Market to Market (March 22, 2019)


Coming up on Market to
Market — Record flooding washes over
several states… And the vice president
gets a first-hand look at the devastation. As one family returns
to the farm, others are creating challenges
by leaving. And market analysis
with Sue Martin, next. ♪♪ Pioneer Hi-Bred
International is a proud sponsor of
Market to Market. 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, March 22 edition of Market to Market, the
Weekly Journal of Rural America. ♪♪ Hello, I’m
Delaney Howell. If all we need is a little
patience, the Federal Reserve is leading
by example. This week, the Fed left
its key interest rate unchanged and projected
the same “hold steady” sentiment for the rest
of 2019 — which some observers translated to a
dimmer economic outlook. Low interest rates helped
the housing sector snap a three-month skid in
existing home sales with a nearly 12 percent rebound,
the most since 2015. Gas prices have been on a
35 cent run over the last six weeks as high demand
arrives with the spring driving season. In much of the 10-state
region surveyed by Creighton University,
flooding was cited as an economic issue. The Rural Mainstreet
Index again went higher. The only pools
residents in many Midwestern states cared
about this week was how quickly the water
would recede. Flood records were set
in six states across 40 locations. Even after this wave
dissipates, conditions remain in place for
another round of flooding as more snow melt makes
its way downstream. 20 percent of the snow in
the Northern Plains melted Thursday. Colleen Bradford
Krantz reports. — Floodwaters continued
to rise across the Great Plains this week,
inundating dozens of Midwest riverside
towns and farms. The flood waters resulted
from a calamitous combination of substantial
late-season winter storms followed immediately
by a spring thaw. The disaster has left at
least three dead,stranded or killed large numbers
of livestock, and damaged thousands of homes
and businesses. The water has begun to
recede in some regions, including the Platte River
in Nebraska and parts of southern Wisconsin. Waters were still rising
downstream along the Missouri River as seen
here in Hamburg, Iowa. Nearly half of Iowa’s
counties have been declared disaster areas
by Iowa Governor Kim Reynolds. West of the Missouri
River, the Nebraska Department of Agriculture
was estimating the state’s grain and livestock
farmers are facing potential losses
of $1 billion. Steve Nelson, Nebraska
Farm Bureau: “It has particularly affected
cow-calf producers, well really any livestock
that’s outdoors.” Vice President Mike Pence
visited the state Tuesday to reassure residents that
federal disaster aid was on the way. Vice President Mike Pence: “Our message is this: ‘We’re
with you.’ And the American people are going
to stand with the people across the Nebraska,
across Iowa, across all of the eight states that
have been impacted by the severe weather
and the flooding.” Gov. Pete Ricketts, Nebraska:
“We really appreciate you coming to take a look
firsthand because this is the most widespread damage
we’ve ever experienced in our state in our
state’s history.” The Nebraska National
Guard helped the state’s ranchers Wednesday with
air drops of hay bales to stranded cattle herds. Local fire and rescue
personnel, like these from Chapman, pitched in to
rescue stranded residents. Woman in Nebraska: “We are
here waiting for a boat that is going to help
rescue a gentleman who was stranded.” Several Nebraskans
volunteered to pitch in and help the National
Guard deliver water to communities where the
supply was no longer safe or available. According to the Nebraska
Emergency Management Agency, roads and other
public property in the state sustained an
estimated $550 million damage, while private
property damage estimates were nearing $90 million. Sen. Ben Sasse, R-Nebraska: “It
really is an amazing thing to behold when you go into
shelters across Nebraska and you find people whose
houses were lost, and they show up at the shelter and
they want to be in the volunteer line…. They
said it’s just property loss. If they have their lives,
they and their kids want to be serving
their neighbor.” Flooding is expected to
continue for the coming week along the Mississippi
and Missouri Rivers as the spring melt continues. For Market to Market, I’m
Colleen Bradford Krantz. Giving up the city life to
go back home to the farm sounds like a
pitch to a movie. For one Midwestern
family, it is a reality. Our series continues
with a now-Kansas family adjusting to life back
where wheat fields dot the landscape. However, as John
Torpy reports in this installment, when the
family arrived back home, there were fewer people to
welcome them — creating a new set of challenges. Zach Meinders, Burrton,
Kansas:” It’s, it’s, it’s just being adaptive. So it’s a change. It’s a huge change. For Zach Meinders, his
return to the farm brought with it a
mountain of work. Almost a year ago,
Meinders, and his wife Joni Embree-Meinders,
moved back to rural Kansas to help operate the Young
farm, an operation that has been in Joni’s family
for three generations. Zach Meinders, Burrton,
Kansas:”It’s called just trying to stay ahead of
the game because if you’re not trying to stay ahead,
you’re going to fall behind and as soon as
you fall behind the five things that just piled up
behind you…You just keep moving forward if you
don’t, you’re going to fall behind.” For the Embree-Meinders
family, the move from Des Moines, Iowa to Burrton,
Kansas was all about timing. Zach’s help was needed
most with harvest of not one, but three crops,
making for a string of long days. Zach Meinders, Burrton
Kansas: “I get home at 10:00 at night compared to
getting home at 7:30, you know, don’t have
quite that time. I mean, I don’t see
the kids as much. That’s definitely, it’s a
no, it’s, it’s definitely known that I’m not seeing
the kids very much because I have one little boy that
goes dad, Dad, dad nonstop when I get home because
he hasn’t seen me.” The Young farm has
a diversified grain portfolio that includes
sorghum, milo, and Sudan on top of three mainstream
commodity crops wheat, corn and soybeans. Embree-Meinders also has
been instrumental in expanding the farm’s
cattle operation. Joni Embree-Meinders
grappled with her first harvest back on the farm
in mid-2018, balancing paperworkand
physical labor. She spent the first few
months unloading grain carts and working 120 head
of cattle with her son Colby. The new chores have
inspired Colby to dream about being the fourth
generation to work the Young farm. Embree-Meinders’ family
is happy she traded her dental hygienist scrubs
for a pair of boots. The long-hours working
alongside family and personal devotion to the
farm’s operation have become part of her
personal journey to rejuvenate rural roots
on the home place. Joni Embree-Meinders,
Burrton, Kansas:” But I also like getting dirty,
and I like being out of the bins and I like
being in the field. And I love, I love the
cattle so it’s, it’s all pretty enjoyable. But the best part is that
it’s no matter what I do I’m doing it
for my family.” Alan Young, Joni’s
Father: ” I’m mean really originally thought that
she would be a good one to take over when dad
couldn’t do the bookkeeping anymore, she
could do that, you know, what she has agreed
to do and stuff. But also she was, I mean,
a couple days ago I was over at the farm and she
was in the truck with the gooseneck trailer. Whoa. Whoa. Uh, hooked on behind it,
you know, and she was driving and they were
moving one group of cattle back over to the farm and
Colby was helping with four wheeler and, and so
that left some of the other people to do other
jobs, you know, so that, that was really great.” While Zach, Joni, and
their three children enjoy living in a rural setting,
they know moving back to the farm is
bucking the trend. According to data from the
University of Kansas, the number of people living
in Burrton peaked in the 1980’s at 976. The population has been in
steady decline, impacting the town and its
economy ever since. Pastor Kim Andrews,
Pleasant Grove Methodist Church: “I think it’s
great that they’re coming back. I think it’s a maybe shows
to our young people, young couples, Hey, you’ve got
something here that you don’t know. This is a little gem that
somebody has noticed and seen and is coming
back to uncover. And maybe you look at that
gym all the time and you don’t see at such a
special thing anymore. Maybe it’s lost
its luster. Maybe you just need to,
you know, shine at a little bit.” Pastor Kim Andrews has
served the congregation of the Pleasant Grove United
Methodist Church for six years and has watched the
number of parishioners filling the pews
slowly dwindle. Pastor Kim Andrews,
Pleasant Grove United Methodist Church: And we’ve lost a lot of
major important people here who were the grandmas
and grandpas and that knit us together. And um, so it’s a time
that the people who are here now need to decide
are we going to be now those folks for other
people that are coming up.” Pastor Kim Andrews,
Pleasant Grove United Methodist Church: “But
what she talks about in wanting to have a place
for her family and for her kids to connect with
the community and understanding,
she’s been there. You know, she’s seen
that she’s lived that. And so what may still look
kind of appealing to some folks here. She understands that maybe
the grass is actually greener here for
her and her family.” That greener grass has
lured many away from the south central Kansas town. Josh Durner, who is part
of the second generation to operate the State Bank
of Burrton, elected to stay because he sees
promise in the town’s location. Josh Durner, President,
State Bank of Burrton: “We’re in a unique
position in Burton. We’re 15 minutes from
Hutchinson, 45 minutes from Wichita, so we are
kind of a community that commutes to work
for the most part. We’re a very
old community.” Mainstreet has become a
shell of bygone businesses and the street itself
is in disrepair. The tax dollars available
to fix the roads have been decreasing along
with the population. Josh Durner, President,
State Bank of Burrton: We
need more people to come back and take an ownership
of the community. I mean, people that grew
up here lived here and they need for the, for
Burton not to dwindle off and disappear. We need more people
to come back.” The Embree-Meinders family
they is focused on farm and family as they
approach their first anniversary in Burrton. To make their return a
successful one, the couple feels that embracing their
community is key to their future in rural America. Joni Embree-Meinders,
Burrton, Kansas:” I’m all in. I’m here to do what my
grandpa needs me to do and learn what he
wants me to learn. But I’m also here to help
them wherever I can and at the end of the day when I
get ready for bed, I am so content. My heart is so
happy here.” For Market to Market,
I’m John Torpy. Next, the Market
to Market report. The impact of flooding,
African swine fever and trade all factored
into the markets. For the week, May wheat
gained 4 cents while the nearby corn contract
increased 5 cents. Traders appear to be
disenchanted on the news coming from China
in the soy complex. The May soybean
contract fell 6 cents. May meal improved
$4.20 per ton. May cotton expanded
$1.08 per hundredweight. Over in the dairy parlor,
April Class III milk futures added 43 cents. To say the livestock
market had an interesting week is underselling it. June cattle added $1.57. May feeders jumped $5.60. And the April lean hog
contract rocketed $9.53, another 14 percent jump. In the currency
markets, the U.S. Dollar index
rebounded 60 ticks. May crude oil added
23 cents per barrel. COMEX Gold increased
$10.30 per ounce. And the Goldman Sachs
Commodity Index improved 2 points to finish
at 433.65. Joining us now to offer
insight on these and other trends is one of our
regular market analysts, Sue Martin. Sue, welcome back. Martin: Thank
you, Delaney. It’s nice to be back. Howell: And we have
an exciting week. We’ve got a lot going on
in the markets this week and I think we really have
to start off the top here. We had a lot of social
media questions coming in about flooding, including
one here from Tim in Sparland, Illinois. He said, what kind of
impact is the flooding having in Iowa and
Nebraska going to have on the markets or production
to the rest of the country? Martin: Well, I think that
as we go into spring, first off it does have
the feel of a very late spring. We have this year is very
comparable to the year of 2010-2011 and to the
year of 1926-1927. And I think what happened
is everybody wants to think of 1993, but that
year the flooding came later after the
crops were planted. This one is different. And this one could
certainly, farmers are already behind the eight
ball to start, they didn’t get a lot of fall field
work done, so they need to kind of be able to get a
foothold of being able to get into the fields and it
appears it is going to be late. Now, the flooding is
probably going to still last another two to three
weeks as we see the snows out of the mountains
and out of the Dakotas continue to melt
and move south. But when we look at
planting, I would have to say there’s several things
that go into that mix. One is profitability, how
profitable someone is, that if they need to delay
their, or can’t get in and get stuff planted they
might opt to string it out and take prevent plant. And then if you have a
decision made with the trade negotiations between
China and the U.S. and that occurs by the end
of April well, you might see some plant more acres
of corn, they might have a little more optimism if
they’re able to get in. If they decide they’re
going to plant and they still get delayed because
it’s all going to come down to saturated soils
and how much rain we get in April to May. And so I think there’s so
many variables here that’s going to come into play
that this prospective plantings report at the
end of March is really not going to be a true
picture I don’t think. Howell: Okay. That’s definitely an
interesting perspective. Sue, when we look at
the wheat markets in particular we haven’t seen
quite as much flooding in the Dakotas but Kansas,
Nebraska, those areas have been getting
hit with floods. How much are we going to
have to see, how much more impact in floods are we
going to have to see before we see some
wheat acres abandoned? Martin: Well, I think
first off in the Dakotas, especially North Dakota,
they’re a little bit late in getting stuff to melt
and they started here this week. I think that when we look
at spring wheat, hard red spring wheat, I think what
we’re going to see is probably less acres
planted this year, maybe 4.5% less. But in the meantime,
Durham is looking like because of Minneapolis
wheat being the stronger child here for a while I
would say that Minneapolis Durham is probably going
to gain some acres, maybe as much as 5%. And the rest will come
down to possibly more bean acres and North Dakota has
really made a stand in bean acres anyway. Another thing that is
helpful to North Dakota is that some of these exports
that are going to China are going out through the
Pacific Northwest and that has been a Godsend for
that area because they have had a few years here
where things just weren’t moving real well on the
rail out to the Pacific Northwest and their basis
levels were horribly affected. So that is good
news for them. But as far as the rest of
the areas, I think that when we look at the hard
red wheat, winter wheat, even the soft red, I think
that we’re hearing that the month of April could
be a cooler and wet month and possibly into May. If that is the case that
is certainly, they’re already pretty well
saturated and that has kind of kept a lid on
wheat prices because usually when we’re going
through wheat breaking dormancy we’re hearing all
about how dry it is and everything but
that’s not the case. So moisture, subsoil
moisture has led a bearish feel over the market. And then our exports
have been a little slow. But the good news is
Russia is out, they’re pretty well sold out and
we think they oversold. We think they pulled
reserves and sold to make money. We have sanctions on them. And you have Australia,
well they’ve been getting hit with flooding in the
north, dryness in the south and this week there
was two tropical cyclones that were going
to hit them. They’re not going to be
sending wheat to China or anywhere. Howell: So maybe giving us
a chance to step in there. Martin: I think so, yes. Howell: All right. Sue, this week in your
newsletter you called corn the darling of the market. Explain to me the
sentiment behind that. Martin: Well, I think that
when I look at corn, first off we’ve been in such a
dismal, dull market and we’re going towards spring
planting and when I look at corn with China today
we had 300,000 metric tons reported, on Friday
I should say. Howell: Right, giving some
positive sentiment to the markets? Martin: Yes, it was, and
we had been hearing for a week that China was in our
market sniffing around and inquiring and what have
you and they bought 300,000 metric tons. That’s just I think the
tip of the iceberg. We think that China could
probably buy around 700 million metric
tons of corn. Howell: Do they have the
need for it with now what we see going on with
African swine fever, they’re backing off
their hog production? Do they have the
need for that corn? Martin: Well, I think
they do but it is being transposed because as they
have been liquidating out of their hog herd, I’m
hearing up to 40% of their sows gone, but as they’re
liquidating out of that and the consumer is
backing away from pork they’re shifting over to
other proteins, which means beef which is maybe
the less of all of them, and then it’s poultry
which is a big one and that is a big consumer
of corn and soy meal. Then there is also aqua
culture and in aqua culture it takes wheat for
feed along with soybean oil. So I think we’re going
to see some shifting. So I don’t think we’re
going to see quite the disappointment that we
think and if we’re not feeding it there we’re
going to be feeding it here because I think
we’ll expand our poultry industry and we certainly
have a lot of it. But also you’ve got Brazil
we’ll be shipping beef there. I think 70% of the beef
that China will import, they’re looking for a 20%
increase in beef, so I think maybe 70% of that
will probably come out of Brazil. Howell: Okay. When we look at what the
African swine fever is doing here domestically,
especially in the soybean complex, are we seeing
that add some support to our domestic prices? Martin: Well, as far
as for soybean meal? Howell: Are we seeing
producers here preparing to increase hog production
to send to China? And is that having an
impact in the soybean markets? Martin: I don’t think yet
because we had such a hard break into February,
which was interesting. We took April futures, for
example, down to 57.25, 57.12, right in there. And what was interesting
is that break did not take out last October’s low,
nor last August’s low, which was the
low last year. But in the meantime the
cash market broke harder because our production,
our pork production is up 4.8%. So by doing that we hit
like a 20 year low in cash prices. So in a face of that
they’re not going to expand just yet. It’s going to take to see
some prolonged prices. I think that when we look
at the processing for soybean meal it’s going
to be needed here, we are competing against
Argentina, they’re the world’s largest
exporter of soy meal. We’ve been competing
against Argentina for corn exports. South Korea has been
buying a lot of it from them. And then of course we’ve
got Brazil that is going to be coming online with
their second crop, looks like it’s going
to be a good one. So we’ll probably be
dealing with that. But as we go down the road
it’s expected that of this 2019 crop in Brazil that
they’re not, well their exports are going to drop
about 13.9, just shy of 14 million metric tons. It’s because they’re
looking at expanding in their own industry, they
need to expand their poultry, they’re trying
to get expanded in pork production and
cattle production. So I think they’re going
to be utilizing some of it, not to mention
for ethanol too. Howell: Okay. So I’m going to say
the prevent planting discussion for
Market Plus. Let’s talk about the
protein markets because they have all had an
exciting week starting here with feeders. Are we going to see the
feeder market continue this chug up or is this
just a short-term uptrend because of all the
flooding impacts? Martin: I think it’s more
longer term than that. First off the loss of
calves, for example, Nebraska is estimated at
50% of their calves is gone, Montana 20%, western
Iowa lost a fair amount of calves this year, more
than last year because we just were so bitterly cold
and with the winds that we had with the snow those
calves, if you didn’t get to them very quickly they
died within minutes. And so I think that when
we look at the less numbers of calf crop that
will be more as we go through the latter part of
this year into next year. The cows that have been
stressed and the bulls that are stressed, you’re
going to have open cows this fall, so the feeder
market I think more next year will feel this one. For now I think what it
has been is our feeder market broke because of
feedlots like in Nebraska and Kansas weren’t
taking cattle. So therefore buyers
couldn’t buy them because they had no place
to go with them. So it allowed the
market to break. But now we’re at the point
where wheat is breaking dormancy and you’re going
to start to see in April to May feeders coming off
of wheat pasture and I think the feedlots are
getting ready for that, moving cattle to market
even though they’re not as heavy as they should be,
they’re moving them so they can get their
feedlots in shape and get ready for the
next go around. Howell: All right. Let’s take the cattle on
feed report, save that for Market Plus as well. We’ve got to squeeze in
the lean hog markets. They had two limit up days
and an extended limit up day. Sue, how much
higher can we go? Martin: Oh, I think you
could see, first off I think the lead contract
April will probably take out 84.07. That was the high last
year for a lead contract. Granted at the time it was
a July futures that did that. But I think with all the
demand that’s going on right now and with the
interest with China buying, they’re our second
largest buyer right now behind Mexico, and they’re
taking, oh gosh, they’ve really jumped since
December in pork and they’re doing it
at a 62% tariff. So I think they haven’t,
of course we know they have a need for it, and
they did not back out on pork imports from Canada
while they banned everything else from
Canada that they were taking on the premise of
feeling frustrated about the CFO of Huawei, I guess
that’s how you pronounce it, don’t know. But the bottom line is
they have a need for pork. So when we look at this
industry the need is here and you look back at the
PED virus, which is I think a little smaller in
comparison to this, and you had hogs just go
parabolic, they started earlier, they started in
February, got up to 130 and then fell back a
little bit and then got to 134 in the June. Howell: Okay, Sue, I’m
going to break you off right there. I’m going to save that
to where we’re going for Market Plus. Sue Martin, thank
you so much. Martin: You’re welcome. Howell: That wraps up
the broadcast portion of Market to Market. But we are going to keep
this conversation going on Market Plus where we’ll
continue to answer more of your questions. You can find it
on our website at MarketToMarket.org. Thank you for helping us
reach a milestone on our YouTube Channel where we
post feature stories and Market Plus segments. Subscribe today at
Market to Market. Join us again next week
when we’ll break down the government’s planting
intentions report and more with a roundtable
discussion. So until then,
thanks for watching. I’m Delaney Howell. Have a great week. ♪♪ ♪♪ Market to
Market is a production of Iowa Public Television
which is solely responsible for
its content. Pioneer Hi-Bred
International is a proud sponsor of
Market to Market. 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.

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