Market to Market - June 20, 2025

Coming up on Market to Market. Farm labor gets caught up in political and policy scrutiny. A major metropolitan water treatment plant deals with high nitrate levels and an extended commodity. Market analysis with Jeff French and Ross Baldwin 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 a Pioneer our name is our mission.

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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.

This is the Friday, June 20th edition of Market to Market, the Weekly Journal of Rural America.

Yeager: Hello, I'm Paul Yeager. Consumers have long been a big part of the U.S. Economy, and this week's data gives new points for discussion. Retail sales veered off course in May by 9/10 of a percent. Shoppers taking their foot off the gas and buying autos led to the decline. The Federal Reserve held their key interest rate steady. Fed Chair Jerome Powell says increases in tariffs are likely to push up prices and weigh on economic activity, potentially making for persistent inflation. The Rural Mainstreet Index reported a major jump higher in May, crossing the growth neutral line for only the second time in 21 months. The survey of bank CEOs in rural areas covers ten states heavily dependent on agriculture or energy. Some parts of the agriculture sector have strong labor needs. The issue of who's here and doing some jobs was at the center of policy debates on two different sides of Pennsylvania Avenue. The White House was asked to pause Immigration and Customs Enforcement activity around packing plants, some farms, restaurants and hotels. Ice agents have continued with deportation of undocumented workers. The issue also was the center of a Senate hearing involving leadership of the Department of Labor. Peter Tubbs reports.

He committed to working with Congress.

This week. The Senate Committee on Health, education, Labor and Pensions held a hearing on the nominations for leadership positions in the Department of Labor and the Equal Employment Opportunity Commission. Andrea Lucas, acting chair of the EEOC, who has served the commission since 2020, defended the EEOC actions on employers violating the use of H-1b and H-1b visas for foreign workers.

[Senator Jim Banks] Can you walk me through some of the trends that you're seeing on that front? In cases like those? And what is what motivates that discrimination?

[Andrea Lucas] Yeah, it can be found in almost every industry. How it plays out varies. I think that when you look at warehouse businesses, agricultural manufacturing, it is often Hispanic preference, but sometimes it is another preference for foreign workers. Either way, it is often motivated either by racial bias, the assumption that a particular racial group that you're bringing in of an immigrant will be more motivated than the local white or black workforce, and sometimes it's motivated by economic arbitrage, the sense that you'll be able to pay them less, because at any point you could deport them. We've seen everything from, again, Hispanic worker preference to importing workers from the Philippines that they can on visas that they can at the moment notice, get deported, revoke their visa or move them all over the country. We also have seen it in the tech industry, in particular, with preference for H-1b visa workers at the expense of, again, local workers. So, it can come up in both high school workforces as well as your frontline manufacturing jobs. It can also come up in terms of company towns where instead of employing hard Appalachian workers that are in your local communities, you are again importing foreign workers, decimating those, those, those towns and creating kind of a captive workforce. Again, it's a serious problem.

For Market to Market. I'm Peter Tubbs.

Yeager: Water restrictions in central Iowa have been eased, but high levels of nitrates continue to be a concern to operators of the state's largest water plant, the Central Iowa Water Works has banned lawn watering for the last two weeks. At a tour of one of their treatment facilities Friday, leadership reiterated this is a water quality issue and not a quantity issue. Recent rainfall has added to river levels but not done much to significantly dilute the makeup of the water. CWW pulls from both the Raccoon and Des Moines rivers. All of the coalition's nitrate removal plants have been running for the last 60 days, according to utility officials. These are the highest nitrate levels seen following a drought.

We had some pretty dry times from 2020 to 2023. Significant drought for four years in a row, we saw some higher nitrate concentrations last year, but then we had enough rain to kind of dilute this year. We're having sort of more normal spring precipitation. And we think although there are many factors, those are some important ones that are leading to a nearly record high concentrations in our rivers.

Next, the Market to Market report.

[Yeager] Higher rain has been problematic for wheat growers and welcomed more in corn country for the crop, but not the market for the week. The nearby wheat contract gained $0.24, and the July corn contract sold off $0.16. Lower weather risk ahead for the soybean crop met the biofuel demand and the soy complex. The July soybean contract lost $0.02, while July meal fell seven. 80 per ton. July cotton contracted $1.29 per hundredweight over in the dairy parlor. July Class III milk futures declined $0.61. The livestock market was mixed. August cattle dropped two. 62. August feeders cut 3.98 and the July lean hog contract added 330. In the currency markets, the U.S. Dollar Index put on 56 ticks. July. Crude oil moved higher by another $1.88 per barrel. Comex gold fell $0.68 per ounce, and the Goldman Sachs Commodity Index expanded by more than 30 points to settle at five 8155. We are providing extended discussion on the markets this week with two of our regular market analysts joining us, Jeff French and Ross Baldwin.

[Both] Hey Paul.

[Yeager] Good to see you guys.

[Baldwin] Good to see you.

[French] Great to be here.

[Yeager] If only there was something to talk about with you, Ross. So, we'll start with Jeff. Of course. Normally I know how you feel about the wheat market. It is always that tough thing to discuss. Except this week, rain in key areas, quality issues popping up, global situations. Question now is, Jeff, are we just getting started on a rally?

[French] We'll have to see. But the week was the GMO trade. It was the get me out. And beginning this week the funds were short 170,000 contracts. They were looking for lower prices. And then obviously with Israel attacking Iran, Russia coming out with one of their biggest wheat producing regions and proclaiming some drought problems that sent the short sellers for the buyback they wanted out of their positions. So, we rallied $0.75 here off the lows. You know, the charts look pretty good to go. Another maybe 20 or $0.30 before you run into resistance. But we do have harvest fast approaching. I mean Kansas right now is probably 5% harvested. They've had problems with wet weather, but we should be about 30% harvested this week. But we are going into harvest the wheat crop. I know we've had a lot of rain, but in general should be awfully good. So, we took advantage of this rally. We tightened up on our old crop sales, and then we're looking to protect the downside here in the new crop.

[Yeager] Did you fully take advantage of it or did you kind of hold thinking we could rally more?

[French] Oh yeah. No, we did 20%. We got rid of the old crop and then we started with 20% of the new crop, get some downside protection in place because. Absolutely. I mean, it doesn't look like the Mideast conflict is going to end anytime soon. And then you still have the funds that are probably short 80 to 90,000 contracts.

[Yeager] So Chicago and Kansas City kind of leading the way. Is there any indication that Minneapolis gets to join the party? They've had their rally before.

[French] Yeah. And you know, they're still months away from harvest. You know, this rally has been led out of the Chicago market. That is where the most volume is. And that's what probably will continue to lead the way.

[Yeager] So Ross with the wheat, though, I mean, for being as low as it was, it was kind of seen as maybe an option for feed alternative. Are you hearing anything of that coming back or now going away because of the rally?

[Baldwin] You did hear about it a while ago. But yeah, you're hearing the opposite of it now. And I think a lot of while you're hearing about wheat not working its way into rations or working its way out of rations, is, frankly, how cheap corn is. And you've got a lot of them big feed yards down in the South that had got aggressive on getting their new crop. Corn needs booked. And just with the price of corn and where it's at, I think that's the biggest factor right now.

[Yeager] Corn is usually what we talk about next. So, let's keep going. But I do want to ask Gary's question, if we could, before we move any further, Gary in Wisconsin wanted to know. Jeff, most farmers are undersold a lot because of so much drought talk and lower prices. Is it time to get aggressive on sales and catch up, or is the drought still ahead?

[Baldwin] Well, the drought is not ahead right now. I mean, we got I know there's areas that are dry, but if you look in general of the country, you know, here the third week of June, we're sitting in a pretty awfully good situation. I mean, we've got a long summer ahead of us, but we'll see. You know, this, this December corn market has been awfully quiet since the beginning of March. I mean, we've been in a 25 to 30 cent trading range. We can't get above 470 and we can't get below 4.35. So, we're being patient right now. Obviously, we're going to have some positions on before the June 30th acreage report, but we've got a lot of growing season ahead of us. 435 is the line in the sand for me? I think you got to get aggressive. If we start closing below 435. But let's let the market do what it does and see what it does. Right now. We've been awfully quiet in the corn market.

[Yeager] I guess they are people. Do people have any old crop? Are you pretty much having conversations about new crop right now?

[French] Both. I mean, you'd be surprised. There's still a lot of cash corn still out in the out in the countryside. And you would see that with the July contract, July options expired here today, this week. In July, board made a new low for the year. It's still above the contract low at 421, but we close at 428. I mean that that market since mid-April has been on a just a one way track lower mid-April, we were 497 today here we're at 428. So, it's just it's been on one way street lower.

[Yeager] What if you have a bunch of old crop left? Ross, what do you do?

[Baldwin] I think the, the tricky part with the old crop is just the lack of story that the, the corn market has. Now, if you had livestock, you, you could definitely look at feeding it to that.

[Yeager] And do you get the sense. Well, you could and you're going to need some help, I guess. Let's, let's get to cattle on feed if we could, because that was another big story that was developing today right before we went on feed, 99% placements, 92% marketed 90. Which number stood out to you?

[Baldwin] The placements number for sure. The average trade guess was 94.9, I believe, and it came in at 92. So, you two and a half to 3% below the average. Guess that that is going to be the number to watch. And the number that should get all the bullish attention. I don't think it's a complete surprise that the placements even came in below the average trade. Guess because you had the full effect of the Mexico border being closed here when they just recently announced that. So that was all factored into this report. But as Jeff and I were talking about before the show started with the pressure and the weakness that the cattle market has seen over the last two weeks. I mean, it's been it's been some aggressive selling that we haven't seen for a while. And I think it's going to be it's going to be worth watching on Monday to see how we, we perform. If we would see a sharp rally get sold on Monday. And in the face of this, bullish cattle on feed report, I think it's a pretty telling sign of the things to come.

[French] Well, we've been looking for it. I mean, it is a friendly number. Monday's close will be very telling, but we've here in the last week or two, we've seen the fundamentals kind of shift here. We've seen cutouts start to move lower. I mean cutout hasn't moved lower for 2 to 3 months. And then cash prices they've been on absolute fire. Great fundamental bull market. Until this week. We start to see cash prices lower. And seasonally you get through Father's Day weekend. You know, massively demand robust weekend. And then we work lower into the warmer months of the summer.

[Yeager] I thought July 4th was that holiday.

[French] Well, I mean, it could be, but.

[Yeager] But I mean, so I mean but that's the that's the consumer side of this discussion that I asked Ross back in March when we were in Lincoln. I said, you know, at what point does the consumer step away? Has the consumer stepped away yet?

[Baldwin] Up to this point, no, they have not. And you've got the cutout where we're at. If you take out the spike of COVID, when we got at boxes up to 410 briefly. But that was all COVID ramifications. You take that out. We are at all-time record high prices. And so far we have not seen the consumer blink on beef demand much. And you start getting up to this threshold though up until today sell off. We got up to 3.94 almost 3.95. It was. So, you start getting up to this 400 mark on the choice cutout. We're going to find out the resiliency of the consumer here moving forward. And it probably doesn't bode extremely well as we talk about seasonally you start to see weakness. You beef demand peaks for the summer. At this point. You start heading into the dog days of summer. And so, with these high prices at this point, it could start to be a little bit of a struggle to continue moving beef. At the rate we have been.

[French] And I'm not bearish by any means. I mean, the fundamentals are not changing, but the funds have just absorbed all this bullish information for so long. You know, where else can they go with it. So, we may see some fund liquidation here in the next weeks to come.

[Yeager] Well I was going to ask Ross but since you bring it up, one of the theories on the Friday move lower was the funds exiting because of the Mideast. Now do you buy that potentially?

[French] I mean, if this conflict goes longer in the Mideast, Mideast, that potentially is a negative to the stock market. And if the stock market breaks, the cattle will actually go through with it. But technically, on Friday, we closed below the 20-day moving average for the third consecutive day. I think that's very telling. If we can get back above that Monday, that would look extremely strong. But yeah, we close below 210 in August. I mean, we're kind of teetering here.

[Baldwin] And early this morning we had recovered. We're trading well above the 20 day. So, I agree with Jeff. The 20 day remains key to watch to get back up there. But early this morning before we had this reversal futures market looked like it was good. Hey have we had enough of a short-term correction like we've seen several times recently and they just hammered the market here today. So, it's I think it's a that's what makes Monday's trade really worth watching because this has been a they've aggressively sold these rallies here over the last ten days. And you can hit a period where as Jeff saying what's left to throw at this market or the funds that they haven't already traded.

[Yeager] Good point. I want to talk specifically to the one who feeds. And there's the thought that the cow calf person is making the money right now, or has made the money, and then I've got the people commenting on stories that saying, why would why would we expand right now? Why would we put feeders? Why would we hold anything back? Why not stay at this number of animals out there? Is that going to happen? Is somebody going to actually say, I'm not going to expand, I'm just going to take this?

[Baldwin] I don't think so, because we don't do that in production agriculture, whether it's row crop farming or livestock profits and extreme profits drive expansion. You go back to seven $8 corn. What do you go do you go plant as much corn as you can. You clear every tree that you can possibly clear cattle. We're in the same boat. I feel like while I think I think expansion. We are underway with expansion. And I think there's more expansion going on than what the market thinks. I don't think it just it takes time. I mean, you're three years out from that, but I do think this year, over the last few months, we have started that expansion phase. My bias is it will get confirmed. And now this is a long time away. But the January of 26 inventory report, I think 25 is when we will bottom this herd in the U.S. You're still a ways down the road from the time that it really has an effect, but it just goes back to profit. I mean, right now it's difficult to expand it, but when you're making these kind of profit levels that you are, especially the cow calf guy, you want more calves to sell.

[Yeager] I think he's trying to book himself in January of 26 to say I was right. If you could, would you be putting up a soybean crush facility right now or a soy something to take advantage of last week's news?

[French] Well, I think there's a story out there now. We have the, you know, public hearing that, you know, we take 60 or 90 days before it becomes law. So, we'll see what happens there. But very friendly proposal. Absolutely. I mean, there, especially with this year low acreage numbers. And we'll see that here next week. But there is something of an acreage battle that could be on the horizon very shortly.

[Yeager] I mean, Jeff, we had the conversation for 2 or 3 previous times. It was, why does anybody want to take advantage of soybeans right now? All of a sudden if you took the opposite of what everybody said, you look smart, right?

[French] Yeah. But still, I mean, if you look at the cash price on soybeans, I mean, we are still right at a break. Even. So, it's not like we're making a ton of money on an acre of soybean right now. So, we're still in that tough boat side right now.

[Yeager] But the question now becomes on November, can I get to 11?

[French] So 1075 was a big number. We haven't closed above that since October of last year. We got up to 1074 failed today outside down day today. You know we've been up five days in a row. So, it could have been, you know Friday profit taking. You get above 1075 11 is your next hurdle. But I think you're probably going to see number one you need a probably a trade deal. And then some weather thrown into the mix.

[Yeager] Do we need necessarily you mentioned trade deal, but do we need a weather issue too in beans or is that window shut?

[French] Well I think it would help. I mean, the funds are still short beans. I mean, obviously they bought back quite a few here this week, but that would absolutely help if we get a dryness period and we're going into a very hot time right now. But it's June 20th and it's only going to last, you know, 4 or 5 days a month from now when corn is in pollination, I think the market will react a lot differently. But the market just did not react to this hot weather coming in right now.

[Yeager] Hot in early. But there's a lot of areas that picked up moisture, which headline? How does an algorithm figure that out? Or how do you sort what you humanly see to help advise people?

[French] Well, I think actually the heat will be pretty good right now. And we got pretty good moisture in the ground. And, you know, going back to the old saying that rain makes grain.

[Yeager] Oh, we haven't heard that one in a while. It's supposed to be dry all the time. When I look at hold on here, Ross. Because if I look correctly. Yeah. Again. Meal another $7.80 down on the week. I think $3 last week is why is meal falling given what the other story is on the other side of the soybean market right now?

[Baldwin] I mean, a lot of it the what? The crush expansion that has occurred. I mean, we have there's no shortage of meal in the country. But then you coming off the big South American crop and there's I mean, they had a massive bean crop down there. And it's just there's plenty of meal in the world. And so, there's just there's not a meal story right now to speak of.

[Yeager] So no news means you usually fall.

[Baldwin] I would say so, especially just right now with the, with the supply of beans in the world. When you look at world ending stocks for beans, I mean, there's just no shortage of beans right now.

[French] And one of our biggest clients in the world, China, has absolutely gone quiet on purchases of beans. May of 24, they imported 24 million metric tons. May of 25 they imported 8 million metric tons. So, they have gone quiet on. And that's not just from us. That's from Brazil as well. So, they have gone very quiet on the bean side.

[Yeager] And if we would rally towards that $11 mark, I don't think the phone gets picked up, does it?

[French] Not unless a trade deal is made.

[Yeager] That forces the hand.

[French] Correct.

[Yeager] All right. Let's talk hogs a little more there because that's the one bright spot this week.

[Baldwin] Why hogs have had a really strong week actually July hogs made new contract highs again this week. They've just been on a tear higher lately. And it's really, they've just got a favorable favorable situation. I mean consumer demand on pork has been strong. I wouldn't call it off the charts. But there's actually room here moving forward. You can see an increase in in pork demand from the consumer. And so, I think there's some optimism around increased demand. We do not have burdensome supply of hogs heading the market. The cutout been strong. And we're not we haven't seen a lot of expansion. I mean actually it's very minor. You know the expansion that we've seen. So, hog margins have been good, which they need it. I mean, it was, you know, the last year or so has been extremely tough for hogs. And I think hogs got a good story moving forward.

[French] Still tight supplies the cutouts $22 over this time last year. We're entering the BLT season. Some of the most fantastic demand time of the year. The charts look good. Funds are long now. We are. You know, we're we've rallied $25 here in the last two months, so we may take a breather here. But watch 108.50 in August. I think if we can stay above that we can continue this rally.

[Yeager] Jeff, if you had to put a bow on this week's news, which is what's your biggest headline?

[French] Well, I think it's the geopolitical right now and how the funds and the investment community will react to that. You know, that's the one thing that we don't know what will happen here. You know, we know what the weather is doing and if we're getting rain or not, and we can look out our backyard and see the crops, they look pretty good. But what the outside investment community does around the world, that's I think that's the biggest story here.

[Yeager] What do you see?

[Baldwin] If I was look at, I agree with Jeff. The geopolitical is probably one of the biggest headlines right now. I mean it's pretty quiet otherwise. I mean you look at the grain markets, whether it's just it's really good. So, there's not a lot of story for corn and beans there. If I step over to the cattle market and wanted to look at some of the biggest factors driving that, you had the USDA come out this week, they're announcing that they're ramping up production of sterile flies at a facility down in Texas. They've already announced down in Mexico. And as you move forward with that, I mean, they're looking to ramp up from 100 million sterile flies produced a week, up to 160 to 200 million. And so, I do think that creates some bearishness on the backside, because they will get, they will get a handle, I think, on the screwworm advancing northward. And so, it's something to keep an eye on for the feeder cattle market.

[Yeager] I have to write fly futures is what we'll cover. All right. Thank you very much, Ross. Good to see you. Thanks. Ross Baldwin Jeff French. Thank you as well. Good to see you. And you have been watching the analysis segment. And in a moment, we will continue our discussion here with these two in our online only segment, search Market Plus with Jeff French and Ross Baldwin. Wherever you get your podcasts to hear the conversation. Or you can go to our website at Markettomarket.org. The news of what's happening behind the scenes of this program, including our one last big event celebrating our 50th season, can be found in your email each Monday by subscribing to the Market Insider Newsletter. Head to market head to Markettomarket.org. Familiar website there to subscribe now! Next week we are going to look at the past failures in America's land. Promise. Thank you so much for watching. Have a great week!

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 a Pioneer our name is our mission.

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.

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.

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.