Market to Market - October 28, 2022

Market to Market | Episode
Oct 28, 2022 | 27 min

Low river levels on the Mississippi slow the flow of goods. New data indicates record high greenhouse gas emissions around the world. One dairy producer's search for additional revenue streams. Market analysis with Ted Seifried.


Coming up on Market to Market -- Low river levels on the Mississippi slow the flow of goods. New data indicates record high greenhouse gas emissions around the world. One dairy producer's search for additional revenue streams. 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, October 28 edition of Market to Market, the Weekly Journal of

Rural America.


Hello. I’m Paul Yeager.

If a picture is worth a thousand words, the economic snapshots of this week tells a story open to interpretation. — -

New home sales fell almost 11 percent in September as higher mortgage rates held back buyers.

The third quarter GDP provided some clearing of the clouds as the U.S. economy added 2.6 percent of growth, breaking two consecutive quarters of contraction.

Orders for durable goods expanded last month by 0.4 percent. Civilian aircraft lifted the sector of items meant to last three years or more.

The government’s preferred inflation index, the PCE, pushed higher - this time by 0.5 percent – even with a rise in consumer spending and private industry wage growth. –—

Metaphors aside, the lack of physical clouds has left the fall inland waterway system in peril.

The latest Drought Monitor reveals 61 percent of the continental U.S. is in moderate drought or worse - the highest since the peak of the 2012 drought.

Any rain that falls for the foreseeable future will stay where it hits and get soaked up leaving transportation on the Mighty Mississippi in the slow lane.

Here’s David Miller.

Continued dry conditions and reduced water flow have altered barge and tow traffic.

Here in Tiptonville, Tennessee – an area about halfway between St. Louis and Memphis – a large section of the riverbed of the Mississippi River has been exposed.

Grain usually heads downstream this time of year with fertilizers, salt and steel making the trip up river.

American Commercial Barge Lines reported depth in some spots of the Lower Mississippi River at 9 feet or about 30 percent of normal.

To compensate for the lower flow, barge companies have cut loads by a quarter. Tows that were usually 40 barges chained together have been reduced to about 25.

Low river levels have revealed some history.  Near Baton Rouge, Louisiana, this ferry emerged from the depths this fall and has likely been there since sinking in the late 1800s.

Dr. Chip McGimsey, Archaeologist for the State of Louisiana: "The drought is the only reason we see her. Normal pool of the river is up there at the top of the tall green weedy patch. There was a previous drought in 1992 and she became known at that time, but at that particular time all you could see was the very tops of the sides. She was completely full of mud with mud caked all around her. So there wasn't really much to see. We knew she was here, but couldn't say much about her."

Even if rain picks up along the Mississippi River basin, deeper flows may take some time to be restored.

Mike Steenhoek/Soy Transportation Coalition: “Unfortunately, it could be a considerable period of time, because you know, with with any additional precipitation that occurs, a lot of U.S farm ground is one big dry sponge right now. So a lot of it's going to get soaked into the ground, which is good for the farm ground, and which we certainly hope for that. But how much of that will actually get channeled into the river system that's going to be quite limited. So this is something that, you know, unfortunately is going to be a challenge for us for the for the foreseeable future.”

For Market to Market, I’m David Miller.

Ten years ago this week, Hurricane Sandy slammed the East Coast. It increased the volume of the calls to address global climate change.

Today, the same pleas are being made and not much has changed in that timeframe. 

Peter Tubbs looks at the reports issued this week.

Climate scientists have observed globally reduced crop yields over the past 50 years and animals moving to higher altitudes to find lower temperatures. If the trend goes unchecked, the same scientists are predicting water basins dependent on snowpack will see water volumes decline by as much as 20 percent.

The gasses believed to contribute the most to climate change hit record levels in 2021. Carbon dioxide, methane and nitrous oxide each contribute to atmospheric warming in different ways, all of which are major contributors to climate change.

Recent data shows that China is the world’s largest emitter of carbon dioxide due to its reliance on coal for electricity. The country of 1.4 billion, continued to discharge twice as many tons into the atmosphere as the United States.. However, on a per capita basis, the United States emits twice as much carbon per person than China, and over seven times as much carbon dioxide per person than India. 

The warming of the atmosphere is believed to be disrupting weather patterns around the globe.

Dr Oksana Tarasova, Senior Scientific Officer, World Meteorological Organization (WMO): "This amount of energy which is additionally accumulated in the atmosphere the greenhouse gases have to go somewhere. So you will have more extreme events. You will have more precipitation or more severe storms. So it's kind of a long term changes in weather patterns. 

The growth rate of methane and nitrous oxide emissions in the atmosphere increased to record levels in 2021. Agriculture is a significant source of both gasses globally, primarily from the raising of livestock and the application of fertilizer.

Some believe that the time for agriculture to reduce its emissions has come, and governments will need to play a central role in the adoption of so-called climate smart practices.

Tom Vilsack, Secretary of Agriculture: “ For the last 40 years or so, our focus has been predominantly on increasing productivity that needs to continue, obviously if we're gonna continue to feed a, a, a fragile world in the basic climate change, but we have to make sure that it is also not only sustainable, but also profitable. “

For Market to Market, I’m Peter Tubbs.

Roadblocks can be physical, mental and governmental.

How one clears the obstacle comes in many forms.

A New England producer faced new rules for disposing of waste from a family dairy farm.

How they handled the challenge is this week’s Cover Story. Here’s John Torpy.

The fall foliage in Northwest Connecticut provides an idyllic backdrop for Freund’s Farms, a dairy operation where the management practices are designed to ensure the family farm’s future.

Matthew Freund, Owner and Operator, Freund Farms: “New England is a tough spot to milk cows. There's just, our costs are much higher than the rest of the nation.”

Matthew Freund is the second generation working on this operation rooted in the rolling hills of Canaan, Connecticut. Freund’s father, Eugene, started the operation with sustainability in mind. When Matthew and his brother Benjamin took over the dairy, they continued using the same sustainable mindset.

Matthew Freund, Owner and Operator, Freund Farms: “We've always been astute to the fact that there's other things that have to happen to make the dairy stay solvent.”

Facing new manure disposal regulations, the Freund brothers decided to turn a potential negative into a positive. They took the manure from their 300-head dairy and used it to generate additional revenue by building one of New England’s first anaerobic digesters. 

The methane captured from the manure is burned to heat water, the barns and their family home. The pasteurized liquids are sprayed back on fields as fertilizer, reducing input costs for the farm.  

Matthew Freund, Owner and Operator, Freund Farms: “Okay, so what do you do with it? At the end of the digester, you really didn't change your nutrient load. You made some methane and you converted some of your nitrogen to a more readily available, uh, chemical. But you still haven't changed anything. You still have all that nutrient. So at first we started to try to sell it for compost and that didn't work out so well because my next door neighbor, who milks four times as many cows as I do, was selling compost as well. ”

The brothers continued to search for a use for the manure solids. Around 2001, while attending a local farm cooperative annual meeting, an official from the Connecticut Department of Agriculture suggested making flower pots out of the manure  

Matthew Freund, Owner and Operator, Freund Farms: “And I thought about that for a little bit and then came home and started doing some research and just spent an enormous amount of time looking to see how I could make a pot out of cow manure.”

With a little outside help, the Freunds finally came up with a working model and a plan for marketing what are now known as CowPots.

Amanda Freund, Sales and Marketing, CowPots:“You're

taking this pot as it is and you're setting the whole thing

in the ground.” 

Amanda Freund is the third generation to work on the family dairy and currently holds the sales and marketing reins for CowPots. 

Amanda Freund, Sales and Marketing, CowPots: “This is awesome for me, like just, to like, be able to be reminded and to have the firsthand experience in our own market garden here. That this is a parsley plant that went in the ground in June with the pot intact. We didn't score or crush it, we just put it in the ground as a full pot. And you can see there was absolutely nothing preventing the roots from growing right through that pot wall. And you can see, look at all these grubs I've got here. Hey, Mister, come here.” 

She also helps out at Freund’s Farm Market and Bakery, a storefront business run by her mother. Amanda notes proper land stewardship and economic opportunities are working hand in hand on the farm.

Amanda Freund, Sales and Marketing, CowPots: “Being able to generate revenue from producing CowPots, which are these biodegradable pots from our cows manure that we then get to use in our farm market garden center. And so the manure from the dairy is then formed in the cow pots at our cow pots factory and then used to grow plants for our farm market. So it's a synergy of these three businesses all being able to work together.”

CowPots footprint has grown from supporting gardens in New England states, to supplying gardeners with compostable flower pots nationwide. Some of Freund’s products can be found in Des Moines, Iowa, at the city’s Downtown Farmers Market. 

Jana Erickson, Owner, Wit’s End Gardens: “I wanted something that disappeared…” 

Jana Erickson is owner of Wits End Gardens. Her business specializes in growing perennials for pollinators. When she started selling flowers at the Farmer’s Market in 2015, she was having a difficult time deciding how to pot her flowers.

Jana Erickson, Owner, Wit’s End Gardens: “I'm not even sure how I found cow pots, it's cow cow poop, which is like the best thing in the world for our plants. It is beyond sustainable. Um, cuz when I tell people, you know, I'm like, you know, their day job is making ice cream and cottage cheese, but their side work is, you know, pooping and, and you're never gonna run out of cow poop.”

Erickson believes the biodegradable flower pots have improved her plants, her sales, and her mission.

Jana Erickson, Owner, Wit’s End Gardens: “I'm not, I am not selling a plant just so I can sell the plant, make money. I'm selling the plant so you have a beautiful plant in your garden and the pollinators are gonna come, so therefore it has to live and grow. Right? And I, to me, that's a point of pride.” 

To carry on the tradition of maximizing potential while remaining sustainable, the Freund’s decided to sell their herd in September to a young producer looking to get started in the dairy business. Their focus is now on their storefront and CowPots production. 

Benjamin Freund, Owner, CowPots: “You know, we have a lot of farms with very mature leaders on those farms and that farm needs to get to the next, next generation in order to to keep a actually a vibrant vision on that farm. Because if you're trying to stick with people my age, you're kind of gettin’ stuck, I want to I don't say in a rut or that all people my age don't have any place to go, but the vision of someone in their 60s versus someone in their 20s is vastly different. So we’ve been searching for the right individual to kinda come in and take over the cows and we were finally successful at just the beginning of last month. And it was a very long process and I think a very good process and I think the prospects for making milk in Connecticut are brighter with these young people coming up and through.”

For Market to Market, I’m John Torpy.

Next, the Market to Market report.

Widespread rain paused harvest briefly as commodities were held in a tight trading range. The nearby wheat contract lost 22 cents while the December corn contract shed 4 cents. Meal and decent export sales kept some lift in the soy complex. The January soybean contract dropped 4 cents. December meal added $7.50 per ton. December cotton shrank $7.02 per hundredweight or 9 percent. Over in the dairy parlor, November Class III milk futures declined by 73 cents. The livestock market was mixed as December cattle added 57 cents. January feeders were even. And the December lean hog contract dropped by $3.03. In the currency markets, the U.S. Dollar index shed 128 ticks. December crude oil gained $3.32 per barrel. COMEX Gold decreased $12.20 per ounce. And the Goldman Sachs Commodity Index added almost 11 points to finish at 637-even.

Yeager: Joining is now to provide some insight is Ted Seifried. Ted, welcome back.

Seifried: Hey, thanks for having me, Paul.

Yeager: The markets, wheat, corn, soybeans, I won't say dull, they're limited. Why is wheat struggling to break out of any range?

Seifried: Wheat is actually kind of breaking out to the downside. At least we've broken some very key technical support levels in the form of the shallow uptrend that we had been in, in the form of moving averages that we had below us. And it's really kind of disappointing that wheat was doing that this week considering that we had some positive news to throw at wheat in the form of the dollar being sharply off its highs, good export sales, more concern about whether the grain corridor is going to stay open or not. And even with all of that wheat still came under pressure. We're past harvest pressure. There's a lot of reasons why you could say hey, wheat could have had a really good week and it didn't. So that makes you really wonder where wheat goes from here. I think you have to be on the defensive. You have to be a little bit worried about more downside potential for the wheat at this point. But wheat is a very global market, it is very sensitive to anything that we have going on from a headline perspective and it's very sensitive to the dollar. So the look on the chart that we were left with at the end of the day on Friday isn't good, but something fundamentally unexpected could happen and change that in a hurry.

Yeager: But you've already said that lots of things have been thrown at this market and not a reaction. So, when you say a range down, what is your range down?

Seifried: Well, the idea is that are we going to look for those June and July lows? And I think pretty clearly the chart is suggesting that we will. Now, whether we will see follow through below that or not, that remains to be seen. I would say that the global wheat picture is still fairly friendly. Look at the dryness in Argentina, look at the dryness in Australia. We had issues with our last wheat crop. Wheat is at a rather elevated price. But then again, look at all commodities really are. Corn and soybeans we're near, well we're historically on the higher end. So maybe wheat is more of a canary in the coal mine like it was in 2008 and maybe it's suggesting that a lot of the additional premium that you have above and beyond what the actual fundamentals of these markets are, i.e. inflationary premium, maybe that's starting to come out a little bit more aggressively.

Yeager: What is the biggest factor in the corn market this week? Is it news out of Mexico? Is it harvest pressure? Basis challenges?

Seifried: Yeah, so corn should be getting to the point where harvest pressure should start to fade a little bit because we're past that 60% mark now at this point. The Mexico news is very interesting because it's not realistic and you would think that when you hear Thursday and Friday Mexico saying that all of the corn coming into Mexico going forward or starting next year has to be non-GMO, so roughly 650 to 750 million bushels, you say wow that's going to be a problem because realistically that's about how much, on the high end that's about how much non-GMO corn we grow in the United States as is. And that corn is already spoken for. So if we're going to convert 700 million bushels of GMO corn to non-GMO corn in order to continue to do business with Mexico, who is our number two buyer of U.S. corn, well then the market is going to have to buy that. And right now you've got non-GMO corn trading like $2 over GMO corn but to buy it maybe that $2 has to go to $4. So does Mexico want to pay an extra $4 billion on the corn that they're buying? And are we going to more than double our non-GMO production? It just doesn't seem feasible or realistic. So I think when people that know what they're talking about hear that they say, yeah that's not really realistic, and so we kind of ignore it. I don't really feel like the market really traded that Thursday night and Friday. We were down a little bit but it's not like the market completely flushed out. I'm a little bit surprised that the funds, who may or may not know these things, that they didn't kind of run for the doors. But the fact that they didn't kind of says to me that the market is not really trusting that info.

Yeager: Maybe it needs to show up in mainstream press.

Seifried: We need to hear more about it. I think we need more clarification from Mexico exactly how they're doing it because what they said is they want to basically contract individual farmers to do it that way. Well, that's a huge amount of production that they're going to have to do that with and I can't imagine they would do that in any short period of time.

Yeager: I need to move to beans. It looks like this week towards the end of the week the bull spreads were appearing. You had some exports meeting expectations. Harvest more in the rearview, past that as you said 60% threshold. So do we need exports from someone else besides China?

Seifried: Maybe, we saw exports to Spain on the daily flash on Friday morning, almost 200,000 metric tons. That's a pretty nice number for Spain. Okay, good deal. Exports have been better in the recent weeks. We have gotten past September. September was a problem because of what Argentina was doing with offering their currency advantage to their farmers and their exporters. Our exports during the month of September were really down but in October we're really picked that ball up and we've had some pretty good weeks, two weeks ago really fantastic, this week not quite as good but still probably more normal for what we would expect this time of year. So those soybean exports are there. The question is how long will that continue? And that I think is going to depend a lot on South American weather.

Yeager: Well that ties into the question that we wanted to ask. Adam in Wisconsin asked you on Twitter this week, is there any bull case for exports to China out of the U.S. with a big crop in Brazil, currency valuations, river issues and geopolitical tensions? We didn't talk about the river as much in your previous answer.

Seifried: Yeah, so the river is more of a problem for corn than it is for soybeans. Soybeans we have in the Pacific Northwest, we do send a significant amount of soybeans out of the Pacific Northwest. If you look at the last couple of weeks it has been almost 50/50 for the beans going out of the Pacific Northwest versus the Gulf. So yeah, that's an issue. I think the biggest issue for soybean exports is going to be how does Brazil get going? We know they're going after a massive, massive crop this year. We have some concerns specifically in Mato Grosso, how they might be dry, but if their weather looks good I would kind of think that global end users might want to pump the brakes on U.S. export sales and wait for that Brazilian crop if they can.

Yeager: Okay, need to get to livestock and the live cattle from this week we had a couple of things that were, again, it's back to exports. But you saw big changes when it came to cash versus futures.

Seifried: Right, yeah. And look, the futures shrinking into new highs and we're optimistic about where things go in the future rather than necessarily where they are right now. We're feeling a lot better on domestic demand with the idea that hey, the stock market has come back pretty well. We're feeling like maybe we're not going to have this big recession. GDP as you were mentioning in the opening was a positive number which technically speaking means we're out of a recession because two in a row, two negative numbers in a row put us in a recession, but now having a positive number that definition no longer applies. So going forward we think that domestic demand, or at least the market thinks that domestic demand is going to be there, therefore packers margins are going to be there, therefore cash is going to stay up. So the live cattle market is optimistic going forward. I'm not doing jumping jacks about the export sales. It's nice to see China on the list. We're getting really overbought in the cattle. I would not be surprised to see a correction here at some point. But I don't know if we need to say the market has put a top in at this point either.

Yeager: Same story in the feeder market though?

Seifried: Yeah, feeders are going to be very reliant on what happens with the corn obviously. And if corn does in fact break out to the upside at some point that is going to have a lot of negative effect on the feeder market. But I'm not so sure that's going to happen. I think corn with the exports, or lack of exports that we're seeing there, I think there is a building demand concern for corn and if corn breaks out to the downside feeders might really benefit from that.

Yeager: Well, we went from a time where it used to be yes, the feeders went up when corn was down. But you could argue if you want to go back to the beginning of our discussion since we haven't been in a big range this probably was a big opportunity to do some feed need covering.

Seifried: Yeah absolutely but you could also say well if we can't get corn shipped down to the Gulf and we're going to see this big lack of exports then going forward or further on during time we're going to have a whole bunch of extra corn laying around that we could use for feed and that prices might be lower.

Yeager: Lower prices were in the hog market, sharply higher though for cash, but it was the futures that were the problem yesterday.

Seifried: It was the futures that were a problem yesterday. We were really very overbought in the hogs. We basically had come straight up after that big break that we saw mid-September into early October. So we needed to see some technical correction. But there's sort of mounting negativity, negative things happening in the hogs too. Weights are up. Cutout values they're at the lowest levels they've been since February so that puts pressure on packers margins. So you wonder if we're going to see this sort of build in supply. You don't have this recessionary trade where people, you're expecting people to want to go to the cheaper alternative and buy pork instead of beef because they're worried about their 401K and their bank accounts. And our export sales are maybe a bit off of what they had been, about half of what they had been for previous weeks. So maybe we are seeing some demand destruction there.

Yeager: Thank you, Ted. Appreciate it. That's going to do it. We're going to put a pause on this analysis and we will continue with Ted and answer more of your submitted questions in our Market Plus. Find that on our website of in podcast form, also on YouTube. The first quarter of the school session is in the books but we are still adding to our classroom portion of the program. Each week new content is added to the commodity markets and other sections of the site that can be found at Next week we'll take a look at what is at stake in next month's election. Thank you for watching. Have a great week.




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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.