Market to Market (February 7, 2020)

Market to Market (February 7, 2020)


Coming up on Market to
Market — Presidential praise for the economy. The EPA stands
up for Roundup. Filling the gap in
the trucker shortage. And commodity market
analysis with Tomm Pfitzenmaier, next. ♪♪ Pioneer Hi-Bred
International is a proud sponsor of
Market to Market. 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, February 7 edition of Market to Market, the
Weekly Journal of Rural America. ♪♪ Hello, I’m Paul
Yeager, Delaney Howell is away this week. A winter storm stretching
from Texas to New York has already taken more than 5
lives and cut power for several hundred
thousand customers. The storm rounded out a
week where politics took center stage in
rural America. A messy caucus Monday led
to Tuesday’s State of the Union and Wednesday’s
acquittal of the President. As of Friday, the results
for the Iowa caucus were too close to call with
all eyes switching to New Hampshire. Iowans travelled to rural
city locations on a winter’s night at the
beginning of the week to officially cast support
for their presidential candidate as part of
the Iowa Caucuses. Gathering in church halls
and high school gyms, the results of what was
decided that night were delayed on the Democrats’
side of the process of picking a nominee. Iowa Republicans picked
President Donald Trump as their winner as he went in
front of America the next night, delivering his
third State of the Union address. The President focused on
many things, with the biggest applause lines
from his statements about the economy. Donald Trumps: “From the
instant I took office, I moved rapidly to
revive the U.S. economy – slashing
a record number of job-killing regulations,
enacting historic and record-setting tax cuts,
and fighting for fair and reciprocal trade
agreements. Farmers were mentioned
once in reference to new trade deals. However, the National
Farmers Union responded to claims made by the
president about the “great American comeback” with a
statement that farm debt has climbed to its highest
level since the 1980’s farm crisis. Farmers and ranchers
continue to take the brunt of the trade war even with
a signed cease-fire in place. Chapter 12 bankruptcies
increased in 2019, but are still below historic highs
according to a report by the American Farm
Bureau Federation. The increase of 20 percent
– almost 600 farms – is the highest filing rate
since 2010, the year following the
Great Recession. U.S. Farmers began receiving
the third tranche of MFP 2.0 payments this week. The federal government has
joined farmers in saying “trade not aid” but is
making the payments to help offset losses from
the U.S/China trade war. In the month leading up
to the announcement, the nation’s economy
added to its gains. – Last month, 225,000
jobs were created – in line with the Fed’s
overall expectations. The unemployment rate
moved up 0.1 percent to 3.6 percent as more people
tried to return to the workforce. The Creighton University
Mid-America Index pushed seven points above growth
neutral with help from the USMCA and Phase
1 trade deals. However, the survey was
conducted before the coronavirus began putting
pressure on the regional economy. – Since its introduction
in 1974, glyphosate, marketed under the name
Roundup, has had a significant influence
on global agriculture. Many GMO crop varieties
were developed specifically to allow the
direct application of the weed killer. Peter Tubbs has more as
the EPA stood up for Roundup. The Environmental
Protection Agency has issued an interim decision
on one of the world’s most productive and
controversial weed killers. The regulatory review by
the EPA reaffirms the agency’s stance that
glyphosate does not cause cancer. Glyphosate, the key
ingredient in Bayer AG’s Roundup, has been the
target of litigation charging that exposure
to the chemical leads to cancer in its users. Multiple juries have
awarded millions to cancer patients who believe their
illnesses were caused by the herbicide. The EPA judgement follows
similar findings by regulatory bodies in the
European Union, Australia and Canada. In 2015, the International
Agency on the Research for Cancer declared glyphosate
a probable carcinogen. The EPA claims it
considered a larger dataset than the
IARC to arrive at its non-carcinogen conclusion. The EPA also found no
indication that children are more sensitive than
adults to glyphosate, or that the chemical is an
endocrine disruptor. The EPA also considers
trace amounts of glyphosate in the food
supply to be safe. Bayer AG, which bought
Monsanto in 2018, has maintained that glyphosate
and Roundup are safe for both users and the
environment at large. The agricultural chemical
company is appealing the court verdicts
against them. Reuters is reporting the
agricultural chemical giant also has begun
settlement talks. The EPA is expected to
render its final decision by the end of the year. For Market to Market,
I’m Peter Tubbs. It’s not something you
generally think about when picking up a delivery off
the porch but chances are it got there by truck. According to the American
Trucking Association U.S. trucks moved nearly 11
billion tons of freight in 2017, generating about
$700 billion in revenue. The number of drivers
bringing you goods from faraway places is starting
to decline, but there are a growing number of people
who are looking to make the open road
their office. Colleen Bradford Krantz
has more in our Cover Story. These truck
drivers-in-training don’t typically sign up at Iowa
Central Transportation Technology Center because
of reports about a national shortage
facing the occupation. But the Fort Dodge, Iowa
facility’s staff, who train the students to
handle 80,000-pound semi-trucks, are happy to
see the men and women walk in the door. This training center and
others around the country know that the U.S. needs another
60,000 drivers. The first signs of a
shortage were seen in 2005, although things
improved for a few years. The trend took a turn
for the worse in 2011. The shortage has grown by
about 500 percent over the past 8 years. Officials with the
American Trucking Associations say the
shortage could climb to 160,000 in less
than a decade. Dean Fryar, Transportation
Technology Center: “Eventually the driver
shortage will mean the companies can’t haul the
freight that they have been hauling in the past. And so then it’s going to
create delays, whether it be groceries or
other goods…It can cause…just a kind of
chain reaction.” Experts at the ATA say the
shortage is tied, in part, to increased demand for
shipment of goods, but also an increased demand
for drivers with a clean driving record. Dean Fryar, Transportation
Technology Center: “In my view anyway, the insurance
companies have driven it. In other words, the
drivers have to be very qualified now in order
to drive for trucking companies… They better have a squeaky
clean record in order to be hired.” At the same
time, the Department of Transportation, hoping to
limit fatigued driving, changed regulations in
2003 and 2005 to more strictly limit a semi
driver’s allowed hours behind the wheel
in a given period. Dean Fryar, Transportation
Technology Center: “The hours of service rules
have gotten stricter over the last few years. That’s also made a dent in
the amount of money that driver can make. And it has also made a
dent in the amount of drivers that companies
need because productivity isn’t quite
as much.” Those factors, combined with the
retirement of older drivers and a reluctance
among drivers to be away from family on long-haul,
multi-day jobs, have left the industry struggling. Deon Clayton, a
26-year-old from Fort Dodge, signed up for
classes to get his Commercial
Driver’s License. The idea of travelling
outside of Iowa sounded more interesting to
Clayton than the factory jobs he held in the past. Deon Clayton,
Transportation Technology Center, student: “I wanted
to do something where I could travel and that was
my main motivation for being a truck driver… I haven’t seen most of the
United States and I wanted to be able to get as many
states under my belt.” Clayton was only halfway
through the 11-week course when he was handed a
conditional job offer by an Iowa trucking company. He had no idea the nation
was facing a driver shortage until he
began his training. Deon Clayton,
Transportation Technology Center, student: “I found
out when I got here and was like, yeah, that’s
great because I was told that this is a good time
to be getting into the industry … Most students
get jobs before they even leave the program.”
Agriculture has yet to be affected quite as severely
as some industries. Many times, agriculture
products like livestock or grain only need to be
moved a short distance, allowing drivers to be
home most evenings. The idea of retirement
didn’t sit well with former farmer and
emergency medical service worker Don Greiner. The Missouri man agreed
to help a friend whose company hauls grain
and fertilizer. Don Greiner, truck driver,
Oregon, Missouri: “I can’t sit around and do nothing. I gotta be doing
something. So this is probably
as good as anything. I make a few dollars at
it and have a good time. I enjoy the people that I
work with and the other farmers…. (But) I don’t
want to be going over the road or something like
that where I’m gone two or three …nights a week.”
During agriculture’s busiest seasons, Greiner
might work longer days than before he “retired”
from his last job. Don Greiner, truck driver,
Oregon, Missouri: “I went to work at seven yesterday
morning and I got home about 10 last night. So 12, 14 hours or 16
hours aren’t out of the ordinary here during
harvest and planting.” An American Trucking
Associations survey shows the average age of
long-haul drivers is 46, younger than other
segments of the industry. The ATA suspects older
drivers or semi-retirees,such as Greiner, prefer
the shorter travel and avoid the long-haul jobs. The industry, which has
about 3.5 million truck drivers, believes the best
solution may be to bring in more women. Right now, females
represent less than 7 percent of all drivers. Bringing in younger
drivers may be another solution, but truckers
currently must be at least 21-years old to
drive an interstate tractor-trailer. Dean Fryar, Transportation
Technology Center: “I don’t foresee the shortage
getting any better anytime soon.” For Market to Market,I’m Colleen
Bradford Krantz. Next, the Market
to Market report. The USDA says it will
not include Phase 1 projections in
next week’s WASDE. Commodity traders are
expected to subtract China’s projected
purchases and recalculate carryout numbers. For the week, March wheat
rose a nickel and the nearby corn contract
gained 2 cents. Predictions of heavy rain
in South America and evidence the coronavirus
scare is fading, helped add a dime to the March
soybean contract. March meal fell
$1.70 per ton. Cotton expanded a quarter
per hundredweight. Over in the dairy parlor,
March Class III milk futures lost 37 cents. The livestock sector
finished mixed. April cattle put on 12
cents and March feeders cut $1.75. An announcement by Tyson’s
CEO that their pork exports to China were 600
percent above the same quarter last year helped
the April lean hog contract add $4.65, an
increase of nearly 8 percent. In the currency
markets, the U.S. Dollar index
skyrocketed 136 ticks. March crude oil lost
$1.19 per barrel. COMEX Gold plummeted
$15.80 per ounce. And the Goldman Sachs
Commodity Index fell a little more than a point
to finish at 385.40. Joining us now to offer
insight on these and other trends is one of our
regular market analysts Tomm Pfitzenmaier. Welcome, sir. Pfitzenmaier:
Thanks, Paul. Yeager: We have to
start with the dollar. I said 136 ticks. We got a question that
came in via Twitter this week that we thought
was a good one. This came in from Former
Farm Boy @ruralmidiowa. He says, I don’t see
any weakness in the USD anytime soon. So, what he’s asking,
why should we expect an increase in exports? So, you can answer either
part of that first. Why is the
dollar going up? Pfitzenmaier: Number one,
I think the dollar is going to continue
to get higher. The dollar’s value is
based on differentials, interest rate
differentials, and Germany had negative interest. I think that as long as
the interest rate in the U.S. stays strong, which I
don’t really expect any big change there, possibly
even could be moved higher if they think the economy
gets a little too hot. I would expect the dollar
is going to continue to be strong. As far as the second part
goes, I guess you have to make the assumption that
the dollar value makes a big difference. And I’m not totally
convinced that within a fairly wide range if
people need our products they’re going to buy them
and I’m not sure the dollar value
changes that much. We may be more subject to
the currency changes in Brazil and Argentina
than we are to the U.S., changing the dollar
value of the U.S. Yeager: We’ll get into the
cheapest one at the Gulf here in a minute
when we talk corn. Let’s start with wheat
though, Tomm, because there’s all those TV shows
on NBC, Chicago Hope, Chicago whatever, it was
Chicago wheat that was leading. Is that going to continue
to be a star of this market? Pfitzenmaier: I think so. That is the one everybody
trades, that’s where the volume is so I
would expect so. We’ve kind of been in a
trading range, bounced up a little bit. I think there’s another 20
cents up in that Chicago wheat contract up in that
$5.65 to $5.85 range. If you want to be a
seller, I think you need to be, I guess I’d scale
up somewhere up in that range and start
to make sales. Export sales continue
to be not that great. There’s plenty of wheat
around the world. There’s a lot of, as we
always have this year, is it too dry in the wheat
countries, is it too wet or is it going to come out
of dormancy too quick? All that stuff that goes
on every year is going to give us little bounces. But in the end I just
don’t think we can go that far. Yeager: All right. So you talk about
moving up sales. How long of a period
do I have to do that? Pfitzenmaier: I think
probably into the spring, probably pre-harvest. Yeager: All right. That’s on the
wheat market. But on the corn as we
were talking about just a minute ago right now the
corn market is struggling to be, it’s not the
cheapest at the Gulf and it is the cheapest in the
world at the Gulf right now, so why is that? Pfitzenmaier: It’s the
cheapest until April 1st when Argentine corn
becomes available and then that’s the cheapest. So we’ve got a window here
and we had good export sales as a result this
week, are probably going to have another three or
four weeks of good export sales as long as we have
that price advantage. When that goes away then
I’m expecting you’re going to see a pullback
in exports. Now, the China thing is
the big wild card in there so we don’t really know. The USDA said that
they’re, I guess I’d correct a little bit what
you said in the intro in that they have said
that they’re going to incorporate what
we know publicly. And there’s a lot we don’t
know that is not public. So that is why I think
people aren’t looking for all that much change in
the export estimates in the report next week is
because there just is a lot of unknown and from
what we do know there’s probably not a lot of
reason to change it much. Yeager: Are you surprised
at how much frankness sometimes the USDA has
been on making statements like this like, you know
what, we’re only going to talk about this? They didn’t
always do that. Pfitzenmaier:
A little bit. They tend to be a little
quiet about what they’re doing and kind of leave
a lot of uncertainty. So it’s kind of a little
bit refreshing in some respects to have
them tell us that. Yeager: That is surprising
when you see that. You do have a report
scheduled to come out on Tuesday. You’ve got some concerns
about the 2020 crop size when it comes to corn. Pfitzenmaier: I’ve got
tons of concerns about it. If we come back in, plant
most of those prevent plant acres, bring them
back in, and these reports that the USDA does this
outlook thing in February, that’s probably going to
use a trendline yield, that is kind of what they
always do, which is quite a bit higher than
last year’s yield. So if you use a trendline
yield, a big jump in acreage and demand that
doesn’t change all that much unless you’re one of
these that think China is going to buy us out of
corn, it looks to me like you could be looking at a
2.7, 2.8, 3 billion bushel corn carryout next year. So it’s another reason to
me that I’m a little less than optimistic that China
is going to run in here and buy corn because they
can look at that too. They could very well stall
here, wait for prices to drop and then step in
because there’s no real time restrictions,
immediate time restrictions on
the buying they do. And as far as I understand
they’re not even going to check them until
July or August. It takes four months
to do the paperwork. So why wouldn’t you just
sit, wait, see if we sag a little bit and then maybe
step in and do some buying. Yeager: And the Chinese
might be doing that whole wait game too, right? They want to push the U.S. price down. Pfitzenmaier: Exactly. Yeager: So do you see
China a bigger story in the corn market or in the
soybean market when it comes to phase one with us
twiddling our fingers and thumbs waiting for
something to happen? Pfitzenmaier: It depends
on how you want to define the story. There’s potential in corn
and beans with the size of this Brazilian and
Argentine soybean crops coming on here I don’t
see, I know the bean carryout is half of what
it was a year ago and all that and that gets
everybody kind of excited, but it’s still we’re
probably going to be looking at a 400 to 450
million bushel carryout on beans. And once again if you pull
those prevent plant acres in, use a trendline yield
in beans, that could be a pretty good chunk too. Again I think soybeans in
Brazil are a lot cheaper than U.S. beans. China historically doesn’t
tend to buy stuff that is expensive if they
don’t have to. So why wouldn’t you,
if you were China why wouldn’t you buy the cheap
beans to fill what you need for a while, wait and
see if we do plant all these acres, do have a
decent crop, which we have a pretty good tendency to
grow crops under a wide variety of conditions,
we’ve proven that the last couple of years,
wait for U.S. bean prices to sag and
then step in and buy them after that’s done. So the near-term it’s
really hard for me to get all that excited. I don’t want to be
negative and I don’t mean to say they’re not going
to buy anything but they could play us a little
bit, like that’s never happened before. Yeager: I’m going to say
let’s move onto meats now shall we, Tomm, before we
both get in trouble with a comment. The cattle right now the
packer and the lots are kind of far apart
on these markets. Pfitzenmaier: I think the
cattle market maybe got a little bit overdone. We have had exports are
down 4.4% from a year ago so that is disappointing. On the other hand I think
we’ve probably peaked out our numbers in cattle and
they’re going to start to contract a little bit. So it’s hard for me to get
bearish cattle down here in this $119, $118 is a
50% retracement in the April contract so we came
kind of close to that this week. I guess I’m expecting that
we’re probably still going to have some weather
issue, some demand issue, something that comes
along to give us a pop in cattle. So if I was a producer I’d
be staying open on cattle. I wouldn’t get too
concerned about that. Yeager: Speaking of
pops, hog market. Last week, it’s been
falling like a rock, not sure what the
reason was there. What is the reason for
this rise back up other than what Tyson said? Is there more
in this story? Pfitzenmaier: Well, we
got wildly oversold. The other thing you’ve got
to be a little careful with this Tyson comment
is we had practically no exports a year ago so
first grade math — Yeager: Fun with
percentages is what to call it. Pfitzenmaier: Yeah, it’s
maybe not as significant as that sounds when you
hear that 600% number. But we need, I’ve been
saying this for a year, if China doesn’t buy
significant quantities we’re producing
way too many hogs. That is the reason hogs
have gotten depressed. Part of it I think too is
a lot of people have over the last year been trying
to be long hogs and I think this was a week
where they threw in the towel and said the heck
with it and got out and that drove us down
to lower levels. So I think it’s
going to stabilize. You could pop April hogs
back up in that $75 range and it wouldn’t surprise
me just because it got so oversold. But don’t get excited
about going much beyond that without some huge
quantity purchases by China. Yeager: Yeah, because
limit up on Thursday, triple digit gains
again on Friday. All right. That’s all we have time
for, Tomm Pfitzenmaier. But we will keep this
conversation going on Market Plus because I have
a whole bunch, I actually did homework for you. This isn’t the B team. I’m trying to be
legit and everything. So Tomm, thank you much. That does wrap up the
broadcast portion of Market to Market. And as I said we will keep
this conversation going in Market Plus. That is where we answer
more of your questions which come in through
several different channels. You can find the show and
submit questions to us on our website at
MarkettoMarket.org. And one of those social
media channels is Facebook. It allows you to keep
track of your favorites including those
from rural America. You can find our
links and photos under MarketToMarketShow. That is a new
Facebook name for us, MarketToMarketShow. Join us again next week
when we’ll look at how a group of beekeepers are
using groundbreaking methods to fight colony
collapse disorder. So until then, thanks for
watching and have a great week. ♪♪ ♪♪ Market to
Market is a production of Iowa PBS which is solely
responsible for its content. Pioneer Hi-Bred
International is a proud sponsor of
Market to Market. 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.

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