Market to Market - July 28, 2023

Market to Market | Episode
Jul 28, 2023 | 27 min

On this edition of Market to Market...

Unbearably hot temperatures continue and farmers may be paying the price. Monetizing the soil through carbon sequestration. Plus, the hay market scrambles to stabilize as key growing areas struggle. And, market analysis with Matthew Bennett.


Coming up on Market to Market - Unbearably hot temperatures continue and farmers may be paying the price. Monetizing the soil through carbon sequestration. Plus, the hay market scrambles to stabilize as key growing areas struggle. And market analysis with Matthew Bennett, next.

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 at 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.


This is the Friday, July 28 edition of Market to Market, the Weekly Journal of Rural America.

Hello. I’m Brooke Kohlsdorf. Paul Yeager is away this week.

With inflation rising at an annual rate of three percent, the Fed pumped the economic brakes, again, to avoid a recession.

For the 11th time in 17 months, the Fed raised the prime lending rate. At 5.3 percent - the highest in nearly two decades - there is no word if this is the last one for a while.

The increase comes as the Personal Consumption Expenditures Index - the Fed’s preferred measure of inflation - rose 2-tenths of one percent in June hitting an annual rate of 3 percent.

When food and energy are removed from the equation, the “core” rate increased the same amount for the month but hit 4.1 percent when compared to a year ago.

The Fed is pressing for a 2 percent annual increase to inflation.

A new study out of the Imperial College in London places the cause of the current heat dome across this country directly on climate change. The authors say rising temperatures match a simultaneous increase in the release of greenhouse gasses and say this could be the new normal.

Over the next 5-7 days, much of the West and the southern Plains will be dry while the Midwest will continue to suffer in the heat.

David Miller has more.

Official temperatures from around the globe are showing that July is set to be the hottest month on record for the entire planet.

As much of Europe and nearly half of the United states are enduring unprecedented high temperatures the White House stepped forward, this week, with a heat hazard alert.

President Joe Biden: “I don't think anybody can deny the impact of climate change anymore. There used to be a lot of time when I first got here, a lot of people said, oh, it's not a problem. Well, I don't know anybody. I shouldn't say that. I don't know anybody who honestly believes climate change is not a serious problem.

The President directed the Department of Labor to increase inspections of potentially dangerous workplaces like farms and construction sites.

In Florida, just off the tip of the peninsula, the water temperature registered at 100 degrees midweek.

Concern is already mounting over the effect of the high temperatures on row crop yields as this week’s heatwave is piled on to previous bouts of high temperatures.

According to the U.S. Drought Monitor, drier than normal conditions exist over the “I” states, Minnesota and Wisconsin. Drought regions also expanded in western states like Montana.

For Market to Market, I’m David Miller.

Back in the 1970s, the EPA worked to stop acid rain caused by the exhaust from coal-fired power plants in the Northeast. A stock exchange of sorts was created that allowed polluters to buy credits from companies with a lower smokestack output. Eventually, federal rules required enough equipment replacements that the problem was virtually eliminated.

With greenhouse gasses considered to be more of a problem every year, there have been attempts to create a carbon market along the same lines. An exchange created in the early part of this century fell on hard times and failed. However, there has been a revival of sorts to get something started.

Peter Tubbs has our report.

The U.S. Department of Agriculture announced that it will use $300 million from the Inflation Reduction Act to monitor agricultural emissions, including the creation of a research network to monitor carbon levels in soil.

Researchers at Purdue University have been studying soil samples that go back over 40 years to understand the impacts of different cover crops and tillage techniques.

Shalamar Armstrong, associate professor of agronomy, Purdue University: “Farmers grow crops. And so, when those farmers grow those crops, those crops are farming carbon. They are storing carbon through photosynthesis and then ultimately the decay of the residue into the soil.”

Brad Wetli, farmer: “I think right now we’re real in the infancy of knowing how much carbon we’re actually storing in the ground. So, for the contracts of how much carbon you store and getting paid on I think that can sway me one way or the other, like what contracts to go for if I know how much carbon I’m actually putting in the ground.”

Establishing techniques to monitor the captured carbon will be required to properly price contracts to reimburse farmers for their storage work.

Shalamar Armstrong, associate professor of agronomy, Purdue University: “The market has to understand farmer risk when adopting practices to store carbon. I think that the that happens and they find a middle ground, you’re going to see greater adoption.”

While cover crops improve soil performance and durability over time, the costs of planting covers can be hard to justify in the short term. Carbon storage contracts may change the math.

Brad Wetli, farmer: “Doing cover crops on our ground, we’ve noticed the structure getting better, our soils aren’t washing down into the streams like they have probably in the past several years. So as far as it benefitting for me, it’s the fertilizer I put down doesn’t get washed down the streams, so, basically that money I put out in the field will stay basically in my pocket.”

For Market to Market, I’m Peter Tubbs

The market for hay to feed hungry animals is becoming a tight one. Animal producers usually have a range of prices to pick from that pencil out. As farmers and ranchers plan for the rest of the season they are facing choices on a list full of mostly high prices.

 Colleen Bradford Krantz has more in our Cover Story.

When southeast Nebraska rancher Paul Johnson hauls water in the July heat to cattle whose pond-supplied tanks have run dry, he’s often thinking about winter. He’s wondering if he’ll have enough hay after a drought-plagued year to feed his cow-calf pairs through the cold months when grazing is no longer an option.

Paul Johnson, HJ Bar Ranch - Palmyra, Nebraska: “This year I mean, we are probably 30 to 40 percent of what we normally get or whatever so I mean… usually I put up probably a couple hundred bales of good grass hay and I think, so far, I’ve put up maybe 30 or 40 and I am a little over halfway done.”

Johnson and other livestock producers in parts of Nebraska and southern Plains states have endured moderate to exceptional drought for much of the spring and summer. Early July rains may have settled the dust in Johnson’s area of Nebraska, but they didn’t ease concerns about hay prices and supply as the year’s early cuttings came up short.

The brome grass Johnson counts on for the majority of his hay grew poorly during the dry spring.

Paul Johnson, HJ Bar Ranch - Palmyra, Nebraska: “When I first started baling my brome, I said, ‘It’s going to be short.’ And I was talking to a lot of neighbors and they were all concerned what they were going to do with hay or whatever. I said, ‘Well I’m going to start making some calls because I’m going to get it bought now versus later.’… I reached out to some people in the areas that have had a little bit better rain and more hay supply and purchased four semi loads from out of the area and had them hauled in here just so I have a reserve and feel comfortable.”

Johnson thought the $175 he paid per ton for the Missouri grass hay was fair considering many in his local area were selling similar hay for $260 a ton. The 2022 hay crop hit record prices nationally, averaging $235 a ton, which is 40 percent higher than the 10-year average. Already this summer, Texas, another state battling drought, has seen prices occasionally reach $400 for high-quality alfalfa.

Paul Johnson, HJ Bar Ranch - Palmyra, Nebraska: “There’s people looking for hay. I mean I think our only saving grace is that the cow herd is shrinking. So, I mean…I think overall, demand may be down somewhat because we have less cows to feed now than in the past… but, still, if everyone is 50 percent or less of their normal cutting, this hay is going to be tight.”

The U.S. had 95.9 million head of cattle as of July 1, down three percent from a year earlier, and a continuation of an ongoing downward trend that began in 2019. Connor Biehler, a beef systems educator with Nebraska Extension, says decent cattle prices over the summer have at least helped ease some of the financial hit from buying more expensive hay or having fewer bales to sell.

Connor Biehler, beef systems extension educator –Eastern Nebraska Research Extension and Education Center: “So last summer, we started to see…quite a bit of people getting rid of some of their cows, selling them off. If you look back at the 2012 drought and how that affected the cattle markets, in 2014 we saw a drastic increase in price of cows and calves as well. We are at a pretty high end of our calves… so I think … a lot of people are trying to avoid getting rid of their cows so that way they don’t have to rebuild their cow herd once the conditions become good again…. A lot of guys who were offsetting their hay and maybe feeding a little bit of grain were maybe balking at doing that this year just because the price of grain is so high. If you take it to town, it’s got a little better value for you than putting it through your cows.”

Hay producer Josh Weems, from Adel, Iowa, has regular customers outside the state – primarily in Nebraska, South Dakota and Wisconsin -- and believes he will be able to continue to supply them this year, despite some struggles.

Josh Weems, producer - Adel, Iowa: “The alfalfa holds its own in drier weather, sometimes the later cuttings kind of fall off a bit, but the grass has really been a struggle to produce for people that want or need grass hay, it’s been a lot less and had to charge a little more because of it.”

Because hay is bulky and expensive to ship, Weems says it tends to be marketed locally but the severe drought in adjacent states has also influenced prices close to home.

Josh Weems, producer - Adel, Iowa: “I look at the Facebook Marketplace and I have never seen people asking out-of-the-field prices as high as they are this year. I’ve seen a lot of guys just straight up on bales like that that they just made being $185 or $200 a bale so take that times one and a quarter and there’s your price per ton…I haven’t seen it that high before…And the small square bales? Holy cow. People think them things are worth gold, evidently.”

Increased input costs have also helped drive up hay prices. Weems says it has cost him a lot more in the last few years to produce his annual goal of 2,500 tons of hay.

He’s also seen a trend where owners of large cattle feedlots rely on others for their hay, versus the smaller feedlots of the past that typically grew their own.

Josh Weems, producer - Adel, Iowa: “Now, you can have a 10,000-head dairy that doesn’t farm a lick so that hay has to come from somewhere. And I don’t know that as an industry we are keeping up with that change.”

Having competed a second cutting of hay, Weems, who also raises cattle, won’t breathe a sigh of relief until he finishes his third and, possibly, fourth cuttings.

Josh Weems, producer - Adel, Iowa: “I think the entire Midwest is on a knife’s edge as far as water. I mean I look at the drought map. Everybody can see the drought map. Everybody is like, right there… I had a guy tell me once: there’s always hay for sale. You just might not be able to afford it.”

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

Next, the Market to Market report.

It was a volatile week in the commodity markets as a heat dome covered the U.S. and Russia increased its attacks on port cities along the Black Sea. For the week, the nearby wheat contract moved 7 cents higher, while September corn fell 6 cents. After being up midweek, the soybean complex had a bearish key reversal. The September soybean contract ended up 4 cents higher and September meal added $7.30 per ton. December cotton dropped 22 cents per hundredweight. Over in the dairy parlor, September Class Three milk futures gained 2 cents. The livestock market was mixed. October cattle cut $2.30. September feeders lost 30 cents. And the October lean hog contract put on 78 cents. In the currency markets, the US dollar index rose 56 ticks. September crude oil gained $3.28 per barrel. COMEX gold lost $6.20 per ounce. And the Goldman Sachs Commodity Index climbed nearly 18 points to settle at 588.90.

Kohlsdorf: Joining us now is Market Analyst Matthew Bennett. Hi, Matthew.

Bennett: How are you doing?

Kohlsdorf: Doing well, good to have you on the show. So, there was some economic news this week. The Fed raising interest, the key interest rate, which was pretty expected for them to do. It's going to cost farmers a lot more, farmers who borrow money, to put a crop into harvest. How bad is that for them?

Bennett: You know, a lot of the folks that have money borrowed on land is at very cheap rates that was locked in the last couple, three years, maybe three and four percent. But, the problem is that we spend so much to put a crop out these days, it's very well documented that the 2023 crop was for a lot of folks the most expensive crop they ever put in the ground. So, you're talking anywhere from $1000, maybe $1100 per acre. And so, this next year folks going for operating notes are going to be borrowing probably at 8% and 9% I would imagine. And the unfortunate reality is a couple of years ago they were borrowing at 4.5%. So, it's definitely going to be an additional expense they're going to have to be very mindful of and moving forward it's just something that they're going to have to learn to deal with.

Kohlsdorf: Yeah, that little bit is a lot for farmers. So, the other big story, of course, that we have been watching unfold for a while is just what's happening in the Black Sea. There were more attacked on Odesa, which is a key port city. So, is that what has been impacting the wheat market the most?

Bennett: I think it has been a huge impact on both the wheat market and the corn market more so than the soybean market. So, of course there's a lot of wheat coming out of that part of the world. We know the wheat is there. But the problem is, it definitely disrupts the flow of that wheat to other parts of the world. And so, we started out the week like a house of fire, corn was strong, wheat was strong, but as the week went on a lot of this just kind of subsided and it seemed like the trade was less concerned with it. As the week went on I think everyone knows that supplies there, it will find a home at some point, it's just a matter of it being disrupted for the time being.

Kohlsdorf: Is wheat overpriced? And do prices need to come down in order for our exports to go up?

Bennett: It sure appears that way. We're not competitive with Russian wheat. Now, who wants to deal with Russia right now? That's a big question. Not everyone just wants to rush into that situation. There's a lot of dynamics at play here. By all means we are expensive for the time being. I've got to think wheat probably the path of least resistance is lower. Now, with that being said, if we come in on Sunday night and there's bombs flying again it's pretty tough to outguess what's going to happen in that situation. The trade gets understandably a little bit nervous when that occurs. But, for right now I certainly would feel that way that we're a little bit overpriced.

Kohlsdorf: Okay, so corn, that drought monitor that we saw earlier in the show, it's bad in a lot of the corn growing states and it hasn't let up, the weather hasn't let up this past week. So, is that the thing most impacting corn right now?

Bennett: The thing is, again, at the start of the week, so for instance on Monday, December corn traded 32 cents higher, November beans traded 22 cents higher, so I've got to think it wasn't drought because the corn is farther along in the production cycle than what soybeans are. A lot of the corn in the "I" states pollinated in pretty decent fashion. I know it's not just about the "I" states. I just know a lot of the producers that we've talked to said pollination actually went okay. We had a pretty big weather pattern shift at the start of July with a lot of rain. We went into that dry. The thing is, is that a lot of times when you get that weather change around the 4th of July it stays wet, or dry, whatever the change is. And this year has been very strange in that we were super dry, got wet, got dry again. And so, you look at the drought monitor and you've got to ask yourself, what can corn do here from a yield perspective whenever you're this dry across the Corn Belt? And so, of course we talk to a lot of growers, I've been out in my own fields, I feel like the timing of the rain was really good. The genetics are really good. And I think that you could still have some good corn. With that being said, I still think the USDA is too high as far as their yield is concerned. But the bottom line is that's not the only thing impacting the corn market, which is what your question was, it's still some of this Black Sea region, or you'd have started out the week stronger on soybeans than what you did on corn if we were just looking at weather.

Kohlsdorf: All right, let's go to social media for our next question about corn. So, this is, the gentleman is asking, are corn exports really that bad that drought in a widespread area isn't really affecting the markets? And I personally don't believe there's as much old corn crop in farmers' hands that the government is trying to tell us.

Bennett: Interesting question. So, whenever you looked at the quarterly stocks report in June we had quite a bit less corn, talk 150 million bushels or so than what the trade was really expecting. And so, you've got to ask yourself, usage hasn't been what we all would hope it was, exports have been very poor, we know that compared to last year. And so, what was going on there is that most likely last year's crop wasn't as big as what the USDA had indicated. And so, the question is a fair question. But at the same time, I think that there's still some corn out there. You're seeing some originators that have chased corn around a little bit. They're talking ethanol margins have been fairly good. We've seen really good ethanol grind over the last three or four weeks. So, there is some corn still out there and there's still people willing to pay for it. But we are running out of time. You've already got harvest in parts of the country, down in Texas, it's going to creep to the north. In earnest it's not going to really start for probably another three to four weeks, we know that, but it's here, it's getting very close, and so we're running out of time.

Kohlsdorf: Okay, with soybeans we've seen some up and down this week. Is it mostly because of Ukraine? Because we still have August for soy to kind of do some of its key development or some development, right?

Bennett: Right, I think there's some following going on. Whenever corn is up 32 cents, like I said, to start the week, and beans are up 22 cents, I've got to think that beans are just kind of following along with corn. Whenever it gets right down to it we know it has been hot, super hot, these nights have been brutal. And so obviously that kind of played into corn, but as far as soybeans go you can stress the heck out of a soybean crop and if you get rain at the right time, and I'm talking August, we know beans are an August crop. And so, if you do get a good weather pattern in August, I still think that you could have a 51, 52 national crop as far as beans are concerned. I go back to 2012 and in 2012 we were just super dry, everyone was super dry. My bean crop looked dead. It just looked dead on arrival. We had the hurricane come up the Gulf the second week of August and all of a sudden we had 49, 50 bushel beans and we didn't have very many pods, we had gigantic beans because that bean plant is able to adapt and these genetics are even better now than what they were then. So, I personally think that this bean crop is not toast by any means. We've still got some time.

Kohlsdorf: We'll have to see what happens next week and the week after that, which could change. Okay, so how much is Brazil's competition in the soybean market affecting prices here?

Bennett: Yeah, it's definitely affecting things. So, obviously you look at our export book. Has it been quite what we wanted? We saw good sales this week, those surprise sales in the mornings. It's been nice to see next week's exports are going to be good on Thursday. But, looking at new crop, the problem is right there. We're running drastically behind where we are usually at this time of year. And so why would that be? A couple of reasons. In my opinion, I think China sees that world soybean supplies are very, very strong. It looks like we're going to pick up around 20% year on year from world supplies from this marketing year to next marketing year. A lot of that is due to this big Brazilian crop and I think the Chinese are taking a look at that saying, what's the rush on chasing these soybeans in the midst of a U.S. drought situation, right? And so, I think that they're going to step in and buy beans. How much are they going to buy off of us is a big question. But, Brazil has a large supply available, ready and I do think that we just have to get more competitive. We've been fairly competitive but not competitive enough as far as the new crop book goes.

Kohlsdorf: Okay, so with cattle we're mixed this week. Is it still a bull market?

Bennett: Overall. Here's the thing, I think we're just kind of a taking a little bit of a breather. It was a very boring blasé market. We've run up to some new highs. But whenever I see late in the week the corn market fall off, if you continue to see the corn market fall off I think the feeders are going to stay very strong. The thing about this cattle market is that placements have been adequate to say the least. Why are placements good when the cattle herd is so small? It's a well-documented thing. And a lot of these folks are selling heifers instead of retaining them, even as their pastures are getting healthy, if you will. In the West we've seen a lot of rainfall that we didn't get a year ago. But if I'm a rancher and I'm able to turn a heifer into $1,500 or $2,000 cash, these folks are getting right. They're getting their balance sheets in good shape and I do believe at some point when they start retaining these heifers that's when your cattle on feed numbers are going to plummet and that could be the next leg higher. But for the time being I'm an overall cattle bull. It's just I don't really think we're going to race higher right now. I'm looking Q4 to next year Q1.

Kohlsdorf: Okay, what about, we have about 45 seconds, what about hogs? Is there anything that could disrupt the market?

Bennett: Oh, of course. You know, we saw decent exports. The hogs, protein has been good. Hogs have kind of followed along with cattle. I didn't think we'd get front months back to $100 but we did. And so, hogs are definitely hard to figure out. But for the most part demand is strong. I think you're going to continue to see decent hog prices. I'm not a bull here, but I certainly don't think that we're going to fall out of bed either.

Kohlsdorf: Okay. We covered a lot of ground, sounds good, and we'll cover some more in Market Plus, some things that we didn't get to. Matthew, thank you, as always.

Bennett: Absolutely.

Kohlsdorf: All right, well we are going to pause this analysis and continue our discussion about these markets in Market Plus, as I said, and you can find both Analysis and Plus on our website of These resources are free. The weather has been brutal with temperatures and precipitation extremes. So, send us your pictures via our Instagram account. You can join our feed and keep an eye on what is happening in fields two states away. Follow us @MarketToMarketShow. Next week, we will look at regional land values. Thanks so much for watching and 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 at 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.