Paul Yeager: Coming up on Market to Market,
Coming up on Market to Market
Global tech companies find work arounds for tariffs.
Eastern powers huddle without Western allies in the room.
Plus honoring the tradition of cheese making.
And commodity market analysis with Chris Robinson. Next.
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Hello. I’m Paul Yeager.
The pace of hiring slowed in August, but employers still managed to add more new positions. The new hires also serve as another data point for the Federal Reserve and will influence their next decision on what to do with the key interest rate.
The latest employment report from the Bureau of Labor Statistics revealed a gain of 22,000 jobs. Revisions to June’s figures showed employment fell by 13,000 jobs – the first net loss since December of 2020.
The unemployment rate rose to 4.3 percent, the highest since October of 2021.
Farmer sentiment dropped for the third consecutive month in the Purdue University/CME Ag Economy Barometer. Crop producers responded with less optimism than livestock producers.
The week in trade news started during the holiday weekend when a federal appeals court ruled President Trump’s reciprocal and fentanyl-related tariffs were illegal.
Overall uncertainty about tariffs has given pause to businesses looking for firm details in trade plans.
David Miller looks at some of the global stories happening with and without the United States in the trade and security sectors.
David Miller: The world economy is working through several trade pattern changes and partnerships.
At a tech show in Germany this week, tariffs were on the minds of exhibitors looking for new markets and planning for existing ones, including in places they already have manufacturing operations.
Markus Miele, executive director of Miele: “The thing about tariffs is it changes more or less every day…. But of course, if tariffs were to come, we have to increase prices of course and the customer has to pay the tariffs in the end.”
Miller: Many companies with displays around food and AI have already expanded in the countries where they have factories, hedging their bets on policy changes.
Enrico Hoffmann, Senior Vice President of Sales and Marketing at BSH Group: “We have 40 factories worldwide and we have a local for local strategy. So what we produce in China is mainly for the Asian market and the American market we serve it mainly from our American and Mexican factories. So that is why it’s not that much affecting us.”
Miller: India, and its 1.4 billion people, is seen as a market of opportunity for the United States.
This week, it was China hosting the Indian prime minister in an effort to rebuild ties between the two countries. The meeting was ahead of a regional summit.
Leaders from North Korea and Russia were also in Beijing and the session was seen by some analysts as an act of defiance towards the United States and its allies.
Ukraine is also a part of the equation between all of these countries. As is the oil purchase by India from Russia. President Trump has announced a 50% tariff on India for its purchase of Russian oil. According to Trump’s trade advisor Peter Navarro, India’s purchases of Russian oil only started after the invasion of Ukraine making the Asian powerhouse an enabler of that war.
Peter Navarro: “India charges the highest tariffs in the world, has the highest non-tariff barriers. So they export a bunch of stuff to us. We can’t export to them. Our workers and our businesses get hammered by India. India then uses the money we give them buying their exports to buy Russian oil.”
Miller: Secretary of State Marco Rubio, arrived in Mexico this week in an effort to work out trade, migration and border security issues.
Mexican President Claudia Sheinbaum hosted the event aimed at collaboration on security matters.
Regardless of the outcomes in all these negotiations, uncertainty in trade has been tough for agriculture and business in general.
Gbenga Ajilore, Center on Budget and Policy Priorities “If you’re putting trade restrictions to be more competitive, then if the countries respond to that and are more competitive, then that’s a good goal and they meet that, but then you’re not raising revenue because in the revenue goes because you take the tariffs off.”
For Market to Market, I’m David Miller.
Yeager: The concept of value added agriculture is taking a raw commodity and processing it into something else.
The dairy industry has a long history of doing just that with milk processed into butter and yogurt. But it is cheese that’s an industry in itself.
The process of making cheese is centuries old and the tradition is unlike any other.
Josh Buettner reports in our Cover Story.
Rufus “Junior” Musser IV/Owner – Milton Creamery:“It’s really neat how you just take a simple vat full of milk and six hours later you’ve got 900-thousand pounds of cheese. There’s a lot involved in cheesemaking. There’s art. There’s science. There’s passion involved.”
Rufus Musser IV, or “Junior” as he’s known in the rolling hills of southern Iowa’s Van Buren County, is an integral part of a family operation helping to boost the local economy.
Rufus “Junior” Musser IV/Owner – Milton Creamery: “You got all your different products here: Prairie Breeze, Garden Vegetable Cheddar, Tomato Garlic, Black Pepper, Caramelized Onion, Four Alarm, Old-Style Cheddar… We are in all 50 states.”
Buettner: Satisfying demand for the award-winning, globe-trotting cheddar cheese varieties crafted by Milton Creamery creates jobs and allows for profit-sharing with fellow Mennonite and Amish source dairies.
Rufus “Junior” Musser IV/Owner – Milton Creamery: “Cheese gets made in the other building…comes out here for aging. So what aging does – it allows the flavors to develop. This particular cheese has been here a little over a year.”
Buettner: It took a little time for Milton Creamery’s gastronomic accomplishments to ripen as well. Junior’s parents relocated their Mennonite family from Pennsylvania to Iowa in the early 1990s, away from selling homegrown produce and into dairy farming, which brought its own challenges.
Rufus “Junior” Musser IV/Owner – Milton Creamery: “We don’t have a lot of population. So, to get much milk out there…going to have to do a lot of driving – a lot of delivery time. Dad kept looking at the price of milk in the store, and the price he was getting on the farm, and he said: somewhere, somebody is making money in between here.”
Buettner: The eureka moment came around 2000, when the elder Mussers attended a value-added dairy conference in Wisconsin and came away convinced that specialty cheesemaking, not milking cows, was their best path forward.
Milton Creamery Employee: “That is straight off the farm, right there!”
Rufus “Junior” Musser IV/Owner – Milton Creamery: “Dad said: Here’s our niche. This is where we need to be. You bring milk in, being as milk is 87 percent water, you take the water off – condense it to cheese – now we can afford to ship it across the country.”
Buettner: After breaking in and lighting up farmers markets for several years with their celebrated cheese curds, Milton Creamery unveiled Prairie Breeze to much acclaim.
Rufus “Junior” Musser IV/Owner – Milton Creamery: “The American Cheese Society would describe it as a sweeter cheddar, or a new age cheddar. We decided that’s going to be the Cadillac. That’s what’s going to drive the business forward, and it truly has.”
Buettner: Their success allowed for expansion, which helps ensure a steady stream of customers with discerning tastes. Just this summer, Milton Creamery’s Old Style Cheddar won gold at the International Cheese and Dairy Awards in the United Kingdom.
Megan Jennings/Villages of Van Buren County: “Well known in Van Buren County, and around the world!”
Buettner: County tourism officials celebrate the Mussers and a rising tide of similar endeavors which help bring things like tax relief and school funding to local communities.
Megan Jennings/Villages of Van Buren County: “We’re very fortunate we do have the Amish and the Mennonites, and how they do work with us too. They know that they have wealth coming in, but they also want to share it. They support economic development. We have bakeries, wood carving, cabinetmaking… It offers unique tourism for people who want to experience their life, or just buy that unique craft, or food, that they make.”
Buettner: The Amish reputation for exceptional craftsmanship and work ethic is well known. Though larger groups are found mostly east of Iowa, the Hawkeye state’s Amish population ranked ninth in the U.S. in 2023, at just under 10,000, according to statistics compiled by Pennsylvania’s Elizabethtown College.
Dr. Gail Carpenter/Assistant Professor & State Dairy Extension Specialist – Iowa State University: “Iowa actually has quite a large Amish-Mennonite population: a plain population. They’re actually quite a large contributor to our agricultural sectors. In dairy in particular, Amish milk makes up about 25 percent of the milk that’s produced here in Iowa, so they’re definitely big players.”
Buettner: Iowa State University Assistant Professor and Dairy Extension Specialist Dr. Gail Carpenter says larger mainstream dairy producers, consolidated mainly into northern pockets of the state, harness various technologies to maintain high animal welfare standards and milking efficiency for their huge herds. She says while the Amish shun such advancements, Mennonite beliefs are less strict in practical application – though they adhere to stringent quality standards. Complimentary partnerships have emerged, like Milton Creamery and the 5 dairy farms they buy milk from within 25 miles of their plant – the largest herd being 80 head. Together, they leverage value-added niche opportunities inside a smaller footprint.
Dr. Gail Carpenter/Assistant Professor & State Dairy Extension Specialist – Iowa State University: “They share a lot of the same values that their producers would. So, I think that creates a lot of trust there. It’s also a very competitive market trying to look for places to sell milk. It can be hard for small producers to find a co-op that wants to buy their milk from them because they just don’t have the same volume as a farm that milks a lot more cows would have. So having that stability and that surety and that lack of risk with selling to Milton Creamery also fits in with their culture and their values as well.”
Buettner: Carpenter adds each dairy cow in Iowa contributes roughly 24-thousand dollars to their local economies – and in a world of fewer producers, frayed connections between customers and food sources, a spirit of nostalgia has emerged – driving demand for products like specialty cheese.
The Musser family’s vision has led to benefits for their business and the region. For creamery workers, hard work also pays off – in more ways than one.
Rufus “Junior” Musser IV/Owner – Milton Creamery: “Forking the cheese curds, stirring the salt in…very intense… Also, when you put the 40-pound blocks into the hoops to put in the presses – between the weight of the hoops, plus the cheese in it – you’re looking at lifting 60, 65 pounds. I like to tell new employees, when they start here in the production facility, you can cancel your gym membership.”
For Market to Market, I’m Josh Buettner.
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Yeager: New contract lows in wheat this week. Even with a shrinking world supply. While corn tried to hold on before harvest, pressure fully enters the futures market. For the week, the nearby wheat contract lost $0.15 and the December corn contract declined $0.02. China remained out of the market for U.S. beans, instead opting for more South American products. The November soybean contract fell $0.28, while October meal decreased to 90 per ton. December cotton shrank by $0.50 per hundredweight. Over in the dairy parlor. October class three milk futures lost $0.98. The livestock market was mixed. October cattle lost three. 67. October feeders cut 658. And the October lean hog contract expanded by $1. In the currency markets, the U.S. dollar index was flat. October crude oil fell by 217 per barrel. Comex gold added $137.40 per ounce, and the Goldman Sachs Commodity Index was off by more than five points to settle at 540 305. Joining us now is regular market analyst Chris Robinson. Hello, Chris.
Chris Robinsonr: Hello, Paul.
Yeager: This wheat market doesn’t seem to change. It. Except one thing happened that you just don’t want to talk about. All three of those contracts. Contract lows. How much longer can that market not attract buyers as it keeps going down?
Chris Robinson: Well, there’s that old expression, right? The cure for low prices is low prices. But every time you turn around, you know, there’s just more bearish news out there about. We had a huge crop and it’s just ironic right. Farmers do all they can to grow a good crop. And then you know you get one. This year has been very difficult to market. We have 1 or 2 chances. We’re $1 plus off of our June July highs. We had that one little blip up to June-July. And that’s why this has been such a hard market year. You get these moves. We think we’re going to go, it’s time to go. And then, you know, we grind it away. So but wheat is definitely wheat doesn’t have a story. It’s there and again we’ve produced too much of what the world wants less of. Eventually we’re going to find a bid down here. We’re near five year lows depending on which contract you look at. I don’t care if you look at Casey, Chicago or even spring. And so the good news is, is that usually when we start getting down that level, you’ll start to see some, some more interest buying coming in.
Yeager: Do you have any ranges lower on this one?
Chris Robinson: Well I think the biggest risk is if we get we’ve already seen it when we go from the five handle to the four handle, then people start doing what they always did. they go back and look and say, okay, where’s where the last time we were this low? So we’re probably going to go back to those, you know, the 2013 lows somewhere in there. That’s probably a risk. So I’d say there’s probably another 40, 50 cents worth of risk. And again it could turn at any point. The one saving grace is yes the speculators are bet short. But it’s not massively short. So it’s small enough that if something changes, you know, they could flip and turn us around. But yeah, it’s, it’s you know, people are going to store it. Ignore I would say you have to store it. And you know if there’s 50 more cents worth of risk, you have to keep a floor under it somehow.
Yeager: Last week we had some assistance from corn. This week, corn, two cent loss on the week. Do you have to take that as a good sign that it didn’t fall further?
Chris Robinson: I think that if corn hadn’t, you know, we’re $0.35 off the low corn had a great week up until the finish today. We finished a couple cents lower, but since that August 12th report where we made a low of 3.92 corn, you know, we hit almost 4.25 for 25. A market likes to go to those round numbers. The psychological numbers. So yeah I think it could have been a lot worse if corn hadn’t had this little blip. I don’t know what’s driving it. It’s again, we’ve had consistently good people stepping up and buying corn consistently from Mexico and our end users. So that’s been a positive. There was a little bit of worry that we might get an early frost that was out there last week. That’s always good for 10 or $0.15. But as we get closer and closer to where the rubber meets the road, we’re going to find out what the yield is. Everybody’s been, and rightly so. Just disappointed about the yields that came back, even from the crop tour or whatever. Analysts are looking at. But it’s a big crop. The question is, will we continue to see good demand, and are we going to hold you know, it all comes down for I think psychologically these corn’s got to hold that $4 level. I think if we can hold a $4 level, then there’s some possibilities ahead. But if I’m a producer and, again, that’s nice to see. We’re from 390 to, to almost 425. Any year where we’ve had an 85 cent trading range $0.35. It feels like $3. So it was a little bit of a gift. A couple, about a two month high. So hopefully we’ll get a little bit more here. There’s three weeks left in this month. Hopefully we get a little bit more gas on the fire.
Yeager: Do you get the sense though, that that harvest pressure, I mean, knowing and confirming whether it’s Stone or Allendale or whoever is doing the private estimate that keeps saying, yeah, yeah, yeah, it’s big. So you mentioned “store and ignore” with wheat. Same story going to happen in corn?
Chris Robinson: I think farmers are going to do that. Typically they like to store corn and they typically will sell the beans off the combine. And as far as wheat, they’ll sell what they need to sell and wait. I mean, you go back, you know, wheat especially has always been a difficult market to trade and or hedge corn. I think that’s probably where the biggest risk is financially for the whole country. When you look at, you know, where our farmers are exposed to price risk, it’s in corn. Everybody really needs, you know, the high of the year for 79. Are we going to get back there? I don’t know. This is going to be the first time in a long time where we might not get back to the spring insurance prices, which was 470. So I’m hopeful, but I’m not blindingly hopeful, you know, hopes it’s always nice to be hopeful, if we’re lucky. In my opinion, we may get one more chance. There’s a gap. Back in the July 4th weekend where we were making highs, highs, highs. We gapped lower. It comes in around 434 435. That’s going to be the big test. If we can get these guys to push us up there. You may see some more fun short covering. They bought 35,000 last week so they were only short 110. It feels to me like they probably bought another 15 or 20 this week. We’ll know when they get the data today. And at this point, if I’m long corn, if I’m a farmer, anybody that’s watching this, you’ve got to hope that those guys start to feel a little bit of heat and cover some of those positions. It may give us one more blip up, and all I can say is if we get there, you got to be ready to do something.
Yeager: Talk about buying China, they bought Argentine and Uruguay beans. I don’t see the United States. How much longer can we hold out or are we stuck with no sales from China? Now go to a plan B.
Chris Robinson: I think that’s one reason we had a little bit of a blip earlier this week with when the Chinese, the negotiators, said, we’ll see you in two months. The market did not like that and we had a really good rally and relatively really good rally in soybeans. We had a rally at about 80, $0.85. It looked like we were going to maybe take one more shot at 1075, which is roughly the high for the year. And, and, you know, in three days it all went away. Now, what’s interesting is yesterday, which was Thursday, we had a very vicious, sudden turnaround. And all that was was if you take that move, it was $0.80. We came back halfway. Somebody I don’t know exactly who it was, but somebody bought that. I don’t know if it was computers, the algorithms or whether we see that a lot in these things where you have a big move, you get halfway back. Now what we need is more of that for the next week. But yeah, China’s been gone. But we’re still running. We’re about 2 million metric tons ahead of where we were this time last year without China in there.
Yeager: So who’s buying it?
Chris Robinson: There’s a good question. It’s always goes to unknown. Right. Well, no unknown is when the USDA says this is unknown. But I honestly think it’s just the function of the market. You know, soybeans were near one year low. We were at the bottom of the trading range. So if you’re an end user, you know, you’re going to step in there and say, all right, we’re going to start buying here. You know, and I think if those people have a longer term outlook, that’s the key. So we’ve got to get through this month. But there’s some possibility there.
Yeager: Well let me ask Matt G’s question a little bit. And it extended I kind of asked the first part right. If a trade deal cannot be reached with China soon, is it better to sell beans out of the field and hold on to corn to capture the carry in the market?
Chris Robinson: I would say most farmers are going to store corn anyhow, and they may say they’re going to try and store beans, you know, statistics statistically, basis gets better. Usually January, February for beans. That time of the year. So if you’re going to store beans, keep a floor under it. You may want to be trying to look for that basis to get better. But remember basis is one thing. Your flat price is what you can defend. So if we were to lucky enough to get back, you know, north of 1050, 1060, I have no problem with people selling it at that, especially if you’re making money. And again, you can always re-own it. Right. If you sell into a dollar rally and you’re worried, it’s going to rally another dollar, as soon as I pick up the phone, I always tell clients, re-own a part of it. You know, you just made a dollar. Hold back. Ten, 15, $0.20. Now with these shorter dated options, you don’t have to go out and spend 25 or $0.30 to buy a long term option. You can protect yourself and you can stay in the game after the sale. So I think that if you’re trying to play that basis game, I’d look at that in the beans.
Yeager: Real quick. Cotton, you think the support is finally here?
Chris Robinson: It sure.
Yeager: Looks like it, right? I mean, we’re.
Chris Robinson: At five month lows. Somebody has been stepping in here and buying it. If I did the charts this morning, a lot of what I do is chart based. So it’s holding in there again that’s very, very sensitive to what’s going on with China. I think that, you know, 65 cent cotton is not what most guys want. But the thing is you don’t want to let 65 cent cotton turn into 60 cent cotton. So I would say this, keep it cheap, put underneath it if we’re lucky enough to get a turnaround, be ready to sell into it.
Yeager: Live cattle. Other thing, other side of this happening. Is this the beginning of the end?
Chris Robinson: It was the first lower close for live cattle. I think in seven weeks or 11 weeks. And for feeder cattle, the same thing. It was either seven weeks or 11 weeks for seven weeks we’ve had and I’m talking about on a weekly basis. So that’s number one. Number two, we’re all familiar with the fact that people on the East Coast and West Coast who never talk about commodities have suddenly gotten interested in cattle. It’s shown up on a lot of stock index shows. So that’s kind of a late warning sign when somebody that’s never interested in something gets, gets it grabs their attention. It could be a sign that we’re kind of long in the tooth. And let’s say we are, you know, we are long in the tooth. We could have a ten, 15, 20 cent correction in cattle and not have it be completely meaningless. So it’s a possibility. The big thing I’m worried about and we dodged a bullet today. We had the unemployment numbers. Today. The stock market I believe the S&P made a new all time high. So there’s a big correlation between if the stock market stays in good shape. I think that’s a positive for the cattle market. The first thing these guys will do if we do have a correction in the stock market, they will pick up the phone and they’re massively long cattle. The first thing they do, you’ve made a lot of money in something. You’re losing money over here in stocks. Let’s take profits on the stuff that we’ve made money on. That’s the risk. If you’re long cattle.
Yeager: What about hogs? Are you long them yet?
Chris Robinson: You know hogs. It’s funny, there was a lot of argument out there about the last pig report. They they got the numbers wrong. I’ll tell you one thing. Mr. Market thinks you need to be long cattle. I mean, excuse me, long cattle, long lean hogs. New contract highs this week. But at the same idea, I also if if there was a hiccup in the economy, the first thing people are going to do is say, you know what? We’re not buying steak anymore. We’re going to buy pork. You may see a shift towards that anyhow. So I think that as long as the numbers are the way they are right now, the supply is a little bit tight. If I’m a hog producer, I want to stay long. I want to make sure that I’m defending it because again, we go to bed one night, somebody says something. We break, you know? Ten, 12, $0.13. And now again, you don’t have to spend a lot on these options. Now you can defend that. So I’d say defend the revenue. Stay long if you’re worried as you’re selling a pot load or two, you can always stay in the game. The best strategy for the last four months has been anytime you sold two pot loads, we own one for something cheap and that would have really helped you make you feel better. As you watch prices go higher.
Yeager: You make us feel better too Chris, when we see you. Thanks, Chris.
Chris Robinson: Thank you.
Yeager: Sir Chris Robinson, everyone, you have been watching the analysis segment and in a moment we will continue our discussion in an online only segment that we call Market Plus search Market Plus with Chris Robinson. Wherever you get your podcasts to hear that conversation, or go on to our website at Markettomarket.org. Thank you to those of you who’ve been in our inaugural year of the Market Insider newsletter. Sign up for season two on our website of markettomarket.org. Next week we get into an extended livestock market discussion. Thank you so much for watching. Have a great week!
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