Market to Market - May 13, 2022

Market to Market | Episode
May 13, 2022 | 27 min

New evidence shines light on meatpacker activity at the start of COVID-19. The meat processing workflow at the local level. Hot and dry replaces cold and wet in the Grain Belt. Market analysis with Naomi Blohm.


Coming up on Market to Market -- New evidence shines light on meatpacker activity at the start of COVID-19. The meat processing workflow at the local level. Hot and dry replaces cold and wet in the Grain Belt. And market analysis with Naomi Blohm, 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 13 edition of Market to Market,  the Weekly Journal of Rural America. (music)

Hello, I’m Paul Yeager.

The inflation story keeps arriving at the door of those with their hands on many of the levers and pulleys of the economic system in the United States. 

New data sets arrived with the Consumer Price Index - the prices paid by you and me - and 0.3 percent was added to the cost of buying goods. The annual growth rate fell for the first time since August. 

Without the volatile factors of food and fuel, Core CPI rose 0.6 percent.

The measure of inflation before it reaches consumers - the Producer Price Index - went up 0.5 percent in April. The year-over-year mark fell modestly from March and for the first time the annual level declined since December. 

The president talked about inflation earlier in the week, then hopped on Air Force One to the Heartland to deal with another major issue - Russia’s invasion of Ukraine. 

President Biden visited a farm outside of Chicago promoting the idea of double cropping. The Administration hopes that by encouraging farmers to plant more wheat, the global price of all commodities will fall to pre-pandemic levels. Also the additional availability of double cropping insurance through USDA may help in the decision making process.

This area of Kankakee County is primarily corn and soybean country, but producer Jeff O’Connor told the president wheat would provide a new rotation option and still allow for a late-season bean crop.

Wheat’s overall global production has been limited since questions arose over Ukraine’s ability to grow a trend-line crop since Russia’s invasion. 

The meat packing industry during the first few months of the COVID-19 outbreak came under scrutiny of a congressional committee this week. 

Peter Tubbs has more on conversations between industry and political appointees in the previous administration. 

The House Subcommittee on the Coronavirus Crisis released its report on how the Trump Administration worked with the meatpacking industry to limit slaughterhouse closings and keep meat workers on the line despite the risks of exposure to the COVID-19 virus. 

The report documented close coordination between meatpackers and the Trump Administration to claim an impending shortage of meat products if processing lines were closed, which drove up consumer prices, while at the same time telling meat exporters that supplies for overseas would not be interrupted.

The closure of processing plants resulted in an oversupply of animals ready for slaughter, which softened prices for most of the year. 

Meat industry profitability jumped for 2020, and profits have remained high since. 

For Market to Market, I’m Peter Tubbs. 

The plight of the giant meatpacker during the early days of COVID-19 did open the door for more nimble processors.

The local meat locker has served families for generations and for the last two years - the new norm is a busy one - year round. 

Peter Tubbs has this report in our Cover Story.

The employees of the Corning Meat Processing Service are gathered around the cut table on a Wednesday morning, cutting meat for a customer who had a steer processed with the Iowa-based company. Their goal is to finish breaking these sides down along with the meat from two more steers by the end of the day. Tomorrow they will return to process three more animals from a different customer. The locker has been on this pace for two years, since the COVID-19 pandemic put kinks in the meat supply chain which forced, producers and customers to explore new delivery methods including a direct line from the farm to the table. .

But it wasn’t always this busy for this small town locker. 

David Walter, Corning Meat Processing “Come in March, April, May has always been kind of a open time. We didn't know we'd some days we'd cut every, every day. Uh, we'd be booked out maybe a couple weeks at the most. We went from nothing to do just very little to do to book clerk full April, May out for, I went out as far as a year and 10 months book solid, full, uh, and with a waiting list of probably about 80 people with 120 head livestock wanting in. So it went absolutely from nice, not, you know, like to be a little busier to absolutely overloaded.”                    

The new demand for local meat extended more than 80 miles away Adams County. 

David Walter, Corning Meat Processing “We have a lot of people coming from Omaha or Des Moines out of the cities that were looking for meat because they couldn't buy meat. Uh, in the stores, they were limited to one or two or three pieces in the stores. Uh, so they started digging out into the country, looking for, you know, quarters and halves and porks, so it, yeah, they it's extended it way out and brought a lot new people in that's never, ever experienced a butcher shop.”

That jump in demand has meant a 40 percent increase in the number of animals slaughtered at the small facility, and a similar increase in the pounds of meat cut and wrapped by its employees. 

David Walter has been in the meat business since 1985 when he began working at the Corning locker. A decade and a half later, he became the owner, and he was glad he had the long lead time to learn the business.

David Walter, Corning Meat Processing “I worked for my boss 15 years. I don't regret a time of it. Yeah. You can get by with seven, eight years. It's like I told Jacob, you know, he works with me for 5, 6, 7 years. He's really digging in and finding and learning all about it. You walk into it blindsided. You're gonna get blindsided. It's just, it's how it's gonna happen.”

Jacob Cross started working for Walter as a teenager, and returned two years ago as a fulltime employee. Cross is now planning on buying the locker when Walter retires. 

Jacob Cross, Corning Meat Processing “We have people that come even from when I worked here back in 2005, still coming, you know? And so, and Dave's been here a long time before me, you know, and people's grandparents, fathers now, sons, you know, and now their kids are starting to come and they've seen all of them, you know, they remember, you know, so that's kind of cool to be a part of something that generations have always came to this place.”

The building has been a meat locker since the 1950’s, and Walter has continued to renovate the facility. A new refrigeration system was added in 2019, and a Value Added Producer Grant from the USDA financed the purchase of a meat slicer and electric smoker. The tools will help expand the menu into ready-to eat products they currently don’t sell to consumers.

David Walter, Corning Meat Processing “When I hired him two years ago to come in and really follow my footsteps and push me to and push things to go and get things to go farther and let him either manage or own this thing down the road. Uh, we're looking at doing some new, new brats, things for the case to sell, uh, new sticks, different things that way.” 

Local lockers are important to their communities, but the number of animals coming in the door varies more than some new operators might expect. Walter says those looking to get into the business often are in for a surprise. 

David Walter, Corning Meat Processing “‘Do you realize what's coming?’ I said, ‘Do you know what's happening and what it is to this business?’ And so many of 'em don't know what's what's going on and what it is. It's just, there's more to it. That side of not, it could go back the other way, just as fast as it is busy as we are, which is, can be devastating.”

Walter has watched his the meat processing business ebb and flow with the local weather but the effect on the number of animals coming in the door has often been delayed by several years. A southwest Iowa drought in 2012 forced many cattle producers to shrink their herds. Two years later, when those missing cattle would have been ready for harvest, Walter and his employees found themselves without animals to process.  

Jacob Cross, Corning Meat Processing “There'd be weeks up, it cut nothing on the table, nothing at all. It would just be, you know, maintenance would Walker, you know, try to fix up some things that needed, done, um, painted some, you know, made the place, look a little nicer and did some odds and ends some extra stuff.” 

Today, demand from consumers is still strong, but for some the price of a quarter or side of beef can be a source of lead to sticker shock.

David Walter, Corning Meat Processing “A lot of those city people reached out when the fee prices started climbing back up and they had to pay out 22 or $2,400 and one lump sum. A lot of them people understood and worked with it, but a lot of 'em didn't understand and could do it because they were used to putting out $150 or $200 a week for, for meat and you're throwing it all out at once. So it's the budget thing has kind of affected some people.” 

Iowa has lost 20 twenty percent of its small to mid-sized, locally owned meat lockers since 2010. The succession plan that Cross and Walter have created means that Corning Meat Processing will hopefully buck the trend of small towns losing their lockers as longtime owners retire. 

David Walter, Corning Meat Processing “We're trying to get ways figured out to get people interested in this business, uh, because it's needed big time.”

For Market to Market, I’m Peter Tubbs.

Hundreds of record highs were set across the country this week as an early heat wave washed over a major portion of the country. 

Some of you went from winter coats to shorts in just hours. 

Others expressed concern over this weather pattern being too hot too fast. 

More now from Josh Buettner.

The seed planter operators flipped the heat to the A-C settings almost overnight. An unseasonably warm push of air blasted much of the Midwest as conditions finally started to allow for some fieldwork and eventually planting.

The slow start to the 2021 season has put a drag on the national corn and soybean planting progress, keeping things well behind the 5-year average.

The hot and humid weather smashed records across the country as a heat dome settled over a region from Texas to Michigan.  Soil temps jumped up as highs in the 90’s to even 100’s warmed the conditions for planting.

 Much of California remains locked in extreme drought – and this week wildfires broke out, again - this time in Orange County. Red flag warnings are up in New Mexico, Texas, Oklahoma, Kansas and Colorado meaning conditions of strong winds, low relative humidity and warm temperatures create favorable weather for rapid growth and spread of wildfires. 

Drought is one fire factor that is weighing heavily on the nation. The weekly snapshot did show a 9th week of improvement but conditions in the lower 48 states were the best since September. Most of the improvement could be seen in the Pacific Northwest.

Thursday, at least one person died when a tornado ripped through South Dakota as another round of severe weather battered that region. This video from northwest Iowa shows the intense winds roaring through.

A weekly look at rainfall reveals areas from the High Plains to Minnesota and Wisconsin received the most precip along with the heavy grain producing areas.

For Market to Market, I’m Josh Buettner.  

Next, the Market to Market report.

The planting window opened but the ‘word of gov’ had more to say on the direction of the trade. For the week, the nearby wheat contract added 69 cents, while July corn declined 4 cents. The reaction to USDA was mixed in the soy complex before a breakout day higher to end the week’s trade. The July soybean contract expanded by a quarter. July meal dropped by $4.30 per ton. July cotton gained $1.59 per hundredweight. Over in the dairy parlor, June Class III milk futures fell by 56 cents. The livestock sector was down. June cattle lost 67 cents. August feeders shrank $6.67. And the June lean hog contract decreased by $3.35. In the currency markets, the U.S. Dollar index increased by 98 ticks. June crude oil strengthened 26 cents per barrel. COMEX Gold fell $76.10 per ounce. And the Goldman Sachs Commodity Index lost almost five points to finish at 765.50.

Yeager: Joining us now to provide some insight is Naomi Blohm. Dull week, huh?

Blohm: Never a dull moment in these markets.

Yeager: It hasn't been. Let's start with wheat for a moment. It applies to a lot of these markets. We think that we -- you always talk about the traditional, the weather market is now until pollination. So when you have strange weather, a delayed planting season, the market reacts one way and then a report comes out and the market reacts in a different way. How can both of these things happen in the same week?

Blohm: Well, this is a year where everything is not normal. Again, it goes back to those nine commodities with the tight grain and oil seed, the tight ending stocks. And that is what still is setting the stage for this whole thing. So as far as the wheat market goes, on the USDA report this week they cut the old crop ending stocks, they cut new crop ending stocks so that they're going to be smaller than the old crop ending stocks for next year. The weather was a factor because we saw abandoned acres on the USDA report for Texas and Oklahoma. So that is definitely affecting the market because production is down for the winter wheat crop and the winter wheat ratings are still bad. And then you look at the spring wheat market where that crop is really behind on planting just like everything else with producers in North Dakota and Minnesota really going to be in a struggle to get anything in the ground. So weather markets and USDA reports combined for an explosive wheat market this week. And I think actually you're going to still see that wheat market continue to climb and we're not out of the woods yet.

Yeager: So we mentioned it earlier talking about the President's idea of double cropping and putting some more wheat into the pipeline domestically. We can't really do that right now. That is very hard to do but something to think about maybe in October. But is it needed?

Blohm: Okay, so here's the skinny on that. So, with what was suggested it still needs congressional approval and it's not anything that is going to be helping this wheat because they need both soybeans and wheat. This is what the reality of the situation is. So if this were to go into effect it's not until for next year and then I don't know if there's time that we get the congressional approval, is everybody on the same page, that type of a thing and between now and then we still have to find out for sure what India is going to be growing because they're crop is getting smaller along with who knows how the Chinese crop is going to fare. So there is still from a global perspective we're not out of the woods. And yes, it will help that the United States could grow potentially a little bit more wheat or more soybeans. But we'll talk about the double crop acres for the soybeans too. It's not going to be enough.

Yeager: Well, but that's the thing, as we move into corn for a moment, you mention these areas, we have a couple of questions about prevent plant and things like that, North Dakota, South Dakota, Minnesota. It has been nonstop rain, no action. Those are new corn acres that have helped contribute to the greater commodity total in this country. We needed trendline. Where does the market go if we don't get there with anything into the ground?

Blohm: Yes, so for corn and trendline, the USDA did something they haven't done in over a decade where they did not use their February baseline projection yield number. We were thinking it would be like 181 because that's what they said in February for yield and they already backed it down to 177, which is still near record, same as last year kind of a situation. So you're still asking the market for a lot. So if we don't have 177 yield we're in trouble and the price of grain has not reflected that yet because the ending stocks -- no, if we don't have the yield out there, if we don't have 177 we're sunk. We are sunk. The demand is that strong. The new crop demand in the new crop marketplace we have ending stocks tighter than this year already projected for next year. So looking at the corn charts right now, we saw the market get up to the $7.55 area for Dec contract and then back off, go back up and test it, back off, and now we're back up to that price point again. If we can get through $7.55 you'll see December corn hit $8, that is the swing objective higher. So we're going to be trading crop progress reports, we're going to be trading every single weather forecast, we're going to be watching demand and watching of course the weather around the world still.

Yeager: Okay. What do I do?

Blohm: Well, as a producer I think a lot of producers for old crop have been moving it because they have been able to get that $8 cash marketplace and seasonally there is a strong tendency for corn, soybeans and wheat to now work higher from this point in May until the middle of June. A lot of times that June price peak will coincide with the USDA report. So on any sort of a rally you're going to still want to be looking at making cash sales for old crop if you have any. You're going to want to be courageous then to go ahead and pull the trigger on new crop sales if you're feeling comfortable with your crop. And then that is the price point where we'll want to start looking at doing some hedges to protect unpriced bushels because you just never know what black swan might come in or maybe we'll end up having perfect weather when all is said and done. But I don't think for right now the market is done going up. I think we will see another leg higher.

Yeager: Well, I have Mitch in Hull's question that is very similar to what we've discussed. I'm going to be real quick. He just said the same things you just talked about. But his last part is a little more specific. Do you expect us to set new highs on the Dec contract before June?

Blohm: And that I can't answer because that would be dependent on the crop planting pace would have to be extremely behind and we are of course behind right now 22% planted, normally we're 50% planted. I don't think we're going to be more than 50% planted on Monday. On my drive here Wisconsin may be 25% planted and when I came through Northwest Illinois and Eastern Iowa it was barely maybe 40% planted. And that's where we've had some potential progress to get things done. You think about the poor folks in Minnesota and North Dakota who are just looking at swampy fields from all that rain. But I would say probably not necessarily that we can see that higher price before the end of May but definitely I think it coincides before we get to the June WASDE report.

Yeager: You've already talked about beans a little bit and how it folds with those other two. Is there anything different affecting the soybean complex right now other than meal?

Blohm: Well, soybean complexes right now is keeping an eye on making sure exports stay strong. We saw the USDA account for stronger exports for old crop. They increased export demand for the new crop year, they increased the crush demand for the new crop year. So those are things that are important and they used big yield numbers. So we are talking about all those extra acres, we're talking about big yields and so if we don't have the bigger yields of if we see any prevent plant acres come into play, especially in the Dakotas or Minnesota, then you have a situation where the new crop bean price would have incentive to rally because quite frankly we need all those beans, we really do. The world needs it and so we want to make sure that they get in the ground.

Yeager: All right, I'll look at the chart again on the Nov contract that is on the screen now. Similar to that corn, a couple of drops, headed back up but not quite to that technical level before. Is that a technical or a fundamental story right now impacting the November contract?

Blohm: The November contract has been brewing up a little higher because of the fundamentals. Technically speaking it's smack dab in the middle of its trading range. If it can get up to resistance, resistance is only about 40, 50 cents higher, if it could get through there, again that is going to be a combination of continued strong demand, we would need a planting delay story to continue to happen there. But the upside would be $1 to $1.50 higher to all-time contract highs for soybeans for that new crop price. So, again, we're not out of the woods. We have nine commodities with the tight ending stocks and we're not going to get it fixed this year. And the world then of course didn't have a perfect growing season either so now we're going to see the residual effects go into the next year. So it's going to be unfortunately high prices on grains for a while.

Yeager: High price in dairy too but then a little selloff. Are we stabilized yet there?

Blohm: Yeah, so front month dairy contracts have been up between 22 and 25 so near all-time contract highs. We've had awesome export demand, especially for butter and for cheese. Domestic demand has kind of softened a little bit as it is the end of the school year, that's a little bit normal. But overall milk production had been still kind of trending lower. We have a milk production report next week. That's going to be the next cue for the dairy complex.

Yeager: Meats and live cattle specifically, the story continues to kind of float around, there's political pressures on the packers right now and the prices paid. Has anybody benefited from all this chatter, the packers or the consumer?

Blohm: Well, I would say that the cattle producer has not benefited but we've known that for a while. Packer values I don't think that they've seen a lot of fantastic value here recently. But I think going forward what we're going to be seeing with the livestock market, probably just a little bit of back and fill action, sideways trading action, the front month contracts to just follow cash markets. They're oversold. I think they're going to start to work higher. But the friendly story continues to be those deferred contracts and how production is going to be down next year just because all those cattle have come to market here recently. Long-term cattle story is still friendly. I think the demand is going to be there for the rest of this year because the consumer from my understanding and from what I see at the grocery store they're not changing their spending habits too much and they're not changing driving patterns too much. So there is always that fear of gas prices are so high so they're not going to buy steak. Well, no, that's not true.

Yeager: Which gives fuel to the why lower prices if we're able to? If you're willing to pay it let's move forward.

Blohm: Yeah.

Yeager: Okay, so the feeder though has been in a tough position because they had a two day window to buy some lower corn and then the big input has been a problem, we're falling off the table. How much lower can this go?

Blohm: Well, I actually think feeders are going to be at a point where they're going to start to stabilize here for just a little bit. Looking at charts they're at the lower end of their downward channel. Prices at this time I think probably just stay in some rangebound trade. But we're going to be at the situation where we're going to be watching to see who is going to pay up at these higher values? Who is going to be confident and comfortable going forward with the high prices that are there still overall especially with high prices grains looking to continue?

Yeager: And in the hog market?

Blohm: The hog market, here's one good thing about the hog market is that from a technical perspective front month contracts finished their downside objective that was a head and shoulders formation on the chart. So technically speaking I think they're going to come up for air and have a nice recovery bounce higher. The situation and the reality with the hog market though continues to be that the demand for exports has fallen back. We have seen the producers reduce their production amounts but overall we don't have the domestic demand to kind of fulfill a necessity to push the price too much higher but from a technical perspective we're ready to see probably a good one or two week recovery.

Yeager: Okay. We have to cover in Market Plus, we have to cover more of your drive and what you saw in your windshield tour and what's going on in Wisconsin and we'll have that in a moment.

Blohm: Sounds great, thank you.

Yeager: Naomi Blohm, thank you so much. That will do it for the installment of the TV show that we call Market to Market. We're going to keep going in that section I just called Market Plus so join us there. Find that on our website, which is free by the way, the website and the Market Plus, at Now, you may be watching us on delay from your normal viewing time. It's spring planting season and all. That's the beauty of the podcast. Download and go with any of our three offerings including the M-to-M. Check where you get your podcasts to also download our Market Analysis or Market Plus. Next week, we look at the work to repel rabies. Thank you for watching and have a great week.



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

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.