Market to Market - Feb. 4, 2022

Market to Market | Episode
Feb 4, 2022 | 27 min

Most of the U.S experiences the 1-2 of winter. Planning for the next Farm Bill starts with conservation. The growing cost for medical marijuana. Market analysis with Mark Gold.


Coming up on Market to Market -- Most of the U.S experiences the 1-2 of winter. Planning for the next Farm Bill starts with conservation. The growing cost for medical marijuana. And market analysis with Mark Gold, 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.  

Sukup Manufacturing Company -- providing equipment and buildings to store and condition grain to help farmers adjust to market swings. We build drying, moving and storage equipment designed to preserve the quality of their crops. Sukup Manufacturing -- store now, profit later.


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, February 4 edition of Market to Market, the Weekly Journal of Rural America.


Hello, I’m Paul Yeager.

The in-demand item of 2021 is still the must have in 2022 - the need for workers. —

Friday’s jobs report revealed 467,000 jobs were created last month along with huge revisions upward for December and November.

The unemployment rate moved higher to 4 percent. The participation rate rose to 62.2 percent - the highest since the start of the pandemic. In April of 2000, the labor force participation rate was a little over 67 percent when unemployment was 3.8 percent.

Purdue’s CME Ag Economy Barometer moved lower by 6 points as rising farm input costs and supply chain disruptions appear to be on the minds of farmers. –

The weather in farm country and beyond was a major topic as a series of storms worked across the country.

Wind, rain, cold, ice, snow and even tornadoes were all part of the system.

Dave Miller has this weather wrap to lead off this week.

A winter storm blasted across the nation striking the mountains, racing through the South and sweeping up the coast to the Northeast. 

Hundreds of thousands in the storm's path have been left without power as the hardest hit regions dig out from under the snow and ice. Major airlines have cancelled more than 7,000 flights in areas leading in and out of the storm’s path. 

More than 20 inches of snow dumped on the slopes of the Rockies in Colorado. As the storm moved east it put more than a foot on the ground in Illinois, Indiana and Michigan. In Oklahoma, Arkansas and Texas, along the southern edge of the storm, residents dealt with freezing rain that coated streets, trees and buildings.

Gov. Greg Abbott, (R) Texas:"First thing I can tell you is we are dealing with one of the most significant icing events that we've had in the state of Texas in at least several decades."

The power grid in Texas, which suffered a major outage under similar conditions almost a year ago, appears to be holding its own. There have been a few exceptions where power lines snapped under the weight of the accumulating ice leaving 70,000 without power.

The recent snow and sleet events across the country were not included in this week’s Drought Monitor, but last week’s winter storms helped mitigate some areas of severe and extreme drought. Despite the additional moisture, there are still concerns over the final effect of reduced mountain snowpack and increased dryness across the plains.

For Market to Market, I’m David Miller.

Winter months are reserved for renovation projects on equipment - but not every overhaul is possible.

A new bill introduced into the Senate helps address the right To repair challenge many owners face.

Another piece of legislation started the arduous task of winding through the committee process to assist producers all across agriculture.

Peter Tubbs reports on the beginnings of the next Farm Bill.

The House Ag committee began the long process of writing the 2023 Farm Bill with a hearing about the conservation projects the USDA administers according to the 2018 Farm Bill.

Farmer access to services during COVID-19 driven closures were a primary concern of Committee members.

Rep. Barry Moore, AL, R: “What is the staffing capacity level, do you need to effectively implement the farm bill conservation programs and to provide needed technical assistance?” 

Terry Cosby, Chief, National Resource Conservation Service: “Over the last two years, we've hired about 3000 employees, and over the next two years, hopefully we'll be able to bring on the same. We are well above our attrition rate as people leave the agency for retirement. We've been able to maintain our numbers. We're at 10,300 right now. Our number is a little over 11,000 that we can staff up to and we're going to make that number this year.”

Rep Ann Kuster, NH, D: “Would you comment on anything you're already doing or considering within USDA to improve accessibility to NRC programs?” 

Cosby “I'm a son of a farmer from Mississippi, and in the seventies, my dad had to give up farming operations because of being denied services that he needed to keep the operation flowing. And it was a sad day for my family to give up their farming operation. I would tell you that it's something that I get up every morning and I work hard on not only conservation, but making sure that every person in this country that wants to benefit from the USDA program has that opportunity.”

For Market to Market, I’m Peter Tubbs.

This week, Mississippi became the 37th state to legalize the medical use of cannabis.

It may be months before the first marijuana dispensary opens.

The business of pot has been big for some states and expansion has been a challenge on many fronts.

Josh Buettner reports on the state of affairs in this week’s Cover Story.

As officials report a $1.5 million windfall over the first two days of 2022, Montana joins 17 other states which have collectively reaped more than $10 billion in recreational marijuana tax revenue since 2014.

Still illegal at the federal level, state-sanctioned adult-use pot has mainly sprung up in the West and Northeast.  Though limited in the Midwest, Michigan and Illinois tout recreational industries – with the Land of Lincoln boasting an accumulated half-a-million dollar levy since January 2020.

By contrast, medical marijuana has soaked deeper into the nation’s fabric.  Since California first opted to legalize for therapeutic purposes back in 1996, 36 states have followed suit.  Proponents just west of Illinois, in Iowa, say progress on the state’s medical front has improved since highly prohibitive origins in 2014 – expanding from pediatric epilepsy to allow treatment for several other health conditions.

Lucas Nelson/General Manager – Medpharm Iowa: “The market really kicked off in Iowa, December 1st, 2018 – and from there we’ve been able to supply products to the various dispensaries across the state, from then.  We’ve gone through a lot of changes.  We’ve been able to remove a THC cap that used to be on the program.  Now, allowing fully THC levels in any of the products.”

Lucas Nelson is General Manager of Des Moines – based Medpharm Iowa, the state’s sole approved cannabis grow operation.

Lucas Nelson/General Manager – Medpharm Iowa: “Every single plant, in the entire facility, has to be tracked, in real time, by our electronic system, and the state.”

Only five sanctioned dispensaries operate in Iowa, and MedPharm is currently supplying them all – including their competition, as well as their own locations in Sioux City and Windsor Heights.

Stephen Wilson/Dispensary Manager – MedPharm Iowa: “The number one thing we see in here is pain, whether that’s chronic pain or acute pain.”

Dispensary Manager Stephen Wilson says many new patient customers have detailed a harrowing journey through a slough of other pain meds.  And even though some doctors suggest cannabis before other harsh and addictive prescription drugs, Wilson says hurdles remain for income-restricted sufferers.

Stephen Wilson/Dispensary Manager – MedPharm Iowa: “I think the most important thing to realize is this is an expensive product that is not covered by insurance.  You know opiates are often, very often, covered by insurance.” 

Currently, state-certified patients must pay up to $100 annually for a medical card authorizing purchase of cannabis products.  Just under 8,000 Iowans are registered cardholders, less than a fraction of 1 percent of the state’s population.

Stephen Wilson/Dispensary Manager – MedPharm Iowa: “The big difference between our program and other programs are the type of products available for purchase.”

Acceptable delivery methods include topicals and oral forms – but no edibles.  Vape oil, once a restricted item, has quickly become the most popular offering, though Wilson says patients have been pushing for more.

Stephen Wilson/Dispensary Manager – MedPharm Iowa: “Most other medical cannabis programs are going to have, flower. Iowa doesn’t currently allow for us to manufacture or sell flower products.  If we are able to do that, prices are going to naturally fall.” 

A half gram vape mix of high THC and low CBD sets Iowa patients back about $75, after tax, while similar items can be found around 66 percent less for about $25 per unit in other states.

Stephen Wilson/Dispensary Manager – MedPharm Iowa: “It’s very expensive to operate in this state, currently.”

Iowa border municipalities haven’t reported a significant increase in crime statistics since Illinois began recreational sales, but law enforcement cautions illegal trade hasn’t evaporated.

Apprehension grew in northwest Iowa when South Dakota voters approved dual-track legalization in November 2020.  Though medical remains intact, the governor there successfully blocked recreational implementation.  Onlookers expect voters’ voices will still be heard.

Dane Schumann/Attorney – Wandro & Associates/Des Moines, Iowa: “It looks to us that the legislature in South Dakota will probably still end up passing some kind of a recreational cannabis program anyway.”

Dane Schumann is a lawyer who lobbies Iowa lawmakers on behalf of MedPharm – which involves keeping an eye on pot-related developments nearby.

Dane Schumann/Attorney – Wandro & Associates/Des Moines, Iowa: “We see the impact that Illinois’ program has had on the medical program, because we can track how many patients in Iowa’s medical program there are, within each county.  If you look over at Iowa’s eastern border, the amount of patients has completely stagnated since January 1 of 2020, when Illinois’ program went live.”

Lucas Nelson/General Manager – Medpharm Iowa: “Many of us have been in that situation where, if we’re in pain, or someone in our family, or we care about, is in pain, we’ll do anything to help that.”

Industry and medical experts believe one of the biggest risks for patients who choose to engage the black market, besides Iowa’s zero tolerance statutes, is product purity.

Lucas Nelson/General Manager – Medpharm Iowa: “What you’re seeing here is some of our THC oil that’s being distilled.”

Right now, Iowa’s authorized, raw marijuana crop must be processed into oil before manufacturing – driving up costs.  Nelson says the absorption rate of inhaled products is much higher than other means, and lifting the flower ban would move the state toward a full range of patient choices.

Health pundits warn combustion releases volatile chemicals and fumes, but some states offer flower vaping, and Nelson says, for the destitute, pain-relief benefits may outweigh potential risks.

But short of legislative adjustments, MedPharm could be forced to expand into friendlier business climates outside Iowa, sending more jobs and tax revenue elsewhere.  It’s a scenario Nelson prefers to avoid.

Lucas Nelson/General Manager – Medpharm Iowa: “We have no intention of leaving.  We’re all from Iowa, have connections to Iowa before we started working here at MedPharm and think that makes us a maybe little bit more uniquely dialed in to understand what this state needs.”

For Market to Market, I’m Josh Buettner.

Next, the Market to Market report.

The arrival of moisture in the Plains and even a lower dollar took some steam out of the bull-driven grain train. For the week, the nearby wheat contract fell 20 cents while March corn dropped 16 cents. The Chinese were still buying soybeans even as the Lunar New Year celebrations took place. The March soybean contract jumped 83 cents. March meal strengthened $32.70 per ton. March cotton expanded $2.98 per hundredweight. In the dairy parlor, March Class III milk futures gained 37 cents. A higher week in the livestock sector. April cattle improved $3.78. March feeders added $6.47. And the April lean hog contract rebounded by $5.15. In the currency markets, the U.S. Dollar index fell by 180 ticks. March crude oil broke $90 and added $5.39 per barrel. COMEX Gold rose by $19.80 per ounce. And the Goldman Sachs Commodity Index improved almost 22 points to finish at 644.65.

Yeager: Joining us now to provide some insight is Mark Gold. Hey, Mark.

Gold: Hello. How are you tonight?

Yeager: Well, I'm good. You dodged the weather a little bit there in Chicago. We had a big storm two weeks ago. But this system was huge. And I mentioned at the start of the markets about moisture in the Plains. Was that the big culprit in the selloff in wheat this week?

Gold: Well, I think that was certainly part of it. I think the really poor exports are another part of it. Maybe the biggest part of it though has been the stalemate on the Russian/Ukrainian border. Now, are they going to move in? Nobody knows. What's interesting is that Putin was that the VIP box with President Xi of China at the opening of the Olympics this morning. Rumor has it that they were putting together a new deal on exporting some products to China and signing some kind of trade deal. It may have been a cover for Putin to get Xi's permission or blessing to go into Ukraine during the Olympics. I don't think he would make that kind of a move without talking to him first. So nobody knows what the real message was. But we rebounded, we broke 90 cents, we rebounded here in the last couple of days. We've been pretty oversold. Certainly if Russia moves on Ukraine wheat prices can get a lot of this loss back in two days if it wants to. I think a lot of -- go ahead.

Yeager: Well, this selloff this week prior to the Opening Ceremony story that you’re talking about, you always say that the market kind of tells us some things. There was some chatter this week that said the market is maybe shrugging off any of this tension between Russia and Ukraine and they think that it's over. Is that at play here?

Gold: No, I don't think it's out of play. If Putin moves on Ukraine we'll see a spike I think in all the grains. Is it going to last long? Is it going to be more than a 10 minute blip on a chart? I don't know. But I think the pros will be willing sellers on a good rally.

Yeager: Are the sellers done in corn? Because we had quite the, we've had quite a move in that market, a little unseasonable, but high ethanol inventories, high crude prices. What else is going on here?

Gold: It has been a little bit of a mixed bag. I think the biggest news was China canceling that sale yesterday. That took a lot of people by surprise. The rumors have been consistently that after the Lunar New Year is up on Monday that the Chinese are going to be buying corn and beans. Now, if they're going to be buying corn why would they cancel a sale? It doesn't really make a whole lot of sense. Some people are starting to doubt whether the Chinese buying is going to be that significant. We've got the Chinese $13 billion shy of what they needed to accomplish on the Phase 1 deal. There are Phase 2 I guess talks in place right now. Are they going to let them slide on that $13 billion and tack it onto the next program? I don't know. But corn is still at a pretty high price here, it has been a nice move, it hasn't backed off. And a lot of people think that exports over the next couple of months nobody is going to have enough corn. So that is what every time we see these breaks in the market, the market has a tendency to come right back.

Yeager: Yeah, the tight stocks is a concern I read this morning. We'll get to the impact of wheat and corn in the livestock market in a moment. We need to go to the big story of the week in soybeans. China still busy, they're not all celebrating, they're still buying. You mentioned the export story in corn. What is that export story impacting soybeans?

Gold: Well, the Chinese have been buyers here, not huge buyers. We don't see a million, million and a half metric tons going out the door. But it's fairly consistent, 150, 220, those kind of numbers. We had a bigger figure here today. So I think the Chinese are here. The big question will be what happens on Monday. Are they going to get really aggressive as the rumors have it? Certainly with exports tight in South America the U.S. is competitive right now so we could see a little bit of a later shift than we normally do from the U.S. into Brazil. So hopefully we can see some good numbers on the WASDE. Right now the average guess is that they'll take out, take the carryout down to about 310, a 40 million bushel reduction here and I think that is reasonable looking at Brazil numbers, they look like they might lower it 5 million metric tons. That's a chunk of business. So we'll have to see how -- we've got two things working next week. We've got potential Chinese buying and then we've got the WASDE report which doesn't look like it's going to be quite as bullish as the bulls would like to see. They're going to step down these production numbers for South America over time and I don't think they're going to lop off a big number right from the beginning.

Yeager: Well, so after that WASDE report is that the last we hear of South America being a major influence on our trade in soybeans?

Gold: I think so. All the Argentinean beans have been planted, Brazil is moving along on their harvest. I'm in the camp that the rains that they saw over the last couple of weeks really did some good. It was like the U.S. getting rains in the middle of July. But the stories you hear out of South America is one worse story after the other. I just don't think, I think it's a lot of hype and people are getting involved in this stuff, I'm not so sure it's quite as bad as what they're saying. Certainly we have lost production but maybe not as bad as the market has anticipated.

Yeager: Mark, we have a report coming up that you talked about. We also have moves that are crazy. I'm looking at soybeans, a three month rally of $4. Let's talk about protection. Scott in East Central, Iowa asked me this morning via Instagram, he had a question about some things you've talked about before, Mark, and that is protecting yourself. He wants to know, buying protection of puts and calls can be expensive. Would he be farther ahead if he just sold cash instead of say an 85 cent outlay per bushel that he's had to pay recently?

Gold: Well, I don't think there's anything wrong with selling, whether it's old crop or, particularly old crop at these levels. You've got no carry in the markets really. So why would you store the grain? Sell it, basis is generally pretty good everywhere around the country, and I would reown it with some call options. In soybeans it's going to cost you 30, 40 cents to get something legitimate. We've never looked at buying 85 cent options out here. In the corn market to replace it, it's going to cost you 20, 25 cents to get something legitimate. For the new crop, you've got to think that we're going to see more bean acres. I haven't been a big proponent of the switch that a lot of people have but now that prices have gone up here and we've got new crop beans sitting here at today $13.95, almost $13.96, that is one heck of a price for soybeans for new crop for this time of year. So would I be trying to do something out here, buy a put? Yeah, between the cost of the put and the slippage in the strike price they're going to probably leave about 80 cents on the table. But look at where you were a year ago. Now you're complaining about locking in a net of $13, not even locking in, protecting a $13 floor? If I was from the government and came to you and knocked on your door and said, how about a $13 floor on your soybeans right now, the guys would jump all over it. Well you can do that in the markets today. So if you don't want to buy the puts, you want to sell the cash, you have to reown it with some kind of call option in case we have a problem here. There's no telling where things are going to go. But I don't know that I'd really want to be long going into the March intentions report.

Yeager: Makes sense. That's coming up before we know it here as we're already into early February. Livestock wise, live cattle, report on Monday really kind of set the tone for the week. But everything was up. Why specifically in live cattle?

Gold: Well, I think it's the inventories, it's continuing to show liquidation out there. I think that is part of it. Boxed beef prices have settled back down. I think that is going to bring more beef into the counters. If you're a housewife and you're shopping for steak or whatever and the pickings are pretty slim you're going to probably back away and look for something else. Now that we're seeing these lower boxed prices I think that is telling us that more of the cattle are getting processed, that the production numbers are really up, we'd like to see the slaughter exceed 650, 660, which we'd be pretty much at full slaughter out here and I think that is going to lower the price of beef at the counter, get more beef at the counter and I think for the first time in a while the cattleman may be in charge here and the packers may be having to take it on the chin a little bit by paying up for cattle. These closes tonight were pretty strong.

Yeager: I may have to get you to say that again louder for the people in the back. Feeder wise, are you expanding right now, Mark, in a herd?

Gold: Well, tell me what corn prices are going to do, I'll tell you what feeders are going to do.

Yeager: Well, is that what is telling us right now in this? That's why -- I teased it earlier, but is that why we maybe had a rally this week is because of corn's drop?

Gold: Yeah, I think that is part of it. I just think the whole meat complex because of these lower numbers that we've seen on the inventories now it's telling us that where are the cattle going to come from in two or three or four months? So I think that is supporting all the meat products out there. Hogs new contract highs in the April and the June contracts. That is a combination of exports and good demand out here. So we've got hogs at high prices out here. As I've always said, if you're in the store and you can buy a steak for a little bit more than a pork chop you're going to buy the steak. So I think all that is helping in here and I don't expect it, this is a good start to the month, a good start to the year, and as a risk manager I'd be protecting it with some kind of puts out here for sure. But I'm looking for higher prices longer term.

Yeager: In the final few seconds, are you buying more pork chops right now? You talked about price, but we had a rally in there this week.

Gold: I like a good pork chop and love good ham and I'll be looking to buy both. I love Canadian bacon for breakfast. So the demand is there and I think it's going to continue. I think the Chinese want to keep importing. So I think all these markets look pretty good.

Yeager: All right, very good, Mark. We'll continue our discussion, we've got some good questions for you here coming up in Market Plus so hang with me for just a few minutes.

Gold: Will do.

Yeager: All right, that is going to do it for the TV show. As I said, Mark and I will continue our discussion in Market Plus so join us there. Find that on our website of And we were doing podcasts before they were cool. Our Market Plus and Market Analysis arrive shortly after we're done producing this program Friday afternoon and a new MtoM arrives each Tuesday. Follow all three today to stay in the know. Next week, the drought story that won't go away. Thank you 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.  

Sukup Manufacturing Company -- providing equipment and buildings to store and condition grain to help farmers adjust to market swings. We build drying, moving and storage equipment designed to preserve the quality of their crops. Sukup Manufacturing -- store now, profit later.


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.