Market to Market - May 6, 2022

Market to Market | Episode
May 6, 2022 | 27 min

The weather extremes of wildfires and drought. Cold and wet planting conditions remain the story of spring. The ongoing battle to fend off famine. Market analysis with Mark Gold.


Coming up on Market to Market -- The weather extremes of wildfires and drought. Cold and wet planting conditions remain the story of spring. The ongoing battle to fend off famine. And market analysis with Mark Gold, 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, May 6 edition of Market to Market, the Weekly Journal of Rural America.


Hello, I’m Paul Yeager.

American employers continue to look for job seekers as more than a few prospective employees remain on the sidelines over COVID-19 concerns.  - - -

In April, More than 400,000 positions were added for the 12th straight month - despite inflation at 40-year highs. 

The positions came as chronic supply shortages plague businesses, higher borrowing costs. 

The unemployment rate stayed at 3.6 percent - just above the lowest in a half-century. 

The Federal Reserve added another half-point to the benchmark rate this week and signaled more hikes to come.

Sentiment among producers surveyed by Purdue’s CME Group Ag Economy Barometer went up in April. But remains 32 percent lower than last year’s reading at this same time.  - - -

Spring is a season of transition. 

As much of the grain belt has experienced an extended winter, other locations are dealing with tornadoes, wildfires and drought.

Josh Buettner has this week’s weather wrap.

For some parts of the country, this week the weather came and went like a lion – in full roar.

Martina Gonzales/Las Vegas, New Mexico: “I’m just taking the most valuable stuff that I have, that I actually need.  So pretty much everything else just has to stay.”

Winds up to 70 miles per hour hindered firefighters and exacerbated seven wildfires raging across several counties in drought-stricken New Mexico – currently, the most in any state - according to the National Interagency Fire Center.  Nearly 16,000 homes were evacuated with almost 200 residences destroyed as the Calf Canyon and Hermits Peak blazes, which merged over a week ago, torched over 200 square miles of northern forestlands.  The blazes prompted the governor to seek disaster aid from the White House.

Gov. Michelle Lujan Grisham/D – New Mexico: “We are going to be the very first state in the nation to have a presidential declaration accepted and signed by the president, unlocking all of these resources for watershed recovery, restoration of all those wild lands, and personal, direct financial reparation and assistance…before the fire is out.”

Further north, still, in Nebraska, emergency management officials say tinder-dry areas aren’t out of the woods yet.  Recent wildfires sacked the Cornhusker State’s agricultural industry – burning off topsoil, pasturelands, and stored livestock feed.  Fire-trashed center pivot irrigation systems could harbor another gut-punch for producers - as insured values haven’t tracked with cost-doubling inflationary trends over the past two years.

The other shoe dropped early this week as parts of the panhandle received up to 15 inches of unseasonal snow, with rain inundating most of the rest of Nebraska.  Several other Midwestern states gripped by moderate to exceptional drought also received notable precipitation, which delayed spring planting in some areas.

Jeffrey Deems/Co-Founder – Airborne Snow Observatories: “Snow is our biggest reservoir, but it’s not uniformly distributed across the landscape.  What we do is fly an aircraft over the mountain watersheds and get complete coverage with our remote sensing instruments of snow depth, snow water equivalent, and snow albedo – or reflectivity.”

In Colorado, upstream from both Nebraska and New Mexico, water managers are using a NASA-developed eye-in-the-sky to map water availability.  Officials say more traditional methods have become increasingly unreliable due to rising temperatures associated with climate change - and credit airborne snow observation with success prior to the pandemic.

Taylor Winchell/Climate Adaptation Strategist – Denver Water: “In 2019, the snowpack was above our traditional measurement stations – and that information allowed us to prepare for a second peak of runoff, and accurately lower our reservoirs to capture that water, to avoid any flooding impacts downstream.”

The National Weather Service’s Seasonal Drought Outlook predicts improved drought conditions through the Great Plains and Northern Rockies through the end of July, but forecasters say the rest of the American West should buckle up for a bumpy summer.

For Market to Market, I’m Josh Buettner.

A NASA climate research scientist and agronomist was named the 2022 World Food Prize winner this week.

Cynthia Rosenzweig continues the tradition of recognition for helping improve global food systems.

Ending famine is a worldwide effort as 155 million people in 55 countries faced acute hunger in 2021. 

The challenge seems monumental, but some focus has offered a more positive outlook.

Colleen Bradford Krantz reports in this week’s Cover Story. 


Just a generation ago, it would have been hard to imagine someone saying this:

Ken Menkhaus, Davidson College, Charlotte, North Carolina: We have been quite successful at reducing and almost eliminating famine from the world.”

Ken Menkaus, a political science professor at North Carolina’s Davidson College, isn’t the only one who has noted how close the world has come to wiping out famine.

Jean-Paul Rodrigue, Hofstra University, Hempstead, New York: “Historically, they were recurrent. So famines have disappeared. That’s excellent news.”

The one exception noted by these professors and the United Nations, which helps determines when a hunger crisis is officially declared a famine, is the situation in the African nation of Somalia just over a decade ago.

Ken Menkhaus, Davidson College, Charlotte, North Carolina: “I think in the ‘70s, ‘80s and into the ‘90s, famine was tragically very much a part of the political landscape in a variety of places, especially in Africa…It would have surprised people to hear me say just 20 or 30 years later that we thought we had conquered famine... And that’s why the famine in Somalia in 2011, which claimed over a quarter of a million lives, was such a setback. And so stunning for us, it was a reminder that we haven’t in fact solved all the underlying problems.”

The world has, however, dramatically reduced famine-related deaths, most of which result from weakened immune systems combined with normally minor illnesses rather than directly from starvation.

Since the 1860s, the Americas have represented a small portion of such deaths. The same is true of the Middle East. Historically, Asia - India and China in particular - struggled for generations with severe and recurring famines, a situation that eased with agriculture’s “green revolution,” which provided the region with better plant genetics in the 1970s. Parts of Europe suffered famine through the early- to mid-1900s, including a World War II cluster of hunger-related deaths. Since the 1990s, Africa remains the only region still struggling with famine, though on a smaller scale than was typically seen in the past.

Many of the historic famines were tied to either war or natural disasters, such as a crippling drought. But with improved transportation and logistics for the movement of food, and advances in agricultural production, experts say today's natural disasters are less likely to result in widespread death.

Jean-Paul Rodrigue, Hofstra University, Hempstead, New York: You can now efficiently move supplies from places with surpluses to places which have shortages in a very rapid fashion. And that’s the reason of many famines in human history in the past: it was not because the food supply was not there. It could not be moved.”

Ken Menkhaus, Davidson College, Charlotte, North Carolina: More responsive government is key. Amartya Sen, a famous Indian writer on this topic, made a claim that was backed by strong evidence that democracies don’t experience famine because democratic governments have to respond to the needs of the people and do in famine-like conditions. But there’s also a number of other factors: The Green Revolution has dramatically…increased production. We’ve got better food distribution systems and we’ve got high-tech and low-tech abilities to monitor crops and yields, long before we get to a loud humanitarian crisis.”

Both professors say the work done so far to feed the world during the COVID-19 pandemic has been a remarkable example of the resiliency of the world’s food system.

Jean-Paul Rodrigue, Hofstra University, Hempstead, New York: The pandemic was a gigantic stress test on our food supply systems in the United States, in particular…It took some few weeks and months to resolve a lot of headaches, to adapt, but there was no technical shortages.”

Ken Menkhaus, Davidson College, Charlotte, North Carolina: I remember going to the grocery store at one point and they didn’t have blueberries. And for a second, I was kind of put-off by that. Then I realized, ‘Well, dude, we’re living in a pandemic, you know? I mean maybe there aren’t supposed to be blueberries here now.’”

One potential consequence of the pandemic on future famines, however, is the financial pressure that may follow the U.S. government’s accumulation of an unusually large amount of COVID-related debt in the last three years. However, foreign aid is typically only a small percentage of the federal budget - about one percent most years.

Ken Menkhaus, Davidson College, Charlotte, North Carolina: It could affect down the road the level of U.S. foreign aid that is manifested in actual money, that’s allocated to development assistance. I don’t think it’s going to affect humanitarian assistance in part because we continue to be a major producer of surplus food and we want to find constructive ways to use that.”

Menkhaus is more concerned about the most significant remaining barrier to fully eradicating famine.

Ken Menkhaus, Davidson College, Charlotte, North Carolina: “We’ll never see famine eradicated as long as food can be used as a political weapon.”

Menkaus, who witnessed hunger and starvation when living in Somalia during an earlier famine, says it’s important to remember food insecurity will continue to be a major concern, even if the world keeps the wolves at bay by holding off future famines.

Ken Menkhaus, Davidson College, Charlotte, North Carolina: “That has a searing effect on you when you see babies that malnourished. I got back to the United States and my first trip to the local grocery store, just to pick up groceries and set up normal life. I got to the produce section and I just started crying. I just lost it. It was the only time. I had to wait until I got all the way back to the U.S. to see that level of plenty to realize and process what I had just seen in the famine….It just strikes you what a miracle our food system is.”

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

Next, the Market to Market report.

A planting window looks to be opening and relieving pressure on a delayed spring. For the week, the nearby wheat contract added 53 cents, while July corn dropped by 29 cents. The outlook for meal improved but the weather forecast appeared to calm the rally in the soy complex. The July soybean contract shed 63 cents. July meal decreased by $18.70 per ton. July cotton fell $2.02 per hundredweight. Over in the dairy parlor, June Class III milk futures strengthened by 11 cents. The livestock sector was mixed. June cattle added a dime. August feeders improved $6.42. And the June lean hog contract declined by $2.28. In the currency markets, the U.S. Dollar index expanded by 70 ticks. June crude oil gained $5.42 per barrel. COMEX Gold fell $26.90 per ounce. And the Goldman Sachs Commodity Index increased more than 15 points to finish at 770.10.

Yeager: Joining us now to provide some insight is our old friend, Mark Gold. Hi, Mark.

Gold: Hi, Paul, nice to be back.

Yeager: You've got the smile, but we're going to see if you have much to smile about after we're done with the discussion. So we'll start positive. Wheat, split contracts, everything is moving differently. Why? 

Gold: Well, most of the dryness is certainly in the Kansas City contract so that has been very strong. Plus they have problems in Canada and Montana and North Dakota. So the spring wheat has been a hot item too. Chicago has kind of kept pace and at times even outpaced them. Hard to understand why, frankly. We had plenty of moisture north for the winter wheat. But overall the funds have been in and out of the wheat. They've been long, they've been short, they've been long, they've been short. Right ow I've got them short a little bit, maybe a couple of thousand contracts literally. But overall, we've got so many problems around the world for supply, the French wheat is now having problems. We've got all this heat and dryness out west with the fires. We see it everywhere. The supply side is certainly in question. It's the demand side that remains an issue with the dollar making new contract highs on Friday over a dollar four.

Yeager: I think you wanted to talk about India, we were discussing earlier. India had this news, not news statement that kind of sent the market and then it responded. But even with all of these pictures that are happening it doesn't seem to be that the U.S. market is moving. Is that what you're trying to say?

Gold: Well, I don't know if the U.S. market isn't moving. We've seen a lot of volatility. And it's interesting, India came out with the news, we were up 30 or 40 cents, they retracted the next day. We were even higher again the next day. So, you wouldn't expect that, which tells you that there is some underlying strength there and certainly the weather is playing a big part in that. I just worry about the U.S. demand. Where are we going to export this? The weekly export figures have just been terrible and with the dollar so strong. But the question is, when push comes to shove where is the world going to get all the wheat? The world will get the wheat. We've seen Russia now steal grain from Ukraine. They're going to wind up probably selling it in the market. We see the ruble from the low after the invasion of three-quarters of a cent rally back up to over yearly highs. It has doubled in value. Somebody is buying those rubles and they're buying those rubles either to buy oil, gas or grain. So there is grain moving around the world. And as you know we harvest wheat somewhere around the world every month.

Yeager: I was going to say, almost all the time. We're in planting season for corn. We'll get to the deferred in a moment. I want to start with those that might still have corn sitting in the bin. Did the high, your famous question, have we hit the high?

Gold: Well, if $8 corn wasn't good enough for you, what is? Are we going to go to $10 or $12 corn? We might if we have a drought in this country in July and August, we will see grain prices far exceed any records we've had before. In my opinion, we could go to $10, $11 corn, we could go to $22 beans. If we don't have a drought and we get this crop in the ground, I've always said every spike we've had since 1972 in the grain market we're back under the cost of production within a year and a half because supply and demand still rules the markets. High prices bring less demand, they bring more acres and prices go down. And how far will they go? They'll go back under the cost of production. It's never been wrong. That doesn't mean this summer we can't go higher first. But therein is the tough part of the question. Farmers don't want to sell it now because they don't even have it in the ground. But if we get 50% of the corn in the ground, we're going to see these prices move significantly lower.

Yeager: As we sit here on Friday afternoon to record this, by the time this airs in many places the weather could be dramatically different. The planting window is going to open. Everybody is going to roll that can. What is that going to have an impact on corn? Mark, in Iowa where you're sitting last week at this time 62% of the acres were planted, we had 9. The nationwide average was 33 versus 7. We know those numbers might look ugly Monday, the next Monday is coming. Is the market going to factor all this in?

Gold: Well, I think they'll factor it in if we do have that window Monday morning when we come in and there's any weakness anywhere in the world we're going down. If we come in Monday and the window is suddenly closed for whatever reason we're going right back up. We're just at a very delicate balance between supply and demand right now. So again, this crop progress report won't tell us the whole story. It's going to be the next week that will really be the definitive answer in my opinion.

Yeager: What's going on in soybeans? The oils have maybe some of that demand has dried up. Is that the big driver?

Gold: Well, that and the mean has been under a lot of pressure here. We made highs in the oil at I think it was 88 cents, we backed off to 80, 81. It certainly looks like highs are in. IT's going to be tough to beat that. But again, that is without a drought this summer. I think what is driving the beans is if we can't get the corn in the ground we're going to plant a few more beans. We've already got a pretty good leg up on beans right now with the acres. If we do have the crops we're going to see lower prices. And we're hearing stories of guys planting beans first this year waiting for the weather to warm up for the germination on the corn, then they're going to plant the corn. So it's going to be an interesting time. But again, I think a week from Monday we'll know the real picture of what's going on.

Yeager: You see that bean before corn happen a little more and more. That trend has happened. It might necessarily not be tied to weather. But the same question I had in corn about the planting this weekend. If that opens, what is going to shut any type of rally down? Is it good weather? Consistent weather? Average weather?

Gold: We need good weather right now because we do need top yields in order to keep those balance sheets from really getting dangerously low. But we've seen farmers plant 40% of the corn crop in one week. So in the next two weeks can they plant this crop? They sure can. Can they get it all in by May 25th? They sure can. And these stories you hear about the drag on yield for late planted corn, the University of Illinois just came out with a study, you guys can get it at It was that late planted corn, as long as you get good weather in the summer really it doesn't have much of a drag yield and I agree with that. But the fact of the matter is, the farmers don't want to sell it now. And by the time they realize they've got it in the ground and everybody else has got it in the ground we could be another 50 cents lower in corn and a dollar or two lower in beans. It's going to happen very quickly if we think we're getting the crop in the ground.

Yeager: All right, the supplies, you've already kind of answered this question and teased it but I want to ask it officially on the record and it's a question that came in via Twitter. Nathan in Inwood, Iowa asks you, high prices cure high prices. Have high prices destroyed any corn or soybean demand yet?

Gold: Destroyed it, no. Have we slowed it down? I think that's possible. We were supposed to see the Chinese come back from their holiday on Wednesday night, Thursday, Friday buy grain. No export sales announced. I think that is significant. Again with the high dollar. We just don't see the demand from anybody really but China and if China is backing off I think that is key. They are rebuilding their hog herd very quickly which is one of the reasons the U.S. hogs have been under such pressure. But the fact of the matter is they're going to need some grain. But if COVID continues there and they keep having these shutdowns and it's getting worse and if COVID picks up here demand is going to shut down in a hurry and we're going to see that ration, the price will ration demand at that point for sure.

Yeager: Let's go into livestock with the hogs. You mentioned the Chinese side of this equation. It has been under pressure. This week we finished down 2%. Is there any demand story outside of China that can change the narrative?

Gold: Well, if cattle prices got high enough and we've got such a disparity between the futures price and the cash price in cattle now. You had cattle $10 over the futures. I'm not sure how that's going to wash out. I hope it washes out higher. But the fact of the matter is we've got to curb the demand on cattle. We're heading into the great grilling season. Box beef prices have come down. So one would expect that cattle, beef is going to be in favor of pork. So I'm not sure where the demand side is going to come from on the pork, particularly if the Chinese aren't there. We're still pretty high price hogs here.

Yeager: Well, we're not too far off on cattle either, live cattle. Next week we're going to have a story about the independent producer, the big four were under the spotlight last week. Was there any fallout in the market because of that last week?

Gold: You know, when I was sitting in my hotel room this morning I was watching those hearings. It's amazing some of the stuff that comes out and some of the sad stories that the big four tell. And they always talk about cycles. Farmers had their turn back in 2016, made a lot of money, now it's their turn to make some money and it goes in cycles and that's all true. One of the representatives says, what are we going to do for the farmer right now who's not going to make it through to the next cycle? And it's a point well, well taken. We've got to do something out here for the ranchers and the feedlots. The packers are making a fortune out here. And how many farmers, how many ranchers are we going to put out of business in the meantime? I'm all for competition and free markets. But we have to have competition. Four big buyers don't make enough competition, in my opinion, and we need to do something about getting more smaller plants out around the country.

Yeager: Always a topic of discussion that we could do probably another couple of hours on, Mark. I want to finish with feeders here. Say you're somebody starting, are you expanding a herd right now?

Gold: Not with corn prices and energy prices where they are. Shipping is a big expense, you can't get around that for the time being. Feed costs are going to be high. Why would you come in now when you've already got relatively high feeder cattle prices? November feeders I think are $180, $181. That's not cheap feeder cattle prices. So where is the price likely going to go? Back down. So do you want to be building inventory now with higher gas prices? I don't see that happening, which I think long-term is a little bit friendly for the cattle market.

Yeager: I was going to say, where is that break between the short and the long-term?

Gold: I wish I knew. Four months.

Yeager: Three months? Four months?

Gold: Yeah, that's what I'd say.

Yeager: Real quick before we finish up here, the crude oil market. Does this thing stall out at any point any time soon?

Gold: If somebody shoots Putin, there's any kind of regime change there, he's going in the hospital I guess for a cancer surgery. Who knows what happens then. That could spike the oil. I don't really see it coming down any time soon. But again, if we have COVID and all of a sudden the economies fall out of bed crude oil is going with it.

Yeager: Okay, thank you, Mark Gold. We'll continue that discussion in a moment.

Gold: Thanks for having me, Paul.

Yeager: Thank you. That will do it for the TV side of Market to Market and this installment. We're going to keep going in Market Plus so I'm not just cutting him off for show. Find it free on our website at And a few of you have a love hate relationship with Twitter. We've been on that platform since 2009 as we offer links of our content and requests for your input. Follow along if you like @MarketToMarket. Next week, we look at the meat processing workflow at the local locker level. Thank you for watching and 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.