Market to Market - February 17, 2023

Market to Market | Episode
Feb 17, 2023 | 28 min

Market to Market - February 17, 2023


Yeager: Coming up on market to market. A huge congressional delegation gets an earful about the farm bill. A change in policy may keep U.S. corn flowing into Mexico. Plus, an industry at the crossroads of commerce and conservation. And the market analysis of Chris Robinson next.

Announcer: What's next? Doesn't happen by chance. It happens when researchers and farmers work together to solve tomorrow's agronomic challenges. We're committed to creating what's next because a pioneer. Our name is our mission.

Announcer: Sukup Manufacturing. Celebrating 60 years of innovation as a family owned and operated manufacturer of grain storage, drying and handling equipment out of Sheffield, Iowa. Learn more at


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

Announcer: This is the Friday, February 17th edition of Market to Market, the weekly Journal of Rural America.

Hello, I'm Paul Yeager. Pretty soon the heads of several economists are going to be rubbed raw with all the head scratching over the economic signals being sent by the US economy, lower unemployment, increased job numbers and more spending has come in the face of decades. High inflation reports and aggressive interest rate hikes. The consumer seems undeterred and keep spending on vehicles, furniture and dining out.

Retail sales were up 3% in January, the largest monthly gain in nearly two years, and reversed the consecutive declines that finished out 2022. The Consumer Price Index rose half a percent in the month to month reading. The annual CPI moved higher by 6.4%, making seven straight months of reductions in the year over year. View the Rural Main Street Index, a narrower review of just ten states remained above growth neutral, however, based on responses from the bank CEOs surveyed, the Creighton University Index declined slightly.

The House of Representatives was designed to be responsive to the people. Listening sessions are still commonplace, especially when it comes to gathering information. For the farm bill, a hearing in California this week drew quite the crowd, as Peter Tubbs reports.

This week, the House Agriculture Committee held a hearing in Tulare, California. Commenters had specific requests of the Committee concerning the needs of producers of food crops in the Central Valley that they would like addressed in the next Farm Bill.

Jacob DeBoer, American AgCredit: “As you look at the intersection of agriculture and the environment, our ask is that any program provide for voluntary incentive based tools for farmers and forest owners, promote private sector solutions, and third, not require any decision on agriculture lending be based on farmers adopting certain conservation practices. So voluntary and incentive based, please.”

Aubrey Bettencourt, Almond Alliance: “Specialty crop producers face unique challenges with the application of AGI limitations compared to Title I Commodity Crops and most farm bill programs. Current implementation of API limitations disproportionately prohibit specialty crop producers from participating in certain USDA programs in a meaningful way.”

Jamie Johansson, California Farm Bureau: “This farm bill should prioritize development of new crop insurance tools for uncovered producers, as well as improvements to existing tools. In a practical, affordable way regardless of commodity and farm size. In California, less than a quarter of our 400 commodities are covered by existing crop insurance programs.”

Lynne McBride, California Dairy Campaign: “On the dairy side, for more than four years, we've joined with dairy farmers from around the country, including those from Pennsylvania, Mr. Chairman, to call for a nationwide dairy growth management plan so that we can manage our national milk supply to be more responsive to profitable market demand. There was a well-known study that was conducted conducted by the University of Wisconsin and Cornell that showed that a system of managed growth and again, this would be incentive based production growth, would have a positive impact on the dairy economy.”

Manuel Cunha, NISEI Farmers League: “Farmers across the country depend on their families, but their family includes farm workers. And after 30 years, these workers are still in the lurch, not getting work authorization. They were here for COVID. They worked with the farmers. They made things happen. I would hope that the House ag committee will have some influence on immigration, of keeping families together in immigration, but getting them done once and for all.”

For Market to Market, I'm Peter Tubbs.

Paul Yeager

According to 2021 data from USDA, the United States is Mexico’s largest agricultural trading partner, buying 81 percent of Mexican exports and supplying 69 percent of the country’s imports in this category.

Any change in policy, especially involving U.S. corn, could have a major impact.

David Miller reports on the back and forth over genetically modified crops. 

U.S. grown genetically modified corn will still be welcome in Mexico past 2025 but only for use in animal feed. The proposed ban on imports would have dramatically altered the biggest destination for 17 million tonnes of American yellow corn - or about $3 billion worth of product. 

Mexico’s Ministry of Economy announced Monday they will carry out a gradual substitution of GM feed and milled corn, but left the dates for doing so open ended. However, Mexican experts, and authorities from other countries, will be looking at potential health issues. 

 Corn has a long history in Mexico. The first domesticated varieties were grown around 9,000 years ago. In order to protect native corn varieties, America’s number one trading partner will prohibit the import of GM corn seeds and block the use of GM corn for human consumption. 

The ban had created some tension between the two trading partners and even raised fears of a possible violation of the U.S. - Mexico - Canada trade agreement.  

The U.S. Trade Representative has been saying for several months Mexico’s position was not grounded in science and threatened to cause serious economic harm to U.S. farmers and livestock producers.

For Market to Market, I’m David Miller.

Paul Yeager

At the turn of the last century, the upper Mississippi River region was home to a major portion of the lumber industry from growing to processing. Shifts in trends sent some of those states in a different direction. Josh Buettner reports in our Cover Story.

Cole Spurgin/Moravia Hardwoods LLC: “Timber is like any kind of crop – corn or beans – it just has a lot longer life cycle than a year-to-year crop.”

Professional loggers would like Midwest farmers to glance up from their fields to what they see as an overlooked resource.

Cole Spurgin/Moravia Hardwoods LLC: “The best advice I can give a landowner is, if they have a current or growing timber stand, don’t just put it on the backburner.”

Cole Spurgin procures logs and timber for his southern Iowa family business, Moravia Hardwoods – in operation since 1968.  He harvests several species, like oak, cottonwood and cherry, but says Iowa, Missouri and surrounding states’ crown jewel is high quality black walnut, which accounts for 10 percent of global lumber exports. 

Cole Spurgin/Moravia Hardwoods LLC: “We’re after the trees that have very few limbs on them, because we are using them for grade lumber, flooring lumber, stuff like that.  So we don’t want knots and defects.”

USDA analysis reveals U.S. hardwood exports have more than doubled over the past 30 years – cracking over $1 billion in annual revenue.

Spurgin says demand surged during the height of COVID, driving lumber prices the highest he’d ever seen – and they haven’t snapped back to pre-pandemic levels.

Cole Spurgin/Moravia Hardwoods LLC: “It’s rotten in the center of it.  There’s an evident hole there that that tree is dying.  On its way out, there’s a big tree somewhere suffocating it.”

Spurgin says the industry is selective and sustainable…

Cole Spurgin/Moravia Hardwoods LLC: “Livestock are very hard on trees.  Stumpworm showing there.”

…though if it’s invasive species or weather, loggers will always battle Mother Nature.  Key, he adds, is proper management, to help tree stands grow faster and realize potential profit sooner. 

Cole Spurgin/Moravia Hardwoods LLC: “Step into your timber, and every so often, harvest the large, mature trees that are ready to come out to give room for the littler trees to grow.”

According to Iowa State University Extension and Outreach, some 3 million of Iowa’s total 26 million acres of cropland are forests – with 85 percent under private ownership.

Greg Heidebrink/District 2 Forester/Iowa Department of Natural Resources: “That’s where we come in, to help private landowners manage their woodlands.”

Iowa Department of Natural Resources District Forester Greg Heidebrink gives recommendations for habitat, hunting ground and recreation.   He also marks timber sales and helps coordinate equitable transactions between sellers and loggers like Spurgin.

Greg Heidebrink/District 2 Forester/Iowa Department of Natural Resources: “We have, quite honestly, some of the best loggers in the world in the state of Iowa.  But you, as a landowner, have to understand that that logger’s job is to buy your very best trees for as little as they possibly can.  That’s business.  I compare that to me going to the sales barn to buy cattle.  If I’m at the sales barn and there’s nobody else in the seats, I’m probably not going to stop the sale and say: ‘I’m not paying enough for these cows.’  Well, that’s what a logger’s job is.  So it’s up to you to get somebody on your side.  Whether that’s a private consultant, or it’s a district forester, to help you through that process.  And try to bid those trees out so you have some competition.”

Officials say Iowa was a sawmill mecca during the second half of the 19th century.  One-third of the nation’s lumber supply, log-harvested from old growth forests in Minnesota and Wisconsin, traveled by river and rail to sawmills on the Mississippi River before recession and deforestation doomed the region for generations.  But modern sustainable forestry practices rose from the ashes.

Greg Heidebrink/District 2 Forester/Iowa Department of Natural Resources: “I’m standing in a clear cut that was done in the early ‘80s.  So if we look around, we have some fantastic trees coming.”

Heidebrink says state forestry and all associated ties are worth around $5 billion to Iowa’s economy.  Value-added endeavors have helped push the envelope.

Mike Paul/Swan Creek Cabinetry/Boone, Iowa: “Our company starts with the lumber that we receive from a primary sawmill, dry kiln operator, and we start by ripping it up into strips that we further cut to length and machine and try to turn into a finished product.  It’s just a very different scale of equipment and a lot more fine…You know, a logger might measure to the foot, a cabinetmaker might measure to the /64th.”

Mike Paul founded Boone-based Swan Creek Cabinet Company, fresh out of high school, nearly 35 years ago.  He grew up in the sawmill business, grading and stacking lumber.  While his primary market is residential kitchen cabinetry, with all parts manufactured at his shop, business to business manufactured components and moldings account for a quarter of sales.

Mike Paul/Swan Creek Cabinetry/Boone, Iowa: “We buy hickory.  We buy walnut.  We buy cherry.  The quality of Iowa hardwoods is very good.  The primary manufacturers in the state…there are several very, very good ones…It’s a great resource and it's very local. Our two main suppliers are within two hours of here, so it makes freight, inbound, very workable as well.”

Though Paul successfully navigated his operation through COVID, he says labor shortages and unprecedented inflationary pressures have bloated his backlog from 90 days to 6 months.  He’s hopeful plywood costs will drop and clear the way for more help tackling projects.

Mike Paul/Swan Creek Cabinetry/Boone, Iowa: “There’s a lot of relevance in being able to take wood, a natural resource, and turn it into something that someone can use.”

As rural America eases the lingering sting of the coronavirus, unknowns remain, but optimism is in heavy supply.  Producers work to fill supply lines with various raw commodities and finished products, and stewards remind timber landowners of the crucial link between conservation and commerce.

Greg Heidebrink/District 2 Forester/Iowa Department of Natural Resources: “We really encourage them to put a plan together.  That plan is so important.  It’s your road map to successful forest management.  It’s that follow-up work that is so important - making sure that we have good trees coming.”

For Market to Market, I’m Josh Buettner.


Next, the Market to Market Report.

Paul Yeager: Traders seem to be kicking the can down the road to next week's USDA economic forum as movement was mostly muted for the week. The nearby wheat contract lost $0.21, while the March  corn contract shed $0.03.  Bean meal, again, led the way in the soy complex. The March soybean contract fell by $0.15, while the March meal contract contracted by $8.30 per ton.

March cotton shrank by $5.02 or that's nearly 6% per hundred weight. Over in the dairy parlor March Class three, milk futures declined by $0.35. The livestock market was mixed as April cattle added $0.70. March feeders fell for 15 and the April lean hog contract improved a dollar 95. In the currency markets, the US dollar index added 26 ticks.

March crude oil sold off 326 per barrel. COMEX gold lost $23 per ounce and the Goldman Sachs Commodity Index dropped by almost 17 points to settle at 586. Joining us now is regular market analyst Chris Robinson. Hey, Chris.

Chris Robinson:


Paul Yeager:

This year, this snow thing that you had to drive through, by the way, I think to finally hit some of the Western wheat belt. Is that the only reason for the rise in price?

Chris Robinson:

We've been so oversold for so long. And also up until three weeks ago when we were still getting to traders boards, we knew that the funds had a big short position betting on lower prices, and the commercials were long. So people were kind of setting up to see who was going to win that battle. Now, we haven't had good data from the commitment traders for two weeks now apparently is going to be another week to see.

But it certainly feels like this last bump was some short covering, especially last Friday. A week ago, we had had a pretty big sell off. October to January, we lost over two bucks for both KC and Chicago. The rally we had back came back to one of those retracements. So we like to look at the 30%. And also, you got to the point now we're looking ahead to next year.

You've got July, Chicago wheat flirting with $8. Big psychological number. You have July KC flirting with $9. So I think producers are starting to look ahead to that number.

Paul Yeager:

Well, give me give me a little range on that July contract. What do you see for Chicago in the next month? Yeah.

Chris Robinson:

Well, it's very oversold. And we all know what the low is now because we just came off of it in January, February. So we'll see if there's more upside. But but we haven't had any follow through for the last six months last year. We know that we have extremely tight supplies at the end of the day. We've seen more grain come out of Russia than anybody thought was going to come out of Russia.

They've pretty much had every bid quietly over in the Black Sea, and they are going to be renegotiating that treaty to get stuff out of Ukraine. We'll see if that happens. Any type of uncertainty like certainly like that, we've had multiple 40, 50 cent rallies, but they don't last. So I've been telling clients, if we get another move like that, nothing beats a good cash sale.

Paul Yeager:

Well, and you have you have some very good detailed advice to clients we'll get to in a minute here with soybeans and corn, let's move to corn export sales. Are they starting to turn?

Chris Robinson:

We are on par for what was expected this week, but we're running behind schedule at the end of the day and we catch up. Well, we'll see. That's that's up to Mexico. We were just watching Mexico. And also with China, China has been kind of, you know, out of the market. People thought they would come back after the lunar holiday.

They really haven't. People thought that we were going gangbusters in commodities once they reopened their economy after shutting it down. We haven't seen that. Crude oil has been kind of the canary in the coal mine, gets to 80 bucks and backs off. I think that's been the number one thing to watch is people's anticipation. Oh, here comes China again and the reopening. And it hasn't it hasn't come through.

Paul Yeager:

Okay. On new crop, you have a couple of interesting things that you wrote about this week. One was the French frog. We can talk about that. There you go. But I first want to get into a range on this new crop corn. And what percentage do you think someone should be sold on new crop?

Chris Robinson: You had a great opportunity. I mean, nobody has a crystal ball because some people out there do. But I don't. Right at the end of the year, we were up a seven, eight month, nine month high. It was it was a really good bounce for not only new crop corn but new, new but new crop beans as well.

We had a nice little run up there, couldn't get above 613 and then now we've been in this miserable trading range for really three months and kind of trending lower, which is the only thing that I'm concerned about. There's also some technical resistance there, 100 day to day moving average. What's kind of what affects money flow from the speculators?

It's right there around six, ten, 613. So that's big resistance. The October high at 637, that's going to be the high watermark that we're going to be looking ahead as we look into what's going to happen in the spring, the that's you know, we know what that is. So unless we get about 630, 640, that may be a sideways the lower market.

Paul Yeager:

So are we the frog in the water right now and doesn't know that the temperature is rising and we maybe missed our chance at the first of the year to sell?

Chris Robinson:

Well, that was the most that we saw was 5% of guarantee. Brazil same thing. We had a bump up a new crop. Soybeans got up to about $14 for about a week and then we slammed lower. I think that at this time of the year, you look for opportunities like that. You don't want to get too oversold because we don't know what the weather's going to be like.

So as tempting as it may be to sell something, I think it's more important to to set hedges. And the best way to do that is with put because keep the upside open. Nobody knows what's going to happen with the weather this year.

Paul Yeager:

Well, one thing we know is that Brazil might have a pretty good crop. And Phil in Ontario has a question that he wants to put into our discussion here. With acreage expanding in Brazil this year and surely in the years to come, Chris, are grain prices poised to slump into the future or will demand grow to consume that supply? Or will seasonality in relation to futures prices be more distinctive during the calendar year? And you could talk to either corn or beans or both here.

Chris Robinson: I think new crop corn and new crop beans. There's a reason that we're sitting at near $6 new crop corn and near $14 new crop beans, especially in relevant. When you look at what other commodities have done, seeing the big pullback in cotton, you seen the big pullback in crude oil, you've seen the big pullback in things like copper.

So there's been money coming out. All that money that was long commodities because they were worried about inflation. Now they're kind of worried about they're kind of whispering the word deflation, right? Nothing really out there. Yeah, but that's probably your biggest concern. But you've got new crop corn and new beans at historically great prices for this time of the year.

We're heading into the end of the month, we're going to get the insurance price. That's key. That will set the insurance price. And we're in really good shape historically. And how is that going to last? There's two more weeks to go. Most likely, you know, unless something drastic happens. But there's a reason that new crop beans are at $14 and you look out corn is at six bucks.

To me, that's a gift. And you talked about and so to answer the gentleman's question, I'd say that the demand is going to really come down to how big of a crop, especially for soybeans they know. We're looking at a record crop supposedly in Brazil, 5.6 billion bushels might get bigger. That's compensating for what we've lost in Argentina.

Right. As we've been bombarded with Argentina, Argentinian lost.

Paul Yeager:


Chris Robinson:

And I think that the number one thing is going to be it's like we're playing a game of chicken with China because it's China's waiting to buy their beans. So they're going to buy their beans from South America. They're going to buy their beans from us. That's the key. And so if you could have an inside track to Mr. Xi Jinping. I think he's he holds the cards there.

Paul Yeager:

Well, not chicken but beef. Let's talk about cattle. That is a market that we're getting ready for cattle on feed next week. But we also have consumer inflation data that says doesn't matter what the price is, we're still buying.

Chris Robinson:

It's been impressive for six months. We've all been told the recession coming. All these, you know, experts are saying that they'll just wait. It's just a matter of time and the markets shrugging it off. So the market's gotten bad news and shrugged it off. The the continue to see good demand for boxed beef the demand in the cash market.

So we're at eight year highs. In fact cattle live cattle were almost near eight year highs in the feeder cattle. So the market's holding up incredibly well. And you've got old crop corn, you know, flirting with its for a while here, you know 675 680. That's that's to me a sign of strength the demands there and it's flying in the face of all the experts who are saying, look out for the recession.

Paul Yeager:

Okay. So are you not selling then at these prices? I mean, you just get done saying we've had these incredible good prices in some of the grains. Am I holding some of my live cattle or my feeder options right now?

Chris Robinson:

Oh, I would say that this has been you know, people always argue about, do you want to use futures to hedge or do you want to use options to hedge? Pull up a chart of fat cattle for the last year. It's just gone up into the up into the right. Up into the right. So it's been a classic like this is why you want to use puts because a put option is at the floor market rallies.

You participate in the rally. Yeah, you've lost the value, you're put, but you could have done that multiple times. Anybody that use futures, you've kept a tremendous rally. I mean, you know, we rally 20 bucks a year and right now we're sitting up here, you know, I'm not going to sit here and say we can't go out. We're very, very close to going back and trying to take a look at those 2014 highs.

Everybody's looking at that and how are we going to get it? I would say I would hope so. But the simplest way to do it is to ratchet up your floor on your puts. You get to decide how much money you as you spend on your puts. At some point, we're going to have some correction and nobody knows when that's going to happen.

But that's the nice thing about a put it's like those guys that go mountain climbing, they've got the crampons in there, they slip and fall. You know, they don't drop a thousand feet, they drop 50 feet and they can start back again.

We fell pretty hard in hogs since the start of the year. Are we done falling there?

It feels like, you know, we went from contract highs to one year lows and that was really fueled by a lot of money flow. There was a huge amount of money that was bet long. We can see that the the traders at the end of the year, we wanted a Christmas look like, oh boy, it's going to be a great year.

And, you know, we just we dropped 16 bucks and it was this was relentless, relentless, relentless. It feels like that all the longs are out now. Finally, we'll see. I think that 80% level in April is going to be big. It's a big round number, tracks a lot of attention. But yeah, we've had a little bit of a bounce.

We'll see. It would be interesting to see if the rest of the protein complex can pull up the lean hogs.

Paul Yeager:

Thanks, Chris. Appreciate your time.

Chris Robinson:

Thank you.

Paul Yeager:

Chris Robinson, everybody. We're going to put a pause in this analysis, continue our discussion about these markets and our marketplace segment. Find that on our website of market to market dot org. And we also have more homework for you this time. Several stories we think you may find interesting in our Flipboard magazine of Market to Market Reading Material.

Next week, we look at high school students whose class work returns dividends to the community. Thank you so very much for watching. Have a great week.


Market to Market is a production of Iowa PBS, which is solely responsible for its content.


What's next doesn't happen by chance. It happens when researchers and farmers work together to solve tomorrow's agronomic challenges. We're committed to creating what's next because a pioneer, our name is our mission.


Sukup manufacturing. Celebrating 60 years of innovation as a family owned and operated manufacturer of grain storage, drying and handling equipment out of Sheffield, Iowa. Learn more at


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

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.