Subtitles section Play video Print subtitles Coming up on Market to Market - Wildfires leave more than burned timber and towns in their wake. Government scientists search for foodborne illnesses at the molecular level. And a journey from field crops to vineyards through the bottling of hopes and dreams. Those stories and market analysis with Naomi Blohm, next. Funding for Market to Market is provided by Grinnell Mutual. You think differently about a customer when you stand in the middle of his dreams. We work to make sure you get covered right. Grinnell Mutual -- a policy of working together. Information on finding an agent near you is available at grinnellmutual.com. And by Sukup Manufacturing Company. Offering a full line of grain drying and storage equipment and steel buildings, Sukup Manufacturing is on a mission to protect and preserve your crop and the tools that produce it. This is the Friday, August 21 edition of Market to Market, the Weekly Journal of Rural America. Hello, I'm Mike Pearson. Next month the federal government could run out of money and the Federal Reserve might raise interest rates. But this week the stock market stole the show despite positive economic indicators. According to the Commerce Department, housing starts rose 0.2 percent in August - the strongest showing in more than 7 years. Data released by the Labor Department revealed the Consumer Price Index rose 0.1 percent in July. When volatile factors like food and energy prices are removed, Core CPI matched the increase. But low inflation and declining foreign markets may sidetrack efforts by the Fed to raise interest rates. Even with positive economic news, plunging overseas markets pushed Wall Street dramatically lower. The Dow Jones Industrial Average and the S&P 500 had their worst finishes since October of 2014 with the Dow sinking 528 points at Friday's close. While the market appears to be cooling off, the west continues to burn. To date, this fire season has charred more acres than any year in the past decade. The U.S. Forest Service has been spending $150 million a week on the task and will likely devour its entire firefighting budget by the end of the month. Bone dry conditions present a clear and present danger. And this week, a few who "walk where the devil dances" lost their own battle in this year's epic war to protect towns and timber. The battle against the western wildfires took a deadly turn this week as three firefighters died after a vehicle crash trapped them in what was described as a "hellstorm" of flames. This brings the death toll to 13 for the year. The trio were members of the U.S. Forest Service. Four other firefighters were injured near the north-central Washington town of Twisp. Local officials have urged people in the outdoor-recreation area to evacuate as wildfires advanced through the region. Tinder-dry conditions, high temperatures and winds combined to fuel the inferno in the Evergreen State. One of the biggest fires is near the scenic Cascade Mountain town of Chelan. More than 155 square miles in central Washington have been charred. Nearly 3,000 people were ordered to evacuate the area this week. A major fruit-packer's warehouse in Chelan was destroyed by fire which contained nearly 2 million pounds of apples. Washington is by far the nation's biggest apple producer. The amount of fires across the West is taxing crews as the U.S. military is being sent in to assist. Rob Allen, Deputy Incident Commander: "Nationally, the system is pretty tapped, there is a lot of fires going on not only here, but in Washington, in Oregon, Northern California still burning up. And things have started to pick up in Idaho, Montana and Colorado. Nationally we are at planning level 5. Everything is being used right now, so competition for resources is fierce." And the 29,000 fire fighters in the west could get help from other countries as they work to contain the nearly 1,000 fires ... Cooler and calmer weather has given firefighters a break in California and Idaho. The massive 443-square mile Soda fire near the Oregon/Idaho border is nearly contained. At one point this week, almost 900 firefighters were battling the blaze over. Much of the scorched land was used by cattle and sage grouse. At least one farmer was seen herding about 200 head of cattle down the road to safety. The U.S. has the most abundant and affordable food supply on earth. Between the field and the table, the USDA has put rules in place to protect that bounty. Occasionally, that supply gets contaminated with unwanted pathogens that make people ill. The Centers for Disease Control and Prevention are responsible for notifying the public when tainted products make it to grocery store shelves. According to the CDC, foodborne illness costs the U.S. economy nearly $16 billion annually. But agency scientists are always on the lookout for new weapons to prevent, find and reduce the size of the outbreaks. The nation's top disease detectives are betting genetic clues could help combat food poisoning outbreaks. The Centers for Disease Control says of the roughly 48 million Americans infected every year, about three-thousand die of foodborne illnesses. Jill Pollack/Silver Spring, Maryland: "I'm normally very confident in the safety of the food I am buying. Certainly if I hear about something in the news I might be more aware about a particular outbreak." In the wake of last spring's bacterial contamination of Blue Bell Creameries ice cream in Texas, the CDC is expanding a pilot program to ten states that fights back against potentially deadly bacteria and viruses by decoding their DNA. Listeria, the third-leading cause of death by food poisoning, and the culprit in the Lone Star State contamination, is now a top target in germ fighters' crosshairs. Dr. Robert Tauxe/Deputy Director - Division of Foodborne, Waterborne, and Environmental Diseases - Centers For Disease Control and Prevention: "By testing the DNA of the bacteria from people all over the country we may find that people in totally different places are infected with exactly the same bacteria. If we can figure out what it is that they have in common, and show that yes that was the source of the infection, we can find an outbreak even when it's very small." Armed with $30 million from Congress, the CDC is taking advantage of faster and cheaper genome sequencing technology. In the future, government scientists hope to use the game-changing approach across the nation to fight more common bacteria like Salmonella and E. Coli. By identifying pathogens early, officials will be able to warn consumers before widespread outbreaks develop. Those suffering under the drought in the West may receive a reprieve if the predicted El Nino weather system comes to pass. And despite the fact that fruit and vegetable producers continue to worry about where their next drops of water will come from California wine grape growers worry a little less. Production of the specialty crop has been a source of income since the ancient Greek's began fermenting grapes. Today, California vintners produce $24 billion of product annually. But Midwestern growers, once a powerhouse of production, have been getting back into the act. For some producers, the journey to the vineyard has been a long one that has its roots in other commodities. Delaney Howell explains. Headquartered just south of Sacramento, California, is Lange Twins Family Winery and Vineyard. Dating back 4 generations, the original vineyard was planted just prior to the beginning of Prohibition, in 1917. The first generation of these Central Valley vintners began with Lange's great-grandfather who actually started with 135 acres of watermelons in the Lodi area. After success in the watermelon industry the Lange family purchased a ranch nearby that came with grapevines. The decision was made to try both crops. For many years, the family planted watermelons in between the rows of grapes as they worked on mastering the art of viticulture. Since then, the farm has grown to approximately 8,000 acres of wine grapes. The 4.5 million vines produce 55,000 tons of grapes annually. Brad Lange, Co-Owner of LangeTwins: "So it is a family run enterprise. We were wine grape growers right up to about 2005, 2006. We made a decision to build our winery and so it's a relatively new winery built over the last nine years, by vertically integrating we are ensuring, with that success, a multi-generational farm family." LangeTwins has three vineyards stretched across two Central Valley counties. The diverse locations have helped them in their four year battle against the drought. Brad Lange, Co-Owner of LangeTwins: "...the last few years, three years, we have not had those heavy spring rains that we typically have so there isn't as much available rain water for the vine to grow. And so in the springtime, depending on the rainfall, we just have to sit back and wait for the vine to start running out of water. Then we can start spoon feeding it with our drip irrigation system. So in that respect, we have an opportunity to bring that vine into balance more quickly than in a rainy year, like 1998, to where it was raining heavily in June. And so we have the opportunity to really control the water that, the amount of water that the vine will give. So in that respect, the drought actually helps us." According to a study by the University of California-Davis, the drought has already rung-up $2.7 billion in damages due to lost crops, livestock deaths, and increased payments for pumping groundwater. The whitepaper reveals an estimated 565,000 acres of farmland will be fallowed due to severe drought, but many viticulturists are thriving despite the harsh conditions. The Golden State ranks 1st in the nation for grape production and 4th in the world for wine production, behind Italy, France, and Spain. But in the past few decades, California winemakers have begun to see vintners in other states bring out their own award winning vintages. In the early 19th & 20th centuries many Midwestern states dominated the grape industry with Iowa ranking 6th in production. The soaring success of wine production in the Midwest was quickly stifled with the onset of prohibition. Farmers turned to growing grains and oil seeds to make ends meet, leaving California the stand alone source for grape growing. Ardon Creek Vineyard and Winery located in Letts, Iowa sprang from old family roots as well, but like LangeTwins, this endeavor started with different origins. Mike Furlong, Owner of Ardon Creek: When I was younger my father raised tomatoes for Heinz's when they made Heinz's 57 Ketchup. And so this farm was alive with people in the summer and I just thought that was pretty neat. And so, wine is an interesting endeavor and I thought this is a little bit different than row crop you know the proverbial corn and soybeans, which are important certainly to the Midwest but grapes were unique in wine making so that's the road we followed. Mike and Diane Furlong, majority owners of Ardon Creek, planted their first set of vines back in 2004. The couple finally finished their 4.1 acres in 2008 and opened their winery doors in 2009. This smaller scale operation reigns on the 160 year old family farm that has been in Mike's family for 5 generations. Both Furlongs worked off the farm for years prior to their interest in the wine industry taking root. Ardon Creek has expanded into retail outlets throughout Iowa and is licensed to ship product to more than 20 states. But no matter how successful, competition is always present. With approximately 100 wineries in Iowa alone, competition can be a concern to owners. To compete with wineries both state and nationwide, wine producers such as Ardon Creek often enter various competitions to gain credentials for their wines. Mike Furlong, Owner of Ardon Creek: "We won best dry red in Ankeny, Iowa at the Mid-America wine contest and even though we sell a lot of sweet to people in Iowa, it's sort've the holy grail is to have a good dry red and we won best. And there were 80 wineries and 12 states involved in that. But I think it's important and it helps our wine maker get feedback from professional judges and we're very pleased with the direction we're going and some of the results we're finding." In addition to competition both nationally and statewide, Iowa vintners are constantly fighting misconceptions and stereotypes about what their flavors produce. Mike Furlong, Owner of Ardon Creek: "25 years ago I was a wine snob, I got over it. I though you needed to drink merlot, cabernet sauvignon, or Chardonnay, and there are some people you'll never dissuade from that position and that's ok. However, if you're a little bit more open minded there are some great dry reds, dry whites and certainly some sweet wines that are very drinkable, you just gotta realize it doesn't taste like a Malbec, Merlot, or Cabernet Sauvignon." And as the heartland continues to move at full steam, vintners like Lange are more than welcoming towards Midwest competition. Brad Lange, LangeTwins Winery: "We see them introducing wine to people that never have had wine before. And over time they're just helping not only themselves, but they're us. So we embrace the development of the wine industry throughout the states and we absolutely don't see them as competitors but as enhancing and enabling us to have success in the marketplace. For Market to Market, I'm Delaney Howell. Next, the Market to Market report. Worries over a stronger dollar, a weakening Chinese market and cheap energy resulted in mostly lower prices. For the week, September wheat lost 7 cents. The nearby corn contract was only a penny higher. Soybean prices were volatile again this week adding to the strong market reaction from the August WASDE report. The nearby soybean contract was 20 cents lower. December meal prices went sideways gaining only 40 cents per ton. In the softs, December cotton continued its rally rising nearly $1 per hundred weight. Over in the dairy parlor, September Class III milk futures gained 31 cents. The livestock sector fell back this week with the October cattle contract declining $3. October feeders dropped $10.05. And the October lean hog contract lost $2.52. In the currency markets, the U.S. Dollar Index fell more than 1.5%. Oil slumped $2.66 for the week ending the trading session at a six and a half year low. COMEX Gold gained $46.90 per ounce. And the Goldman Sachs Commodity Index lost nearly 18 points to settle at 348.35. Pearson: Here now to lend us her insight on these and other trends is one of regular market analysts, Naomi Blohm. Naomi, welcome back. Blohm: Hi. Thanks, Mike. Pearson: It was a very volatile week both in the commodities and the equity markets. When we see a 1,000 point drop like we've seen so far in August in the Dow Jones, is that an indication to you that maybe money would come out of that and move into some of these other commodities? Or what does that tell you about the commodity markets? Blohm: We are hoping that the money that is coming out of the stock market goes to the commodities. If you look at how that Goldman Sachs Index had been trading, it was inverse to the stock market for the past year. So now with the money coming out of stocks usually it does come to the commodities and then we'll hopefully see things at least maybe start to materialize and hold firm and then as soon as we get some friendly news maybe we'll really get some market momentum behind it. Pearson: Once we can get a story going maybe get some of this money on the buy side. Blohm: Right. Pearson: Well, now speaking of getting a story going, it seems like we've been waiting for quite some time to get an export story going in this wheat market. Is one starting to develop? Blohm: Not really yet. We just haven't had the news to justify it by any means. The bigger thing with wheat right now is that the spring wheat harvest is coming along just fine, it's ahead of schedule, not any big quality issues there. And then also around the world still not any big stories yet. What we are keeping an eye on though is in Argentina. They had a really wet planting season and so their crop is expected to be a little lower. And then of course we're keeping an eye on El Nino, which continues to develop and be strong. So maybe later in the year it makes a story for dry conditions in Australia or India. However, there's just nothing to talk about. And because of that, the Chicago market might see the price range, at the lowest my opinion would be $4.75 and then to $5 but I think we start to see the market just slowly trudge a little lower and we sit and wait for some news. Pearson: So generally a tight range that we're pretty close to the top of here at $4.99 and change. Blohm: Right. Pearson: Okay. Now as we jump down into the corn market, we did see some stability this week. We've had two weeks now of relative stability. What does that tell you about the corn market? What should producers be looking for? Blohm: Corn has done a great job of saying we don't believe what the USDA is telling us as far as the yield goes and it showed that this week. The one bit of caution would be that today on the market charts it posted a bearish reversal and so to me it means that prices might work a little bit lower here. I would say in the next two to three weeks we see the corn price for December futures stay between $3.60 and $3.75, real quiet, tight range. Pro Farmer did come out though with their final numbers and they put that corn yield at 164.3, which is lower than that USDA number of 168 and I think more realistic. And just keep in mind that with corn when that market price hit $4.50 on the December futures earlier in the summer that is when the market was trading 163 yield. So I feel really strongly that the market is going to probably just trade sideways, a little bit lower, sometimes it grinds lower throughout September. But there still is enough unknown out there that we're going to probably see it not fall too much lower. Pearson: Until we start to see what the combines are bringing in, do you think there's opportunity post-harvest for some sales at hopefully a little better pricing? Blohm: I do. I'm still optimistic. Earlier this spring I thought we would see that market bounce. Now we're at the point where we had the opportunity and now it's going to take a little bit of time again but I think it's coming. Something to keep in mind though with corn is that the exports are really behind as far as the new crop goes. We're only at 12% and we should be at 25% for this time of year. So if we don't see that pick up at harvest then that's one thing where the USDA might be comfortable saying, oh you're right, the yield is lower but now we have this export demand out there and keeps the ending stocks at a wash. Pearson: Okay. Now let's jump into the soybean market, second big down week in a row, 20 cents this week. Are we getting close to a bottom? Blohm: No. No. It's kind of unfortunate. Pro Farmer did confirm the USDA yields that that 46 number is probably accurate. The one silver lining that might come out of this is that the planted acres, as far as the prevent plant and all of that, probably still does need to come down. But, as we know, the USDA it might take them a year to admit it. So, with that in mind, with the market closing below $9 support levels the shorter-term downtrend I'd say the next two weeks maybe $8.75. You could argue $8.50 but, again, it's just a little too premature for the market to really crash. We've got harvest coming up pretty soon in the southern states so we'll want to wait and see what that does before the market price really tumbles, but probably see it just a little bit negative over the next couple of weeks. Pearson: With the downside risk that really sounds like is apparent here to listen to you, should producers be out in front of this thing making some sales up in here close to $9 if they can get it? Blohm: I would say so now, just again because the Pro Farmer Tour did confirm that the yields are likely there and we haven't had a lot of weather stress to justify it or signify otherwise. So I think I would, especially if you're in a position where you need the cash flow and you can't store it, I think I would use this as an opportunity to sell. Pearson: Okay. Well now as our native Wisconsonian here with us I'd like to take the chance to discuss the dairy markets. We did see a little bit of an upside, 31 cents to the upside in Class III milk. What is causing that to buck the bearish trend? Are we getting some good news? Blohm: Yes, finally. This week we had good news from the global dairy trade auction and they increased their index number by 14.9 percentage points, which was the first increase that they had shown since March. And that's a big deal because finally they were able to say that demand had picked up for the powder market, for the cheddar markets, the butter markets and so that is what pushed the market price higher. And then we actually had confirmation of increased cash sales for the butter and for the powder and then the futures markets in those rallied as well. So market to me is now done going lower and we see milk stabilize between $16.50 and $17.50 for a little while. But we did have another report with milk this week. The July production numbers came out and said that production is up 1.2% from a year ago. So even though the California production is lower, Michigan and other states made up for it, so we have, again, no supply issue but finally demand is picking up. Pearson: U.S. producers are still making those cows milk, gangbusters. Blohm: Yes they are. Pearson: Well now let's jump into the livestock markets. We saw a pretty broad step back here on both live and feeder cattle futures. Let's talk this live market first. Are we getting close to finding a bottom? Or is this another grind lower situation? Blohm: I think we're at the bottom now. October futures have really solid support at $143 and the perception, I think we've traded, we were importing so much more and the exports are down, I think that is old news. So going forward though we're looking for an increase in demand heading into fourth quarter. So that's probably going to keep that October/December contract firm overall. And the cattle on feed report today was actually neutral, so not any big issues one way or the other as expected and just need to make sure that we can see the demand pick up like we're anticipating. I would say though if we have rallies it probably is an opportunity to be making sales. Pearson: And would you, again, be a pretty far out in the deferred month's seller? Blohm: I think I would just again because that longer term perception is changing. So this is your equivalent of the $8 corn, $7 corn slide and make sure you capitalize on it. Pearson: Okay. Now same question as we look at the feeder cattle market. $10 selloff this week. What does this look like in the short-term? Blohm: Still negative actually. And the perception there too is that with the live cattle being lower, the feeder cattle are going to grind lower and that there's going to be increases in supply coming. So obviously we know it's a slow increase. But, again, that perception is all that matters. Technically speaking in the past two weeks the feeder cattle futures broke their short-term uptrend and then they were sitting on that like 200 even support level which failed. So now technically the downside is $180 but that is the long-term uptrend. I do though think that we'll probably see that market drift lower in the coming months. Nothing quick but just a slow grind lower because the fundamentals have just shifted enough. Pearson: Okay. A lot of calves being held back, a lot of cows being retained. Blohm: Mm-hmm. Pearson: Now, as we jump into the hog market, we ended the week down $2.52 and livestock slaughter said July was the highest pork production month in history. So we clearly have growing numbers. Where can this market find some stability? Blohm: I think it is actually finding the stability now. Earlier in August we had some strong demand and that was evident in the cutouts and that's why that August contract was so strong. But now the October market and the December contracts, they were appropriately holding back on the perception that fourth quarter production was going to be increasing. And so it is already priced into the market. Seasonally also demand starts to pick up a little bit too. And what we have to really watch for with the hogs right now for the October/December contract, we need to make sure that that market can stay over 60 and what we have to watch is the hams and how the ham movement goes. That is the bigger factor right now. And this afternoon's cold storage report showed that the ham inventories were actually large. So it wasn't quite the information we were hoping for. However, we still have a lot of time to work that through the pipeline and system. I'm kind of curious with turkeys being so expensive this year maybe people won't' do as much for Thanksgiving and do some other proteins. So something to keep in mind. Pearson: Well, great. Naomi Blohm, thank you so much. Blohm: Thank you. Pearson: That wraps up this edition of Market to Market. But Naomi and I will continue our discussion and answer some of your questions in our Market Plus segment available on our website. You'll also find audio podcasts of our discussion as well as streaming video of our program exclusively at that Market to Market website. You can also interact with us through our Twitter and Facebook feeds. And join us again when we'll check in on a growing industry that's all up in the air. So until next time, thanks for watching. I'm Mike Pearson. Have a great week. ♪♪ Market to Market is a production of Iowa Public Television which is solely responsible for its content. Funding for Market to Market is provided by Grinnell Mutual. You think differently about a customer when you stand in the middle of his dreams. We work to make sure you get covered right. Grinnell Mutual -- a policy of working together. Information on finding an agent near you is available at grinnellmutual.com. And by Sukup Manufacturing Company. Offering a full line of grain drying and storage equipment and steel buildings, Sukup Manufacturing is on a mission to protect and preserve your crop and the tools that produce it.
B1 market pearson wine corn cattle week Market to Market (August 21, 2015) 171 8 richardwang posted on 2015/08/22 More Share Save Report Video vocabulary