Market to Market - July 15, 2022

Market to Market | Episode
Jul 15, 2022 | 27 min

Processing policy and legal changes in the meat industry. Opening Ukraine’s grain pipeline. Water quality remains a challenge for Iowa utilities and farmers. Market analysis with Chris Robinson.


Coming up on Market to Market -- Processing policy and legal changes in the meat industry. Opening Ukraine’s grain pipeline. Water quality remains a challenge for Iowa utilities and farmers. And market analysis with Chris Robinson, 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.  

Sukup Manufacturing Company -- providing equipment and buildings to store and condition grain to help farmers adjust to market swings. We build drying, moving and storage equipment designed to preserve the quality of their crops. Sukup Manufacturing -- store now, profit later.


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 15 edition of Market to Market, the Weekly Journal of Rural America.


Hello. I’m Paul Yeager.

We saved, we spent, we waited.

The global pandemic prompted government stimulus checks that were promptly squirreled away, doled out for a new deck or a payment in January for a new couch that finally arrived last week.

The Consumer Price Index marched higher again in June - this time by 1.3 percent driven mostly by higher fuel prices.

The core rate strips out the volatile gas and energy sectors and was up 0.7 percent last month.

AAA reports the national average for a gallon of regular gasoline has dropped to $4.58, almost two bits lower than a month ago.

The upward pressure remained in the Producer Price Index which reflects supply conditions of the economy. The wholesale level rose on the month and 11.3 percent year over year.

Consumers showed resilience in June pushing retail sales 1 percent higher as Americans still purchased non-essentials like gadgets and furniture.

The links in the supply chain on either side of the meat processing industry have been concerned about prices for years. Earlier this month, Sysco, one of the largest distributors of food, claimed collusion and price fixing among the big four packers via a lawsuit. 

Enter the smaller processors to the fray in an attempt to relieve supply-chain challenges and increase their market share.

John Torpy has a conversation with those leading the charge.

Owners of small and medium size meat processors from across the country gathered in the Midwest this week to examine what the future might hold for their industry.

Darla Kiesel, Incoming President of American Association of Meat Processors: ”We're struggling with the same things that the big Packers are struggling with.” 


Darla Kiesel is the new president of the American Association of Meat Processors, a trade association representing multiple businesses within the meat processing industry. Kiesel notes,  confronting labor issues and adapting to changes in government regulations are a different struggle for her association members.

Darla Kiesel, Incoming President of American Association of Meat Processors: “ A lot of times we look at what the JBS’s, and the Tyson's and the National Beef are doing and these are great companies. The problem is that that doesn't always trickle down to the small processor. Our smokehouse is very different than the big boys.And so we have to look at ways with AAMP that we can support our meat processors and help them to fix their situations with the Appendix A and B, which is the cook, cooking and cooling of meat products.

Another subject on the table was how to manage the enormous increase in business during the onset of the pandemic, when larger processors were forced to temporarily close. John Tiefenthaler, co-owner of Tiefenthaler Quality Meats in Holstein, Iowa says while the increase in business has been great, managing the increased volume of new orders has proven stressful.

 John Tiefenthaler, co-owner of Tiefenthaler Quality Meats: “ We're a small family company, and we’d have guys call with semi loads full of pigs and think that they could bring them to us and market them through us.And we're not that scale. We're really not. But and the pandemic has continued to push us to this. Everybody wanting to schedule every you know, we're just so limited on capacity. Our building is only so big. We can only roll so many beef and pork through a week that everybody wants to get in today. And unfortunately, we can't take care of everybody.

While the pandemic placed a lot of pressure on small to medium sized meat processors, association members like Tiefenthaler see it as a mixed blessing.

 John Tiefenthaler, co-owner of Tiefenthaler Quality Meats: “We were always busy and steadily kept busy. But today I just get so many calls, more people wanting to get in, more people wanting to get in. It's just, it just continues on.”

Attendance at this year’s conference is on track to be the largest in the gathering’s 83 year history. Organizers estimate roughly thirty percent of the attendees represent new processing facilities. 

For Market to Market, I’m John Torpy.

Multilateral talks have opened the door to getting Ukraine’s grain out of ports and onto the world market.

David Miller looks at the intricacies of brokering a deal.   

Harvest is underway in Ukraine despite nearby fields being on fire and the need to avoid shell holes or unexploded ordnance.

Up until late this week, there was no assurance the 22 million tons of grain trapped inside the eastern European nation would flow out of the country at its normal rate. After five months of war, the door to increasing exports cracked open just enough to give Ukrainian farmers and worldwide customers a glimmer of hope when negotiators from both sides met in Istanbul, Turkey. 

Before the Russian invasion, Black Sea ports were the primary route for the export of up to seven million tons of grain per month. Currently, the war has cut that number by two thirds.

The effect of severely reducing the flow in the grain export pipeline has increased food insecurity in African nations. Before the war, Ukraine sent 30 percent of its harvest to Europe, 30 percent to North Africa and 40 percent to Asia. Ukraine is one of the world’s largest exporters of wheat, corn and sunflower oil.

According to Turkish Defense Ministry officials, the agreement gives joint control of ships traveling in and out of the affected Ukrainian Black Sea ports. Turkish officials say there will be an agreement to sign next week but experts are cautioning the move won’t have an immediate impact on grain exports.

For Market to Market, I’m David Miller.

This week’s Drought Monitor revealed a slight improvement in dry conditions as an active weather pattern over the Midwest and Southeast provided ample rain.

Tile lines picked up with intensity on the moisture.

Water quality monitors are watching the flow to see what’s in the stream.

Josh Buettner reports in our Cover Story the improvements made in keeping more nutrients in the field.

Iowa is a leader in several farm commodities, but collateral damage – in the form of runoff-impaired waterways – has spurred legal actions designed to thwart pollution linked to agriculture.  While ultimately dismissed, those moves may have helped cultivate renewed interest in farm conservation.

Ted Corrigan/CEO & General Manager – Des Moines Water Works: “Because our lawsuit went away, the Raccoon River did not clean up.  The Des Moines River did not clean up.  There’s still nutrient contamination that still needs to be addressed and we want to have those conversations.”

Ted Corrigan is current CEO and General Manager of Des Moines Water Works, which sued farm drainage districts upstream in 2015 over excess nitrates the utility must remove in order to deliver federally compliant clean drinking water.  

Ted Corrigan/CEO & General Manager – Des Moines Water Works: “We’re never going to be off the river.  We’re always going to need direct surface water at Des Moines Water Works, and so we are always going to fight for water quality.”

Critics charge excess fertilizers and manure, applied year-over-year at similar rates, can build up during drought – and flush out of fields with ever-wetter spring rains.

Chris Jones/Research Engineer/Iowa Institute of Hydraulic Research – University of Iowa: “This is a nitrate sensor.”

The University of Iowa maintains a statewide network of roughly 70 streambank monitoring sites.  The real-time data helps chart progress toward the state’s water quality objectives.

Iowa adopted the Nutrient Reduction Strategy in 2013 – a voluntary, open-ended approach to drop nitrogen and phosphorus loads by 45 percent.  The program’s own assessments found over 90 percent of the state’s nutrient flows were generated through agriculture.  Scientists have long tied farm pollutants in the Mississippi River watershed, where Iowa is grounded, to the Gulf of Mexico’s seasonal low-oxygen Hypoxic Zone.

Chris Jones/Research Engineer/Iowa Institute of Hydraulic Research – University of Iowa: “As I always say, if you’re going to have a voluntary strategy – you need volunteers.”

Chris Jones is an outspoken Research Engineer with the University of Iowa who says the issue is driven by a combination of ubiquitous highly-efficient farm drainage tiles and relatively low uptake of methods like cover crops – which help slow the flow of water and nutrients off rural landscapes.

Chris Jones/Research Engineer/Iowa Institute of Hydraulic Research – University of Iowa: “There’s no magic bullet here.  We have a problem of scale.  We’re trying to farm every piece of farmable land, pretty much in the state.  We’re trying to raise 25 million hogs at any one time, and however many cattle and 80 million laying chickens.”

Jones says researchers estimate some $3 billion is required annually to adequately tackle the problem of flooding and water quality in Iowa’s watersheds – so private landowner investment is essential – but elusive.

Chris Jones/Research Engineer/Iowa Institute of Hydraulic Research – University of Iowa: “Can we ever get the water quality we want at the scale at which we are doing things?  Right now, I would say no we cannot.”


As needed, Des Moines Water Works employs their mammoth, but aging, nitrate removal facility – which costs around $10,000 per day to operate.  The plant was fired up again for 24 days this spring – the first time since 2017. 

Corrigan says inflation could bump operational supply costs by 10 percent in subsequent years.  Water Works plans to continue proactively drilling riverside wells to mitigate future nutrient surges.

The utility recently announced a groundbreaking partnership between Heartland Cooperative, Water Works, state, county and city authorities – to purchase a cover crop seeder and encourage more conservation.

Ted Corrigan/CEO & General Manager – Des Moines Water Works: “We see this single cover crop seeder as the beginning of a whole fleet of these across the state.” 

Sec. Mike Naig/Iowa Department of Agriculture & Land Stewardship:  “We believe that that’s the right way to approach these issues, is: science-based practices, and working together in partnership…and flat out – if you want to see improvement in the water, well then you’ve got to see change on the landscape.”

Ruth McCabe/Conservation Agronomist/Heartland Cooperative:  “We pitched the idea to the whole group and said: ‘You know, we know this is crazy, but what do you think about trying to do what Kansas City did?’ – And there were four public entities that didn’t laugh us out of the room.”

Senior Conservation Agronomist Ruth McCabe modeled Heartland’s project after a similar regional approach.  While some local funds trickled down to Iowa through President Biden’s American Rescue Plan, participants would still be on the hook for seed and application fees.  McCabe says while other cost-sharing programs could allow some first-time adopters to break-even, she’s witnessed much more aggressive measures in watersheds tied to the Chesapeake Bay in New England.

Ruth McCabe/Conservation Agronomist/Heartland Cooperative:  “I think if a farmer could get $80 an acre to use cover crops, I think we’d see a heckuva lot more cover crops on the landscape in Iowa.  LAUGHS.  I can almost guarantee that.”

The Iowa legislature has claimed strides toward funding clean water initiatives, but environmental groups say the 2022 session was business as usual.  Attempts to funnel tax dollars toward a water quality amendment, as passed overwhelmingly by voters over a decade ago, were shot down once again.  State authorities cite a $5 million federal cash infusion for a partnership in the Gulf Hypoxia Task Force, as farm interests try to chip away at the problem while avoiding the specter of intrusive federal environmental regulations.

For Jones, measures he says lack accountability are still not enough to move the needle - as rural influence can drown out urban concerns on this topic.

Chris Jones/Research Engineer/Iowa Institute of Hydraulic Research – University of Iowa: “We really need to look at some common sense things.  We farm right up to the stream banks all over Iowa.  Why do we do that?  We need rules about what can be farmed, what inputs should be used, and the amount of inputs – if we want water quality.  If that’s our priority, we have to be able to talk about things like that.”

For Market to Market, I’m Josh Buettner.

Next, the Market to Market report.

The weather refused to yield the steering wheel of trade, even in a week of USDA news. For the week, the nearby wheat contract plummeted $1.15 or 13 percent, while September corn dropped by 29 cents. Drier forecasts coupled with a cut in demand provided guidance in the soy complex. The nearby soybean contract lost 47 cents. August meal shed 30 cents per ton. December cotton fell $6.92 per hundredweight. Over in the dairy parlor, August Class III milk futures declined by $1.61. The livestock sector was higher as August cattle added 98 cents. August feeders put on $4.62. And the August lean hog contract improved 65 cents. In the currency markets, the U.S. Dollar index jumped 111 ticks. August crude oil lost $7.10 per barrel. COMEX Gold cut $37.80 per ounce. And the Goldman Sachs Commodity Index fell almost 24 points to finish at 670.50.

Yeager: Joining us now to provide some insight is Chris Robinson. Welcome back, sir. We spent so many weeks writing words for the markets going higher. Now we're running out of words to say the market is going lower. When we start with wheat, plummeted is not accurate. Bottom fell out of the contract. What is happening?

Robinson: Collapsed. Well, we saw that wheat stocks were tight. We began the year we knew that. And then we really accelerated with the whole Ukrainian issue and you saw when Chicago wheat went from $6.50 to $10 most people are like that's a great price. That last $3 was really a combination of Iowa think panic speculation and then we had the daily reminder that inflation, inflation, inflation. So anybody that had missed the year and a half rally, which really is started at the bottom of that March low, March 20th, 2022 when we shut down the economy for COVID, that was the bottom. So we had this huge rally, everybody missed it and it was interesting, as soon as all the news was out, you had the UN saying we had six weeks left of wheat. That was almost the top within three or four days. What happened? The market repriced, I think that reality kind of came back in. But to see wheat completely lose the entire rally, we're back to where we were in February/December. So 2022, if you had fallen asleep in December and just woke up today, you missed that whole situation. So it was unusual.

Yeager: So what do you do now? You've missed the party. Can you still get an invite?

Robinson: Well, I think most people, when we were at 10, 12, 13 year highs most people I think did some sort of hedging or certainly if they hadn't they've learned a lesson that when you have those rallies like that, that's when you really need to be doing some sort of risk management. I understand people are afraid to sell ahead because they might not grow the crop. But certainly this is the first time probably in a decade, probably since the '08 move where we had that big move where people start to wake up to the importance of using puts, that's really what it comes down to. You get your risk on paper, you don't have the risk of delivering and you can capture some of that revenue.

Yeager: Corn and wheat are often tied together. Are there those that buy and sell corn, should they be looking and learning from the wheat stories they look at their crop?

Robinson: Right, wheat typically takes the sell side of that spread, people will buy corn and beans and sell wheat and you've seen that really aggressively in the past, really in the past two months as wheat turned first and then we saw what happened with corn and beans as well. And again, we were right at that critical, critical time and sometimes that's not even a bunch of new selling came in, there's no more buyers left. And this has been an interesting year. We haven't had a year like this really, you'd have to go back to '08, maybe '12 where we've had these types of swings. So it has been a learning lesson. And I think a year and a half ago we started seeing volatility pick up and I think that I would imagine that volatility is going to remain for the next year, year and a half, especially as we figure out what is really going on with inflation and what is really going on with are we entering this recession?

Yeager: Well, that's a very good transition to our social media question that we have. Shane in Bloomfield, Nebraska is asking, given the 9.1% inflation currently, the new crop price for corn seems undervalued. Does yield and inflation balance each other out or do they support each other for a new trend in this market?

Robinson: Well, we had a two year $4 rally in corn. That was your inflation rally if you look at it. And then in two months we lost half of it. So the correction was extreme, we've come back down to that midlevel. These halfway back trades are very important, it gives everybody a chance to re-evaluate what is going on. I know there's a lot of arguments out there as to if you do the inflation adjusted corn, but I think that you can get too far in the weeds on that. What really matters and I think for viewers what really matters is that spreadsheet number. What were my inputs? Where can I sell it? What is my basis? And as long as that is a healthy relationship I think that worrying about where it is for inflation adjusted it's kind of an exercise that I wouldn't spend a whole lot of time on. I get it, it is something to watch, but at the end of the day demand trumps everything and you will see that. You saw that back when we had leading up to the whole Chinese --

Yeager: Well, the Chinese, they always seem to have some story, it doesn't really matter what it is.

Robinson: Right, when we had the tariffs, they didn't care, they kept buying it. In fact, they aggressively bought for two years in spite of the tariffs and in spite of the high grain prices. So if somebody needs something, if they want the product they'll come get it. You've seen that here, we were talking about wheat, yesterday we had one of the biggest wheat sales we've had in a long, long time. Well why not? Because wheat just lost $5 a bushel, they're going to step in there. So I think that is more important, to answer that question, demand.

Yeager: Okay, let's get into the soybeans. China and soybeans always go together. But you also mentioned the balance sheet of things. All of a sudden there was out of this USDA report kind of some missing numbers. What's the story?

Robinson: Well, those numbers really weren't that bearish. Most analysts I think if you survey everybody that talks about this it really wasn't that bearish. The interesting thing was they took away, they already took away 75 million bushels of demand for next year's soybeans. So they're factoring in the recession, a worldwide recession. So that I think was to me the most interesting piece of information in the last data dump. And if you look at the actual numbers, if we have any yield problems with soybeans we're back to pipeline supplies. So those numbers are going to be very, very key. I think the WASDE numbers are going to be fixed point in times where we're going to continue to have we call them price discovery days where we have 40 cent trading ranges as the market figures out where it wants to go. So that volatility is not going to go away especially when there's arguments about what the carryout is going to be.

Yeager: You mentioned weather as a story in your newsletter this week. Is the weather factor, how big of a driver is that new crop beans?

Robinson: For new crop beans, I don't think it's that big a factor yet because beans are made in August. Really what is driving us now is what is going to happen with corn pollination. And we saw a week ago Sunday it was hot and dry and people could not own enough corn. After that $2 break we were right back up to $6.50, $6.58 new crop corn. That was a huge rally. A lot of people thought it's game on, it's 1988 all over again, here we go or it's certainly 2012 all over again. That did not come through because 24 hours later we were back down on the lows and that was I think the carryover from the concern that we're heading into or possibly heading into a worldwide recession. The managed money, the money flow has trumped I think the fundamentals right now because that's the only reason, you saw crude oil break $23 a barrel, you saw cotton, every commodity out there had a tremendous selloff. As soon as Chairman Powell mentioned the possibility that we'd have a recession they have sold every rally and they have rightened that position up and that is what has really helped push a lot of these commodities down.

Yeager: I'm going to have to get your thought on cotton in Market Plus. I need to move to cattle quickly. For the sake of this, we'll have another question about it in Market Plus, there's these sales in Texas and other big areas. Is that driving the market higher or is this we're benefiting from lower grain?

Robinson: Well, the herd is getting smaller. It's going to be I think the smallest herd in at least 8 years that we're expecting. I think it dropped another 3%. So the herd is getting smaller and that is not really that surprising. You've had input costs go through the roof for everything, diesel, now you've had that drought in Texas which has really hurt. If you can't feed the animals people are not going to keep buying feed for the animals. They hay has gone from $50 a barrel to $100 to $150 a bale, excuse me, not a barrel. So your input prices have doubled and tripled, people are going to make the decision and it's a painful decision I get it, but we have to reload. We can't keep throwing good money after bad. So yeah, you're seeing these animals come to market. There's a silver lining to that. We've had actually a rally recently. When corn dropped $2 that took a lot of heat off the feeders. Feeders we've had a nice $17 rally. We had a four month high. So there's always a silver lining to it. I know what's going on in Texas there is a sad situation but I think that is more local, that drought is very, very bad.

Yeager: Real quickly on hogs, we finally reversed a trend. Does that continue higher now?

Robinson: We've had really good demand and I think that is something to continue to watch. We broke out of that range for a long, long time. We couldn't get through this price resistance. I think the other thing is too you get this natural thing, we talk about money flow, money flow is coming probably back into the long side onto the pork complex because the idea is well, if the economy slows down people aren't going to buy beef, they'll buy more pork. So I think that is going to be supportive there.

Yeager: I have to put a pin in it. We'll keep it going in Market Plus. Thanks, Chris. As I said, we'll pause Analysis, we'll continue with Chris and answer more of your questions that you submitted in Market Plus. Find that on our website of It will be both in podcast form as well as on YouTube. All of these resources, by the way, are free. Stay away from the summer slide in your knowledge in our Market to Market Classroom. Check out our modules offered on the 1980s Farm Crisis, science and technology as well as the role of government. Visit to enroll. Next week, we look at the sunflower industry adjusting to global changes. Thank you so very much for watching and have a great week.




Trading in futures and options involves substantial risk. No warranty is given or implied by Iowa PBS or the analysts who appear on Market to Market. Past performance is not necessarily indicative of future results.

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.  

Sukup Manufacturing Company -- providing equipment and buildings to store and condition grain to help farmers adjust to market swings. We build drying, moving and storage equipment designed to preserve the quality of their crops. Sukup Manufacturing -- store now, profit later.


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.