Coming up on Market to Market, a new study shows agriculture is responsible for the bulk of the nitrate pollution.

In two Iowa rivers.

And a look at the long view of the economy for rural America with economic analyst Ernie Goss and commodity market analyst Chris Robinson.

Next.

What's next doesn't happen by chance.

It happens when researchers and farmers work together to solve tomorrow's agronomic challenges.

We're committed to creating what's next.

Because a pioneer.

Our name is our Mission.

Family owned and operated for more than 60 years.

Sukup Manufacturing is a full-service provider of grain handling, storage and drying equipment, helping farmers feed and fuel the world.

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 4th edition of Market to Market, the Weekly Journal of Rural America.

[Kohlsdorf] Hello, I'm Brooke Kohlsdorf.

Paul Yeager is away this week as America prepares to celebrate its 249th birthday.

The economy and what it means to everyone's financial picture remains high on the list of concerns for rural and urban Americans.

To explore what might be next, we've brought two analysts to the table to get some perspective.

Ernie Goss is the McAllister chair and professor of economics at Creighton University in Omaha, Nebraska, and Chris Robinson is managing director of agriculture and commodities at TJM and a regular market analyst here on the program.

So, Ernie and Chris, welcome back.

[Goss] Thank you.

Good to be here.

[Robinson] Thank you.

[Kohlsdorf] Looking forward to talking to you more in just a moment.

But first we have some news.

President Trump's one big beautiful bill is still being reconciled in the U.S. House.

As of Wednesday.

When we recorded this show, thin margins, separate passage or defeat the bill contains provisions, provisions for making the 2017 tax cuts permanent, dropping taxes on tips, and allocating more money for the border wall.

There are also cuts to Snap and Medicaid, along with early phaseouts for some renewable energy tax credits.

The nonpartisan Congressional Budget Office says the bill could add 2.4 trillion to the national debt.

This week also saw a defeat for pork producers trying to overturn California's controversial prop 12.

The Supreme Court refused to hear the case, and the measure stands out.

This is the 19th loss for hog producers trying to overturn the legislation that requires more living space for sows farther from the Beltway.

A study commissioned by county supervisors in Iowa's most populous county in the number one hog and corn producing state, lays the burden of higher nitrate levels in the capital city's drinking water sources directly at agriculture's feet.

Peter Tubbs has been following the issue and has this report.

[Narrator] This week, the Polk County, Iowa, supervisors released their scientific assessment study of the water quality in the Des Moines and Raccoon Rivers, which merge in downtown Des Moines.

The study finds that over 70% of the nitrate in the two rivers comes from agricultural sources.

Either animal manure or fertilizers.

The study also calculates that 13% of the nitrogen applied to farm fields in the watersheds migrates into the rivers.

The study, which took two years to complete, reports that both the Des Moines and Raccoon Rivers remain polluted with high levels of nitrate, despite decades of voluntary and government programs to improve the water quality of these rivers.

[Matt McCoy] The cost of addressing these problems is enormous, but the consequences of not addressing them is not an option.

[Narrator] Iowa Secretary of Agriculture Mike Naig released a statement in response to the study, which says in part, we're not interested in stoking animosity between rural and urban neighbors.

Agriculture, conservation, recreation, urban and rural development, and business growth.

Can and must coexist in Iowa.

Iowa Farmers Union President Erin Lehman believes a rural and urban partnership is necessary to solve the problem.

[Aaron Lehman] Farmers have to be a big part of that solution, but they won't be able to do it with current with the without having a public investment, rather than having the dichotomy of whether this is farmer versus urban issue, we need to say that we're all on the same team, and we all get to be pushing in the same direction on.

[Narrator] On June 12th, high nitrate concentrations in both rivers forced the Central Iowa Water Works to institute a ban on lawn watering and cutbacks for high volume water users.

The CIW uses filtering systems to remove enough nitrate to meet EPA rules for safe drinking water.

However, it does not have the capacity to keep nitrate levels below EPA limits and meet full summer water demand without requiring curtailed water use.

For market to market, I'm Peter Tubbs.

Next, the Market to Market report.

[Kohlsdorf] Now to some of the numbers for the commodity markets.

As of Wednesday, when we recorded the show.

After marching in place for a week, the market rallied a bit after the release of the quarterly stocks and acreage reports for the week.

The nearby wheat contract gained $0.24, and the September corn contract added $0.07.

Soybeans rallied after moving lower on the reports September soybean contract put back $0.23, while August Meal gained $1.20 per ton.

December Cotton retreated by $0.69 per hundredweight.

Over in the dairy parlor.

August class three milk futures declined a nickel.

The livestock market was mixed.

August cattle shed $0.85.

August feeders gained $1.13, and the August lean hog contract cut two.

38.

In the currency markets, the U.S. Dollar Index took off 63 ticks.

August.

Crude oil put back a little of last week's losses, with a gain of $1.87 per barrel.

Comex gold improved 75 $0.70 per ounce, and the Goldman Sachs Commodity Index gained nearly eight points to settle at five 5565.

Well, joining us again, economic analyst Ernie Goss and regular commodity market analyst Chris Robinson.

Glad to have you on the show.

[Goss] Good to be here.

[Kohlsdorf] Last time you were here together was in November.

A lot has changed since then.

I'm going to start with you, Chris.

We had those two new two reports out this week, which one impacted the markets more?

The quarterly stocks or acreage reports?

[Robinson] Probably neither one of them actually.

It was kind of a nothing burger.

Nothing was really that surprising.

We did have a little bit less acres than people had thought for corn and some of the I states, the bigger producing states had a little bit of a reduction, but nothing earth shattering.

And really, when that number came out, it was very, very, very quiet.

And it's kind of more of the same.

We've been in a pretty.

Not a very lucrative marketing year so far.

We had our highs in February, and if I had told anybody back in February around Valentine's Day, that that was going to be the high for a while, you know, and we did.

We've had a kind of a severe, you know, downturn.

Wheat dropped to $1.50 since those highs.

Corn dropped.

Spot corn, which is corn in the bin dropped $0.80.

New crop corn dropped $0.65.

And you add that all together.

And of course, with soybeans from those February highs, we had about a dollar sell off.

Now we have had a little bit of a recovery, but it's been a difficult marketing year.

It's been one of the more difficult marketing years really, since I go back to like probably 2013, 2014.

It's been very frustrating.

We did get a little bit of a turnaround here today.

Hopefully the lows may be in.

I'm not going to.

Don't quote me, but we are heading into the time of year where we could get a weather issue, which could help push prices back higher.

And also, you mentioned the trade, the big beautiful bill.

If we could get that set and we could get a trade deal, I think that would do a lot towards sort of opening the windows for potential recovery.

But right now, I'd say the next six weeks it's all about the weather.

[Kohlsdorf] Okay, Ernie, what about you?

We've got all of these.

I feel like we use that word uncertain so much right now.

We've got the bill that you were talking about.

We don't really know exactly what's going to happen with that.

We've had tariff talks.

We don't know what's happening with that.

Global conflicts and wars.

How is all of this kind of collectively weighing on the market?

[Goss] You're looking for certainty from an economist.

Wow, wow.

[Kohlsdorf] I shouldn't is what you're saying.

[Goss] No, a lot of volatility.

But you know today President Trump announced on truth Social that they cut a deal with Vietnam.

And it's hard to believe I'm not doubting the president.

But the deal with Vietnam 20% tariff on Vietnam Vietnamese goods into the U.S. And 40% on trans shipments through Vietnam, say, from China to Vietnam to the U.S., 40% and zero I mean zero on U.S. Exports into Vietnam.

That's hard to believe if he keeps cutting deals like that.

Agriculture and this part of the country are going to be in fine stead, because we'll be doing quite well.

If you look at looking back, when I think and off topic a bit here, but looking back, I think when we look back on these two quarters, that's first quarter of this year and second quarter that we've just finished, I think we're going to say we're in a recession.

You look at ten states.

Only ten states had positive economic growth for the first quarter.

Iowa and Nebraska, two states had the worst in the nation.

Negatives over negative 6% for each of the states.

Now it's annualized.

Not good at all.

And now, if you look ahead, I mean, things are it's like a rock skimming across the water, up and down, up and down, below and above.

So, it's it could be a recession.

Now, NBER, National Bureau of Economic Research, they date the recessions.

They'll tell us later on what's going on.

But what went on, I should say, and I don't think it's been good.

And if you look at what's ahead, looking ahead, we can almost say with pretty good certainty that the housing market is in pretty darn bad shape or about to be bad.

Now, this part of the country in the midsection, not nearly what we're seeing in the states of Florida, Georgia, Texas, California and Arizona got some real inventory issues there.

So housing is one of the chips that's going to be falling.

So economic outlook going forward is not good in the short term.

And back to the value of the dollar.

I think the value of the dollar is going to continue to move down.

And that's good for agriculture.

It makes our goods and our manufactured goods our agricultural goods more competitively priced abroad.

So right now, in our survey, bank CEOs in rural areas are ten states looking somewhat better.

I mean, I think we've hit a bottom for that.

According to the bank CEOs, bottom for the ag sector going forward, it looks a bit more positive.

And that's after 2023 and 24.

Not good.

Of course, 25 was supposed to be a good year.

Well, it turned not so good.

And a lot to do with tariffs and a lot to do with trade okay.

[Kohlsdorf] So you're seeing some optimism perhaps.

[Goss] From the bank CEOs we are, Brooke, it's looking better.

And you know it's you just can't this the economy is here just are buffeted somewhat from the volatility.

Now even though even though AG is definitely volatile you don't need an economist to tell you that we know that with these ag prices.

And certainly, Chris can attest to that.

[Kohlsdorf] Well, let's talk wheat, Chris.

So, it's been under pressure trending lower.

What's behind that story?

[Robinson] Well, it always comes down to supply and demand.

At the end of the day, we have more of what the world wanted less of, and we did have one good rally in February.

It was the winter kill we had.

We were at about 6 or 7 month highs.

People started getting a little bit friendlier towards wheat and wheat did what wheat does, always does.

It punishes people that get emotional about the price of wheat.

And then you saw that steady decline.

And I think that even though we have the last survey with the acres, we have the least amount of spring, spring wheat acres we've planted.

I think in 55 years.

And so, the American farmers are responding to that.

They're like, why would they plant more when prices are kind of here at this level?

And I was talking to somebody the other day and we saw one gentleman who was a farmer.

He said, I don't think I want to, I don't want to grow wheat anymore until it's $40 a bushel.

He's just some you're getting to that point now where people are just frustrated.

Conversely, you've had a great five-year rally in livestock, so a lot of these guys are like, all right, you know what?

Maybe I'm going to not grow wheat.

I'm just going to move towards, you know, getting the livestock where the prices have been, you know, keeping pace, keeping pace, certainly.

And going with inflation.

So, wheat is in a hard spot.

The problem with wheat is it's a weed.

And every in every country around the world, someone's always harvesting wheat, right?

It's always getting harvested.

So, you have all that supply out there which is overhanging.

Now you mentioned that the U.S. Dollar hit a three-year low.

That should help our exports.

But at the end of the day, a lot of that business that people talk about happens in coming out of the Black Sea, because we saw that with all the uncertainty we had in between 22 and 23, with what was going on in Ukraine, it never really made our wheat prices catch fire.

So, to wrap it up with wheat, I would say that I think we're still in a situation where we could get these short covering rallies off these lows, but we're at multiyear lows.

And I think that if I'm a wheat farmer, I want to make sure that I know where my floor is.

And I don't think this is the time where you want to be saying, you know what?

We're never, ever going to rally again.

Because generally that's what happens.

So, if we can get a weather issue, that's always something we'll give a producer a good heads up.

But I think from now, this time of the year, right now, the market's going to be driven.

What's going on with corn as corn goes into pollination.

And then in August, what happens with soybeans.

[Kohlsdorf] Yeah.

What is the story with corn?

You mentioned this earlier that now we just kind of have to watch the weather right.

It will be all driven by weather at this point.

[Robinson] We have huge acres, which is unusual.

I mean, not unusual, but we're kind of where we were in 2012 and 2012.

We had huge acres.

Prices drifted all the way lower into the end of June, beginning of July.

And then we exploded.

We had the 2012 drought.

Go look at that chart.

That's always a possibility.

But again, it depends on the weather.

But the setup is for if we have a good growing season, we're growing.

You know, every year we grow 15 billion bushels of corn.

We could grow 16 billion bushels of corn.

So that's the real underlying problem.

We're again, in a situation where we're growing more of what the world wants, less of.

There were some indications in this bill that there may be some changes coming with blending rates with biodiesel.

If anything like that would turn the corner, that would help.

Currently, ethanol takes one third of our crop 5 billion bushels.

So, they were to change some legislation where they came from.

More of that.

That would be very positive for producers, because it's like having that solid demand that's not going to go away.

You know, it's going to go there.

It'll help give you a price.

Floor.

Nobody wants to see corn go below $4, but corn went to $4 and a quarter cent last night, which is a contract low for corn.

That's going to be a very big psychological issue at $4 holds.

Maybe we can get a little recovery.

New crop corn, which is what's being planted right now.

You know, if I told you that our high at 479 in February was going to be for the year, and then we had about a 60-cent selloff, again, we're fighting against that, that 410, 425 level.

Most farmers out there really need corn north of five bucks for it to make sense to them.

So again, we may be the type of market where you're the price of what you're producing possibly does not cover your input costs and stuff like that.

And we've had markets like that before where but again and, and we'll see if we can grind through it.

So, moving ahead it's going to be are we going to get a weather issue.

Is this 2012.

I don't know right now.

It's not shaping up that way.

But I think we're going to need a weather issue to get a really strong continued rally.

[Kohlsdorf] What about soybeans?

Is it is China going to come back to the table and start buying?

And is that what needs to happen?

[Robinson] I think everybody out there says that, yes.

Yesterday Italy stepped in and bought some beans.

And is that the reason we rallied?

I don't know, I mean, it doesn't bother me.

Many beans.

Historically, China takes one fourth of our production.

We grow 4 billion bushels.

They take a billion bushels.

And at the end of the day, they've got other sources.

Now they're very heavily invested in South America with infrastructure down there.

That's always been that's always going to be a problem.

South America's crop was very large this year, did not have any weather issues.

So, let's put China kind of in the catbird seat because they need the beans primarily for the meal because their protein choice of their protein choice is pork.

So, they need that meal.

That's why the demand is there for soybeans and soybean meal.

If that ever comes through where they say, you know what?

We're going to, we're going to be nice again, we're going to come back.

We're not only going to take 25% of your bean crop, but we're going to do another X percentage.

That would really help farmers.

And that's the number one thing.

China takes so much of our soybean crop.

When you have one client that takes 25% of your business, you need to make sure you're on good terms with that client.

[Kohlsdorf] Yeah.

Ernie, I want to ask you about that.

What?

Tell us a little more about why China is so important for the commodity markets.

Why do we need them to return?

[Goss] Well, certainly, as Chris said, a big buyer of certain ag products, certainly in the grain side.

And we ask our bank CEOs about grain and farm income this year, their projections 25% negative of grain farmers, 25% of overall farmers.

And then when you take livestock, it's doing quite well.

But the Chinese, one of the reasons, one of the problems is right now their economy is not doing well, doing very poorly.

So, their ability to buy is diminished.

For that reason.

Also, this issue with trade with tariffs, we're battling with them and also, they have a trigger we can't take advantage of a I guess a pistol that we can't take advantage of, which is reducing the value of their currency.

They can.

And that would really make our exports much more expensive.

And of course, make their imports less expensive.

So, we can add on a tariff, for example, on Chinese goods coming into the U.S. Where they can offset that with a reduction in the value.

Now, how do they do that with buying by in the international, the market for money, money markets.

And so, what's happened is I mean they and this goes I'm going to get a little off target if it's okay here.

But one thing they've done, they've sold off about $400 billion of our bonds.

In other words, they were buying our bonds.

Well, now they've gotten rid of.

Well, that raises our interest rates and also tends to increase the value of their currency, but also something happened just yesterday, July 1st.

I don't hear anything about it.

Basel three is now.

Gold is a reserve currency.

Now the U.S. Is the is the reserve currency on the globe.

But now gold has been is now allowed.

Banks can use gold as a reserve currency.

And you look at what's that going to do with the value of the dollar coming down.

And also, with the new reserve currency.

Now I see it as a very positive for gold.

Gold is now a little bit below their all-time highs, but gold and silver and those, those commodities we're talking about commodities growing not so much on the unfortunately for agriculture, not so much on the corn and beans and soybeans.

But look at beef prices, beef prices up there.

And that's held up very strong.

And the consumer continues to buy.

And that's a good thing.

It's baffling.

It's baffling with a weak consumer covered up in debt.

Yet they still love those steaks and those pork chops and other commodities.

So anyway, and finally, I just like to say about farmland.

Farmland prices are getting attractive.

They've been moving down according to our survey of bank CEOs.

And that's, you know, farmers are not in business to selling land.

They're they would like to purchase land to, to do grow more.

So that's coming down.

Not as much as income though.

Income.

Farm income has come down much more than farm land prices.

So that's another issue.

I don't think I answered all your question.

[Kohlsdorf] Well, I think we'll get to some of that because you've written a lot about that, and we'll talk about that in Market Plus.

Let's talk about the thing you've kind of described as the silver lining, which is the meat market.

So, people are still buying.

And I think the question you hear a lot is, are the highs in yet?

Right.

[Robinson] We've been looking at that for five years.

I mean, in the last seven months real quick.

And I do the numbers every day because numbers are really what matters.

People.

And the feeder cattle market September contract memory serves me right, and I think it does in the last seven months we were out $0.78 a hundredweight.

If you look at the live cattle market, the same contract August, it rallied $0.51 in seven months.

And we've had a couple corrections, but it's just been mind boggling.

Now, we did have a nasty correction in the lean hog market when we had the stock market crash.

Remember that in April we crashed and now it's back to new highs.

But that stock market move in April a lot of the speculative funds were massively long.

They sold a lot of lean hogs down there.

We went from about a six-month high to a contract low in three months.

We've come back up $0.27 a hundredweight.

Now.

We've had a little bit of a pullback since then, but that every time we've had these corrections, the market keeps coming.

And you talk about inflation.

Inflation has been you can see inflation and food prices.

But it has not been.

And I think it's been very frustrating for a lot of farmers.

When you think about it like why should why isn't corn at $8.

Why isn't wheat at $12?

But everything else is higher, everything else is higher.

And part of the reason is we don't have the supply that we really need, especially for cattle.

We've been at a small herd for the past 3 or 4 years and go back and you can.

Don't take my word for it.

Look at that.

Pull up a chart of the S&P 500 and cattle.

When we had that COVID low, everything's gone straight up and to the right since then, like in this nice little arc.

And you're right, we haven't had a correction yet.

Now I'll wrap it up with this is the top end.

Maybe we can think Walmart.

If you think the top might be in because that story was just out this week.

[Kohlsdorf] Yes, we've got 20 seconds tell it.

[Robinson] Walmart decided to become vertically integrated.

So, they're going farm to table.

Literally.

They've cut out the Packers.

Everybody doesn't like the Packers.

The people that processed the meat.

So, to me that's like if United Airlines said, you know what, we don't want to buy kerosene anymore from any of these other people.

We're going to buy our own oil, we're going to process it, and we're going to make our own jet fuel.

Maybe that's the top, because when somebody when the big player says, enough's enough, maybe, maybe that's a sign.

[Kohlsdorf] We'll end on that.

We've got lots more to discuss.

You too, but we don't have time right now.

We'll do that in Market Plus.

Thanks for watching.

And the analyst segment analysis segment in a moment with Market Plus, we'll continue our conversation there.

You can search Market Plus with Ernie Goss and Chris Robinson wherever you get the podcast.

And we are so glad that you joined us.

We also have a way for you to find out some of the inside information for this program and what's ahead in rural America by subscribing to our Market Insider newsletter.

You can look in your inbox each Monday after you subscribe at mar kettomarket.org.

Next week, getting a handle on crop conditions in the East and the West.

Thank you so much for watching.

Have a great week!

Market to market is a production of Iowa PBS, which is solely responsible for its content.

What's next doesn't happen by chance.

It happens when researchers and farmers work together to solve tomorrow's agronomic challenges.

We're committed to creating what's next.

Because a pioneer.

Our name is our mission.

Family owned and operated for more than 60 years.

Sukup Manufacturing is a full-service provider of grain handling, storage and drying equipment, helping farmers feed and fuel the world.

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.