Market to Market - July 1, 2022

Market to Market | Episode
Jul 1, 2022 | 27 min

New initiatives from the Secretary on a Midwest road trip. A lawsuit against the beef checkoff is turned around at the courthouse door. Bringing the message from Kansas cattle feedlots to the halls of Congress. Market analysis with Elaine Kub.


Coming up on Market to Market -- New initiatives from the Secretary on a Midwest road trip. A lawsuit against the beef checkoff is turned around at the courthouse door. Bringing the message from Kansas cattle feedlots to the halls of Congress. And market analysis with Elaine Kub, 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, July 1 edition of Market to Market, the Weekly Journal of Rural America.


Hello, I’m Paul Yeager.

No amount of fireworks will distract from the concerns over higher interest rates and a potential recession not even lower fuel prices.

As we celebrate the nation’s birthday, drivers are seeing some relief in the form of lower fuel prices. AAA reports the price of a gallon of gasoline has dropped to $4.84 a penny from last week.

 The Personal Consumption Expenditures Index - the measure of inflation followed closely by the Fed - rose 0.6 percent last month.

The year-over-year rate climbed to 6.3 percent.

Without the swings brought on by food and energy prices, Core PCE held steady.

The Secretary of Agriculture beat the holiday rush to get out of the city for two different events aimed at rural America.

John Torpy was on the trip and begins with a look at a new program to squeeze just a little more out of farm commodities.

USDA Secretary Tom Vilsack hit the road this week, announcing new policy initiatives in the Hawkeye state. 

Sec. Tom Vilsack, U.S. Department of Agriculture: ”This is about creating new economic opportunity for farmers and for rural areas.”

Vilsack’s first stop was at a family owned dairy and creamery in Ely, Iowa where  he announced a $10 million pilot program designed to encourage the creation of biobased products in rural America. The intent of the package is to turn crop residue or other agricultural waste to make construction materials and consumer products.

Sec. Tom Vilsack, U.S. Department of Agriculture: “All of this is designed to support the climate smart, uh, agricultural commodity initiative, uh, that this administration's focused on. And all of that is designed to create two things, more farm income and more jobs in rural places”

The directive in the Bipartisan Infrastructure law pairs the USDA with land grant universities to study the pros and cons of manufacturing with materials derived from crop residue and farm waste.

The following day, Secretary Vilsack stopped at  a farm just west of Minburn. There he told the crowd that more than $4 billion dollars has been distributed out of the USDA’s Emergency Relief Program. The payments were made to agricultural and livestock producers who were impacted by severe weather events in 2020 and 2021.

Sec. Tom Vilsack, U.S. Department of Agriculture: “I think we're now realizing that we're gonna see, uh, disasters of, uh, of, of unprecedented number or unprecedented strength or unprecedented cost. And so we need to have the flexibility to be able to, to shift and adjust our disaster programs to meet the regional or local need.”

The disaster relief fund was created in 2021 when President Joe Biden signed it into law . A total of $10 billion is available for producers impacted by wildfires, droughts, hurricanes, winter storms and other natural disasters eligible for aid. The relief aid also covers livestock producers who incurred losses due to drought and wildfire in 2021.

For Market to Market, I’m John Torpy

One of the Supreme Court’s final decisions of the term cuts the ability of the EPA to regulate power plants emissions. The ruling may be an indicator that the court is poised to block President Biden’s work to mitigate climate change.

Among the other rulings was a challenge to stop government checkoff programs.

Peter Tubbs has our report.   

This week, the United States Supreme Court rejected a challenge from Ranchers-Cattlemen Action Legal Fund United Stockgrowers of America, or R-CALF, over the implementation of the Beef Checkoff program. 

In 2016, R-CALF alleged the Beef Checkoff required cattle producers to subsidize the private speech of private entities, namely marketing arms of state beef boards.

R-CALF won an initial injunction in 2017, after which the USDA entered a memorandum of understanding with the beef councils in  20 states to centralize the marketing messages for the Beef Checkoff. 

The 9th Circuit Court ruled in 2021 that the reorganization by the USDA satisfied R-CALF’s request that Beef Checkoff dollars not fund private speech. The Supreme Court concurred by not hearing the challenge.

The National Cattlemen’s Beef Association noted the end of the lawsuit.

NCBA gfx: “The Supreme Court’s rejection of R-CALF’s petition confirms the Beef Checkoff, and its overseers, are adhering to the letter and spirit of the laws that protect and guide producer investments in the program,” - NCBA CEO Colin Woodall.”

R-CALF is pledging to seek further changes to the operation of the Beef Checkoff.

00:07:58:20 - 00:08:25:03 Bill Bullard “Well, we continue to work in Congress on legislation that would achieve the reforms we seek in the legislative and the checkoff program, including making the checkoff a purely voluntary program as opposed to a mandatory program which makes it just a huge subsidy program in the cattle industry. And it's a subsidy program that we believe benefits the multi-national corporations at the expense of America's independent cattle producers.

For Market to Market, I’m Peter Tubbs.

Last week, a bill to increase price transparency between packers and cattle producers made its way out of the Senate Agriculture Committee. Many outside the Beltway with mud on their boots are concerned about the unintended effect this measure might have on the cattle industry. 

As part of the MtoM podcast, I spoke with one of those cattlemen who built his independent feedlot with his brother and sees the legislation as a major threat to his way of life. 

A short segment of that conversation is this week’s Cover Story.

Shawn Tiffany: About the nature of our business, because our business is something that in Congress, they were saying no longer exists. But you know, we we determined a long time ago when we were in our early 30s, that somebody was going to tell our story, as cattlemen, specifically feed yard operators. And I guess we were just bold enough to say, well, we'll  tell it ourselves and make sure it's right. And so we've been willing to be in the public eye for a long time. But then last fall, I was asked to serve as president elect of the Kansas Livestock Association. You know, I don't think it was accidental that I was asked to go to DC, I think the nature of my business being an independent, custom finishing the lot was in this model as part of that story, but then it would, it wasn't for him, for me to sit in front of a bunch of people and get asked hard questions. We do that all the time. I've had people from the World Wildlife Fund at our operation farmers and ranchers and veterinarians and chefs from all over the world that sometimes don't have an understanding of what a capo is. And so I don't mind being in a situation where I'm gonna get asked the tough questions and have to defend them.

Paul Yeager: I'm gonna go all the way back to the very first thing you said, you were told in the hearing, that your type of business doesn't exist anymore. Is that the independent feeding operation? Is that what you meant with that?

Shawn Tiffany: Yeah, so both for serve, Senator Grassley alluded to the fact that there's no independent preloss anymore. Mr. Ruffin, who is a rancher and the attorney and Missouri who testified along with me, and then Miss Shelley Zetia out of North Dakota, who testified along with me, basically said, There's no such thing as independent feedlots anymore. It's all corporate, which I'm not going to deny there's a lot of corporate feed yards out there that own all their cattle, but they have to get those cattle somewhere. And that's farmers and ranchers from across the US. But but my business, we're exclusively custom. So my brother and I started with nothing we've literally bought a feedlot with a handshake is our down payment collateral, and one of our loan covenants was you're not going to uncap we had way too much risk. And we're highly leveraged to begin with, and our bankers said, no cattle ownership is not going to be a part of our deal.

Paul Yeager: Is there going to be a perfect bill? Or should we just let this thing be?

Shawn Tiffany: Well, I don't believe there's going to be a perfect bill. And frankly, I don't. I don't believe that government regulation is, is better. In many cases, I believe the private sector can sort things out. I am, there's a lot of things that myself, Kansas Livestock Association, and CBA, National Academies Beef Association are not opposed to, you know, widening the reporting regions for LMR. That's a good thing to get more data. You know, the cattle contract library, as long as it's done with confidentiality, you know, that can be a good thing. The Special Investigator bill, that I would argue, the authority to make sure that the Packers and stockyards is followed already exists, and duplicating or creating another agency. For one as to levels of your bureaucracy. It does confuse who has jurisdiction. And frankly, if you ask me, it's an admission on behalf of Congress that they haven't been enforcing the laws that were already in place to begin with. The biggest thing that I'm opposed to and frankly NCBA Kalay is the mandate, just because who gets to choose is the packer which gives them more leverage and, and I've got friends that do manage large corporate yards. And matter of fact, the CEO of one large yard, actually a collection DVRs told me months ago, he said, Listen, if I'm sitting in the sale barn, buying cattle fill our yards, which those larger yards are doing every single day of the year. He said, If I don't know how I get to market, those calves, the day I buy them, my risk just went up, which means my price just went down what I can, what I can stick my neck out for, because even the corporate yards, they're not making very big margins. The way a feed yard works is to capture very, very thin margins across a large population of cattle. But if all of a sudden there's some hiccup like you can't market them the way you thought you were going to and that thin margin goes away. Well guess what? Your profitability just evaporated.

Paul Yeager: So you think things are cyclical? Because I mean, we look at packer margin and go boy, that looks pretty good right now. Is that going to stay this way forever? Do you think that's what Congress is trying to tackle?

Shawn Tiffany: Well, I know things are cyclical, which is why we have this conversation about once every 10 years. And that's because, you know, there's an old saying that the American farmer can ruin a bull market in one year. You know, wheat gets high. Guess what, everybody's gonna raise wheat next year and the price goes down. It kind of goes hand in hand with the old saying the cure for high prices is high prices. And cattlemen are no different. It just takes us longer.

Paul Yeager: The full conversation with Sean Tiffany is available now on the Market to Market YouTube channel. New episodes of the M to M podcast come out each Tuesday.

Next, the Market to Market report.

Quarterly grain stocks numbers and an acreage report joined weather as topics of conversation at the kitchen table. The market quickly digested the news and grains made a run lower. For the week, the nearby wheat contract plummeted again, this time off 91 cents or 10 percent, while September corn dropped 46 cents. Soybeans briefly rode the wave of fewer acres planted before turning sharply lower. The nearby soybean contract improved 8 cents. August meal added $10.70 per ton. December cotton fell 57 cents per hundredweight. Over in the dairy parlor, August Class III milk futures lost $1.17. Lower grain boosted some of the livestock. August cattle added $1.22. August feeders put on $2. And the August lean hog contract declined $3.80. In the currency markets, the U.S. Dollar index improved by 96 ticks. August crude oil gained 91 cents per barrel. COMEX Gold lost $22.70 per ounce. And the Goldman Sachs Commodity Index fell 15 points to finish at 718.70.

Yeager: Joining us now to break down these markets, our friend Elaine Kub. Hello, hello, hello.

Kub: Happy Birthday, Paul.

Yeager: Thank you very much, appreciate that. Also to Naomi Blohm.

Kub: Absolutely, Happy Birthday Naomi.

Yeager: But not yours?

Kub: Not this month.

Yeager: Anybody celebrating who has wheat right now?

Kub: Well, what's wrong with -- it's still $9 some dollars. If you're harvesting wheat in Kansas let's say this past week the yields have been extremely variable, some of them have been good, protein generally above 12%. So I think the general attitude from harvest has been pretty positive, people are pretty happy with it and if you're just going to take it to the elevator and sell it for $9 cash, I mean I know it's not as good as it once was a few months ago, but in historical terms it's still $9 wheat.

Yeager: So, when you put it into perspective, and that's what I heard somebody describe the stock market, yes we're six months into the year, it has been a terrible year when you look at it, but if you go back five years it's pretty good. So, closing September wheat, $8.46. What are you doing come Tuesday when the markets reopen?

Kub: Right, this is the problem. I knew you were going to ask me this and I honestly don't know what to say about wheat because there's not like a clear seasonal expectation in wheat, there never is, which is one of the reasons why I think a lot of producers do tend to just sell off the combine at harvest because there isn't necessarily always a harvest low, it's usually an okay time to do it. And it's just so volatile and it's so based on what is going on in the rest of the world. It's actually the European wheat futures are the ones that sort of triggered this slide and the Kansas City futures have since outpaced them in this downward movement. But because you don't really have any sort of expectation that it's necessarily going to recover but it might recover if something else strange happens in Ukraine or Russia, it's a really tricky answer. And like I said, it's $9 wheat, it's not wrong to sell $9 wheat.

Yeager: Well, and the Russia story, there's this oh all of a sudden Russia has all of this wheat on the market and the thought is they're stealing it from Ukraine. So what is that doing for maybe the global price and the global outlook?

Kub: Absolutely, I think that is absolutely the reason why that European wheat futures did trigger this slide, did start sliding. The Financial Times had a really good investigation where they had satellite imagery of grain ships being loaded out of Crimea, which doesn't grow a lot of wheat, so it is wheat that has been stolen or coerced from Ukrainian farmers and then the waiting says Russia. So that is absolutely what is happening and I think it is completely bananas to think that that would send the price of wheat down to know that stolen grain is coming on the market. But from a supply and demand perspective it is relieving that Middle Eastern wheat market, it's getting into Turkey and Syria, and so that is absolutely what is happening.

Yeager: The market might not necessarily care where it comes from as long as it gets to --

Kub: The supply is there.

Yeager: Okay. All right. In corn, we're dealing with this whole knee high by the 4th of July, we're past it, we've always been past that --

Kub: No, not this year.

Yeager: That's the thing, this year it actually is lower, it's behind schedule. What is that doing to this market?

Kub: Well, yeah, it's a funny time for corn condition ratings and where I'm from in the eastern Dakotas it is short but I have short knees, it absolutely is knee high by the 4th of July.

Yeager: Always is, right?

Kub: Yeah, so this is fine. But it is interesting, I think it will probably catch up. The more interesting thing is the flash drought scenario sort of in Southern Minnesota, portions of Iowa, there's a streak of it from Missouri into Indiana. So there's places where they really do need this rain and we're getting the rain. In fact, I was driving through, on the drought monitor there is a little red spot south of Sioux City and as I was driving through there today it was raining. So you've got to think we've got three days --

Yeager: I'm being told Sioux City wants you to drive back through there on your way home.

Kub: Absolutely. So we have three days of weather before the market is going to open back up again on Tuesday. So it really depends how much rain happens and where it happens and who chooses to respond to that. Do farmers choose to respond to that rain by selling more or do speculative traders choose to response to a lack of rain by putting in more risk premium? I really couldn't predict what's going to happen on Tuesday but I suspect there will be a large movement one way or another based on this weather.

Yeager: But that was also a school of thought going to the whole people are selling, maybe it's the speculators, maybe it's not. Ahead of that such a long vital volatile window and that is maybe most of this? When are we going to sort that out?

Kub: Yeah, this is the time of year, absolutely. This is not a coincidence that we're having a big market movement at this time of year. I looked back, you remember 2012, 10 years ago this is when we had that big vertical run up because this is when the market looks around, can really make a confident prediction about yields because it is knee high, it's at a growth stage where you can be pretty confident about how yields might eventually turn out in a normal year. So this is absolutely, it happened in 2008, 2011, this is very much the time of year when the market sort of gets an overall feeling for what the crop is going to do and trades correspondingly.

Yeager: The market is saying prove it and finally maybe the weather is proving that it's that way. All right, soybeans because that is also the same story similar in beans. However, less acreage, there was some thought that we were going to have less acres but not this much. But there's a caveat. It's like the USDA got an extension on its term paper. Right?

Kub: Yeah, very much so. They put out a number, which is an ostensibly bullish number, saying we'll only have 88 million acres of soybeans planted instead of 90 million acres. So if nothing else changes and you took those millions of acres off, there goes your 280 million bushels of ending stocks. Ending stocks would effectively go to zero. That's not what is going to happen. But you're absolutely right is that these 88 million acres that they put out in the June acreage report is an asterisk because at the time when that survey was done in mid-June there were still soybeans being planted in North Dakota and they have acknowledged that and they sort of tried to build that into that number but they do very much expect to put out a revised number in August. So eventually the supply and demand tables will reflect reality, but for now the markets just either ignored the number or were reacting to other things including the weather.

Yeager: Okay, so behind the scenes here this is the Market Analysis segment. We're going to do a Market Plus, it's separate, it's a podcast, it's on video. We have a bunch of questions that we'll dive in more to what Elaine is saying. But we also ask for social media questions and right now let's go to the one, let's go with Russ in Postville, basis question gets our attention for Elaine. If so much grain is still on the farm, why are basis levels so high?

Kub: Yeah, that was another really interesting part from the reports this week is the on-farm stocks of corn specifically was 22%, which is higher than usual, higher than last year, higher than most years, which is very clever. I think farmers knew going into this year that we relatively short supply or short stocks to use ratio and so they had a feeling that there would be a summer run up and a tight supply or tight market for corn this summer and holding onto some of it. Great move. But he's absolutely right to point out that basis is variable. Again, I'll use the word variable because it really depends on where you are. In Iowa, actually Eddyville is like 35 over so you've got $8 corn opportunities to sell in Iowa. But it's all really dependent on transportation costs. That is the textbook thing about basis, right, it's a reflection of local supply and demand and transportation costs. So if you're in the Dakotas where you've got to put a lot of rail freight on that you could have a dollar under basis. If you're down in the Panhandle of Texas where you're screaming for grain and there is a drought basis could be a dollar over. So there's just a very, very wide range of cash prices for corn specifically right now, it could be $6.40 to $8.40, it depends on where you are.

Yeager: I think it's you that said this but really all basis is local. It's like the old saying, all politics is local. And that matters and so everybody's story is different.

Kub: And when fuel prices are like this it makes everybody's situation so wildly different. It will drive down the prices at the farm gate for people who have to put a lot of freight to get it to a market and drive up the prices for the end user. So nothing good happens when you have diesel at $6 or whatever.

Yeager: Let's go back to Texas, cattle country, this is a story that continues to see higher numbers of cattle getting processed. Is that what -- why is that not reflecting in an up market this week?

Kub: Well, actually the cash market was steady to a dollar lower, like $1.38, so the cash market held up better than the futures market did. You're absolutely right to point out that there's kind of a bearish feel for the live cattle and for the beef sort of wholesale prices themselves going into July, going into mid-summer. There's sort of a sense that they will be a little bit oversupplied because the packers were so, had such a strong appetite in June. So yeah, I think there's some headwinds there for the live cattle market. But feeder cattle, my goodness.

Yeager: What's going on in feeder cattle?

Kub: My goodness, so there were some hot, hot sales this past week. Bassett, Nebraska had six weight calves at like $229 and that wasn't just a fluke, there were multiple lots that sold there. Mitchell, South Dakota $210 I want to say. So even though overall, and this isn't a really strong time of year to see lots of numbers, but when you've got a room full of bidders that really wanted to put these animals on feed despite the prices of feed, they can really get in there and bid up those calves. So that was exciting, that was a really exciting thing to see for feeder cattle.

Yeager: So what does that say long-term because there have been people sitting in this chair for the last two months that saw the summer as an improved time, then that time table got moved up. Did the time table move up? Or is this the beginning of a longer march higher?

Kub: Yeah, I think this is the way it's going to be. The supply of feeder cattle that are not already on feed, because we do have more of them on feed than usual because of the drought and such, so the supply that are out there to be bought yet that aren't already on feed is down something like 3%. This will continue to be the case for the foreseeable future because out breeding herd is of course diminished by this drought.

Yeager: In the hog market though, down this week. Is that -- the pigs and hogs report was not viewed the most positive?

Kub: No, the problem with, yeah the hogs and pigs, the breeding herd, the whole herd, the market herd, everything was down about 1%, but particularly when you looked into the fall and winter timeframe, the October and December contracts, the market seemed to be saying down 1% is not down enough, that there is this expectation of oversupply going into there I suppose because China is not buying as much as they were, rebuilding their own herd. And so the market is trying to keep up with that expectation but just not fast enough.

Yeager: I'm going to tease to our Market Plus and one of the questions that we received is about the demand globally for the meats so we'll keep going on that one. We're going to end in the last 10 seconds here, I want to quickly talk about oil. That is still hovering above 100. IS that going to stay in this area?

Kub: Sure, the oil is one thing, it's the refined products that are the killer for agricultural producers and for consumers just driving on their summer vacations. I mean, this is the trouble is the refinery capacity.

Yeager: The refinery capacity, we'll put a pin and keep going. Thank you, Elaine.

Kub: Thanks, Paul.

Yeager: It was a long question, it's all on me. That's going to do it for this installment of Market to Market. We'll talk more in Market Plus so join us there. Find that on our website of And all of these resources as a reminder are free. Now, here's this week's assignment. We want to hear from you. Send us a photo of you in your field. It may not be knee or head high by the 4th of July. Email that to us at Next week, we check back in with two producers on their crop's progress. Thank you so very much for watching. 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.