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The drought adds to the severity of the 2021 fire season lawmakers push for the end of the ethanol, blending mandates local food sales that increase during the pandemic continues to grow and market analysis with Ted Seifried, 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've 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 23 edition of market to market the weekly journal of rural America.

Hello, I'm Brooke Kolsdorf.

Paul Yeager is on assignment this week, according to the national oceanic and atmospheric administration, this past June was the hottest in 171 years of record keeping.

The high temps continue to put pressure on the West and Midwest.

As the growing drought creeps across the country.

The heat has made for tinder dry conditions in the forest, making it prone to fire across the U S more than 1 million acres have burned during this fire season with grim results for both urban and rural residents.

John Torpy has more in our report.

We're seeing extensive drought conditions across the state with 19 counties and drought emergencies, unprecedented heat waves and fire seasons that are arriving earlier, coming on faster and lasting for longer.

This week, Oregon governor Kate brown gave a dire assessment of wildfires and drought plugging the state with part of the blame pointed at climate change.

After last year, what is very clear is that no corner of our state is immune to fire on the west coast.

And here in Oregon, the urgent and dangerous climate crisis has exacerbated conditions on the ground.

According to the national oceanic and atmospheric administration, over 46% of the contiguous 48 states are experiencing some level of drought and increase over 3% from last week, the scarcity of moisture has exacerbated wildfire conditions in the west officials with the Oregon forest and industries council, a trade association representing more than 50 Oregon forest land owners and forest product manufacturers calculate ongoing drought has brought wildfire season to the region nearly eight weeks ahead of schedule Oregon's bootleg fire.

The largest of the 79 active fires burning across the U S has consumed over 400,000 acres coupled with a loss of over 1 million acres during the 2020 wildfire season, Timberland and sawmill owners in Oregon are worried about their industry that in 2019 generated roughly $18 billion.

Well, I mean.

Imagine right, even invested 40 years in a corn field, you can't harvest it until you're 40 and you're sitting there on pins and needles, just praying to God that it makes it to your 40 and it doesn't.

And we don't have insurance for any of that.

With forecasters calling for extreme drought conditions to expand and deepen in the west.

Williams's worries about what that means for the rest of the 2021 wildfire season and the impact on Oregon forests.

I hate the word unprecedented.

It just doesn't seem, it seems overused, but in this case, again, the conditions were two months ahead.

It's we are a long ways from done, uh, with this summer and with what we're going to see in terms of the fire.

For Market to Market I'm John Torpy.

Finding farm labor has been a perennial issue for farmers in the west.

Over the past few years, Midwestern hog and dairy farmers have joined the search as their operations have grown in size.

Often migrant labor fills the demand, but immigration caps have kept supply at a fixed rate.

The undocumented have, in some cases made up the difference.

The most recent immigration reform legislation to fix the problem past the U S house in spring, the Senate is still wrangling with the issue.

This week, the Senate judiciary committee held a hearing.

And for the first time in history, a secretary of agriculture appeared and gave testimony.

After opening statements, secretary of agriculture, Tom Vilsack made a plea for the bill's passage.

There's a cumbersome process involved, or there are uneven worker protections.

And again, these are separated from families.

What can we do about this?

Well, the house of representatives decided to take matters into their hands in March, as they did in 2019 by passing, uh, the farm worker modernization act.

And this is an act that simplifies and streamlines the H2A process and indeed creates a year-long workforce opportunity.

Ethanol predominantly made from corn has been a federal main state in the U S gasoline supply for more than 15 years.

Over the past few weeks, the ethanol industry has been enduring, increasing pressure from its opponents over blending everywhere from the refinery to the pump.

Here's Josh Buettner with more.

This week, a bipartisan group of senators, mostly from states where the oil industry is a major part of the local economy, unveiled legislation to eliminate the federal mandate, requiring a percentage of corn based ethanol, be mixed into the nation's fuel supply.

Other biofuels will be unaffected, but the move ruffled feathers in the Corn Belt.

Big oil has raised its ugly head again.

Iowa Senator Chuck Grassley pledged to fight the bill and said farm state lawmakers have been battling the petroleum industry since just after the inception of the renewable fuel standard.

In 2005 though, year round sales of E15 was struck down by a federal appeals court earlier this month.

And the granting of small refinery exemptions accelerated during president Trump's tenure.

Gresley expressed some confidence in current environmental protection agency oversight.

That's not saying that I can guarantee you that the Biden people are going to be as pro ethanol is I want him to be, but I don't think we're going to have them finding this balance.

The.

American petroleum Institute, a trade association for the oil and natural gas industry weighed in on the corn ethanol elimination act.

The EPA would best serve the public interest by keeping compliance volumes feasible and maintaining program stability by not exceeding the ethanol blend wall.

We appreciate the growing recognition that the RFS program needs a comprehensive overhaul to better protect consumers and businesses working to meet fuel demand for various modern engines.

Ethanol insiders say similar legislation is teed up almost every congressional session under what they call dubious environmental and economic claims to force defacto negotiation.

It's.

Amazing how impervious DC is to basic facts, right?

I mean, sometimes you can say, Hey, here's a problem.

I think we should solve it this way.

I think we should solve it this way, but there should be some basic facts, right?

Ethanol reduces the cost of gasoline.

Iowa, renewable fuels association, executive Director Monte Shaw thinks this go around was spurred by recent congressional attempts to fix the E15 issue.

Issue or used to it.

But I have a very clear message for them.

You know, we're not interested, right?

We will find a way to sell E15 year round.

We've got other, both federal EPA ways and ways that individual states can level the playing field for.

For Market to Market.

I'm Josh Buettner.

The COVID-19 pandemic has had unintended consequences for the food supply chain more than a year and a half ago, consumers began to shift their focus from eating at local restaurants to going no further than their kitchens.

As the food supply changed directions from commercial operations to grocery store aisles, bottlenecks, slow delivery of supplies, more than a few customers turn to local agriculture for a solution.

Peter Tubbs has more in our cover Story.

Family members returning to the farm is common in rural America, but it's seldom a retirement project.

Iowana farms in Crescent.

Iowa began in that way.

When Terry Troxell started farming her uncles fields in 2007.

I didn't even know what a CSA was really.

When I started, what I knew is I wanted to grow vegetables.

Troxel was a retired physicist who yearned to farm.

He followed her dream after her work at Stanford ended in 2006.

Family helped her get up to speed on the science of agriculture.

2008 Was my first season and I cultivated a quarter of an acre and my uncle was still living.

He coached me a lot on what I should be doing when I should be doing it.

Over the next few years.

Troxel spent time learning about how to set up her section of the farm while the community provided revenue for the project through a community supported agriculture group or CSA.

Iowana farm saw a steady growth in sales, both retail and wholesale or its first 10 years as it served the council Bluffs, Iowa and Omaha, Nebraska markets, but 2020 brought a demand spike that stretched the capacity of the farm as food supply chains, buckled and grocery stores, emptied subscriptions to CSA's jumped.

Iowana farm grew from 51 annual memberships to 73 buyers.

As new customers sought a local source for some of their food supply, the growth has been followed by an increased rate of renewals.

I would say that over the years, my retention rates right around 50%, uh, last year I would say I probably brought back 65%.

The sustained growth matches the feedback Troxell receives from her customers.

I feel tremendous support from the members of the CSA's.

I feel the love and I almost every week, somebody gives me positive feedback by via email.

I love the vegetables.

I love the greens.

The greens are fantastic.

This is, this is so great.

I just, I just love this.

Many of the new subscriptions in 2020 came from first time, CSA buyers and Troxell discover managing their expectations of variety.

Volume and quality is a challenge.

As customers grew adjusted to the variability of Midwestern produce, they looked forward to their delivery.

I hear, I love Iowana Farm all the time.

So it's like we're part of the family when it works, where we're part of the family.

200 Miles to the north in Algona, Iowa Moonlight Farms.

So a similar sales spike in 2020, the 15 year old CSA added 12 subscriptions as new customers made a hedge against the unknown.

And then 2020 came and the CSA just ballooned.

So we were getting calls from people we'd never talked to before customers we've never heard of.

Unsure if farmer's markets would held in 2020.

The bodies' took the chance and directed all of the years produce to CSA shares.

The plan worked and customers have returned for more in 2021.

This is the biggest year we've ever had with 96 customers.

A CSA in a town like Algona.

It goes against convention.

CSA agriculture is more common.

Your population centers, where customers are more adventurous in their cooking, despite a population of only 5,500 Moonlight farms is finding customers in this rural town willing to try new things.

We don't.

Try to do anything super crazy because we found that it's not a great fit here.

And that's just fine.

I mean, we're, we both grew up in Iowa.

We know what the diet and the palette is here.

This is just trying to push people a little bit further into getting more vegetables on their plate and enjoy them and share them and eat them again.

And again, if the only vegetable you ever eat is sweet corn.

How could we improve upon that?

The bodes' wear multiple hats during the week, both Joanne and Benny have part-time professional jobs in Algona.

The farm also raises 15 acres of pumpkins for wholesale customers around Iowa.

In addition to 500 acres of conventional corn and soybeans in partnership with family members, the juxtaposition of non-chemical vegetables and full chemical commodity crops is not lost on the bodes.

Yeah.

It's kind of a paradoxical world because our vegetables are grown with as little chemicals as possible, but the corn and beans is pretty chemical heavy.

We grow all GMO corn and beans and in the vegetable world is completely opposite.

So I kind of have a very paradoxical world.

One day I might be spraying chemicals on all the soybeans and the very next day, I'm just pulling weeds by hand in the garden.

And I kind of enjoy that balance.

It makes me feel a little bit better grounded as a farmer to be in the two different types of soil.

And I do see the different types of soil.

The bodes' have found that vegetables are more forgiving when compared to the corn and soybeans, which take priority.

So the vegetables will always take a back seat to the corn and beans just because we can play catch up a little easier to smaller garden, and I can pull the weeds easier in the vegetables, but when corn and beans need attention, they need attention right now.

Yeah.

Someone's got to pick the basis.

While the tumultuous 2020 has resulted in a CSA that is on better financial footing.

Moonlight farms has also found its production limits to get bigger.

We, I would have to get some more help.

And, uh, I really like our operation because it is our family with a few friends helping.

I really liked that size of the operation because it just makes me happy.

It's nice to know that our family is doing this business together.

And while it might be successful to go bigger and bring in more people in the vegetable world, I've chosen to keep it this size.

I like it like this.

For Market to Market.

I'm Peter Tubbs.

Next, the Market to Market report news.

News of order cancellations by China predictions of much needed rain in the forecast and sales by spec funds made for volatile markets for the week.

September wheat lost 9 cents.

While the nearby corn contract fell 9 cents predictions of moisture for the Midwest and lackluster export sales pressured the soy complex lower for the week.

The August contract plunged 54 cents August meal drop $9.60 per ton.

December cotton gave back 16 cents per hundred weight and over in the dairy parlor, August Class III milk lost 30 cents a positive week in the livestock sector.

August cattle gained $1.32 August feeders put on $4.45 and the August lean hog contract improved $1.70 in the currency markets.

The U S dollar index added 24 ticks September crude oil gaining 49 cents per barrel and Comex gold lost $10.40 per ounce.

The Goldman Sachs Commodity index expanded by more than two points to finish at 53 or 531.85.

Now here to provide insight is one of our market analysts, Ted Seifried.

Hi Ted.

Thanks for joining us.

All right, so we are going to start, I'm going to let Twitter ask the first question today.

Are you okay with that?

I'm a fan of Twitter.

I'm on Twitter.

So yeah.

I think it's someone, you know, so this is, um, Glenn Newcomer and he's wondering of the three major grain commodities, corn soybeans and wheat, which one has the strongest fundamental support and which one has the strongest technical support.

Okay.

Uh, first of all, hi, Glenn, uh, funny thing is Glenn actually came up on my iPhone's memories today.

So that's a fortuitous.

Um, okay.

As far as technical support is concerned, um, you know what, it's going to be the same answer for all of it.

And, and I'm not going to, I'm going to really zero in on spring wheat by itself because fundamentally that's the crop with the most damage.

Um, it's got a really good looking uptrend on a, on a chart.

We had a really nice bounce off the lows there on Thursday, uh, held that trend channel.

Didn't quite get to the bottom of the trend channel, which is, this is what bull markets do.

Uh, so Glen, I'm going to, I'm going to say spring wheat in particular, uh, does, and we as a whole, I think has a good fundamental and technical setup.

I'm a little more worried about the row crops, which I'm sure we'll get into here in a few moments.

Hmm.

Yeah.

Well going back to wheat, so that spring wheat story continues to tell us that there is further erosion up north, um, with the severe drought conditions.

I mean, it's kind of a drought that we haven't really seen before.

Right.

So how does that play out in the market?

Yeah, I mean the spring wheat crop is rated 11% good-to-excellent.

Which is the worst crop spring wheat crop we've really ever had.

Uh, and it's just as bad if not, maybe worse up in Canada.

So there is a massive problem there now, and we're also getting to the timeframe.

Some rains might not even really help at this point or at least not do a big enough difference to, to really bring, uh, those bushels back.

So yeah, you know, uh, spring wheat as any market is not going to be immune to corrections here and there, uh, things don't go just straight up.

Uh, we started to see signs of that earlier in the week, but it did come back fairly nicely.

So yeah, I still think, um, maybe there's a chance to $10 plus, I mean, you know, I was kind of looking at an 11 and a quarter as a possibility for that December, uh, spring wheat contract.

Uh, I don't know if we go straight there, but, uh, yeah, I'm still rather optimistic on the prices there.

Okay.

Well, speaking of weather, so with corn is weather the thing that's going to impact corn moving forward the most, or are there some other factors in there that we need to keep an eye on?

Well, Brooke, there's always other factors, but right now this time of year, the market is very wrapped up in weather, you know, this is a weather market.

This is the time of year for that.

However, you know, let's look at this, we're at the end of July and this is right around the time where we will put our highs in for markets if we haven't already.

And then seasonally had lower because regardless of what has happened with the weather, even if it is a year where we've had some drought issues and we've had some, a supply side concerns, at some point we have to go and prove the demand is out there, right?

We, we look at these USDA balance sheets and I'm a big fan of USDA balance sheets, but, you know, let's take them for what they are, they're estimates.

They're estimating what the demand is going to be.

And until we see that demand, we can't really say for sure that it's there and we haven't really been able to see it in corn.

Export sales, as you mentioned, have really been poor.

We saw old crop cancellations specifically by China that scares the market.

So, uh, while I don't think there's a tremendous amount of downside potential in corn because of the issues that they had in Brazil.

And the fact that that crop is short.

If prices get too cheap, the rest of the world will come and buy more corn from us.

They will be buying more corn from us.

Um, so, I don't think we see this huge slide, but I was on the show a few months ago.

And the question was asked, where do I see December corn during harvest?

And my answer was four 80.

I haven't changed that.

Um, you know, even with the, the drought issues that we've had in some areas, there are some really good corn out there as well.

And, you know, I don't see this as being a big catastrophe for, for our, our corn crop or our national average yield.

I don't think we're quite going to be where the USDA has us at their trend line, but I don't see this as being catastrophe.

And at this point, the market probably is going to transition a bit more towards looking at the demand side of things in less.

It, it really just stays hot and dry from here to the end of harvest.

Okay.

Moving on to beans, so we're getting into that critical growing stage and with the heat continuing and the possibility of it not letting up, is that going to continue to cause some volatility in the markets what's happening?

Yeah.

So weather In the soybeans is a little bit of different story than what we're talking about in corn, because corn for the most part has gotten or is getting through pollination right now.

But soybeans they're most moisture sensitive period is when we get into August.

So we are really watching that, that forecast very closely for soybeans.

And that's what happened this week.

When we see more rain in the third week out, you know, we see more rain in as we get into August for soybeans.

And that put a lot of pressure on us.

We started to see that on Wednesday, that was the first little hint of it.

So we just had a bit of a pullback and kind of held it together.

But as we grew confidence on that Thursday and Friday, that's when beans really came under under pressure.

And here's the situation in the beans.

Yes, we're worried about weather, but if it doesn't seem like that weather is going to be a terrible problem there too, we're going to start focusing on demand, maybe even more so than corn, uh, because Brazil did have a really big bean crop and we have to be worried that China isn't making their purchases of new crop beans right now.

This is the time they normally would be doing that.

Now what would motivate them to do that?

If the drought continues into pod set and it is, there's a ton of concern, well, that would be a motivating factor for them to come in and buy.

And that would flush out the demand because they're going to say, Hey, the prices are high, but they could be going much higher.

So we need to buy now before the stocks run out.

But if that doesn't happen, if we have a more normal August and there are rain chances, and they're not worried about it, and they're not aggressively buying, they're going to wait for us to bring the price down.

The soybeans, I think are on the verge of what I'm calling a demand, hunting expedition, meaning we're going to have to bring prices down to flush that demand, demand out, get the demand cooking again.

And then we can start talking about a harvest low, and then we can start talking about how tight balance sheets could be later on.

And so the lower we go now, I think the higher we could end up going later, but we need to, there.

Okay.

All right.

Let's move on to cattle.

So the cattle on feed report was out today.

Did it have anything in it?

Um, that could cause the market to react.

I mean, look, cattle has been in a very sideways range since the beginning of the, of the calendar year and it's not really based on fundamentals fundamentally.

I'm really rather bullish on cattle.

I think there's very strong domestic demand.

I think there's reason to think that we could be making new highs in cattle, but the problem is the cash trade just isn't going there.

It's not even really moving for that matter.

And as long as that cash rate doesn't do anything, I don't see any reason for the cattle market itself to really do much of anything.

Now, as you said earlier, it was a better week for cattle and hopefully we can follow up on that next week, but the cash has been king and cash needs to kind of allow the board to go higher for us to really feel good about any upside potential in cattle right now.

What about the feeder market.

Now?

Feeders a little different story.

I mean, that, that's really sort of a reflection of what's going on with the corn market.

Um, and as we talked about earlier, corn had been under pressure late this week and you know, we had a down week in corn, so that's really helping the feeder cattle, uh, market and prices go higher.

Um, I, my outlook for corn I think is a little bit on the bear side of things.

Even if we do have a bit of hot and dry, which it looks like that will persist, I still feel like there's going to be timely rains.

And I still feel like we'll make a harvest low.

So there's a timeframe here where I think feeder cattle have have a bit more upside potential as well because of the lower corn prices.

Okay.

And we've got time for one more.

We got to talk about hogs.

Of course.

So there's a flooding in China.

We're hearing about, um, ASF concerns again, what's happening with hogs.

Yeah.

I mean the ASF concerns again, that's, that's, you know, when we saw the cancellation of corn earlier in the week, that's probably with the root of that.

So that is something affecting the corn market as well.

But you know, it's a complicated thing with China and their hog herd because they have this real strong demand for, for hogs.

And when they have producers pushing their hogs to market, and that creates cheap price pork on their markets, they're going to go through that.

And when they do go through that, they're going to have this lack of animals.

So for right now, uh, it's seen as a bearish factor for the hog market and it has certainly had an effect on ours.

We're well off our highs, but as they chew through that literally and figuratively, I see their prices rebounding.

I see our prices rebounding.

I'm looking at the $1.12 gap in the August live cattle as, as a target to fill that gap to the upside.

But really I'm looking at the October, I think further out in time, I'm seeing more demand there.

So I, I liked the October hogs.

I'm Bullish there.

Okay.

I think we covered everything.

You got it all in.

Thanks, Ted.

As always for joining us.

All right.

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Thanks for watching and have 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've worked to help our customers be ready for tomorrow.

Trust in tomorrow.

Information is available from a Grinnell mutual agent today.