Market to Market - Nov. 5, 2021

Market to Market | Episode
Nov 5, 2021 | 27 min

The problems at the port come to Congress. Countries vow to cut coal from their energy diet. The tug of war over authority to address Iowa’s water quality. Market analysis with Ted Seifried.


Coming up on Market to Market -- The problems at the port come to Congress. Countries vow to cut coal from their energy diet. The tug of war over authority to address Iowa’s water quality. And Market analysis with Ted Seifried, next.


What's the most complex industry on Earth? It's not genetics, or meteorology, or logistics. It's a business that involves them all. It's farming. Thank you, farmers, from Pioneer.  


Tomorrow. For over 100 years we have worked to help our customers be ready for tomorrow. Trust in tomorrow. Information is available from a Grinnell Mutual agent today.


This is the Friday, November 5 edition of Market to Market, the Weekly Journal of Rural America.


Hello. I’m Paul Yeager

“What is October” appears to be the answer to the question of when will the American worker return to employed status.

The Labor Department reported Friday 531,000 jobs were added last month offering a sign recovery is overcoming a virus-induced slowdown.

The unemployment rate dropped 2 tenths of a point to 4.6 percent, but edged closer to the pre-pandemic mark of 3.5 percent.

UAW employees at Deere and Company again rejected a new contract offer. The Moline, Illinois-based manufacturer said after the vote that was their best and final offer. 

 Transitory and tapering were the words of the week from the Federal Reserve. Chair Jerome Powell stressed patience on rates and inflation as the Fed announced reading monthly bond purchases.  

Purdue University’s Ag Economy barometer recorded a lower reading than a month before. The producer sentiment dropped three points to a 121.

The revenue picture for the world’s biggest shipping company A.P. Moeller-Maersk is up - dramatically. The Denmark-based company reported third quarter earnings jumped 68 percent from the same quarter last year. 

Many shipping containers bearing that company’s logo sit on ships or onshore ports waiting for semi-trucks to move those goods across this country. 

The bottleneck was the subject of a congressional hearing this week. 

Here’s Peter Tubbs with more. 

Rep. David Scott, GA, D: “I am very, very worried. I'm worried that we could possibly have a delay and a major delay in our food supply chain if we do not address this piercing issue of a need for commercial truck drivers.”

Delays in supply chains have made life difficult for American agriculture and the producers of food, fuel, fiber and feed. 

This week, the House Agriculture Committee held a hearing to learn where many of the problems in the food supply chain are occurring.

A lack of truck drivers was a common complaint.

John Schwalls, Southern Valley Fruit and Vegetable, Georgia: “We are in a supply chain crisis. The U.S. ports rely on a backup in products needed for farming, such as tractors. Computer chips are waiting to be unloaded. They're not enough drivers, warehouses, chasais and shipping containers to keep the product moving to their intended customer, which in this case is the American farmer.”

Jon Samson, American Trucking Association:  “Our economist looks at the number of 80,000 short after the pandemic.” 

A loosening of trucking rules is one solution for moving goods through the food system. Policies enacted during the pandemic are set to expire.

Rep. Michelle Fischbach, R - MN:  “What are the potential impacts on the supply chain on everything from cattle processing to stocking grocery store shelves?”

Greg Ferrara, National Grocers Association: “Congresswoman, this is Greg from the grocers. I'll take the first stab at that. It's been an incredibly important tool. I was talking with our member wholesalers yesterday. It was just remarking at the flexibility that this emergency has given them has allowed them to get orders that otherwise might have been left on a distribution center dock to the store.”

Another pinch point in the U.S. supply chain are American ports. International shippers loading ships to Asia will frequently refuse loaded cargo containers in favor of empty containers, which are earning shipping rates multiple times more valuable than containers full of products. 

Mike Durkin, Leprino Foods: “Freight rates from the Asia in the U.S. West Coast are currently 15 times higher than freight rates from the U.S. to Asia, creating a clear financial incentive for ships to depart empty with no U.S. goods on board versus waiting to be loaded. As a result, shipping companies are refusing to load U.S. agricultural exports in over 70% of the containers are returning to Asia empty.”

Rep Salud Carbajal, CA, D: “How long has ongoing port congestion affected food and agriculture trade involving other U.S. import or export from your vantage point?” 

Mike Durkin, Leprino Foods: “We noticed the increase back in the late what I would call late 2020, when it started to really see the

impact and really became acute right at the end of the year to the beginning of the year to 2021, and has gotten continually to get what I call worse.” 

A bill currently in committee will create oversight on the shipping industry, specifically looking for “ identification of any anti competitive or nonreciprocal trade practices by ocean common carriers”. Companies looking to export their goods welcome the oversight, but are worried that the proposed legislation will take months or years to take effect, doing little to resolve the bottlenecks companies are experiencing today.

For Market to Market, I’m Peter Tubbs.

Coal and methane were two of the biggest topics this week at the global climate summit in Scotland.

Much of the action was non-binding as John Torpy reports. 

Many of the world’s bigger countries, several of the generally acknowledged polluters among them, gathered in Glasgow, Scotland this week making pledges to be better environmental citizens.

Several major coal-using countries announced Thursday at the United Nations Climate Summit they would slowly wean themselves off the use of the fossil fuel.

Kwasi Kwarteng, UK Business Secretary: It's clear to us all that to keep 1.5 degrees in reach, we need to consign coal to history and make clean energy our future.”

The promises made come at a time when energy prices for natural gas and oil have been rising in light of increased demand. Major economies like the United States, China, India and Japan have yet to set a date for ending their dependence on these energy sources. 

However, China was a no-show at the event this week. Presidents from Brazil and Russia also were absent.

The U.S. did not attend the summit under the Trump administration.

Also at the COP26 event, a pledge to cut methane emissions and end deforestation. Promises like these have been made before and, according to skeptics, readily broken.

For Market to Market, I’m John Torpy.

During the growing season, the weather report matters to the day to day operation of any farm. Missed precipitation causes issues later, but the big rains bring their own immediate set of concerns of erosion or runoff.

What’s in the soil is vulnerable to the gully washers for both urban and rural settings. 

Nutrients can be lost and contribute to point and non-point-source pollution. 

Josh Buettner reports on tug of war over water quality in this week’s Cover Story.

Iowa is a national leader in several farm commodities, but collateral damage – in the form of runoff-impaired waterways – has brought several legal actions aimed at stopping pollution linked to agriculture.

Ted Corrigan/CEO & General Manager – Des Moines Water Works: “Because our lawsuit went away, the Raccoon River did not clean up.  The Des Moines River did not clean up.  There’s still nutrient contamination that needs to be addressed and we want to have those conversations.”

Ted Corrigan is current CEO and General Manager of Des Moines Water Works, which sued farm drainage districts upstream in 2015, unsuccessfully, over excess nitrates the utility must remove in order to deliver federally compliant clean drinking water.  

Critics charge excess fertilizers and manure, applied at the same rate, can build up during drought - when stagnant waters are prone to increased algae blooms - and later flush out of fields with ever-wetter spring rains.

As needed, Water Works employs their mammoth, but aging, nitrate removal facility – which costs around $10,000 per day to operate.  The plant hasn’t run in over 3 years.  Still, plans are to spend tens of millions more drilling riverside wells to mitigate expected nutrient surges.

Ted Corrigan/CEO & General Manager – Des Moines Water Works: “We’re never going to be off the river.  We’re always going to need direct surface water at Des Moines Water Works, and so we are always going to fight for water quality.”

Scientists have long tied farm pollutants in the Mississippi River watershed to the Gulf of Mexico’s seasonal low-oxygen Hypoxic Zone.  In response, Iowa adopted the Nutrient Reduction Strategy in 2013 – whose own science assessment found over 90 percent of the state’s nutrient flows of nitrate and phosphorus were generated through agriculture.

Chris Jones/Research Engineer/Iowa Institute of Hydraulic Research – University of Iowa: “This is a nitrate sensor.”

 Chris Jones is a Research Engineer with the University of Iowa who maintains a statewide network of 70 streambank monitoring sites.  The real-time data they harvest helps chart progress toward the state’s water quality objectives.

Chris Jones/Research Engineer/Iowa Institute of Hydraulic Research – University of Iowa: “We have a problem of scale.  We’re trying to farm every piece of farmable land, pretty much in the state.  We’re trying to raise 25 million hogs at any one time, and however many cattle and 80 million laying chickens.”

 Jones says the proliferation of highly-efficient farm drainage tiles expedites increased water soluble nutrients into nearby streams. Though some in the field have adopted conservation methods which help harness efficiencies, improve margins and crack niche markets - he remains pessimistic.

Chris Jones/Research Engineer/Iowa Institute of Hydraulic Research – University of Iowa: “Can we ever get the water quality we want at the scale at which we are doing things?  Right now, I would say no we cannot.”

 Relatively low policy uptake, no timetable for the state’s 45 percent nutrient reduction goal, and what they call a lack of accountability in the program helped lead D.C.- based environmental advocacy group American Rivers to add central Iowa’s Raccoon River to their top ten list of the nation’s most endangered waterways in 2021.  The move ruffled some feathers.

Sec. Mike Naig/Iowa Department of Agriculture & Land Stewardship:  “That report itself…  The way that those types of reports come out – with no basis – it was…they were nominated by an activist group here in Iowa.  It’s a fundraising plea for this organization.  Again, they can do that.  I’m not saying they can’t.  But if you want to talk facts, you have to ignore a lot of evidence – a lot of evidence – that says we’re moving in the right direction.”

Adam Mason/State Policy Organizing Director – Iowa Citizens for Community Improvement (Iowa CCI):  “My response to Secretary Naig, and to anybody that would dismiss us as, you know, radical or on the fringe, is that that there’s nothing radical about clean water.”

 Adam Mason is the former State Policy Organizing Director for Iowa Citizens for Community Improvement. Iowa CCI was a plaintiff in another lawsuit, dismissed this summer, which sought mandatory water quality regulations and a moratorium on what Mason calls new factory farms.

Adam Mason/State Policy Organizing Director – Iowa Citizens for Community Improvement (Iowa CCI):  “Recent reports have shown that this voluntary nutrient reduction strategy could take ultimately thousands of years to get to the level of water quality that we need and that Iowans deserve.  We believe that farmers do know what’s best for their farms, but what we do also believe is that every farmer has got to participate.”

 Both cases unraveled after top judges found the judiciary holds no authority to craft new laws.

Ted Corrigan/CEO & General Manager – Des Moines Water Works: “For the second time now, the Iowa Supreme Court has returned the question to the legislature, and we really think that it is the legislature’s job to take up the question of water quality and make some meaningful change to improve the situation.”

 Rep. Lee Hein/R-Iowa House District 96:  “We didn’t start – all of a sudden – one day, we had dirty water.

I would challenge anybody to find a farmer that isn’t concerned about water quality and is trying to do the right thing.”

 State of Iowa Representative Lee Hein is a past chair of the Iowa House Agriculture Committee and raises cattle, hogs and several hundred acres of row crops over 150 miles northeast of the state capitol.

He served in the statehouse when the Nutrient Reduction Strategy was introduced, and admits the plan isn’t legislation, but counters that lawmakers and officials have since worked tirelessly to secure funds for water quality initiatives.

Rep. Lee Hein/R-Iowa House District 96:  “We do a lot of different things – whether it’s waterways, terraces, the bioreactors, or the saturated buffers. These are not things that we can…everybody put in this year and we have clean water next year.  It takes time.  It takes finances.”

 Hein says the variety of Iowa’s agricultural landscapes are too complex for one-size fits all mandates, but touts successful manure management plans regulated through the Iowa Department of Natural Resources.  However, in September, environmental group Sierra Club, in a legal appeal, accused the DNR of violating their own rules by approving a flawed nutrient management plan of a concentrated animal feeding operation, or CAFO, expansion near the headwaters of a prized northeast Iowa cold-water trout stream.  Researchers report the highest concentrations of nitrate in state waterways near livestock operations.

Chris Jones/Research Engineer/Iowa Institute of Hydraulic Research – University of Iowa: “It’s at Bloody Run Creek, where the new CAFO is.”

Rep. Lee Hein/R-Iowa House District 96:  “One of the things that I have learned, being in the legislature, no matter what the issue is – there’s always at least two sides to a story - and sometimes I’ll tell ‘em three and four.”

 As divided camps appear head toward another potential stalemate, some seek the middle ground.  But consumer watchdogs and grassroots organizations warn if nutrient reduction efforts don’t accelerate, Iowa taxpayers will foot the bill for rising costs associated with clean water.

For Market to Market, I’m Josh Buettner.

Next, the Market to Market report.

Better harvest weather and less moisture along with energy sources tugged at the trade. For the week, the nearby wheat contract shed 6 cents while the December corn contract lost 15 cents. Heavy resistance testing in the soy complex as South American beans are racing to completion and being ready for export. The January soybean contract weakened by 44 cents. December meal added a dime per ton. December cotton expanded $2.02 per hundredweight. Over in the dairy parlor, December Class III milk futures fell 96 cents. A green week in the livestock sector. December cattle added $2.52. January feeders improved by $3.47. And the December lean hog contract strengthened 47 cents. In the currency markets, the U.S. Dollar index improved 21 ticks. December crude oil decreased $2.01 per barrel. COMEX Gold expanded $32.80 per ounce. And the Goldman Sachs Commodity Index fell more than 6 points to finish at 580.50.

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

Seifried: Hello, Paul.

Yeager: I'm looking at my questions to figure out where to start with you because, as always, there's always something. I mentioned weather in wheat. Is that the biggest story in wheat right now domestically?

Seifried: I mean, weather is always a big story for wheat. We have wheat growing pretty much all the time. I don't know, yeah, something that we're watching. We also are looking at this USDA report that we have on Tuesday. We're not expecting any big changes for that and we're also watching the U.S. dollar which broke out into new highs here this week, new recent highs and is looking like it wants to go higher. That is a bit of a headwind for wheat. But if you look at how wheat traded this week it was really tied into what was going on in the row crops. And I think wheat overall has enough of a bullish fundamental story behind it to continue to go higher in a bullish overall grain market complex. But, with the stronger dollar, and if the row crops are going to go lower and we're going to have a bit of a bearish period in the row crops, I'm not necessarily saying we are, we'll get to that obviously, that's what we're doing here -- but if we're in a bearish climate can we go higher? That's the question that I'm asking. And I'm not sure it can. You've got to say the wheat prices are really very good, especially when you look at Minneapolis. I don't know if there is a tremendous amount of downside potential for the wheat. So from a percentage basis wheat should fare a lot better than corn or soybeans. But in a bearish climate you've got to think that wheat prices can come down from these lofty levels that we're at.

Yeager: Okay, last week I asked Shawn Hackett about how high wheat, $7, $8, $9 and he did say, yeah. Do you see that?

Seifried: Well, December Chicago wheat went and flirted with the $8 mark. That was sort of my upside target. So in my book we've kind of completed the target that we needed to based on the fundamentals. Now, can we go higher? We usually go further than what I would consider fair value whether it's up or down or whatever, the market takes the ball and runs with it. But like we were just talking about, are we going to continue to run with that ball like we usually would in a climate where corn and beans seem to want to go lower? I don't know, we might have hit the highs. I was looking for $11.25 for December Minneapolis wheat. We didn't quite get there. But that's acting toppy too. So, I don't know. Yeah, can we hit $8 wheat December Chicago? Yeah, pretty much. But now what we do we have to do from here? We've already kind of hit the upside objectives that most of us had.

Yeager: The bears in corn? Is that where they're at?

Seifried: Soybeans, very much so.

Yeager: Okay, so what's in corn then right now? Harvest pressure, one. Maybe it's a little better harvest than we thought? Is that what is going to be reflected Tuesday?

Seifried: Okay, right. So you've got a real tug-of-war happening in corn, one, from outside markets. Soybeans want to kind of pull everything down. Wheat wants to kind of try to pull everything higher. Corn is kind of sitting in the middle going, I don't know what to do because corn's individual fundamentals are a bit of a tug-of-war too because, like you said, we are noticing that this crop was probably better than we were expecting, certainly a lot better than what some of us were expecting in June or July. I think we have a record national average yield for corn. So I do think the USDA is going to move the corn yield higher, or should move the corn yield higher, on this November report. If they don't I really think it has to go higher further on down the line. I have it going up by half a bushel an acre to a 177 but I could see it going even higher than that potentially. So we're trying to balance the bigger supply with some fairly good demand, especially when it comes to ethanol. Ethanol has been rocking and rolling and that is fantastic to see. Ethanol is the bright spot of the corn balance sheet. Again, I love when that happens. You know, a lot of people know, ethanol is something that is kind of near and dear to me because of what I like to do with it with cars. We can talk about that too.

Yeager: That's a whole other thing. I've only got like 5 minutes left and you could just talk about tires for five. All right, I have a question about something you said before that someone wants to ask. Zach in Lawrence, Nebraska -- by the way, thank you for all the great questions, Ted loves them, in amongst all the car tweets. Zach in Lawrence asked, three reasons not to sell $5.60 cash corn delivered in January? And he says, it might go to $7 doesn't count. So he wants three reasons.

Seifried: Yeah, well first of all, I think you should sell that and then use call strategies to reown it, let's get that out of the way. If I weren't selling corn right now, the three reasons that I would have is one, ethanol is really very strong and that is fantastic. Two, the input cost conversation that the market is having right now. The market seems to think that we're going to see a big shift towards soybean acres because of input costs. I don't necessarily believe in that so much. Let's see where input costs are in the spring. But, at least let the market believe that for now. And then the big one that I don't think very many people are talking about, if we're going to have this input cost conversation we should be talking about that second season safrinha corn crop. We're going to find a lot about this input cost problem before we even start to think about planting and it's going to come down in South America.

Yeager: Okay, so the bear story, the soybean story, you mentioned something right there in corn that could be -- is that one of the bear, the leading bears, biggest bears in beans and it being the acreage? Is that a big bear? Or is it South America? Or is it C?

Seifried: So, it's all the above. So -- the fact of the matter is the bean story has changed dramatically in the last two months. A couple of months ago we were thinking hey, last year's carryover was a 150 and this year is going to be maybe even tighter. Then we added a whole bunch of bushels to production for last year, we ended up with a 256 million bushel carryover, it wasn't nearly as tight as we were expecting, that also means bigger beginning stocks coming into this year and now our thoughts of this year's carryover are, well the average trade guess is a little over 360 million bushels for this report that is coming out on Tuesday. That is a much different narrative than what we were talking about not that long ago. So that has caused a lot of bearish price action. Plus on top of that throw the idea of potentially more acreage coming, the fast pace of planting down in South America that is happening which is usually good for yields. So all of that bearish news hitting soybeans at the same time is what has got soybeans really on the defense and really standing on the edge of the abyss looking down and potentially looking at bigger drop to the downside. Now, we might need to do something like that, as I've been talking about for months, to go and find that demand. But it might not have to happen either because look at soybean meal, like you said earlier, up $10. Soybean meal has the potential to create a soybean rally even with a larger balance sheet. There is that possibility. I think there's only about a 30% chance of that happening. I think more likely we do have to go lower. We can talk about what price my target is.

Yeager: We could but I need to get to the meats quick. We're going to talk all about numbers in Market Plus. There's a tease. Ted has a piece of paper he's going to show and give us some exact estimates so come into Market Plus. Soy meal when it has an impact on the hog market right now. Is that something that is going to be the biggest eater of this demand or the supply?

Seifried: Yes. We have less hogs out there than what we had originally thought. However, weights are gaining so that means we're a little bit back up, that means we have to feed more and the soybean meal market is fairly tight. I think crush margins are going to start getting better because I think soybean meal is going to start getting better and soybean oil I think has limited downside potential simply because veg oils globally are really very strong and crude oil on Friday was back up another $2, $3. So from the biodiesel perspective soybean oil is in demand as well. The products of soybeans I think look pretty good. That crush margin I think is going to get quite a bit better and I think we'll see improvement on the crush. For hogs, yeah, higher input costs, yes we're backing up, but there are less animals out there, demand is really good, cutout values are fairly strong. Can we keep up that strength is a question mark. Either way I see hog values going higher. The December I think should be trading in the mid-to-low 80s. We're a ways away from that. It might not happen in the next week or two but I think over time we'll shoot for those levels.

Yeager: Is the feed story the biggest factor in the feeder cattle market story?

Seifried: Yeah, you put some pressure on corn and it's interesting to see how the feeder cattle market really reacts to that in a positive way and that's good. A little bit of relief coming there. So yes, we are seeing the feeders kind of turn around and go higher. But also look at fat cattle and we have some fairly decent values out there, there's optimism that cash can move higher, packers margins are good, fat cash has really been in a range. I don't know if it does break out to the outside and I don't know if Feb fat cattle can break out from that $130 to $140 range that we've been in, we're creeping up towards the higher end of that range, so it looks like we want to test it out and find out. But I'm a little skeptical that we will.

Yeager: Okay. Ted, thank you so much. That will do it for this installment. But, here's the thing, we have a ton from Ted when it comes to exact estimates and a lot of questions that came from you, the viewer. So thank you very much. We will talk more in Market Plus so that is available in podcast form and you can find that on our website of And here's the thing, there's nothing wrong with following, on occasion. Let's talk podcasts, for example. We have three offerings here. We have the Market Analysis, which you just heard, the Market Plus, which we're going to record in a moment and that's after the TV show, and the M-to-M conversations and behind-the-scenes information from the production of this program. Follow all three where you get your podcasts. And now next week, we will look at the rising costs of inputs, always a story, and we'll have that for you next week. So thank you so very much for watching the TV show, have a great week and we'll see you next time.




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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.