Market to Market - August 4, 2023

Market to Market | Episode
Aug 4, 2023 | 27 min

On this edition of Market to Market - Weather presses crops as extremes of heat and precip grip the nation. Plus, a look who’s buying land and its value in the Grain Belt. And market analysis with Naomi Blohm.


Coming up on Market to Market - Weather presses crops as extremes of heat and precip grip the nation. Plus, a look who’s buying land and its value in the Grain Belt. And market analysis with Naomi Blohm, 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, August 4 edition of Market to Market, the Weekly Journal of Rural America.

Hello. I’m Paul Yeager.

What has almost become a message on repeat - more jobs were created in July and the unemployment rate stayed historically low - even with the Fed still raising the prime lending rate.

U.S. employers added 187,000 jobs last month - about the same pace as June’s report. Previous months were revised downward indicating the weakest additions in 2-and-a-half years.

The unemployment rate dipped to 3.5 percent - still close to the lowest mark in half a century. As more people entered the workforce - this kept a lid on companies raising wages to retain staff.

The Mid-America Business Conditions Index declined on the month and below the growth neutral threshold. The reading of 46.1 is the smallest since the pandemic began and leaves open the door that a recession this year is still “on the table.” 

The stifling heat dome over Phoenix, Arizona finally broke this week - ending a streak of 31 days of 110-degree heat. However, the cooldown is expected to be short-lived.

The high temps from the West to Florida have impacted most outdoor activities and work sites - including a drop in productivity for Amazon deliveries, utility workers and refineries.

David Miller has our extreme weather wrap for the week.

The U.S. continues to be gripped by above normal temperatures and pounded by precipitation that comes in torrents.

A brief but heavy downpour early in the week helped firefighters battling a massive blaze in California and Nevada. Meteorologists warned of the potential for sudden and erratic wind shifts that could endanger crews in the near future.

Experts say the places where streets and buildings are plentiful create urban heat islands. This week, those living in the Bronx found themselves continuing to look for ways to beat the heat and stay cool.

Warmer than normal temperatures dominated the Midwest this week as temps hit 8 degrees above normal. Portions of Wisconsin, Michigan and eastern Minnesota recorded rain amounts that were up to 300 percent above normal. Corn in the good to excellent category combined for an increase of 4 points.  Soybeans in the 18 states responsible for the majority of the crop saw a six-point increase in the same column.

Areas of the Pacific Northwest recorded temperatures six degrees below normal with monsoon rains while Montana had an expansion of the drought hitting the area.

Drought continues to have a hold on the nation’s midsection. In the Midwest, some abnormally dry areas improved due to recent rains while areas of serious drought expanded just a little.

For Market to Market, I’m David Miller

Double digit growth in land values have been a boon to sellers, but harder to handle for some buyers.

As Grain Belt prices increase, the question becomes how much longer can a rally last and who is behind these sales.

Politicians are floating limits on foreign ownership but as Paul Schadegg of Farmers National Company says, the age of the buyer is the bigger story as the industry also looks to balance growth and be acceptable to more people involved in working the land.

Here are a few excerpts from the next edition of the MtoM Podcast that makes up this week’s Cover Story.

Paul Schadegg: What we've seen, you know, if I look over longer term, and that's kind of how I analyze things of that 5-10 year timeframe, we've seen some, some really nice gains in land value, especially over the last five. But even if we stretch that out to 10, they weren't quite as quick in the early part of those that tenure, timespan and then the past three years have been just astronomical with, with what land values have done. Now, what we have seen is we saw things kind of slow down a little bit in the fourth quarter of last year. And then as we came into 2023, you know, it was kind of let's see what, how this is going to pan out. And we've seen a further what I call a de-escalation of values. And not reading too much into that we're not talking about a drop in value, we're just not seeing increases as strong as we did, you know, in 2021, and 2020, and 21, were just through the roof, and double digit increases across many states. And now we're just down to where we're seeing some, maybe some single digit increases. We've even seen some slight decreases when we talk about lower classes away and higher, higher classes, Alam still great demand for that. And they're still playing a premium.

Paul Yeager: Which is better for the industry, double digit increases, or a little slower, one to two to 5%?

Paul Schadegg: I'm, I'm a believer in slow and steady. And if we look out over that time period of go clear back into the 40s, and see how land has appreciated over time, I really like that slow incremental growth. And so those sharp increases are a little bit spooky, because they tend to breed sharp decreases. But the way the ag economy is today, we don't foresee that happening. It's in strong hands. It's not highly leveraged. You know, the ag economy in general is pretty healthy. But, but that always is a little spooky to see something go up because I'm a believer in the pendulum theory where, you know, it's hard, it's swings, one way it could swing the other.

Paul Yeager: Well, let's go back to your beginnings, the 80s. You know, you saw how quickly things could can move and change. Are we in a state of the 80s again, here right now.

Paul Schadegg: And based on the way, land is not highly leveraged, and that balance sheets look good? We're certainly not there. Now there, there are a lot of environmental and geopolitical events that could happen that could drive us to that point. But, but in today's market, now we're, we're, like I said, the poor land is held in very strong hands. Unlike the way it was in the 80s, 70s and 80s. So yeah, we feel pretty good about and very bullish about agriculture in general.

Paul Yeager: Who is buying the land? Do you keep track of that?

Paul Schadegg: You know, we, we keep close tabs on that. And it's, it's an interesting dynamic, you know, we see, you hear you read the stories about, you know, celebrity buyers and foreign buyers and things like that. But that's what hits the news, the real story lies in that there are the land has been purchased, the actual buyer of the land, over 70% of the time is an operator farmer local usually, and they're adding to their, to their farm operation. Now, in saying that, there's a reason that these land values have moved up and there's another class and the investor of type buyers funds and, and just individual investors that are very interested in buying land. And so, they are definitely holding a floor and they're pushing some of those values up. But when they reach a certain point for their return on investment, they step away no motion, and then that's when the operator will make that final bid and usually ends up with the ground and there's a lot of motivating factors, you know, there's guys that have never seen a farm next to them come up for sale and so they want to take advantage. And you know, there's some pressures with adding making your operation of scale that will work in today's economy. And so that's the motivation on their side.

Paul Yeager: Is there an age of a producer? Because what I hear you saying sounds like an old producer 70 Plus ownership, is that accurate?

Paul Schadegg: As far as buyers go, we do see a lot of buyers in that. Oh, definitely. 50 to 70 range. There's definitely a lot of that we do you see a lot of young buyers that are using vehicles, Lone vehicles that are out there and options to purchase as if they're able, but I would say the majority are in that for 50 to 70 range.

Paul Yeager: The Federal Reserve says they'd like to see inflation on a 2% clip that's their goal. Is that a good land value increase goal that you would like a 2% gain each year?

Paul Schadegg: When I look out across that long-term chart, I, I feel good about a, a smaller gain than what we've seen in the last few years. That's where I say, you know, those sharp gains are a little bit spooky because you're worried what's on the other side. If I'm speaking for other landowners, 2% might be a little bit low, they would probably rather see something closer to five. If I'm if I look at it from a landlord perspective. Perspective, I would say that I would be rather I would rather be a little higher, but I also understand we have some struggles going on with the economy in general. And we've got to we've got to figure out how to get a handle on that.

The full discussion will be part of the MtoM release on Tuesday.

Next, the Market to Market report.

Drone strikes in the Black Sea along with forecasted rains were the headline market movers. For the week, the nearby wheat contract plummeted 71 cents or ten percent, while September corn dropped by 37 cents. Soymeal did its part to support the soybean complex, but not enough to keep off big losses. The September contract closed down 46 cents and September meal lost $11 per ton. December cotton expanded three cents per hundredweight. Over in the dairy parlor, September Class Three milk futures shed 21 cents. The livestock market was mixed as October cattle added $3.30. September feeders gained $4.47. And the October lean hog contract cut $1.95. In the currency markets, the US dollar index rose 44 ticks. September crude oil improved $2.24 per barrel. COMEX gold lost $21.40 per ounce, and the Goldman Sachs Commodity Index moved sideways to settle at 593.35.

Yeager: Joining us now is Market Analyst Naomi Blohm. Hello.

Blohm: Hey, Paul.

Yeager: You're in all black. Is that by design? Is that a statement on the week?

Blohm: Well, maybe so. I mean, we just didn't have for the grain markets enough news to keep prices just at those higher values and the outlook kind of for the next couple of weeks, especially with this better weather moving in, there's not a lot of friendly news to talk about in the short-term.

Yeager: Wheat had a lot of headlines in the Black Sea, drone strikes, port closures. Then we see, yeah we're going to get this done but we're going to go this way instead. Is that still the biggest mover on this complex?

Blohm: For right now it is. All of the situations happening with the Black Sea are going to be front and foremost to the market right now. What was interesting is that we had two big headlines in the Black Sea with various war efforts that were happening there and that was enough to get the market to trade higher both times on the overnight trade. But then throughout the day the markets started to ignore it. Part of the reason that the markets are ignoring it is because the rest of the world is really trying to send a message to Putin that heck or high water we are going to make sure that this grain is moved out of Ukraine. So, we've seen Croatia step up, we've seen other countries saying that they're going to do their part to help make sure that that grain is moved. As far as any bullish news, the only little bit that came out this week actually was from India. India said that they're going to likely be stopping an import tax because they are in a situation where they're usually self-sufficient in wheat but they might be needing to import. Now, it was interesting for them to also say they might be importing wheat from Russia. So, a lot of moving parts out there but wheat just can't get some friendly news right now, just to make the market rally.

Yeager: India has proven that they will buy from anybody. So, how does the market respond to that news then?

Blohm: Well, it's mixed news. So, in a sense the market is frustrated because Putin still has a customer. But at the same sense, the fact that India is going to be needing to import wheat is actually bullish because that means that their global supply, their supply is lower. And so that would be supportive to the marketplace in general from that capacity. But, again, with the wheat market right now the funds are still relentless sellers and we are sitting on price support levels for the Chicago wheat, Kansas wheat, Minneapolis wheat. If we can't get some friendly news out of the USDA next week, prices just might continue to slide a little lower.

Yeager: Did you just have a hot key on your keyboard this week in all your writings for the word support, because corn was in the same boat?

Blohm: Yes.

Yeager: You were dancing, soybeans dancing on support level. Corn and beans had a pull lower and affected wheat. But what is corn's story that stands out to you?

Blohm: Right now the corn market we're sitting on $5 support, below there is $4.90 support, and corn is not getting a lot of fresh news from the standpoint of not getting any big export news coming for the corn market right now. And we have the Midwest really going to be seeing some good rain potential over the weekend and then we have cooler temperatures coming for two weeks. Fargo, Des Moines, Springfield, all of those states, all of those cities going to be seeing the ability for low 80-degree temperatures and that's great for filling those kernels. So, I'm a little concerned with the corn market. With the USDA report next week, the USDA is going to be probably slow to drag their feet on any big further yield reductions. They don't have boots in the ground measuring yield for this report so they're doing farmer survey, they're doing a little bit of satellite imagery and then just the statistical surveys that they traditionally do also. But, if the USDA, let's say that they bring yield down even just to 175, which is lower from 177.5, we still have a 2-billion-bushel carryout. And without any big traction on exports, I'm just a little concerned that prices are going to continue to slide lower and also seasonally it's actually normal for the corn prices to slide lower throughout the month of August until that last week of August when we see an early harvest low come in. And the crop tour doesn't start until the third week of August either. So, we're running out of news.

Yeager: A friend of ours, Matt Bennett, was telling me he might have early harvest around him. So, that late August crop tour, they might be competing with combines. Are you hearing the same thing?

Blohm: Actually, Matt was the first one to let me know that information that it could be happening. So, it would be interesting to see what the Pro Farmer Tour finds from that, but more importantly what the USDA says next week because that is what the trade will follow.

Yeager: Well, and I think StoneX, 177 was their drop. So, that's not down too much. But if you drop two more bushels, like you said, to 175, that changes the math. What does it do in soybeans then? StoneX there has said the yield down to 50.5. Good growing weather, good rain, 80 degrees. But if you look at the drought map there's still a lot of drought out there.

Blohm: Yeah, there still is a lot of drought out there and the trade though I think is going to be focused on the rain that is coming this weekend and the low temperatures for the next two weeks because that is exactly what the soybean plan is going to want. And so, while we've had some uptick in export demand, all it's doing is keeping us on track for where we're supposed to be. And so, with a November contract we've got support at $13.25, support below there is at $13 even, but if we can't get a friendly headline next week I think you're going to see a technical washout down to $12.50 and that has me quite concerned. That's not any place where we haven't already been earlier in the summer. And so, the USDA report on Friday next week is going to be very important. What will the USDA do? Some of the industry were saying, well, it wouldn't surprise me if they raised yield at this point either, especially with the rains that are coming and the cooler temperatures. So, just be ready for anything really with this marketplace.

Yeager: I know you had a lot of windshield time to get here. But if you believe the social media traffic there's tip back, there's heavy two to three inches of -- at what point does that factor in because we did have a question, I guess I better technically ask Paul's question that came in via one of the social networks. He says, how much influence will August rain have on new crop prices?

Blohm: Well, I think it will -- I don't think the market is going to just totally fall apart lower, but it's going to have a hard time rallying because the trader mentality will be oh, well that rain and the cooler temperatures is going to help with kernel fill and for the soybeans of course help with soybean production in general. So, the market needs to rally -- three things have to happen for this market to rally. You have to have something really catastrophic happen in the Black Sea region. You have to have the USDA give us a bullish report next week. And then we would need to see our export demand pick up substantially for corn and soybeans both. So, if those three things can happen, we would have a reason for the market to rally. However, I'm a little doubtful on the last two of those and I'm very mindful that seasonally those corn and bean prices have a tendency to slide lower until the August.

Yeager: Do we still have any exports? I mean, the news of exports has been hard to find lately.

Blohm: Well, it is hard to find and so of course every week there's something happening, people are taking advantage of these lower prices in general. But I'm thinking if I'm an end user from somewhere else around the world I'm not seeing the American farmer really, really get frustrated or upset that it's going to be nothing for a crop. I'm not hearing that headline. So, they're already thinking ahead to next winter and saying okay, well if the American farmer has a decent crop here and if Brazil and Argentina have a decent crop next winter there's not a sense of urgency to just go ahead and book huge amounts. They're waiting for a harvest low. Give it three weeks, if this market price works a little lower then I think you're going to see the exports really step up. But right now there's not just that news to make it happen.

Yeager: You mentioned the news, you mentioned certain talking points get baked into traders. The one was we're going to have this rain arrive in late July and early August, maybe hasn't quite happened to the widespread. If a trader sees a difference between 177 to 175 or they see 50.5 down to 48, do they know enough to say that's not good to change things? Is that enough of a headline market mover?

Blohm: On a USDA report it would have to be a yield number a lot lower than expectations. All of it is already baked into the market, it's priced in. And also we have to see if the USDA changes anything to demand and ultimately ending stocks.

Yeager: Let's go to dairy. On the week we were, let's see, I think we were higher. No, we were lower by 21 cents. Back over 17. Does it stay this way for a while?

Blohm: Well, the dairy complex we had Class III milk futures have a nice rally higher. It had been so oversold and so cheap and finally we saw higher cheese prices and stronger cheese demand and that lit a fire under the Class III milk futures price. We were able to get it back over 18 but we don't have any news to keep it running so prices have set back a little bit lower. For the milk production numbers, now we're at a point where we have production flatlined and we actually have less dairy cows than a year ago at this time. So, we're starting to see a marketplace that has responded with a little bit less production, but we still don't have a very bullish headline there. Our exports are down from a year ago and domestic demand right now is, it's okay. We're going to start to see the demand pick up as we start to get ready for the holiday season, so that's encouraging. But it's all about the cheese right now.

Yeager: What's it all about in live cattle?

Blohm: Well, that marketplace, it's kind of the same story, different week. We still have tight supplies. What I notice with the October contract for live cattle, the December contract and the February contract, they are all still respecting the bearish key reversal that the market had from a couple of weeks ago after that cattle on feed report where we had higher placements coming forward. So, that has been keeping a little bit of pressure on those nearby contracts. We also have seen a pullback in the cutout values and so that has been kind of weighing on things. But the deferred contracts are still a friendly story of course because of lower supply. And with the feeder cattle what I really noticed on that inventory report is that the feeder cattle that are off feedlots are down 1.3 million head from a year ago. That's not anything that gets replaced any time soon and so of course that's why the feeder cattle market has a lot of support nearby and the deferreds as well. But as far as front month live cattle go we're still just keeping an ebb and flow between what is the demand doing, what is the export demand doing and what is cash prices doing?

Yeager: Okay, so then that makes sense on live cattle. But then on the feeder side is the bigger story in a week or a time when support is being tested on grains, that no longer is the headline. You're still seeing the lack of animals as the big driver moving forward?

Blohm: It is one hundred percent the biggest driver going forward.

Yeager: What about in hogs?

Blohm: So, a tale of a couple of different things. So, we have the August contract, which has just been racing higher, up to over $100. And so, that has been substantial. But the October contract, the December contract, they also had a little bit of a rally but of course not as much. So, we're seeing normal for this time of year for the hog prices to have an increase. We are seeing some good demand. The cutout value was the most it had been in 11 months earlier this week. And then saw a little bit of pullback as the week ended. But going forward with the October contract right now it is trading at a discount to cash, which is normal, but normally the discount is around $13 and right now it's about $20. So, it is supportive going forward. And the producers are doing a great job of keeping current. So, I would say with the hogs for the October and December contract, probably start to see it just trade sideways as we start to head into fall.

Yeager: And we are going to head to the end. Naomi, thank you so much.

Blohm: Thank you.

Yeager: Appreciate it. We're going to pause this analysis, continue our discussion about these markets in our Market Plus segment. You can find both analysis, which we just finished up, and Plus on our website of All of these resources, by the way, are free. We've been watching corn harvest in Texas and hay cuttings in the Midwest this week on our Instagram. We love sharing your images on our stories section. Follow our feed @MarketToMarketShow. Next week, we look at how one producer is finding additional revenue on the dairy farm. Thank you so 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 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.