to participate in a program like this. We want good, proactive people that want to build an animal disease traceability system for the industry.”

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

Next, the Market to Market report.

The trade moved sideways as positions are starting to solidify ahead of next week’s planting intentions report. For the week, May wheat lost 14 cents while the nearby corn contract dropped a nickel. A break in crude oil spilled over into the soybean complex. May soybeans shed 16 cents. May meal dropped $3.90. May cotton shrank by $4.30 per hundredweight. Over in the dairy parlor, April Class III milk futures added 4 cents. An up week in the livestock sector, June cattle gained $3.10. May feeders rose $5.20. And the June lean hog contract jumped $5. In the currency markets, the U.S. Dollar index improved 88 ticks. May crude oil decreased 64 cents per barrel. COMEX Gold lost $11.10 per ounce. And the Goldman Sachs Commodity Index gained nearly 3 points to finish at 474.05.

Yeager: Now here to provide insight is regular market analyst Ted Seifried. Hello, sir.

Seifried: Hey, Paul.

Yeager: Good to have you here.

Seifried: Great to be here.

Yeager: Great to be here as we talk about really nothing. It's been a week of dancing side-to-side as we get ready for this acreage report. But let's start with wheat and why the weather seems to matter whether it's the United States and the Plains getting rain, Australia getting rain, I always seem to ask the same question but it seems to be the time of year. Is weather the big story or is it a supply issue right now?

Seifried: It's weather for sure. But it's somewhat impressive that we had rain events happening and we're only down 14 cents for the week. So that's pretty good. Now, you found some strength at the end of the day on Friday because we were really approaching some very key support levels. The 200 day moving average in the May Chicago wheat and when you're going home in front of a weekend and you've been short and you see that big support level you tend to want to take some profit so a little bit of shortcovering there. Now, whether that holds or not is a very good question. I think weather fundamentals are getting a little bit more bearish for wheat. But ultimately I think there's some bullish reasons to think that wheat can try to hold here and maybe bounce back up towards those highs again, possibly coming from row crops, or a little bit of spillover strength coming from row crops. But that's all going to kind of depend on what happens with our big report next week.

Yeager: Well, another factor in the wheat market is a question that we got via Instagram from Chris in Wisconsin. He's asking, with the stronger U.S. dollar does that slow down the pace of U.S grain exports?

Seifried: Right. So, that is the concern that we have and that has been part of the thorn in the side of the wheat for a couple of weeks now is that the dollar looks like it has found a bottom and trying to stabilize. So we will have to see. Whenever we talk about the strength in the dollar understand the dollar index is a basket against other currencies. It’s not something that we look at very closely for row crops because we look at our main competitor down in South America, that's not a big part of the basket. That basket is mainly based on the Yen and the Euro. But when we talk about wheat it is a big competitor because of who else is selling wheat. It's not South America. It's Europe and Russia and Australia. So that stronger dollar does seem to have a bigger impact on U.S. exports. But whether there is a whole lot of upside potential in that dollar or not remains to be seen. I kind of don't think there is.

Yeager: The spreads aren't widening so much in wheat but they are in corn but then this week all of a sudden they turned around and got a little closer together. What's that starting to tell you?

Seifried: Not really on Friday, Paul. The very interesting thing that we have in corn is when you look at the fundamentals for corn, or at least the known fundamentals, what the USDA balance sheet says, we have a fairly ample carryover according to the USDA. They have been very reluctant to increase exports, they have been very reluctant to lower that ending stock number at a 1.5 billion bushel carryover. We don't have to price ration corn. That is a soybean story. But the market acts like we do, the spreads act like we do, the cash market acts like we do. That May-July spread that's very much saying that we have a shortage of corn up front. Now, whether that is farmers not wanting to sell cash corn here because they sold too low on the soybeans so now they're looking to make it up on corn or they sold some corn too cheaply and now they're really holding on for the big summer rally that has kind of been touted for the last few months. I don't know what it is. But we're going to see a lot more about that on the quarterly grain stocks report. Are we going to see another revision from the USDA on production from the last couple of years and saying, hey there isn't as much corn out there, which could translate into a big revision on the USDA balance sheet. So the market is trying to tell us something here and it doesn't really reflect the fundamentals that the USDA is giving us. So whether that is the market trying to outsmart the USDA and ultimately the market might be wrong or whether that's the market knowing something that the USDA hasn't put on paper yet, we're going to see and a big part or a big step forward in answering that question is going to happen on Wednesday.

Yeager: Well, and the story about what the market is trying to tell you better than what a government agency is going to tell you is hard to, if you do have grain left in the bin because if you do right now with corn, say you've got some old crop, are you telling anybody to sell before Wednesday?

Seifried: Hmm, it's a great question. I don't have a lot of guys that have a ton of old crop left.

Yeager: I don't think you're alone in that either.

Seifried: Yeah, I don't think so either. But I have been saying hey, we definitely want to hold onto some bushels going into the growing season because if we see some fireworks everybody wants to be able to say hey, I sold $6 corn or whatever. Personally I don't think we're going to see $6 corn. But we will see. I think for the most part what I'm telling guys to do is hey, if you want to manage risk go ahead and make cash sales. If we want to have the opportunity to see prices go higher let's come in and own calls or a call spread, that way we're risking 12 to 16 cents or something like that rather than risking 50, 60, 70 cents on the cash side of things. So, selling cash, if you want to reown using the board that's a different story. But yeah, I think you should be 80% sold cash going into this report on Wednesday.

Yeager: If the market has taught us anything in the last 9 months is volatility can absolutely happen in one or two days. And you could lose that 50 to 60 cents that you're talking about.

Seifried: Yeah, absolutely. And I'm talking about 80% sold on old crop corn. That's not where I'm at on new crop. But even 40%, 50% sold on new crop I think is a very legitimate thing right now. But yes, volatility, wow we saw a ton of that at the tail end of the last calendar year. But we've been so very sideways here basically since the beginning of the year that at some point we're going to see a big move one way or the other. Now, the question is which way? And we don't have an answer to that yet. The market doesn't know. It's super indecisive. We're down on Thursday, we're up on Friday and that's just how it has been. Well, one of these days we're going to pick and direction and we're going to move. Maybe Wednesday gives us some insight into that. Either way, that move is going to happen, so you've got to be ready for that. And if that moves to the downside and you're still sitting on a whole bunch of old crop corn, that is not going to be a fun situation.

Yeager: Then you have to tell people you sold corn at $3 or whatever it is. All right, to soybeans and I'm going to get your thoughts on new crop corn in Market Plus. But on beans, the trade is expecting large acres next week, although we couldn't hold, we barely held $14 at the end of today on that nearby crop. What are those two stories telling you?

Seifried: So, when you talk about acreage we're talking about a new crop situation. When we're talking about $14 May soybeans we're talking about the old crop situation. There's a fundamental difference in the idea that we're running out of soybeans in the old crop, which is why we are where we're at. But just like we were talking about in corn, how the market is kind of trying to tell us something about the cash market and about maybe there isn't as much corn out there as what the USDA is saying. Well, maybe the market is saying something about soybeans too, maybe there are more soybeans out there compared to what the USDA is saying. And I don't know if the market is right about that or not. Like I said, Wednesday should give us a lot more insight into that. But the weakness that we're seeing in old crop soybeans is really interesting because if the USDA is right we can't really see lower prices tempting more demand. We just don't have the soybeans to create new demand. So if we start to see export sales pick up or something like that again then that's just the higher we're going to have to go in old crop soybeans. June and July could be very, very interesting months for the soybeans. So we'll see. But the weakness was surprising at the end of the week. You can say that maybe the market feels like with export sales tailing off, especially new crop export sales being somewhat non-existent, that maybe we have price rationed demand at this point or maybe the Brazilian crop is going to be bigger than expected so maybe we'll see some cancellations. Although at this point we've been shipping soybeans so there's not a whole lot of beans out there to be cancelled. So I still think that it's going to be very interesting June and July for soybeans unless somehow the USDA finds a big amount of soybeans on its quarterly grain stocks report.

Yeager: All right, we'll get your thoughts on kind of where we should maybe position ourselves in Market Plus for corn and soybeans. I want to move to livestock because they were very green for the week. Why? Let's start with live cattle.

Seifried: Well, live cattle, wow it had been seven, almost eight weeks where we had just sideways trading cash and that was getting very frustrating, especially at one point you had April cattle trading into an $11 premium to cash with the expectation that that cash was going to trade higher but then it didn't and then it didn't again and then it didn't again. And it was just Groundhog Day all over again. And so we had to break off of our highs. But finally the cash cattle started to find some footing, a little bit of strength, not a tremendous amount. $14 traded, $15, we heard a little bit of $16. So that is better and that allowed the cattle market to find some footing and start to come back a little bit. Even feeders were higher on Friday despite the fact that corn was coming back up 6 cents or so. So that cattle complex, that chart for both feeders and live cattle look pretty good to go back and maybe go retest those highs. But we need to see the cash cattle trade higher. Now, we're optimistic about that. We know that we have a lot of weight up front so it might take a little bit of time. But domestic demand has been really very good. Export demand has been solid. I think there is more strength coming in the cattle. I like where we're going from here and I like the look of the charts. Now, hogs are much different story. That chart, I've been saying for about a month that that hog chart really looked a lot like the soybean chart looked like back in November. It had been a very nice, organized uptrend. And then we had to see a little bit of a break, we had to sort of fix the overbought condition of that market and we did. And now we're kind of in a position where I think there's potential to go quite a bit higher. Domestic demand is really good, just as we're getting into the beginning of grilling season. And then you have all the chatter out of China about ASF and the exports have been really solid but could they get better even and oh boy, this is sort of an interesting time for hogs. And now you've got pretty much all the contract months trading over the par level, the 100 mark, the bulk of the strength coming in the mid to late summer because that's really I think when we're expecting the domestic demand and the exports to really be competing and that's when we might have quite a bit of exports to China. So yeah, it looks really good. The charts still look really good. Again, we've had our period of consolidation. I think there's more upside potential in the short run.

Yeager: That's pretty good. You've got that timing thing down right to within five seconds of us being done. Ted, good to see you. Thank you so much.

Seifried: Always a pleasure. Thanks, Paul.

Yeager: That will do it for this installment of Market to Market. We will talk more in Market Plus, so join us there. I heard there's going to be a whiteboard discussion. You can find it on our website of Streaming of this program is possible through the PBS and YouTube apps. Our YouTube feed is full of things you don’t see on the broadcast version. Subscribe now at Next week, we look at changes in the grocery store over the last year. Thank you so very much for watching. Have yourselves a great week.



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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