Coming up on Market to Market -- The energy sector fights for market share as demand weakens.

Major snowstorms sweep the country from the Pacific to the Atlantic.

Lessons learned from the first legal hemp harvest in nearly eight decades.

And market analysis with Sue Martin, 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, January 29 edition of Market to Market, the Weekly Journal of Rural America.

♪♪ Hello, I'm Paul Yeager.

The combination of a struggling retail storefront, online forums and Wall Street made for a real-life game experience that could be packaged and sold at GameStop.

But the squeeze on Wall Street from benevolent traders living along Main Street created a textbook case of "“technicals eclipsing fundamentals.

"” Volatility remained in play in several government reports.

U.S. factories took more orders for big-ticket items in December, but the overall Durable Goods Orders report was slowed by 0.2 percent following a big drop in the unstable aircraft sector.

Fourth quarter GDP was up 4 percent, however the full year's rate contracted by 3.5 percent.

Consumers were cautious in December as the Commerce Department reported a 0.2 percent drop in spending.

Drivers are still putting on fewer miles than a year before, contributing to a lower demand for gasoline.

The oil industry was dealt another blow this week as the Biden Administration froze new oil and gas leases on federal land.

The renewable side of the fuel equation is offering optimism in 2021 even as the competition for a slice of the pie is in high gear.

John Torpy reports.

This week policymakers and business leaders from the Biofuels industry met virtually to discuss obstacles and opportunities at the Iowa Renewable Fuels Summit.

Demand destruction lead much of the conversation.

Industry leaders blame COVID-19 travel restrictions for cutting a bulk of the consumption.

Officials with the Energy Information Administration believe that, once all the data is gathered, last year's production numbers will be 13 percent lower than 2019.

USDA Chief Economist Dr. Seth Meyer says it could be slow going in the near future for biofuels.

Dr. Seth Meyer, Chief Economist, USDA: "”So if you envision that ethanol will continue to, that the production of ethanol will continue to keep pace with farmers' productivity.

You know, you either got to absorb it domestically or export it.

And I think that there are challenges to continue to absorption domestically./In the short run, the grind for 2021, most of that's going to be driven by are people driving or not.

"” Emily Skor, CEO of Growth Energy, a biofuels trade advocacy group, believes higher octane blends like E15 are going to be the driving force behind increased domestic ethanol demand in 2021 and beyond.

Emily Skor, CEO, Growth Energy: "”And if we can do a 15, we can certainly do E30.

Importantly, the infrastructure changes that are taking place to be able to blend and sell E15, that equipment can be used for E30 so already a transition that we're working on.

"” Skor is upbeat about working with the new Biden Administration.

Emily Skor, CEO, Growth Energy: "”The President has a real opportunity.

In the first hundred days.

He can make some easy decisions on biofuels.

Many of them regarding the renewable fuel standard that will be a quick win for him.

And it will be a, it will, it will demonstrate to our industry and to rural America that we have a sincere partner in the White House.

"” For Market to Market, I'm John Torpy This week, the weather offered up feet of snow, inches of rain and a deadly tornado.

Peter Tubbs looks at the impact across the country.

The week began with an EF-3 tornado that rampaged through Alabama, destroying the town of Fultondale and killing one person.

A winter storm hurtled across the nation's midsection mid-week, depositing up to a foot of snow across Nebraska, Iowa and Wisconsin.

Blizzard conditions made travel difficult.

As that storm left snow in New England, another system began to pound the west coast with rain and high winds.

Up to 6 inches of rain fell on California, paired with 50-mile per hour winds.

Mudslides and downed trees closed many roads.

Farther north in the Sierra Nevada Mountains, the storm dropped more than seven feet of snow and closed several major highways.

Nearly half a million people were left without power across the state.

While California now has a temporary surplus of moisture, drought continues to deepen across the western half of the nation.

Broad swaths of cattle country face worsening drought conditions, and the prognosis for feed quality on the range are falling.

For Market to Market, I'm Peter Tubbs The new administration is halting many policies by the previous office holders.

Some rules will be stopped -- others are on pause as a new set of eyes reviews various proposals.

USDA is continuing its oversight of the hemp industry with several aspects from registration to marketing to testing.

The new hemp crop had challenges in its return to the fields of Iowa.

Josh Buettner reports in our Cover Story... Josh Barrett/President - United Farms of Michigan/Brighton, Michigan: "“Good!

"” Colby Gardner/Iowa Hemp Company/Norwalk, Iowa: "“I'm very fortunate to have a mentor like Josh, because every time I thought the train got off the rails, he was able to guide me, or coach me, back onto what to do or just have patience.

"” Virtue was earned through adversity for Colby Gardner, who last year helped haul in Iowa's first state-sanctioned hemp crop since the World War II era.

Iowa Hemp Company Employee: "“Hercules!

Hercules!

"” 2020 rained haymakers down on Hawkeye State producers in the form of pandemic, recession, oversupply and more.

Colby Gardner/Iowa Hemp Company/Norwalk, Iowa: "“All I can say is if you're trying to be a farmer, you have to have a good sense of humor.

There's a lot of things that come unexpectedly.

It just depends on how you deal with that.

"” Colby Gardner/Iowa Hemp Company/Norwalk, Iowa: "“Come on, girls..."” In August a rare straight-line wind storm, known as a derecho, blasted Iowa and other Midwest states over the course of 14 hours with gusts up to 140 miles per hour.

Many cornfields were flattened.

Colby Gardner/Iowa Hemp Company/Norwalk, Iowa: "“I feel like this plant got blown over.

I can't see the stem.

Oh...yeah, it did for sure.

"” Despite the destruction, Gardner, one of almost 90 licensed Iowa hemp growers, considers himself fortunate.

Colby Gardner/Iowa Hemp Company/Norwalk, Iowa: "“I spend every day out here looking and checking, so..."” His efforts to minimize pollen drift and root out feral decades-old strains may have been ravaged by the storm, but the majority of his plants straightened back up and kept growing.

Most importantly, Gardner's harvest kept in compliance with state and federal law.

Colby Gardner/Iowa Hemp Company/Norwalk, Iowa: "“Beautiful.

That's your medicine right there.

"” State officials say around 13 percent of Iowa's 680 nascent hemp acres, which includes replanting plots, had to be destroyed last year for exceeding tetrahydrocannabinol, or THC, limits.

Delta-9 THC is the psychoactive molecule found in cannabis sativa-L plants.

Levels of the compound above 0.3 percent have marked the difference between legal hemp and illegal marijuana.

Research is mixed as to whether genetics or environmental stressors drive up surface production of the tiny mushroom-shaped structures, known as trichomes, which help determine cannabis pungency and potency.

Josh Barrett/President - United Farms of Michigan/Brighton, Michigan: "“They're definitely frosty.

"” Colby Gardner/Iowa Hemp Company/Norwalk, Iowa: "“Yeah, yeah, yeah!

"” Josh Barrett/President - United Farms of Michigan/Brighton, Michigan: "“That's got good trichome production on it.

It's basically your little crystal shimmers throughout, all inside there.

"” Industry advocates have long forecast a hemp revolution with everything from concrete and plastics to food, fiber and bio-fuel at the world's fingertips.

Meanwhile, the hemp-legalization buzz induced by the 2018 Farm Bill led to a glut in today's preeminent $5 billion market for cannabidiol - or CBD - another of the 144 plus cannabinoid molecules present in the plant, according to the National Institutes of Health.

CBD oil is extracted and processed into various health and cosmetic products.

Josh Barrett/President - United Farms of Michigan/Brighton, Michigan: "“If you can go through it like that and just run your finger and break the leaves...that's perfect.

"” Despite growing demand, hemp surpluses have led number-crunchers to report price drops of 20 to 80 percent over the past 18 months.

Josh Barrett/President - United Farms of Michigan/Brighton, Michigan: "“Nobody offers hand-OUTS.

They offer hand-UPS.

"” Robin Pruisner/Hemp Administrator/Iowa Department of Agriculture and Land Stewardship: "“So we're in the infant stage of all this and I think we're going to have some highs and some lows until we get that consumer demand and that infrastructure leveled out.

"” Iowa Department of Agriculture Hemp Administrator Robin Pruisner was tasked with weaving state and federal regulations together for Iowa's first 21st century hemp season.

She says even for those who took her advice about securing buyers and contracts before sowing seeds, the lack of specialized equipment and herbicides presented a challenge.

Some repurposed existing farm machinery, but the majority of those surveyed post-season reported laborious hand-weeding requirements.

Robin Pruisner/Hemp Administrator/Iowa Department of Agriculture and Land Stewardship: "“I work with my counterparts in other states.

I try to learn as much as I can from those who have gone before us and learn from mistakes or their advice on what to do here in the state of Iowa for the most efficient program.

"” Pruisner says some hoped for swifter implementation, but Iowa's cautious legal approach, like limiting each new licensee to 40 acres, can be modified over time - and has been.

Fresh off a COVID-19 recess late last spring, the Iowa legislature approved hemp processing within the state.

As local government works to create and implement the new set of rules, Gardner lugged his first harvest out-of-state.

Josh Barrett/President - United Farms of Michigan/Brighton, Michigan: "“We're going to be making raw crude out of everything that we're getting here and then we're going to do a THC remediation on it.

And then we're going to send it back out to Iowa Hemp Company, so that way they can start producing products for contracts we have in place with various hotels.

"” Josh Barrett is the President of United Farms in Brighton, Michigan.

A military veteran, Barrett has helped form a nationwide network of former soldiers turned farmers.

Though not a veteran himself, Gardner first met Barrett at a hemp industry event in Iowa.

Intrigued by the pay-it-forward approach, Gardner was the only Iowan interested in working with the group to get through United Farms' vetting process.

Josh Barrett/President - United Farms of Michigan/Brighton, Michigan: "“There's too many shysters and profiteers jumping out there, you know, just trying to make a quick buck and don't really care who it's hurting or what's happening to them.

And there's some of the stuff that I've kind of warned about in numerous conferences.

"” Once Iowa processing comes online, Gardner could stick closer to home.

Just like USDA's new hemp rule, effective in March, which raises THC thresholds up to a less stringent one percent, Gardner sees Iowa rolling with the punches to expand market share.

Colby Gardner/Iowa Hemp Company/Norwalk, Iowa: "“Iowa has a huge upside for this.

I mean think of it this way: If you look back to the 60's, soybeans weren't like a very well-known commodity and everybody would laugh and like: '‘Oh these soybeans.'

But now they're a major player.

That's a real impact.

And I feel like this is going to be another rotation crop that makes sense for a lot of people.

"” For Market to Market, I'm Josh Buettner.

Next, the Market to Market report.

China keeps buying U.S. grain and volatility reigns supreme in the commodity markets.

March wheat gained 29 cents while the nearby corn contract skyrocketed 47 cents or 9 percent.

The rains have returned to South America while U.S. soybeans are still selling to export locations.

Nearby soybeans improved 58 cents.

March soybean meal rose $9.40 per ton.

March cotton shrank by 92 cents per hundredweight.

More losses in the dairy parlor as February Class III milk futures dropped $1.06.

A mixed week in the livestock sector.

April cattle fell 68 cents.

March feeders dropped $6.42.

And the April lean hog contract increased 50 cents.

In the currency markets, the U.S. Dollar index rose 34 ticks.

March crude oil lost a dime per barrel.

COMEX Gold declined $5.50 per ounce.

And the Goldman Sachs Commodity Index fell nearly two points to finish at 431.80.

Yeager: Now here to provide insight is one of our regular market analysts, Sue Martin.

Hello, Sue.

Martin: Hi there.

Yeager: Wheat is the one that, you write about it almost every night where you talk about some days wheat goes along for the ride and sometimes it's acting on its own.

This week it appeared like it was the tag-a-long little brother for a while.

Is it going to move on its own any time soon?

And if it is, why?

Martin: I think so.

Wheat broke into, we had cycle window timing on Friday and wheat broke into that, which should have struck a low and it did and put in an outside trading range day higher.

The wheat market is, as we get into next week it's going to be interesting to see how it responds to the Arctic cold temperatures that are forecast for hard red winter wheat.

There's going to be very little snow cover and that area is so dry that I suspect there's going to be some concern about possible winter kill.

In the meantime, we keep dealing with foreign entities like Ukraine and Russia.

And of course, Russia has anteed up.

Starting February 15th they're raising the export tariffs or tax and then on March 1st they're going to increase it again.

So, exports are running out the door pretty fast.

Exporters are trying to move as much product as they can before those tariffs going into play.

Yeager: And that was threatened before and it kind of pulled back.

So this time you feel that there's bite to it?

Martin: Well, I think there is bite to it.

As we move into the spring, first off, February is a month where you a lot of times by the end of February, latter part of February you'll start seeing wheat coming out of dormancy and then we start looking at how dry are we?

What do the stands look like?

What does the -- that type of situation.

And then usually it's a market mover when they talk about a frost in April.

But I don't know if we'll see that situation.

But I do think the wheat market is very much a demand pulled market and of course very tight supply.

It's also a market that I think as we go into spring we're going to see what lose some acres.

And that is going to also help I think underpin that market.

Yeager: All right.

With corn, I have so much written down it's an extremely small font.

I can't read it.

Other than to say, the old crop just yesterday had its 6th largest ever flash sale.

That was the common theme this week on that old crop.

There's some stories of 95% of the old crop is gone.

But you differ with some of that in some of your research.

What does that mean when there is a discrepancy like that?

Martin: Well, I think that is an opinion amongst various analysts as to keeping track of the numbers and anticipating just what is going to be sold and that type of thing.

But sales have been aggressive, around 92% is what I'm thinking.

And for what the USDA is looking at for this year, or forecasting.

Well, that be the case we are pushing exports pretty aggressively.

Now, keep in mind WASDE is already at 17, 17.5, I think it's 17 million metric tons for China imports.

So they've got that dialed in.

But, the Ag Attaché this week talked about 22 million metric tons, another 5 million metric ton increase.

Well, there you start working on a carryout.

The problem that corn had was that while it was a demand pulled market, it was one that the carryouts weren't quite as tight as what we've seen the soybean market was.

So we didn't have that having to ration situation.

But now China is coming in full force and hitting us with big sales.

And we've sold this past week about 6.1 million metric tons.

That's huge.

And we've also seen a sale, which is good for the ethanol industry, of 200 million gallons to China as well via ADM.

So that is all good news and very underpinning for a demand pulled market.

And then you get into the technical side of this market.

And it's been a long time since I've mentioned the gaps I think on this show.

But we have these huge gaps that start at $5.49.

Well, we've kind of inched into them this week at the $5.50 and a half.

Well, $5.50 is a little psychological so the market is chattering a little bit against it.

But that gap goes from $5.49 and a half up to $6.84.

Huge gap, it's on the weekly chart, people can see it.

The ones that they miss, many analysts do not look at the daily continuations of each individual contract and they should.

There are huge gaps going all the way back into 2012 for some of them and 2013 for others.

And some of those get up to $7.04, $7.00.

Yeager: That being said, old crop first, make this fairly short I guess and then I'll make you answer fairly short in the new crop.

Martin: Good luck with that.

Yeager: Would you be selling in old crop right now?

If I still have old crop -- Martin: We have 20% sold on the website, or our advisory service.

Second is 15%.

And we did that at around $5.15.

Those were our first sales.

We have nothing sold for new crop yet.

I would not be making sales just yet.

Yeager: All right.

So soybeans, would you be doing either of those things for soybeans given there's still a huge amount of sales that have been going on and we're the only game in town for a little while longer, the United States?

Martin: Well, if anyone still has old crop beans I would probably say watch it through February.

If we make higher highs here in February that tends to, more times than not out of 19 years maybe only 1 year failed, but that doesn't guarantee the future, that little disclaimer.

But it does tend to indicate that the July beans may too.

But July especially should move on to higher highs again.

Yeager: I like to throw curveballs because I told you I was going to ask a different question and I'm telling the control room I'm going to ask a different question.

But Ken in Lenawee County, Michigan.

He's asking about Elliott Waves here and how this ties.

What does Elliott Wave tell you about SH21?

Martin: On the March beans I would say, there are some Elliott Wave people out there that tends to think we're in an ABC correction.

I do not think so.

We have not been rationing beans.

The only reason China has slowed a little bit is they're on anticipation.

If you noticed, this week's sales were all new crop.

But they're on anticipation that they're going to be getting beans out of Brazil.

But Ag Rural, who I have great regard for, they're a wonderful consultant, if you need a newsletter out of Brazil they're pretty accurate, and they believe that first off, Parana, which has been dealing with some rains, heavy rains, is about four-tenths of one percent harvested.

Mato Grosso a little bit more, maybe around 4%, 5%.

I'm going to say 5%, 5.5%, which is well behind normal on both of those.

But, here's the deal.

There's analysts out there trying to portray that the crop is in trouble, that it's being demised with disease and you name it.

Yeager: In South America.

Martin: In South America, yes.

And according to Fernando with Ag Rural that's not the case.

The crop doesn't look that bad.

What my take is, is that if we go through February and the forecast for February and March, according to a couple of weather services we use, forecast more moisture as we move through February.

So in other words, you'd almost call it in a way for developing crops good conditions.

However, if we stay really wet and they become extremely continue to be on that path of heavy rains in Parana and Mato Grosso and some of those, then you could see some of these beans, beans don't like wet feed.

You could see some disease, but what you could see more of is the swelling of the pods and losing beans that way.

Yeager: Been there, done that, seen that in this country.

I need to move to the livestock industry because in the fats they have been feeling the pressure from the left and the right and the center and the up and down kind of beating them up.

But yet it still holds its ground, or at least it has this week.

How was it, why is it so tough?

Martin: Well, first of, in the fats we are looking at a huge number of cattle, maybe almost record number of cattle, market ready cattle.

So we have more cattle than we have shackle space.

That gives the ability of the packer to control a little bit.

In the meantime, the cutout is rising and doing very well and all that money is going into the packer's pocket.

So he has the best scenario he could ask for.

Yeager: '20 wasn't too bad for the packer.

Martin: No, actually they've had a couple of good years I think.

We're into the -- '20 was an awesome year and I even think part of '19 wasn't too bad and they're starting off this year pretty darn good and it may take until the last half of this year before they start to feel any pain.

I think that when I look at the cattle market the April contract appears to me like it's got some issues around $124 to $125.

We got close to that here on Friday.

And that market could then start to sell off towards $120 and try to maybe in that basis level try to align a little better.

Cash could be I'm going to say $117 as we move in towards April, we could see a cash market that is holding around $117.

Boy, it would be extreme at $120, but $117 I'm going to go for.

And in the meantime, exports are absolutely phenomenal.

Exports in April, if you talk 270 million pounds of exports that's going to be a pretty good number.

If we got to 290 it would be the highest export number for any month on record.

Yeager: We'll drill down on feeders in Market Plus.

But in hogs in 30 seconds, exports still a main story there or something else?

Martin: Exports have been pretty good, very good for pork and also the top of it is we're culling sows and on top of that frozen supplies are like dirt low, 10 year lows.

And if you look at bellies we're at 18 year lows, which means your bacon is going up.

And so I think that when I look at the hog market, my indicators that I've been positive on, they've kind of been a limbo, they're still positive, very positive with room to go, but it's like we're just marking time, biding time.

Yeager: Until then.

All right.

And we'll also talk GameStop.

I need to hear your gaming insights, Sue, on Market Plus and how it correlates to the markets.

Thank you, Sue.

That will do it for this installment of Market to Market.

We will talk more in Market Plus so you can join us there.

Find that on our website at MarketToMarket.org.

Also on that site you'll find more stories than you've seen on this program.

We do compile several each week for your reading in addition to the videos and the transcripts.

Next week, we'll look at an innovative data gathering project that helps pinpoint increased insect pressure in plant disease outbreaks.

Until then, thank you so very much for watching.

Have yourselves a great week.

♪♪ ♪♪ 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.