Market to Market - August 2, 2024

Coming up on Market to Market - The USDA pays producers for past discriminatory behavior. Small refineries get a break on blending ethanol. We take a look at the nation's first, almost-forgotten female veterinarian. And commodity market analysis with Angie Setzer, next.

What's next doesn't happen by chance. It happens when researchers and farmers work together to solve tomorrow's agronomic challenges. We're committed to creating what's next because at Pioneer, our name is our mission.

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Family owned and operated for more than 60 years, Sukup Manufacturing is a full-service provider of grain handling, storage and drying equipment, helping farmers feed and fuel the world.

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For over 45 years, Steiner Tractor Parts has shared your love of antique tractors. New parts for old tractors. Learn more at steinertractor.com or at 877-559-7887.

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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.

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This is the Friday, August 2nd edition of Market to Market, the Weekly Journal of Rural America.

Hello. I’m Brooke Kohlsdorf. Paul Yeager is on assignment.

To purchase a house or start a business or even buy a car - you always hope to get a good interest rate to make the purchase affordable. This week, the Fed offered some hope for a chance at lower rates.

The FOMC left the key interest rate alone citing cooling inflation, moderate job gains and a rising unemployment rate.

The Board of Governors signaled a rate cut could happen as soon as its September meeting.

The Fed has also been watching its preferred indicator of inflation - the Personal Consumption Index - which has fallen from 7.5 percent two years ago to 2.5 percent in June. The Governors remain committed to achieving an annual inflation rate of 2 percent.

The landmark 1999 Pigford v Glickman discrimination lawsuit resulted in $2.1 billion in damages being paid to Black farmers that were discriminated against by USDA employees. 

This week, a broader field of 43,000 farmers, ranchers and forest-land owners received compensation for past discriminatory practices by USDA. Under the Discrimination Financial Assistance Program - that was part of the Inflation Reduction Act - those people who were denied the ability to participate in USDA farm programs were able to apply for a one-time payment. Nearly $2 billion was allocated in the I-R-A with nearly half sent to farmers, ranchers or timberland owners living in the South East. - - -

Ethanol production - as mandated in the 2007 Renewable Fuel Standard - sends a full third of the annual bin busting corn harvest to a readymade market. Among the regulations that mandate blending the biofuel into the U.S. gasoline supply is an economic hardship waiver. During the twenty-teens, a few small refineries applied for the option but the EPA denied several of those requests. The affected petroleum refiners took the federal agency to court.

Peter Tubbs has more on the latest legal decision in the case.

The Environmental Protection Agency will have to again review requests for dozens of exemptions to an ethanol mandate.

The U.S. Court of Appeals for the D.C. Circuit issued an order on July 26th vacating most of the EPA’s 2022 denials of “hardship” waivers from the ethanol blending mandate presented by small refiners for the 2018 compliance year.

The decision is viewed as a win for the refining industry, which has long opposed federal requirements to add biofuels to the nation’s gasoline supply. The EPA can grant waivers to refiners who demonstrate that blending biofuels causes undo harm.

Three ethanol trade associations - the American Coalition for Ethanol, Growth Energy, and the Renewable Fuels Association - issued a joint statement.

“EPA’s decision in 2022 to deny the petitions was well-reasoned, based on sound economic analysis, and consistent with the Clean Air Act and the objectives of the Renewable Fuel Standard,”

The 2022 waivers covered 36 small refiners and blenders of gasoline in the United States during the 2018 production year. The number of gallons of biofuels unblended due to waivers had been rising from 2013 through 2017. There have been no waivers granted since 2017.

The consumption of gasoline in the United States peaked in 2018 at 392 million gallons per day, pegging total consumption at 145 billion gallons for the year. By 2023, gasoline consumption was 4 percent lower than 2018.

The exempted gallons of 2018 biofuels are estimated to be less than 10 percent of 2018 biofuel production.

The EPA is reviewing the decision.

For Market to Market, I’m Peter Tubbs.

The Paris Olympics marked the first time there were as many female athletes as male athletes ready to participate.

Since the start of the modern Olympiad 127 years ago, there have been several women who have broken through the glass ceiling in sports. Among many whose names have rarely been spoken since their first appearances are Golfer Margaret Abbott, NASCAR driver Sara Christian, and horse jockey Diane Crump.

One woman that is even less well-known broke through the glass “barn door” with her own achievements that are more than noteworthy.

A warning here, the following story talks about suicide.

Here is Colleen Bradford Krantz with our Cover Story.         

An online search for: “Who was the first female veterinarian in the United States,” generates top results that are a bit misleading.

No, it wasn’t Dr. Florence Kimbell.

Nor was it Dr. Elinor McGrath.

While both of these 1910 vet school grads helped pave the way for other women in a male-dominated field, the search should have favored a woman who graduated seven years earlier: Dr. Mignon Nicholson.

Dr. Howard Erickson, Kansas State University: “If you go worldwide, there were some earlier than her, but she was the first in the U.S. Unfortunately … nobody really knew much about Mignon Nicholson.”

When Dr. Erickson, a professor emeritus with Kansas State University’s veterinary college, was asked once to give a speech about pioneering women in veterinary medicine, he found Mignon Nicholson’s story elusive enough that he asked a couple librarians for help. Together, they were able to pull together a rough picture of the 1903 graduate’s life.

Dr. Howard Erickson, Kansas State University: “Her childhood, as far as we know, was in Ravenswood. It’s a part of Long Island in… New York City. And all I know is she took care of the dogs and cats in the community. She read about dogs and cats, and she read about human medicine and surgery... She also married at a young age as well too, from what we know. And her first husband was a traveling salesman so she was home alone.”

It’s unclear what brought an end to the marriage, but by the time she was in her early 20s, she had moved to Chicago. Defying the odds – and likely surprising administrators when she applied -- Nicholson was accepted into McKillip Veterinary College in 1900.

Dr. Howard Erickson, Kansas State University: “It was one of the largest private veterinary colleges of that day. It had some 1200 graduates I think at that time. McKillip was probably one of the more progressive schools."

The now-defunct Chicago college was co-founded in 1892 by a local horse farrier Matthew McKillip, who also had a veterinary practice. Although not owned by his descendants and now in a different location, his veterinary practice still exists today.

Besides admitting a woman, McKillip Veterinary College also had, four years earlier, admitted Thomas Madison Doram, believed to be the third African American to earn a professional veterinary degree in the U.S.

Erickson said there can be challenges in determining these “firsts” in veterinary medicine due to a failure to preserve journals and other documents from more than 40 now-defunct vet schools. In 2011, a University of Missouri veterinary school librarian’s study showed no indexed records could be found for 18 of these schools, which the author described as a loss of essential information in the history of veterinary medicine.

Although most of McKillip college’s journals have been lost to history, a handful did survive, including several at the University of Illinois - Urbana - Champaign, but they aren’t from the years when Nicholson was a student.

Erickson did find evidence in a Chicago city directory that Nicholson ran a small animal practice during her first year at McKillip, probably from her home. She added pet boarding during her second year.

Dr. Howard Erickson, Kansas State University: “The horse was the primary species that was studied at the time, although they did study dogs and cats and small animals. But it was unusual for someone to establish a small animal hospital.”

 It’s possible some of her peers and professors were less than welcoming to a woman. An American Veterinary Medical Association article reported that one of Michigan State University’s earliest female vet students, Dr. Dorothy Segal, ran into barriers three decades later. According to the article, the dean called Segal and the six other female students into his office and told them to “go back to the kitchen.”

Segal, at least, didn’t listen. And today, women account for about 80 percent of U.S. veterinarian college students.

As Nicholson neared her graduation, she was featured in a 1902 article in the Chicago Tribune, which declared: “No other woman, so far as known, has done this kind of work.”

Within six months of graduating, in September of 1903, she married a man named John Jackson, co-owner of a Chicago restaurant called Becker & Jackson. It’s unclear if she continued practicing after her marriage but later news articles would imply she was struggling with alcohol addiction. Her marriage fell apart. Finally, just three years after becoming the first female to earn a veterinarian degree in the U.S., her life came to a tragic end.

Dr. Howard Erickson, Kansas State University: “She’d gone to the café to try to patch things up again and he said, ‘It’s no use.’ They had gone back together once before and she’d gone back to drinking again and he said it’s no use. So, she stood up and pulled out a revolver and shot herself, right there in the cafe.”

Back then, Dr. Erickson points out, alcohol and mental health treatment was less advanced than today, and her struggles should not diminish her accomplishments

Dr. Howard Erickson, Kansas State University: “I would just say that there is suicide in all professions today, and it happens in veterinary medicine too … You gotta admire her that she had enough, you know, grit to go through the curriculum at McKillip.”

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

Next, the Market to Market report.

The anticipation of what might be in the August Supply and Demand report, wet weather and warm temperatures continue to push corn and beans lower. A note here - we are recording on Thursday due to changes in our production schedule. For the week, the nearby wheat contract gained 9 cents and the September corn contract lost 13 cents. The soybean market continues to move lower as the trade positions itself for the August Supply and Demand report that will include USDA’s estimate of acres planted. The September soybean contract cut 33 cents while September meal dropped $6.30 per ton. December cotton added a nickel per hundredweight. Over in the dairy parlor, September Class Three milk futures fell 14 cents. The livestock market was in the red. October cattle shed $4.82. September feeders fell $7.80. And the October lean hog contract lost $1.17. In the currency markets, the US dollar index found 12 ticks. September crude oil lost 61 cents per barrel. COMEX gold improved $53.60 per ounce. And the Goldman Sachs Commodity Index added almost 3 points, to settle at 549.50.

Kohlsdorf: Joining us now is one of our regular market analysts Angie Setzer, although I should say that it's been a minute since you've been here, right?

Setzer: Regular is a relative term, but I'll take regular. I'm glad to be back.

Kohlsdorf: We love having you. I'm glad that I could be here with you today. So, we haven't had a lot of market friendly news. I guess that's sort of an understatement this week. Last week at this time we were talking about a forecast that looked pretty friendly, it was hot and dry, that all changed. We got a lot of rain, at least in the Midwest we did. So, with the markets losing a lot of ground this week, was that weather or was it a supply issue?

Setzer: I think it was a whole host of issues. You have a continuation of the speculator wanting to sell commodities. You just look at a broad spectrum of commodities from lumber, you saw cotton is down off from its relatively decent levels that we had seen earlier this year, you've got copper, everyone says copper is a great indicator of what is going to happen economically speaking and you've seen copper just completely fall out of bed. So, it's really one of those things where I feel like we have this sort of idea that everything is so bearish in grains and we're just going to continue to sell. It's almost turned into an echo chamber. I've used that phrase more than once here over the last couple, three weeks. But everyone just keeps feeding off from each other when it comes to well this is negative, that is negative. And the reality is we've pretty much, there's a point in time where you can throw so many negative things at the market and eventually you’re going to see it kind of shrug them off. And I think we're getting there. I thought we were getting there for a while, I thought we would have seen the speculators at least move to kind of add some length versus sitting short, but obviously the weather has been relatively benign across the U.S., so I think that was a factor. I think you've got Argentina talking about rolling back export taxes, which would have a huge influence on what global market prices could look like. You obviously had some of this unexpected rain with an 11 to 15 day forecast turning off a little cooler and wetter than what was anticipated. And so, it was just kind of this whole gathering of fun things to really continue to pressure the market. But honestly, yes, we traded to a new low in September corn, which is a little bit frustrating. But we really have slowed the momentum of the downward pressure that we've seen. We've seen wheat really start to hold its lows, which is somewhat supportive, especially for corn, if we can kind of work to grind out this bottom. And so really, we're just trying to figure out how to turn the Titanic right now really and that's not an easy thing to do.

Kohlsdorf: Okay, so speaking of wheat, U.S. wheat is as cheap as any other country right now, right? So, does that mean more people are going to be buying from us? And will that help?

Setzer: I think you will see that. I think that we've already seen a decent start to the export market structure for the year. We have seen a little bit of a slowdown, but that feels more like the consumer is not necessarily as engaged as what you would typically see. Traditionally we would see the end user come in and work to get really aggressively covered for Q3, Q4. We didn't see that this year. We've just seen them go really hand to mouth, China being one of the bigger reasons. Now we are seeing conversation that China is going to look to expand their government wheat reserves and China did. They had a really great high-quality wheat crop this year that they didn't have last year. Last year they lost a third to 40% of their crop due to bad conditions at harvest. It rained, they had sprouts, they had other things that turned into feed wheat. You don't have that this year so you don't really have that drive or that competitive sort of feel on the end user side and that is keeping some of that demand slow. But from an overall standpoint we are going to see a continuation of buying, the U.S. should benefit, especially as we remain cheap. If we see the dollar start to turn under pressure or anything like that, we have the highest quality, easily accessible supply in the world right now, and I think that will benefit us long-term.

Kohlsdorf: Okay, so you mentioned December corn futures went below $4 this week. So, have we seen the lows? What is going to change that? What is going to be the thing to turn that around?

Setzer: I'd like to say that we've seen the lows. I think we should be getting close, like I said. I feel like we're working to kind of grind out what that is, and that takes some time. But I do think when you start to pay attention to the other global factors like I feel like we're ignoring the drought and the heat and the production problems that we have in Ukraine. You take a look at what is going on in Eastern Europe, Romania is looking at cutting 5 million metric ton from their crop. You add in 5, 6, 7, 8 million metric ton loss from the Ukrainian crop, you start to talk about what we're looking at with Argentina's overall production, Brazil's second crop harvest happened at almost double their normal pace and basis continues to rally. That's something in the cash market if harvest happens faster than normal and basis continues to strengthen throughout harvest, that tells me as a cash trader there is something wrong with what we think is happening from a supply standpoint. So, to me I do feel like eventually low prices are going to help to bring in that global demand that we're looking at. The U.S. is the cheapest. The U.S. is the most accessible. The U.S. is the highest quality. And those things matter. And so, to me the biggest thing that we're waiting for right now is just to see the Chinese buyer get engaged because I think it takes China to spook the rest of the world consumer that the price isn't going to continue to the basement forever.

Kohlsdorf: Okay, our next question about corn comes from social media. So, it's a long one. We have an extremely strong summer basis in eastern Nebraska, the kind you find in a small carryout year. Is the strong basis as strong in other parts of the country? If so, the basis is telling me the USDA is overestimating the carryout, looking for a husker harvest days surprise on the carryout.

Setzer: I think that's something to pay attention to. That has been one of the conversations that we've been having for a while. You've seen spread action firm up. Now lately in corn you've definitely seen spreads relax, you've seen basis start to back off from some of the highs and I feel like people have found that they're covered. I do think though there is a real potential that we could be overestimating the numbers based on the June figures. If you talk to Lance from NASS, he'll tell you that the response rate this year was about 40%. And so, if you look at a farmer response rate to drive a survey number, like you're looking at a number that the trade is using with a 40% response rate, for a lot of other polls or any sort of statistical analysis you'd almost look to throw that out. Now I'm not going to say that we'll do that but to me if you start to question what the numbers are or whether or not they're truly accurate you want to look at the cash market for signs. And so, we have seen some versions in the market structure which would indicate that supply is not quite feeding the market like you would want it to. We've seen some strong basis. Now is that a function of a strong farmer holding onto bushels? Is that a function of the grain not moving? That's been a question. But I feel like it's a little bit of both. I don't think the farmer has strong enough hands to fundamentally change the way that the cash market structure works. But I do think that there is enough grain that is starting to move now that you're starting to see basis calm, you've seen the Sept/Dec spread widen out to 15, 16 cents, which is historically wider than what you would have seen over the last five years or so. So, the thought that the carryout is probably close to what the USDA is projecting right now is accurate. But could we find 150 or 200 million bushels less of corn potentially as we get into that September number or maybe find that we have 50 million or so less of beans on hand? For sure. Does that markedly change the overall outlook? Not necessarily with decent production. But it could if that compounds with a surprise in demand.

Kohlsdorf: Okay, let's talk soybeans. We had an almost two year low. I think October '22 was the last time we saw this low, beans this low. So, that is going to rescue that market?

Setzer: China, honestly. It's China or La Nina, a weather issue in South America. And so, we've got La Nina coming in, we've had tremendous dryness in Argentina and in central Brazil, it's part of the reason that their harvest has gone so well, it's part of the reason that I think their crop is probably smaller than what we're anticipating on second crop. So, they're coming into the year, normally they do anyway, relatively dry. We're six weeks away from Brazil being able to turn wheels and start planting their soybeans. And so, it's getting to the point now where here in the next couple, three weeks we're going to be able to start to look at those long-term forecasts. Currently they are concerning that they're going to stay really dry. And so, if they go into the planting season dry and stay dry where we have a late La Nina or a late rain start to develop that could have long-term implications on our export program because right now Brazil has been actively shorting February and March beans far below U.S. values. So, they need to have their crop get off, get started, all of these things. There's plenty of fodder to be had potentially in the soybean market when you look at renewable diesel, you look at increased crush around the world, increased blend rates, there's a lot of things that are positive and so it's hard right now simply because we don't have that export book on that we would like to see from China. If that were to change, we have seen them come in, they were pretty heavy buyers last night, it would matter.

Kohlsdorf: Okay, let's get to cattle because I think we have about a minute left here.

Setzer: Thank goodness.

Kohlsdorf: Oh, okay. Well, so cattle producers have fared a little better than grain producers this week. So, where do you see that live market and the feeder market headed, in a minute?

Setzer: Well, I think you have to be careful in that side. I think that is one of those situations where we're talking like a year ago in corn where maybe you think that there is some potential upside because of the smaller cattle herds and some of these conversations that we've had about being short cattle for an extended period of time. I think we just have to be careful if we are heading into a recession or are running into any sort of situation where you could see the consumer slow down or see to where we could bring in outside supplies possibly to offset some of our domestic demand, just make sure that you are looking at different ways to manage your risk and don't put yourself in a situation where a corn farmer is today where I wish I would have looked to lock in that profit when I had the chance or at least put in that floor to make sure that I'm not trying to figure out how to fix a problem when it becomes somewhat unfixable.

Kohlsdorf: Okay. Angie, we covered some ground. Thank you so much. We'll talk more in Market Plus because I think you have a lot to say. We are going to pause this analysis and continue our discussion about these markets in our Market Plus segment, as you heard. You can find both Analysis and Plus on our website of markettomarket.org. The first place this program appears is on our YouTube channel. Stay in the loop by subscribing to our feed, clicking on the bell to get notifications about new content and let the technology work for you.  Find us at Market to Market on YouTube. Next week, we take a look at a series of new laws aimed at limiting foreign land ownership in the U.S. Thank you so much for watching. Have 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 next doesn't happen by chance. It happens when researchers and farmers work together to solve tomorrow's agronomic challenges. We're committed to creating what's next because at Pioneer, our name is our mission.

(music)

Family owned and operated for more than 60 years, Sukup Manufacturing is a full-service provider of grain handling, storage and drying equipment, helping farmers feed and fuel the world.

(music)

For over 45 years, Steiner Tractor Parts has shared your love of antique tractors. New parts for old tractors. Learn more at steinertractor.com or at 877-559-7887.

(music)

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.

(music)

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.