Market to Market - May 23, 2025

Paul Yeager: Coming up on Market to Market - The House passes a budget in an overnight work session.

A healthy response to a government report. 

Severe weather stretches over days and states causing massive destruction.

The many sides to a renewed water fight in south Texas. 

And commodity market analysis with Sue Martin. Next.

Announcer: 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.

Announcer: 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 the world. 

Announcer: Tomorrow. For over 100 years. We've worked to help our customers be ready for tomorrow. Trust in tomorrow. Information is available from a Grinnell Mutual agent today.

Announcer: “This is the Friday, May 23, 2025 edition of Market to Market - the Weekly Journal of Rural America.”

Hello. I’m Paul Yeager.  

The House voted to approve a budget by one vote as the sun rose on Thursday following overnight debate.

Inside the 1,116 pages include tax cuts, reductions in social programs, projections to raise the deficit by more than $3 trillion along with assistance to rural America in boosts to farmer safety net programs. 

The Senate will now take up the measure.

But it was 68 pages released Thursday that elicited a lot of response.

From the White House, the president was flanked by Health and Human Services Secretary Robert F. Kennedy, Junior, along with USDA head Brooke Rollins and others as they unveiled the Make America Healthy Again report.

The report also comes out against ultra-processed foods linked to a host of poor health outcomes. 

Agricultural commodity groups pushed back at the claims pesticides used on farms are potential contributors to disease in children. Glyphosate and atriazine were targeted, which are staples of corn and soybean production. 

We’ve compiled many of those full comments and posted them on market to market.org.

Now to a pair of economic reports.

Existing home sales fell again, this time by 0.5 percent according to the National Association of Realtors. 

This was the slowest April since the wake of the housing crisis in 2009.

Home prices increased for the 22nd consecutive month as the median price now is $414,000.

New home sales hit the highest level in three years on Friday with a gain of 10.9 percent. 

A week ago while taping this program a weather system was erupting in Missouri and moved east causing damage.

Peter Tubbs looks at the damage from that storm and many others that spun up the last seven days and left behind a lot of rain for a majority of the Grain Belt.

Severe weather started last weekend in Missouri as officials estimated more than $1 billion in damages in St. Louis alone from a storm.

This started a four day stretch when more than two dozen people were killed across multiple states. 

Even in Chicago a major dust storm swept across the city as part of the massive weather system. 

Clean up in Kentucky took most of the week from the same weekend system. Here in the central part of the state, residents had little warning to take shelter.

Lonnie Nantz, London, Kentucky: “All the walls in the hallways are still there, they stayed there. And the rest of the outside walls, you see them, most of them fell in. That one right behind me is still standing, but you can see it's in bad shape.”

A round of storms came through middle Kansas on Monday slamming the town of Plevna. 

Several homes were damaged. Here, the roof and a pair of walls were peeled off this home, trees downed in several neighborhoods and even this farm machinery building was impacted with a combine covered in ceiling and support walls. 

Then it was another system Tuesday in Alabama. This funnel cloud in the northern community of Madison forced residents to take shelter. 

The U.S. is on track to have its second-busiest tornado year ever.

Widespread precipitation from the Rockies to the East Coast resulted in at least one inch of rainfall with some locations receiving as much as 6 to ten inches. 

Parts of Iowa were included in the deluge as a small band of four inch rains were reported in a 100 mile band. Corn planting is nearly complete here in the Hawkeye State at 91 percent. Nationally, the pace is 78 percent, 5 points better than the 5-year average. But rains will limit much of the state’s progress towards the finish line.

The above-normal totals helped alleviate some dry conditions in the weekly Drought Monitor which hit its smallest level since July with 47.7 percent of the country in some form of drought.

Areas of the mountain time zone to the west, missed on the big rains, and southern Texas, New Mexico and Arizona stay locked in the most serious levels of drought in the data cutoff of Tuesday morning.

The 6-10 day forecast calls for below to normal temperatures in the most moisture-laden areas while the driest locations could experience at or above normal temperatures. 

For Market to Market, I’m Peter Tubbs.

Paul Yeager: Water has long been a topic of reporting on this program over 50 seasons. 

We’ve looked at too much and too little that fell from the sky and ramifications from the precipitation levels. 

Then there’s been work in the West about policy on allotments and distribution that has now extended to new regions not normally in the discussion. 

This, the two come together in an international dispute as John Torpy reports in our Cover Story. 

In the middle of the Rio Grande River, held back  by the Anzalduas Retamal Dam, water is being diverted to Mexico’s main irrigation canal. The diversion is part of an agreement established in 1944 between the U.S. and Mexico that dictates how water from the Rio Grande, Colorado and Tijuana rivers is to be shared between the two countries.

Recently, the two countries have been at odds because of Mexico’s failure to honor those water delivery mandates that help provide water to U.S. farmers in South Texas. Tensions reached a boiling point last month as President Trump used the threat of increased tariffs to force Mexico to start delivering water to rights holders in the United States.

Claudia Sheinbaum, President of Mexico: "For Texas farmers who are requesting water, there will be an immediate delivery of a certain number of millions of cubic meters (thousands of acre-feet) that can be provided according to the water availability in the Rio Grande."

Wording in what is now known as the Water Treaty of 1944 stipulates Mexico must deliver 350,000

acre feet of water to the United States annually. Over a five year cycle the allotment is 1.75 million acre feet of water. Deliveries are made via two International

reservoirs on the Rio Grande River - Amistad and

Falcon. After delivery, the state of Texas owns the water

and grants usage to an agglomeration of agencies that distribute the precious resource to end users and water rights holders. 

According to data from the International Boundary and Water Commission, the governing body in charge of accounting for the water deliveries, Mexico has fallen

short on delivery of promised supplies for the current

cycle that ends in October of 2025. At the beginning of May 2025, IBWC data shows Mexico has only delivered just over 600,000 acre feet of water, about 1.15 million acre feet under the amount mandated by the treaty. To meet agreement guidelines, Mexico must deliver an additional 1.15 million acre feet of water by the end of the five year treaty cycle in October of 2025.

The lack of supply directly impacts South Texas Farmers trying to decide how to manage their operations for upcoming growing seasons.

Sid Miller, Commissioner, Texas Department of Agriculture: “They're not paying, paying up. They still owe us over a million acre feet of water./Those farmers down there grow 4 or 5 crops because they pretty much grow year round because of the climate. This year, they they had enough water to grow one, one crop. You can't stay in business doing that. So this, this crucial getting the water treaty fixed with Mexico. So we’ve got a real problem and we need to get on top of that.” 

In April of this year, Mexican President Claudia Sheinbaum announced new water deliveries to meet treaty agreements. However, Sheinbaum points to the

absence of rainfall in the Rio Grande River Basin as the reason she is hampered from making good on delivering the water.

Claudia Sheinbaum, President of Mexico: "Technical proposals are being sought that will allow the treaty to be complied with, because what is happening is that there is less water in the Rio Grande, especially because we have experienced almost four years of drought, so there is less water."

In fall of 2024, U.S. and Mexican officials agreed to an amendment to the 1944 treaty allowing Mexico to utilize water from other Mexican tributaries to pay its debt. Some South Texas farmers and irrigation officials are unsure if Mexican officials will make good on the new deal.  Anthony Stambough is the general manager for the Hidalgo County Irrigation District No. 2 headquartered in San Juan, Texas. His district serves both cities and agriculture in South Texas where roughly 30,000 acres in the Rio Grande Valley receives a portion of the water allotment.

Anthony Stambough, General Manager, Hidalgo County Irrigation District No. 2: “When it comes to some of the provisions that that Mexico, Mexico's put on that water, they have the right to, to turn the light switch off at any time. Okay. So because of that, farmers cannot plan with that water, you know. Why would you invest thousands, tens of thousands, hundreds of thousands of dollars to prep a field, buy seed, go plant it, and then all of a sudden the water source is no longer there.”

Growing a variety of commodities in South Texas helps producers keep their operations profitable. Without knowing if they will have a reliable amount of water to irrigate their fields, farmers face the challenge of deciding what crops to grow.

Dante Galeazzi, President and CEO, Texas International Produce Association: “ Here's the problem. If all of South Texas is only growing 2 or 3 commodities, now, you've oversupplied the market and even worse, you've depressed the market because there's so much supply. Now you're not getting that return. So that's why crop mix is so important, and that's why it's so devastating to South Texas farmers when we can't do a crop mix.”

Some producers have the advantage of being near where the water is available. Tony Martinez is a managing member of Primo Trading Services, a fresh produce brokerage. Martinez farms in both the U.S. and Mexico and acknowledges farming in both countries helps his operations navigate water supply struggles.

Tony Martinez, Primo Trading Services: “We have not farmed Texas watermelons in the valley in the last four years, because we had to move that to Mexico. Why? Because our allocations of water have been less./ So we've had to basically reallocate the limited resources of water and move it to other crops like onions and cabbage.”

Uncertainty over how much water will be available in South Texas has pushed irrigation districts and farmers to be frugal with their water allotments.

Dante Galeazzi, President and CEO, Texas International Produce Association: “We often hear this misconstrued idea that agriculture is overusing water. Let me say this. Agriculture is not overusing water. Agriculture uses exactly the amount of water that is provided to them in a very efficient way, right? In the same acre of citrus 20 years ago. We are producing almost 100 times more right now because we have such better yields, much better technology, much better varieties.

For growers in the Rio Grande Valley, optimism,

like the water they rely on, is in short supply.

Tony Martinez, Primo Trading Services: “The issue with water is something that's not going to go away. Unfortunately. Of course we're going to do our best to continue to advocate, Be diligent in how we use it. You know, I feel that growers have to do their part, too. You know, we have to, we have to evolve with the times. We have to be more efficient in farming. But unfortunately, I strongly believe that this water issue will continue to, to be an issue. You know, I don't see it going away anytime soon.”

For Market to Market, I’m John Torpy.

Announcer: Next, the Market to Market report. 

Paul Yeager: Weather issues globally and domestically played in the grains as the weather window remained open to keep some premium on the table. 

For the week… 

The nearby wheat contract gained 18 cents and the July corn contract found 16 cents. 

Soymeal tried to stabilize the soy complex as tax credit futures lingered overhead. 

The July soybean contract added a dime while July meal put on $4.30 per ton.

July cotton expanded $1.22 per hundredweight. 

Over in the dairy parlor, June Class Three milk futures improved 19 cents.

The livestock market was mixed. June cattle strengthened $3.57. August feeders put on $2.78 and the June lean hog contract fell $2.03. 

In the currency markets, the U.S. dollar index lost 203 ticks. 

July crude oil decreased by 44 cents per barrel. 

COMEX gold added $177.20 per ounce, and the Goldman Sachs Commodity Index found almost 3 points to settle at 533 - 70.

Joining us now is regular market analyst Sue Martin. Hello, Sue.

Sue Martin: Hi there Paul.

Paul Yeager: Wheat has gone and put together two winning weeks in a row. How do they get to three?

Sue Martin: By moving higher.

Paul Yeager: Well, that's the easy answer. Yeah, I did give that too easy.

Sue Martin: I think that, when I look at the wheat market, the funds, I haven't seen Friday's, you know, commitment of traders, but I think we've seen some short covering. But on the same token, the commitment of traders in the past few weeks have shown record short position in Kansas City wheat and then in Chicago wheat. Very large, short position, but not record. And I think that when you look around the world and you look at whether China's weather's very concerning and, you know, just this last week they had temps of 104 and, Okanagan and some of the surrounding provinces, and they account for at least 20% of the wheat produced. And now, if China's going to be importing wheat, they tend a lot of times go to Australia. But Australia is having some dry weather concerns too. And so, you know those two now there's Russia and Russia's been on the drier side and more arid here of late after we've had some frost freezes here in May. This almost feels like a year where Mother Nature could gratify Russia with a frost freeze in June. And a lot of times when you get a violent move higher in June, it's coming off of something that's happened in Russia. Saudi Khan said that they're, they raised their estimate by 1.2 million metric tons for Russian production and took it to 81.2. That's still is not what you call really burdensome. And then you've got, of Rostov, the, province there or state and the governor there is calling for state of emergency.

Paul Yeager: So that's a lot of factors that are being thrown into this.

Sue Martin: Yes. And then U.S..

Paul Yeager: And the U.S., you've got those quickly on we are you holding right now? Are you thinking you're going to make a sale right now?

Sue Martin: No, I would not sell yet. let's counter seasonal a little bit. but if we can hold that counter seasonal, we could rally into June. I think that $5.35 $5.40 is just too cheap. you might get a chance closer towards $6.

Paul Yeager: Weather has also become a story. And corn. Let's talk old crop first, though. Is there any big reason to see that come to the market right now at this rally this week?

Sue Martin: Well, when I look at old crop corn, 85% of it's been sold. And so the commercial doesn't have any need to have to push bids to get the farmer to sell. So when I look at old crop corn, yes, we can still go higher. But for now, I think the concern is about new crop and the lack of farmer sales. Farmer sales are about the lowest they've been in 20 years for like by the 1st of May.

Paul Yeager: Is that a little bit because the farmer is hesitant? Because of the uncertainty of maybe not so much weather, but trade is causing pause or what do you chalk?

Sue Martin: I think it's a little bit of both. I think that the uncertainty with politics is maybe got them on hold for a minute. Price levels aren't high enough. That attracts them. The other thing is, is that we keep hearing talk, weather forecast, talking hot June and July, possibly first half of August. If that is the case, those farmers aren't going to sell. They're going to hold.

Paul Yeager: Especially if you're in the East where you haven't planted anything.

Sue Martin: Yet. That's exactly right.

Paul Yeager: So you have this weather big change in the east and the west.

Sue Martin: And you've had four years of beautiful, everybody, we thought we were in a drought and stuff, but we never had triple digits, and yields were pretty decent this year. Maybe a little different.

Paul Yeager: Let's move to beans, because that's the one that has been weaker for quite a while. And all of a sudden, here comes spring and here comes some optimism. Do you buy into that?

Sue Martin: I do. I think the bean market still has room to go. I think new crop beans will trade over $11. What's sad is that doesn't sound like much when you're trading at, what, $10.50 or something like that or $10.59? That's certainly not asking the world. but it's going to take. we'd like an oil, you know, a policy by the EPA, a decision of what they're going to do with the Renewable Fuel Standard, the 45Z. We've had rumors, but we haven't got anything substantial. And the Senate now with the big tax bill, the beautiful big tax bill. that 1st May be a little more of a struggle because in the House, it only passed by one extra vote. And so I think that, but we keep hearing we're going to have something by June 1st. So that means I got to get busy this next week.

Paul Yeager: And you have rumors out there about all these tax credits and what could happen for renewable fuels. Renewable energy in general has seen that is less optimistic about future there. So if I'm a wheat corn soybean producer right now Sue what's my optimism meter? Am I half up? Half down with my optimism of how things can go higher?

Sue Martin: I think we're still in a half up. Okay. I just don't think we're done yet in this rally. but you got to keep in mind, July 9th, those 90 days are done for the pause. And that could come into play psychologically here at.

Paul Yeager: Or like what happened Friday morning. The president said to Europe, you're not negotiating fast enough. I might raise the tariff by 50%. We could see the same thing happen with China.

Sue Martin: Oh, right. Yes. Yeah. we have to realize in the last go around when they agreed to a phase one. And I think ultimately that's where we'll end up. It might have a little bit of a different feel, but it took from 2018 to 2020 for them to finally come around. And so this time around, is it going to be that quick? Maybe not.

Paul Yeager: Trade is a big thing in the livestock industry too. Cattle Mexico, the screw worm. What is that doing to prices right now?

Sue Martin: Well, first off, you know, we were going to look, cattle come in from Mexico. And of course, in today's cattle on feed report, as would expect, Texas, you know, placements are down quite a bit. I would have to say the concern now is that this and then, Secretary Rawlins banned cattle from coming in from Mexico because they wanted the border to the south, maybe more constrictive because they feel that screw worms coming across that border. However, there is some fear that by the 1st of July, this screw worm could be in Texas and possibly by the end of the summer, maybe to Canada. That's a big concern, because if that screw worm, when it first off ivermectin works quite well and maybe putting it in feed, I don't know. But, they're going to have to start producing more of it just in case. And the concern is if it comes into the U.S., then do they open the borders to cattle coming from Mexico? But the bigger one I'm concerned about is the health issue for people used to eating beef, because if the animal has been infected, it gets into their bloodstream. Yeah, it feeds on tissue, but if it's in the bloodstream, it's in the meat. How will the USDA look at that? I'm not sure.

Paul Yeager: And how will the average consumer look at that?

Sue Martin: Well, all you have to do is give them a little fear. But then you're very tight supply on cattle right now anyway. Prices are extremely high. It could be one of the catalysts that sends this market right back south.

Paul Yeager: Well, you mentioned Cattle on Feed. It was 98% on feed, 97 placed in 97. Fed. What of those three numbers stood out to you in feeders?

Sue Martin: Well, first off, the numbers are right in line with the trade guess. So it'd be called neutral on Tuesday. but in the end, looking at who's placing cattle. I would it was Oklahoma and Kansas that placed more cattle, but on weights, heavyweights 800 pounds and on up 900 pounds. It's over. It was Nebraska that placed a lot more of those. And I think it's because of just how dry they have been. Cattle are moving off of pastures in Nebraska. They just haven't had enough moisture since the first of the year.

Paul Yeager: The conversation, obviously, with many people at grilling time this weekend over the holiday is going to be about the price of beef. And given what you just said about what could happen. Is that the type of discussion that can maybe spook these markets, lower that they've had enough?

Sue Martin: It could. for one thing, when I look at we have indicators we're using and they're all into sell mode. one of them very long term indicator. In fact, it's been flatlined at 99% since July of 23. And it's still there, but it takes proof. I mean, you have to get a break started and then have it end up that it confirms that at the end of the time frame. I think that when I look at my indicators, if the most optimistic thought process could happen in feeder cattle, it might be they could go to 320. They could, but in the scheme of things where prices are, that's not astronomically higher. And I look at fats. And one thing this past week here, we did have, a small earlier than the week before, negotiated cattle, which means coming on next week. We could have a very low kill for that week, and that could stimulate the market.

Paul Yeager: And we are out of time. Thank you Sue. Appreciate it.

Sue Martin: Thank you.

Paul Yeager: We are going to pause this analysis and continue our discussion about these markets in our Market Plus segment. You can find both Analysis and Plus on our website of markettomarket.org. This is also the place to register for our next live event June 3 in LeClaire, Iowa. Information about the gathering is on our website.

We are also here to help with on-the-go activities. Podcasts can go with you and are the perfect companion for those long or short chores. We have three options to keep you informed - the Market Analysis, Market Plus and the MtoM. Subscribe wherever you get your podcasts. 

Next week, a look at building an agriculture program that’s feeding a changing local community. 

Thank you so much for watching. Have a great week.

Announcer: Market to Market is a production of Iowa PBS. Which is solely responsible for its content.

Announcer: 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.

Announcer: 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 the world. 

Announcer: Tomorrow. For over 100 years. We've 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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