Market to Market - Dec. 24, 2021

Market to Market | Episode
Dec 24, 2021 | 27 min

Pushback over Prop 12 - again. Cutting waste to reduce greenhouse gases. Netting big returns in fishing leads to the World Food Prize. Market analysis with Elaine Kub.


Coming up on Market to Market -- Pushback over Prop 12 - again. Cutting waste to reduce greenhouse gases. Netting big returns in fishing leads to the World Food Prize. And market analysis with Elaine Kub, 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, December 24 edition of Market to Market, the Weekly Journal of Rural America.


Hello, I’m Paul Yeager.

MFP Payments to farmers for the three-year old trade war with China have come under scrutiny. According to a Government Accountability Office report released this week, the county-by-county methodology for computing the amount of damage was referred to as flawed and made for inconsistent compensation. —--

The report revealed payments to corn producers were higher in the South and lower in the West.

The GAO also estimated that payments to corn producers were approximately $3 billion higher than USDA’s estimate of the trade damage.

Dr. Seth Meyer, USDA’s chief economist, says the USDA’s Office of Inspector General found their model and methodology to be reasonable.  — —

In 2008, the rule for mandatory Country of Origin Labeling or COOL went into effect. Several lawsuits and a repeal by Congress later, the burden on producers and providers was removed. The same kind of legal dance is taking place in a state that is number one in U.S. agricultural production and boasts the 5th largest economy in the world.

Peter Tubbs has more.

Proposition 12, the California voter initiative approved in 2018, has been challenged in court on the basis that the details are not ready.

A coalition of California retailers and restaurateurs have filed suit in state court to block the January 1st, 2022 implementation of the law which requires animals used in egg, pork and veal production that are sold in the state be raised under specific space requirements. The measure was approved by voters in November 2018 by a 2-to-1 margin.

Representatives from the pork and egg industry have sought to block implementation of the law in multiple legal suits. Each case was based on the premise that if one state’s animal production requirements were higher than current industry standards it would violate the Commerce Clause of the Constitution. The court has ruled against each of those lawsuits.

The new suit challenges the implementation of the law on the grounds that details of the new policy are two years late in being defined by the California Department of Food and Agriculture. The final comment period for the revised proposed rule ended December 17th. 

The terms of the lawsuit request a 28-month delay in activating the new rules to allow the pork, egg and veal suppliers time to adjust their supply chains to the new polices.

The North American Meat Institute, a trade association representing the bulk of the country’s beef, pork and veal processors and their suppliers, supports the delay: 

Mark Dopp, General Counsel and Chief Operating Officer at NAM: “Until CDFA publishes final rules, no one can adequately prepare to comply with a law with criminal sanctions and that authorizes civil litigation.”

For Market to Market, I’m Peter Tubbs.

A year and a half ago, Vermont residents were no longer allowed to send food waste to the landfill. The idea was to reduce human impact on the environment including the amount of methane emitted by landfills.

The Golden State will join their number but the difference is that the scale of implementation is 60 times greater than the Green Mountain State.

Josh Buettner has more.

Bones and all the fixins leftover from holiday feasts will ring out the New Year differently across California, as state-mandated food waste recycling takes effect.  According to state officials, the 75 percent reduction target has never been attempted at this scale.

Ned Spang/UC Davis – Food Loss & Waste Collaborative:  “The goal is to actually reduce methane emissions and other short-lived climate pollutants.  Now methane is released when we put organic waste into landfills.  A lot of the organic waste that we put into landfills is actually food waste.”

Researchers at the state and federal level say 40% of food is wasted in the U.S., with 15% of the nation’s methane emissions tied to rot from landfills. 

Ramin Yazdani/Director-Yolo County Integrated Waste Management:  “This material gets marketed for agricultural use and we also have programs for residents to come out here and get compost.”

Environmental lobbyists counter only about 35 the Golden State’s roughly 200 composting locations can handle the expected surge.

Ramin Yazdani/Director-Yolo County Integrated Waste Management:  “It means that we just don't bury and forget about it. We're actually taking responsibility and not leaving it for a next generation to do something.”

Some facilities use anaerobic digestion to turn compost into energy.  Cities will be required to buy natural gas made from the product, which supporters hail as climate-friendly and economically sensible.

Joy Klineberg/Homeowner - Davis, California: “It’s really easy.  I mean all you’re changing is where you’re throwing things.  It’s just another bin.”

Trash collection fees are expected to increase as local governments invest in new compost operations.

Joy Klineberg/Davis, California: “I appreciate that we can be making a change without really impacting our lives very much.”

Though cities like San Francisco already require food waste recycling, many others – including Los Angeles, San Diego and Sacramento, won’t have their programs up and running on time.

State reclamation agency CalRecycle predicts one year of food recycling, by 2030, will prevent 14 million metric tons of carbon emissions – equal to taking 3 million vehicles off the road for a year.

Ned Spang/UC Davis – Food Loss & Waste Collaborative:  “I think this is a good way we can really just tell the story of food and the fact that we really need to do what's called closing the loop. The food comes from the land and we really should be returning that back to the lands."

 For Market to Market, I’m Josh Buettner.

The easy intro for this story would be to say “This year’s World Food Prize Laureate didn’t just teach someone how to fish, but taught those in developing countries -to- fish.” But there’s more to the story than that. This year’s winner changed diets for millions, opened a way of life to women that was once reserved only for men and opened the door for them to contribute to the economy. 

This profile is our Cover Story.

Born in Trinidad in 1949, Shakuntala Haraksingh Thilsted found her first role-models in the kitchen as four generations lived together. Her grandmother Grandma did more than cook meals for the family - she instilled the appreciation for good food and its vital role for good health. Later, the idea of fish for nutrition was first introduced as a regular part of the nation’s diet and would resonate for Thilsted.

Shakuntala Haraksingh Thilsted: “I am especially grateful for the values and principles that my mother and my grandmother instilled in me while I was growing up in Trinidad and Tobago, these values and principles to make the best of one's ability to strive and to excel and at the same time to help others have guided my life and my career for these precious gifts.”

Following her completion of undergraduate studies, Thilsted worked as an agricultural officer in Tobago. She was the one and only woman working in the ministry on the island. She earned her doctorate at the Royal Veterinary and Agricultural University in Denmark - later becoming a professor at her alma mater in what now is known as the University of Copenhagen. 

The classroom was not confined to a campus-only location as Thilsted started projects all over the developing world to improve nutrition for women and young children. 

During the late 1980’s, while working in Bangladesh, she’d discover undernourished children being brought in for medical attention, but there was little to be done to save their lives. A colleague suggested the best way to help was to make sure the children were eating fish. 

Thilsted eventually would recognized recognize the role small fish could play in providing important sources of essential nutrients and fatty acids - opening up the nutritional options for many of those who were malnourished.

Together with researchers at Bangladesh Agricultural University, Thilsted helped develop pond polyculture systems - the farming of small and large fish together. This led to discoveries of increasing productivity five-fold. Helping increase the size of the catch was - especially with the introduction of small gill nets designed for women to harvest mola in small amounts and for daily household use.  The high nutrient value of the fish led to others understanding the merits of pond polyculture.  

Policy changes in nutrient reduction led to greater harvests - and expansion of fish-based foods.  Thilsted expanded efforts into creating ready-to-eat fish-based foods targeting mothers and their young children. This included a chutney and fish powder that in powder form was four times the nutrient density of fresh fish. 

Thilstead’s work led to women as entrepreneurs producing value added foods and contributing to the overall economy. 

Thilstead is now the global lead for nutrition and public health at the non-profit research organization WorldFish - helping guide other research institutions, government agencies and funders collaborate to meet U.N. sustainable development goals. 

Shakuntala Haraksingh Thilsted: Since the announcement of the 2021 World Food Prize in me, I have been thrilled to see this recognition has greatly magnified global attention to aquatic foods as a powerful game changer towards healthier and sustainable diets that worked for all people and our planet.”

Her work in the sustainable production of fish across several countries likely improved the diets of millions for the most vulnerable in Asia and Africa. 

Shakuntala Haraksingh Thilsted: “This recognition of my work opens up new opportunities to amplify support and investments for research and innovation in aquatic food systems, and thus expand our thinking on solutions that benefit people, nature and the economy.”

Next, the Market to Market report.

We are producing the show on Wednesday with a better understanding of the severity of last week’s storm in the southern Plains and how it has impacted the holiday-shortened trade week. For the week, the nearby wheat contract added 39 cents while March corn improved nine cents. The continued dry pattern in South America and a technical chart move impacted the soy complex. The January soybean contract increased 44 cents. January meal strengthened $23.30 per ton. March cotton expanded by $1.53 per hundredweight. Over in the dairy parlor, January Class III milk futures went up 18 cents. A green week in the livestock sector as February cattle gained 95 cents. January feeders improved by $1.53. And the February lean hog contract added $2.55. In the currency markets, the U.S. Dollar index retreated by 48 ticks. February crude oil expanded $2.18 per barrel. COMEX Gold increased $3.20 per ounce. And the Goldman Sachs Commodity Index gained more than 11 points to finish at 552.40.

Yeager: Joining us now to provide some insight is Elaine Kub. Hey, Elaine!

Kub: Hello, Paul. How are you doing?

Yeager: I ran out of ways to say the word up this week, kind of a trend all over the place. We'll start with wheat. You could easily say Ukraine/Russia is one story. Are we getting a better sense of the other story domestically and just how much wheat was damaged last week?

Kub: Yeah, it is unusual in December to be looking at North American weather being a market influencer. But I think that is the case after that storm of last week that went through the entire middle of the United States. And wheat, it's hard to say exactly how bad this will be ultimately to yields because wheat at this time of year isn't really clear. But it's not great. And I’ll say this, even aside from the storm you look at a drought map and it's a reminder that in western Nebraska, western Kansas, certainly in Colorado there is still extreme drought. So if you have a stressed winter wheat crop like that to begin with and then you come through with some sandblasting winds, it's not going to be helpful, it's not going to be helpful for yields and then on top of that you've got all the other Northern Hemisphere wheat, Black Sea region, Europe, everywhere where there is going to be probably some temptation to skimp on fertilizer applications when we get into the growing season. So I think worldwide there are reasons to feel like wheat yields going into 2022, they're not starting anywhere favorable, let's put it that way.

Yeager: Those don't sound like things that are going to recover in just a matter of days. So if I've got my May wheat contract, the chart up now says $8.17, is that a low for a while?

Kub: I think that these prices, grain prices in general, commodity prices in general are well supported. I think there is a very good chance that if we continue to see damage like this, weather damage or weather concerns through the winter we could see higher prices. But there's a lot of risk going on, especially the end of the year. I wouldn't put too much money on the idea of things staying stable through the last trading week of the year when there is so much fund rebalancing that is going to need to happen after the big moves that all of these assets have had through 2021.

Yeager: Naomi last week said you're not going to sleep much between Christmas and New Year's, there's going to be a lot of instability. It sounds like you're kind of saying the same thing. In this corn market, we're dealing with a little bit of weather, not really in the United States but more in other parts of the world. We're also seeing a lack, are you saying a lack of Chinese business with corn right now?

Kub: Yeah, I like your point about the weather. If you ever want to convince yourself that we're really in a La Nina, consider that we're going to close out here probably the warmest December on record since the 1890s and then we're going to go into a polar vortex in the first parts of January. So we're going to experience that wildness. But remember that the classic symptom of a La Nina pattern in South America is that dry weather and we're starting to talk drought in South America too. And that is a mover for corn. Traditionally we think of it being a mover for soybeans, but it is for corn too. There's full season corn crops that are already being affected by the fact that those forecasts have some showers in them, but they are very light and the temperatures are forecast to be hot in the 90s. So none of this is great, again I think we are in a pattern where these prices are well supported because for the next six weeks or so if the weather scenario doesn't change there is just all of this likelihood of seeing bullishness about poor yields worldwide.

Yeager: Is the crude oil story also impacting oil right now and then it translates into ethanol?

Kub: Yeah, absolutely. Again, well supported because these crops, you can make money on them, you can crush this into ethanol on the one hand but also DDGs. You've got soybean meal at $400 a ton, DDGs, all of these feed prices are another favorable driver to make sure that the basis stays strong, people want the grain, keep the grain moving, bring it in fast. The futures markets themselves are inverted suggesting that the commercial part of the industry wants to receive this grain, doesn't want to motivate farmers to just put it in storage and forget about it. They want to see this stuff keep moving.

Yeager: We are recording this show on Wednesday so we don't know how Thursday is going to go. But with the soybean market, Elaine, we stuck over $13 on Wednesday, well above it. Is that a sign and a door opening to higher prices?

Kub: Well, I think prices we can't get too greedy with these prices. There is a limit to how far they could continue rising before you would start to see pushback from the end users. You think about the transportation costs, it takes $1.60 to get this stuff across the ocean to Asia which is maybe double what it was even a year ago. So adding all of these costs in just makes it harder and harder for the market overall to keep climbing too much higher. But don't look a gift horse in the mouth, especially at Christmas. These are fine prices for the soybean market.

Yeager: A gift of sorts. What is the old saying, the bulls eat turkey at Thanksgiving, they're also eating it at Christmas is one story. I want to ask a viewer question and it kind of relates to the two things you've said already. Let's talk Tim in Iowa here. He says, should $6.13, meaning the price of corn, the price of soybeans, be the reason to sweep the bins clean?

Kub: Okay, so I'll repeat myself a little bit because I think these prices are well supported. I don't think we need to panic necessarily and worry about prices falling apart, other than short-term volatility here at the end of the year. But going into January there's all of these weather reasons to continue to feel bullish or at least neutral about grain prices, not to panic, you don't have to run out and sweep the bins just yet. But I will say not the prices but the structure, and I mentioned those inverted futures contracts, that itself suggests that certainly if you have hedged grain and you would traditionally just lock a price in for that and plan on taking that carry for your stored bushels, that is not going to be a winner of a strategy in 2022. So there are reasons to keep the grain moving. But I don't feel like prices are in imminent danger of falling apart in a big way.

Yeager: Over that time period?

Kub: Well, yeah between here and March let's say if nothing changes in the weather in South America. However, if something did change and they did start to see a wet pattern and more optimism for their yields then I would be in a very big hurry to sell something.

Yeager: All right, in the south we have kind of neglected cotton the last couple of weeks, cotton has kind of been moving sideways, but this week did put on a dollar. We're still trading over 100. But is this a range right now that we're in?

Kub: Yeah, and I think it helped this week that they had a fairly strong export sales report. And that really does need to be the underpinning of this market is exporting, particularly to China, to the Chinese garment industry to the extent that that global trade continues I think we can continue to see strength in cotton but perhaps not to retest that really high high from November when all of the commodities were sort of seeing that big boost of interest.

Yeager: Let's move to the livestock. And we have kind of touched a little bit about Kansas. There was also 400,000 acres burned last week, hundreds of cattle killed. We're not seeing an attribution to that on a reason for a rally in the meats. Why are we seeing a rally in live cattle?

Kub: Well, the futures went up a little bit, but actually the cash trade this week went down a dollar or three dollars and it has kind of stayed unusually sort of the same price as the futures contract there at $135. And that is a reflection of the holiday itself, of the shift at the packing plants and so you'll see slightly lighter demand, only like 120,000 head per day butchered here Tuesday, Wednesday of this week. So that is not too unusual for a holiday timeframe but looking longer term these markets are well supported too. There is a lot of demand for getting these animals that are profitably butchered into the system.

Yeager: If you did not watch this show on YouTube on Wednesday or Thursday before the cattle on feed report you kind of saw how that came out. But the market was pointing to that, or at least a lot of analysts were pointing to this report meaning something. Why?

Kub: Yeah, I think there will be volatility when the market comes back in on Monday because there was such a wide range of expectations going into this cattle on feed report. So it's not like everybody was expecting to see one number, then that number shows up Thursday afternoon and then you have a weekend to think about it. It's going to surprise somebody and we did not have a very large volume of futures trade in the cattle this week. So I think folks are just kind of waiting to react to that report and when Monday shows up I suspect there will be kind of a big shift one direction or another.

Yeager: All right, I'm going to make you repeat yourself again because we're going to talk about grain impacting the feeder cattle market, just all the feed inputs. You mentioned how high meal has gone, corn has gone high, wheat. What do you feed an animal right now in the grains?

Kub: Yeah, great question, Paul. I guess you just bite the bullet and pay the prices because there is money down the line. As I mentioned, there is demand for the fed animals, there is demand for the beef. All the way down the supply chain this is supported. And when you go to the sale barns there is good demand for calves, particularly the high quality calves that would eventually potentially grade prime. So I guess you just, like I said, just pay the money and feed the feed because it has to be done. And we talked about the wheat fields not necessarily being the savior of the feeder cattle market as we go into spring because everything is so dry out west. That continues to be some of the underpinning of the overall cattle market is that drought in the west and the diminishment of the size of the herd. That will continue to haunt or I guess support the cattle market all the way into 2022 and probably 2023

Yeager: What do you see going on in the hog market right now?

Kub: Yeah, again, weird prices just because of the holiday shifts I think at the packing plants. And so you have some days that the buyers would come in and really push cash hog prices higher and some days lower. So just a lot of volatility. But there also we're expecting to see a report from the USDA, a hogs and pigs report on Thursday afternoon, give everybody all weekend to sit and think about it, it is expected to be a bullish report. So on Monday I'm expecting to see prices higher in reaction assuming that the report delivers that. But we did have pretty high volumes of futures trade leaning into that, so I suspect it could swing real wild the other way if folks are disappointed.

Yeager: Real quick, we're seeing a little bit of ASF pop back up in China. Is this a big deal?

Kub: Well, it certainly could be and it's interesting to consider the structure of how they have tried to rebuild their hog herd in a more industrialized manner where you have a larger number of hogs all together in one facility. So I suspect if it comes back around this time it could be worse.

Yeager: Okay. I asked you way too long of a question for 20 seconds. Thanks, Elaine.

Kub: Okay.

Yeager: We'll continue that discussion here as we finish up this installment of Market to Market. I'll ask Elaine about hogs in Market Plus and other things plus your questions. Join us there, find that on our website of And we have been on the Flipboard train for several years. What we do is we pin stories that we are reading as producers of the show and ones that you might find interesting, maybe helpful. Search Market to Market Reading Material on Flipboard. Next week, we look back at the biggest stories of rural America in the year 2021. Thank you so much for watching. Have a great week.


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.

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.