Market to Market - Mar. 18, 2022

Market to Market | Episode
Mar 18, 2022 | 27 min

World fertilizer stocks tighten. Avian influenza expands its reach. A startup advances pollen preservation. Market analysis with Arlan Suderman.


Coming up on Market to Market -- World fertilizer stocks tighten. Avian influenza expands its reach. A startup advances pollen preservation. And market analysis with Arlan Suderman, 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, March 18 edition of Market to Market, the Weekly Journal of Rural America. 


Hello, I’m Paul Yeager.

The biggest buster on our wallets has been inflation. 

The Federal Reserve is drawing up the play on raising interest rates to defend against the biggest inflation spike in four decades.  — —

The long predicted action is aimed at ending the run up in inflation. The Fed also indicated they’ll likely repeat the raise at the next six meetings. 

The tempo of retail sales was lower in February as Americans spent less on gadgets and home furnishings while food, gasoline and shelter took a bigger bite out of their wallet. The rate still increased 0.3 percent.

The National Association of Realtors reported sales of existing homes dropped 7.2 percent last month. Would-be buyers were squeezed as prices for the limited supply climbed higher along with rising mortgage rates. — —

During the spring of 2020, all sectors of the economy wondered how navigation of goods and services would occur because of the pandemic. Two years later, some of the same questions remain though the spotlight on the problem is a bit brighter due to Russia’s invasion of Ukraine.  

Peter Tubbs reports.

Fertilizer costs have been steadily rising since early in 2021, and as farmers begin spring tillage on the 2022 crop, many are wondering when prices will top out. 

One agricultural economist believes that fertilizer prices will fall when the demand for commodities in general drops.

Aaron Smith, University of California, Davis: “That's that global demand has, has ratcheted up faster than supply for a lot of products. And so that, again, has put upward pressure on prices. And we're seeing that in energy. We're seeing that in agricultural commodities.”

The latest data shows the United States uses around 10 percent of the global fertilizer supply, so changes in the world price will be felt here at home. 

Aaron Smith, University of California, Davis: “ that's the sense in which we're in a global market, just as we are for other commodities like gasoline or corn. And so the prices that we see are a function of, of where global demand is leading global supply and often not a function of the things that we're seeing in our, in our local region.”

Russia’s invasion of Ukraine has roiled grain and energy markets for three weeks, and resulted in multi- year highs for multiple commodities. Earlier this month, Russia stopped exports of potash. As the world’s largest single producer of the fertilizer component, this cut could total 20 percent of the world’s supply.  But, so far,  the price of fertilizer has not seen a significant jump.

Aaron Smith, University of California, Davis: “So prices have ratcheted up a lot. As we've said over the last year and a half, but not a whole lot over the last month. So that suggests to me that fertilizer traders and fertilizer markets are looking at this and saying that we're not seeing an additional supply constraint being imposed here.” 

The price of natural gas represents 80 percent of the production cost of anhydrous ammonia. Until energy prices decline, farmers are left to calculate some challenging math on how much nitrogen to add to their fields.

Aaron Smith, University of California, Davis: “And, you know, I think, you know, I would encourage farmers to look at it and say, well, maybe this is the year I can sort of test a little bit whether that insurance is necessary. You know, prices of crop prices are high and fertilizer prices are also high. So maybe just use just a little bit less and see what that gets you and maybe you don't actually sort of lose the yield.”

For Market to Market, I’m Peter Tubbs.

A 2017 USDA report on the 2015 bird flu was unable to point to a single source of contamination but shared equipment, transmission on clothing or boots of employees or even small birds or mice were contributing factors.

This time around, animal health officials are looking to stop the spread of another round of outbreaks.

John Torpy has more.

This week, the number of cases of Highly Pathogenic Avian Influenza accelerated in commercial flocks, impacting several Midwestern states.

Commercial poultry operations in Indiana have been particularly hard hit. In Dubois county, the Hoosier State’s number one turkey producing county, four different operations have had positive bird flu cases.

So far, over 170,000 birds have been euthanized to help control the spread of the disease. 

Denise Derrer Spears, Public Information director, Indiana State Board of Animal Health: “The farmers are watching their birds more closely so that they're picking up even on the slightest signs of any kind of illness, they're getting testing done very quickly. Um, our lab is more prepared than ever. And so we've been able to move things along very fast.”    

Nationally, bird flu has shown up in more than a dozen states, primarily the East Coast and Midwest. Agricultural officials across the country report over seven million commercial chickens and turkeys have been culled this year due to Avian Influenza.

In the Spring 2015, an outbreak of H5N1 resulted in the slaughter of nearly 50 million birds over the course of three months. Damage to the poultry industry was estimated at over $3 billion dollars. 

For Market to Market, I’m John Torpy.

The Parks, Recreation and Forestry Department of La Crosse, Wisconsin wants to initiate “No Mow May” to assist the establishment of pollinators in late spring as they emerge from dormancy. 

Residents would avoid a penalty for the month for letting their lawn grow. 

Pollen may be small in size, the importance in agriculture is mighty.

Colleen Bradford Krantz looks at the scope of the issue in the seed industry. Her report is our Cover Story.

For at least a century, scientists and entrepreneurs have been trying to figure out how to preserve plant pollen, many types of which die within an hour of being shed. If the problem could be solved, pollen could be distributed whenever and wherever needed. 

A University of Nebraska small grains expert says some modest progress was made in the past by keeping pollen cold and controlling humidity but storage life was limited. Those discoveries weren’t enough to prevent major yield losses when weather-related challenges hampered the success of natural pollination.

Katherine Frels, assistant professor, University of Nebraska-Lincoln: “We’re talking about expanding it from maybe an hour to a few hours or maybe a day. And that’s not really long enough if we’re trying to make a lot of pollinations, or say we have a stress window that’s occurring.”

The challenge remained: how could these dust-sized particles be collected, preserved and redistributed on plants in a way that the extensive time and money invested didn’t cancel out any financial benefit.

Katherine Frels, University of Nebraska-Lincoln: “I would definitely say that pollination preservation, while we understand mechanisms that contribute to it, we haven’t been able to reach our goals at a commercial scale.”

PowerPollen, an Ankeny, Iowa-based company says it has not only made progress on preserving pollen longer and maintaining its viability, but they are also able to collect and redistribute within cornfields on a large scale. 

Jason Cope, PowerPollen: We got together and really started brainstorming and came up with the fact that pollen is an uncontrolled aspect of agriculture, where it’s just left to the weather, the elements, timing. And we felt if we could build solid technology around the ability to preserve pollen, that it would be something, a major step in agriculture that’s been a long-held need.”

Co-founders Jason Cope and Todd Krone, who worked at what was then DuPont Pioneer, now under the name Corteva, decided to start out by focusing their efforts on seed corn production. Not only is corn pollen easier to collect than the pollen from many other plants, but it is also considered a high-value crop. PowerPollen’s leaders also believed they could save seed corn companies space in their fields by eliminating the need for rows of male plants.

Jason Cope, PowerPollen: “Seed production is… costly. There’s a lot of labor associated with it. There’s a lot of land utilization. The male is only out there to produce pollen and then those rows are actually mowed out. So as you start to remove male from the field and you have preserved pollen, now you’re increasing the overall productivity of per unit of land.”

The company, started in 2015, now has 30 full-time employees, a half dozen approved patents, and more than 60 others pending. 

PowerPollen has also landed contracts with two major seed companies. Corteva, which also is a major funder of Market to Market, signed a licensing agreement with PowerPollen in 2020 and Bayer followed in 2021.

Jeremy Johnson, Corteva - Global Seeds Production Research lead: “We've had very successful in-field testing to date. And so, based on those, those results where we're really excited and, and look forward to our, our continued collaboration with PowerPollen, to explore its technology, and to better understand how we can integrate the processes and, and, and how it can help us, produce a reliable high quality seed crop for our customers.”

Working with Iowa-based equipment manufacturer ALMACO, PowerPollen developed equipment for collecting and redistributing pollen in seed corn fields. They also pinpointed an additive that kept the pollen from hardening into a brick, a problem that would otherwise make application nearly impossible.

Jason Cope, PowerPollen: “We store it at 4 degrees Celsius, which basically slows it down and makes it just real comfortable and we keep a relatively high humidity so it keeps its moisture content…..We’ve actually stored pollen now for, it’s getting close to two years, normally dies within 30 to 45 minutes….The long-term preservation really, we consider that to still be in the R&D scaling phase, but that is really the ultimate end use for the technology. Once we get that process scaled as well, then you can harvest pollen in South America and bring it to North America and utilize it a year later.”


Cope says their biggest remaining challenge is to reduce the cost of the PowerPollen process to $50 an acre or less.

Jason Cope, PowerPollen: “I think it does seem realistic where there’s gonna be a point in time where people go: ‘Remember when we used to plant our males and females out there and then cross our fingers that they were gonna time together?’ Well, and, I hope they say, ‘It’s hard to believe we used to do things that way’ because this just takes so much risk out of the equation.”

The company is also focused on wheat pollen, which hides deep inside the plant’s head and is more difficult to gather. But experts say the ability to store and reapply wheat pollen could speed up the development of a commercially-relevant wheat hybrid in the U.S., a goal pursued for decades. 

Katherine Frels, University of Nebraska-Lincoln: “We’ve got a lot of research going but we haven’t quite reached the point where there are hybrid weather varieties on the market for U.S. farmers. Hybrid wheat would be a huge game changer… With pollen preservation, we would be able to collect pollen from a field of male plants, you know, maybe somewhere across the state where the plant’s already flowering…, and then we could take that pollen and pollinate our female plants and get that hybrid seed.”

Frels says if climate change creates more barriers for natural plant pollination, being able to preserve pollen may become even more critical for many crops.

Katherine Frels, University of Nebraska-Lincoln: “Challenges of climate change have the potential to really affect our seed production… We may need more technologies like this. I really hope we don’t…but it’s really good that we have these backups, something to come back to if we are seeing production concerns.”

For Market to Market, I’m Colleen Bradford Krantz.

Next, the Market to Market report. 

A possible end to the violence in Ukraine coupled with weather concerns dominated the trade. For the week, the nearby wheat contract fell 43 cents, while May corn shed 21 cents. U.S. export sales of soybeans slowed this week as entering the final day of trade, no export sales had been announced. The soybean contract dropped 8 cents. May meal declined a dime per ton. May cotton expanded $5.72 per hundredweight. Over in the dairy parlor, April Class III milk futures gained 60 cents. The livestock sector was mixed. April cattle added $3.20. April feeders improved $4.35. And the April lean hog contract moved $3.33 lower. In the currency markets, the U.S. Dollar index subtracted 88 ticks. May crude oil decreased $3.12. COMEX Gold lost $64.20 per ounce. And the Goldman Sachs Commodity Index dropped almost 12 points to finish at 721 even.

Yeager: Joining us now to provide insight is Arlen Suderman. Hey, Arlan!

Suderman: Hey, Paul, it's good to be back with you. 

Yeager: Good to have you here. And weather is always fun this time of year. We were talking about the weather before we started rolling and that is a story for where you are at, it has still been dry in the Wheat Belt. Has the weather taken over the Ukraine Russia story as the biggest factor in the wheat contracts in the United States right now? 

Suderman: Well, that would certainly be tempting to think so because we were lower on Friday and saw a selloff there and we were having rains into the Central Plains. I personally don't think the weather is really a big factor. Many of our traditional traders who trade the fundamentals of the market are really on the sideline right now because they're so frustrated by the volatility. In fact, if you look at Kansas City hard red winter wheat open interest, which is the number of open contracts being traded in the market, it was at the lowest level since June 2015 as we closed out the week. So we appreciate the rains and the moisture and the snow that we're getting this weekend. There's going to be more early next week. But we're going to need a lot more in the month of April to really break this drought and that has implications then for the Midwest whether we're able to break this. People in the Midwest really should want this Plains drought to break because that can really influence the weather pattern that sets up for the summer. 

Yeager: Well, and weather is always the topic and we can kind of move into that as we proceed. But let's look at Ukraine for just a moment. The story keeps coming out of the challenges of harvesting that winter crop. Will their farmers be able to get out there? That impacts the global market. If I'm a producer in the Wheat Belt in this country, what do I need to see for any signs or indication of what I should do for what is happening there in Ukraine? 

Suderman: Well, from a Ukraine standpoint 90% to 95% of their wheat production is winter wheat so it's in the ground, looking pretty decent when this battle started and it needed to be top dressed in the spring, as most of our winter wheat needs to be and about 50% of the fertilizer was in position before this conflict started. Some fields in the western half of the country did get top dressed and they'll benefit from that. So most of the rest did not so they're going to have substandard yields. Then the question is, will they get harvested? And the answer to that question is the same as will the summer crops get planted? Most of the farmers headed to the war effort, sent their wives and children off to neighboring countries and they headed to the war and we've seen most of the fuel go to the war effort as well, we've seen reports of Russian troops targeting farm equipment to destroy it or to damage it. So when they come back, when this ends, if it ends this next week what is the situation going to be? How much of the equipment is going to be damaged? How many farmers have been injured in the conflict? Will they have fuel for harvesting? Those are things we don't really have an answer on, we're not real optimistic and I'm saying this from the standpoint that we have customers in Ukraine and so we're talking to those customers and right now we're not real optimistic that there's going to be a lot of exports coming out. The infrastructure has some significant problems in Ukraine. Russian troops have damaged the ports. They will be harvesting some wheat, they will be planting some summer crops, but we think exports are going to be minimal out of Ukraine this next year. 

Yeager: Well, and the same story is in corn. When you talk about the farmers their seasons kind of match up with what we have in the "I" states. The infrastructure story is going to be the same whether it is wheat or corn. What is the Ukraine impact on the U.S. corn sales as we still look at this chart that just has an incredible range on it? 

Suderman: Take us back to the first of February before the Russian invasion of Ukraine. If I would have told you we're going to have a drought in Ukraine that cuts its production by 60% or 70% that would be market moving news. Essentially that is what we're looking at. We don't know exactly but if we linger this war until about the 15th of April I think the odds of any corn getting planted of significance are near zero at that point. And so it's getting down to the critical time in order to see corn field work done and corn planted. So that takes a lot of corn off the market, maybe as much as 30, 35 million metric tons of corn taken off the world market at a time when world supplies are tight. If you look at world supplies minus China and minus the United States looking at the rest of the world we're about a 36, 38 day supply, the tightest in 20 years. We just don’t have that margin for error going into this. So that means we stay tight for the next 12 to 18 months going forward. 

Yeager: Which ties us back into the opening comments about the weather. Right now on the screen we're showing a planter, we're about to start rolling the planters, we've already seen it in Texas, it's just moving up the way. American producers who have some old crop or have maybe not priced some of their new crop, some of them get a little hesitant, what should they be looking at to help make their decisions? 

Suderman: Yeah, I sense that hesitancy when I talk to farmers and when I was visiting with them at Commodity Classic. It really comes down individually to the producer obviously. If you're a farmer who is nearing retirement age and you have a nice nest egg and you don't have any debt you can afford to take a few more risks in how much you hang on. If you're a young farmer with a lot of debt then you've really got to focus on the margins and if you can lock in good margins relative to minus what you're paying for your fertilizer or your inputs, then it does make some sense to be scaling in on these rallies. But overall the fundamentals look like they're going to be tight enough unless we have a much bigger safrinha crop in Brazil than what we're currently anticipating that this market should remain elevated, particularly with inflation remaining a problem. There will be ups and downs, there will be lots of volatilities and selloffs. But we anticipate that the breaks are going to be sold. Now, the one caveat that could, that we need to watch or black swan event if you will, would be if we would see China make a move on Taiwan to reunify it at some point. They're probably not going to give us advanced warning on that. That would have the opposite effect on the commodities. We would expect a selloff in the commodities if that happened. That's why you don't want to just wait and say I'm going to wait this thing out and see how high. Kind of spread out your risk in your marketing. 

Yeager: All right, so let's get into -- we had heavy stuff there in those two. Beans quickly, a lot of the same factors are in place. What are we looking at here this week? 

Suderman: If we look at beans, we calculate that the South American drought has already claimed about 35 million metric tons of production. That is 1.3 billion bushels roughly. The USDA really hasn't fully accounted for that on the world balance sheet yet. They've just kind of massaged some numbers, reduced exports, reduced imports but really haven't accounted for where is that demand going to happen? We think it's going to end up drawing down old crop stocks below 200 million bushels, so nearly another 100 million bushel drop yet as exports climb in July and August. We think it's going to increase exports for the new marketing year because Brazil won't have the supplies then to market at that time. So it's going to keep demand on U.S. soybeans strong. New crop sales to China and to all customers, but most of it is China, are record levels right now for the new crop. So the bottom line, as long as we don't have a black swan event like China making a move on Taiwan, this market should be well supported with the breaks being bought with more risk going forward if we have weather risk in the United States this summer. 

Yeager: All right, let's flip to the meats and proteins. Cattle again the story continues to be who can process but the demand is there, you're starting to see stories of people maybe trying to hold off on some demand. What is that doing to the cattle market right now/ 

Suderman: Very interesting dynamics. We're finally getting slaughter pace up to 125,000 head per day on some days and sometimes even back-to-back days. We haven’t seen that since before the pandemic. That is a positive. We're seeing pretty good domestic and global demand for beef as well, including last week's export sales report having a large sale to China, they have quietly become one of our top three importers of U.S. beef right now. And that market looks solid going forward. But our weights are near record high for this time of year. That means we're getting a lot of meat per animal going through. So we're in this fine balancing act. The packer margins are still pretty good, they have incentive to pull animals through. Last week's cash trade was a little disappointing though. And so this is a fine balancing act. I anticipate we're going to be consolidating in here. Barbeque season starts up shortly, that should help. 

Yeager: Yeah, hog wise what do you see there? 

Suderman: Hog wise, the number of hogs available continues to fall below what USDA has anticipated. That has happened for the last four quarterly hogs and pigs reports in a row, our actual numbers have come in less. That has been a positive. Negative has been that China has been shutting down on buying U.S. pork as they have been oversupplied. That has been a negative. Mexico has been picking it up but we're still short on the exports. Overall from this protein complex, the reason we saw the big selloff was with high energy prices and inflation suddenly the funds became nervous that the consumer was going to quit spending money on the higher cuts of meat and that continues to hang over this market. So far the consumer has the money because of all the stimulus in the system and we haven't seen that big drop off but that's the risk. 

Yeager: Okay, Arlan, we'll continue that discussion in a moment. Thank you, sir. 


Yeager: That will do it for this installment of Market to Market. We will talk more with Arlan in Market Plus so join us there. You can find it free on our website of And I want to say thank you for helping us clear another milestone on our YouTube channel this week. Join the party by subscribing at Ring that bell for notifications to know when that we will drop new content. Next week we take a look at a land lease program in Colorado that is benefiting schools. Thank you for watching. Have a great week. 



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.