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Coming up on Market to Market — Rural America braces for what’s next after the adoption of controversial tariffs And the battle over hog waste still rages more than two decades later Those stories and market analysis with Sue Martin, next Wherever your operation takes you, or who you share it with, we’ll be where we’ve been all along, with you from the word go Proud sponsor of Market to Market Tomorrow, for over 100 years we have worked to help our customers be ready for tomorrow Trust in tomorrow Information is available from a Grinnell Mutual agent today 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, March 9 edition of Market to Market, the Weekly Journal of Rural America Hello, I’m Delaney Howell President Trump made good on a promise to put tariffs in place for foreign aluminum and steel As rural America held its breath in anticipation of a trade war, Wall Street sold the rumor.– The Dow Jones Industrial Average moved higher as the market absorbed the news Adding to the surge were investors switching focus to the potential for talks with North Korea The creation of 313,000 new jobs last month added fuel to the fire The new jobs kept the unemployment rate at 4.1 percent for the 5th month in a row — Many in rural America, are concerned about a potential chain-reaction from the tariffs that go into effect in two weeks The entire Iowa Congressional delegation was concerned enough that they sent a letter to the President discouraging him from going forward However, one Iowan – previously a political football in the controversy over renewable fuels -is one-step closer to the frontlines and all that comes with it Peter Tubbs has the details With the swearing in of former Iowa Secretary of Agriculture Bill Northey as USDA Under Secretary of Farm and Foreign Agricultural Service, U.S Secretary of Agriculture Sonny Perdue filled an empty position on his organizational chart after a nearly five-month delay However, the Secretary still faces a plate full of challenges Under Secretary Northey is the first to hold the title, which covers international trade of American agricultural products That trade environment grew cloudier this week after President Trump enacted tariffs on imported steel and aluminum European Union leaders promised to retaliate Donald Tusk, President of the European Council: “President Trump has recently said, and I quote: ‘Trade wars are good and easy to win’ But the truth is quite the opposite: trade wars are bad and easy to lose For this reason I strongly believe that now is the time for politicians on both sides of the Atlantic to act responsibly.” While the European Union represents less than 10 percent of global steel production, it is the largest source of imported steel for the United States The White House has floated a tariff carve-out for Canada and Mexico if the renegotiations of NAFTA are successful Canada and Mexico are the second and fourth largest sources of steel for U.S manufacturers The steel industry has seen declining wholesale prices over the last five years as capacity grows and plant utilization declines China, which produces almost half of the world’s supply, has been blamed for most of the surplus pushing prices down The U.S imports only 2 percent of its steel directly from China Secretary of Agriculture Sonny Perdue sees the tariff tiff as part of a larger struggle over trade Sonny Perdue, U.S Secretary of Agriculture: “So I think he’s in a position to position the United States He believes solely in his heart America First and American People first, and that includes American agriculture, and that’s what he’s working toward He wants a good deal with NAFTA, I think we’ll get one, I think even this effort this past week may put us in a better position to get a better deal in NAFTA than we would have gotten otherwise.”

Domestic critics of the tariff plan abound, even on the Republican side of the aisle Sen Charles Grassley, R-Iowa: “The economy is on the right track thanks in large part to President Trump’s leadership, but imposing tariffs could wipe away all this progress as quickly as it would take the President to sign his name.” Rep Paul Ryan, Speaker of the House: “The president’s right to point out that there are abuses There clearly is dumping in transshipping of steel and aluminum That’s absolutely happening There’s a big over-capacity problem Let’s go focus on that Let’s go focus on the abusers of that and that is why we think that the proper approach is a more surgical approach so that we do not have unintended consequences Voices on both sides of the Atlantic are hoping the President steps away from a trade war However, EU Commission President Jean-Claude Juncker is prepared to fight back Jean-Claude Juncker, EU Commission President (March 2, 2018): “This is basically a stupid process, the fact that we have to do this But we have to do it We are now imposing tariffs on motorcycles, Harley Davidson, on blue jeans, Levis, on Bourbon We can also do stupid We also have to be this stupid.” For Market to Market, I’m Peter Tubbs In June of 1995, a major storm in North Carolina softened a dike surrounding one of the larger hog manure lagoons in the state The subsequent collapse of that single lagoon, released 25 million gallons of effluent into nearby streams, killing thousands of fish The massive spill spurred state officials to take a closer look at how the hog industry was regulated A MORATORIUM and a stack of REGULATIONS followed More than 20 years later, the hog industry is still under attack and a Chinese conglomerate is square in the cross-hairs Paul Yeager has more Some neighbors near swine operations in the nation’s 2nd largest hog producing state are crying foul over distribution of the animal’s waste Those complaints fostered dozens of odor nuisance lawsuits scheduled for trial late last year against Murphy-Brown LLC, a subsidiary of North Carolina-based Smithfield Foods The mist created when manure lagoon wastewater is sprayed onto fields is a major point of contention in the litigation Lawyers for the plaintiffs plan to present DNA testing evidence showing tiny particles of hog feces are settling over their clients’ properties Terry “Pap” Adams, Lives Beside North Carolina Hog Farm: “When the wind is right, you get it It’s like a mist When they spray that stuff, it’s like a mist Every time the thing hits like that, it throws a mist off It’ll be right pink with hog blood, manure and all that stuff.” A former Environmental Protection Agency engineer conducted testing on homes near several hog farms in southeast North Carolina The swabs used on the outside 14 of 17 structures came back positive for pig2bac, a genetic marker linked to the presence of hog feces In at least one case, the marker was found inside a home located less than 500 feet from a hog lagoon, separated by a narrow buffer of trees Smithfield lawyers contend the testing methods are shoddy and unreliable A microbiologist who has consulted with the EPA says the study of pig2bac is far from conclusive An analysis by the Environmental Working Group and Waterkeeper Alliance in 2016 revealed hog operations in North Carolina alone generate more than 9.5 billion gallons of fecal waste annually Pork production is a $2.3 billion industry in the Tar Heel State where 9 million hogs make their home Everette Murphrey’s operation in Farmville, churns out 5,700 hogs a year for Smithfield His center pivot irrigation system sprays downward, minimizing drift Everette Murphrey, Smithfield Contractor: “I’ve never had a complaint from a neighbor Never.” Last spring, North Carolina lawmakers passed legislation protecting hog and other agricultural operations against lawsuits like one pending in federal court The first two of 26 trials against the world’s largest hog producer and processor are set for April in North Carolina For Market to Market, I’m Paul Yeager Next, the Market to Market report The commodity markets finished mixed in the wake of a late week report Despite some bullish news, the grains took it on the chin

For the week, May wheat fell 11 cents while the nearby corn contract moved a nickel higher Projections for a larger Brazilian harvest added pressure to already declining prices as the May soybean contract plummeted 32 cents May meal lost all of last week’s rally falling $19.30 per ton May cotton added $2.43 per hundred weight Over in the dairy parlor, April Class III milk futures were flat The Livestock sector was mixed as the April live cattle contract rose 95 cents Nearby feeders shed $2.13 And the April lean hog contract put on 27 cents The U.S dollar index moved 10 ticks higher April crude oil bumped up 79 cents per barrel COMEX Gold poured on 60 cents per ounce And the Goldman Sachs Commodity Index gained nearly 3 points to close at 444.20 Here now to lend us her insight on these and other trends is one of our regular market analysts, Sue Martin In case you want to go over things again, you can download or listen to our Market Analysis and Market Plus podcasts online anytime at iptv.org/mtom Sue Martin, welcome back Martin: Thank you, Delaney It’s nice to be here Howell: I’m glad to have you across the table from me, Sue This week we had some big news coming as we saw earlier in the news section tonight We had President Trump sign these retaliatory, or sign these tariffs into effect What do you see that doing for agriculture and specifically the commodities? Martin: Well, I think there has been a lot of concern, a lot of fear because in the past we have had retaliation from countries that we have put tariffs out there Unlike though that it’s not a ban I remember when President Jimmy Carter put a ban on imports from, or exports of our corn to Japan and it ruined our business for years I don’t see this as bad, and I tend to be an optimist, but when I look at China they don’t make the top ten of our importers that we’re importing from So the concern is that they’re transshipping probably through Thailand or Taiwan And granted, imports from Thailand I think are up over 260%, 270% just this last year But when I look at China I think that when they send it out it’s going into other countries being formed into another type of a product, maybe it goes from flat steel to a pipe or something like that Coming from China it takes 66 days to get here so it takes a long time, it’s very expensive because of the weight So I think that when I look at Canada and look at Mexico I think that President Trump was basically kind of using it as a maneuvering tool for NAFTA What is amazing is it’s Russia that we’ve seen a lot of imports from steel and of course Canada accounts for 40% of our imports just this last year on aluminum Howell: Okay Well, that sounds like a little bit of optimism then that we won’t see that take a direct hit to some of our commodities Martin: I don’t think so Everybody is worried about our bean exports And you’ve just got to say China is a business country as well as us and when you have Brazil producing like they’re producing and hitting new record production every year, some of those estimates are up around 117.9 even though CONAB is not there yet Are they going to go to Brazil for more of their beans? Probably They have the crop to sell And if it’s more reasonably priced they’ll do it and I don’t think that is any trade retaliation, I just think it’s business Howell: It is business And we’ll get a little bit more to that discussion when we talk about soybeans Let’s talk wheat As we know we had the WASDE also come out this week Were there any surprises when you looked specifically at the wheat report from WASDE? Martin: I think the fact that they raised the carryout on the U.S carryout was a little disappointing Global supplies shrank a little bit But at the end of the day I think wheat is still in a weather market and we’ll see because as it is coming out of dormancy now it needs moisture and there have been some forecasts that parts of the Wheat Belt will catch some moisture here over the next 10 days But here’s the thing, with the wheat being some of the lowest acres we’ve had in a very long time, our wheat acres are growing in Minneapolis wheat, I think that what we’re looking at is a very tough time in the wheat, crop condition ratings have hit some really low levels It makes you wonder in the poor to very poor how much lower can it go? The one thing for the wheat market is back to Argentina if this drought stays with them it’s going to evolve into their planting season for wheat and that also could start to add more support under

our wheat market Howell: Definitely Let’s talk Argentina weather specifically when we look at the corn market Is that still a big story here? Martin: Well, Argentina is the number two exporter in the world and so I’m surprised it hasn’t gotten more footage than it has, or mileage But when I look at Argentine weather their crops, they should be getting some rains, they’re going to catch some showers over the weekend and in the 6 to 10 day forecast they’re looking at some heavier thunderstorms, not this next week but the week following and they’re going to hit central Argentina areas where they really haven’t caught much rain So I think that is weighing on the market Plus you had crop condition ratings poor to very poor on soybeans 79% corn 69% So again it’s such a heavy weighted that we may have priced some of that, a good chunk of that weather in for now Are these the tops? I don’t think so Howell: Sue, this is the first year that we’re going to see expected, not the first year, the first year in a little while I should say We’re going to see more corn consumed worldwide than what is produced Do you see that giving us a strong upside potential for corn? Martin: I do I think that when I look at corn, first off production is going down nearly every country around the world And then I look at larger hog numbers, you’re looking at China with hog numbers record Poultry numbers are hitting highs U.S production is up Our beef production is up and we have had cattle moving into the feedlots because of the weather that was enhancing into cattle country, which is hard red winter wheat and consequently moving those cattle into feedlots is causing more feed usage So when we get into the quarterly stocks report at the end of this month I think we’re going to be looking at that quarterly feed usage and it should ramp up Again, stocks are starting to shrink globally and in the U.S I look at the corn market and I think it is the story that we’re only in the first or second chapter and it has a lot more to be telling us yet And it was kind of the creeper but I think there’s big things yet to come for corn It’s taking a little time as we have been seeing producers sell corn One thing I’ve been hearing is that ethanol plants are starting to see that they’re being full for April, May and June I’ve heard where some even have their facilities, their buy bought for about three-quarters of what they need for every month beyond That is a concern because where are farmers going to go? But what it tells me more than anything is basis isn’t going to be real special so if you see some weather hit because with the weather that has hit in South America and we think the USDA is probably 4.5, 5 million metric tons too high in Brazilian corn production, so when we look at South American production going south and ours we’re losing acres here, we need a good crop because our usage is growing, not only here but globally So I would have to say I think we are going to see higher prices with time Howell: Okay Sue, we’re going to save the social media questions for the Market Plus segment Let’s talk soybeans We saw significant pull back here at the end of the week when we look in the soybean markets, futures markets Was that because of retaliatory tariffs, impact from that or WASDE? What are your thoughts? Martin: I think that the soybeans fell back, everybody wants to tie it to the steel tariffs I don’t think it’s that at all The market has been struggling Our lead contract, now granted every contract we have had made new contract highs over the last year, except our lead contract has not been able to make higher highs over 2017 2017’s range for beans and for corn is inside ranges, lower highs and higher lows So one of those sides, excuse me, is coming out this year and of course I believe it’s the high side So the bean market has all the South American production in Brazil to look at, to deal with, so we should be because of our crush here so good and the crushing margins are very strong we should be seeing this bean market try to eventually push higher I just think we’re into a corrective phase in the market That phase might last into early April Howell: Sue, really quick before we move onto meats, how high do you see soybean prices heading? Martin: If we can get that $10.80, $10.84 out, because $10.84 is 50% retracement, then I would say we move on up to around $11.19 to $11.44 Then the real stiff target is the 2016 high of $12.08

and a half and that would be awesome if we could do that But I see better things for corn Howell: Okay Of course, the bullish story remains in corn When we look at the cattle markets we saw significant pull back up until the end of the week Are we going to see further downside potential, a further downside break? Martin: Well, I’ve been a proponent of the cattle market and it has been a little disappointing to me because it seems like we get these nice strong days and then it just sort of fades back But the one thing we did do today, and it might have been driven by the fact that our cash market this week actually ended up pretty strong, and I think a lot of the bears were trying to tout the negativity in the market, they’re continuing to look at supply and justifiably second quarter production is going to be 12.8% over a year ago at this time So I understand that But we also have really good demand and that demand would even be better if we didn’t have all of these Nor’easter’s happening So I think that the cattle market closed higher for the week after having made lower lows That’s a plus Now, the feeders didn’t, but the fats did And so I think this next week we’ll chatter a little bit early in the week and then I think we should start to move and take off and move higher We may go back but I do think because of all the production that the cattle market is somewhat limited as to how strong we can get yet in this as we move into April So on these next rallies we’re probably going to want to be doing some hedging One thing in this meat market, especially the cattle market, that I think has been missed is immigration And immigration, you look at Europe and they improved, in 2016 I think they had 1.3 million people immigrate, in — that was ’15 – and in 2016 they had about 1.2 million immigrate because of the open door policy in Germany and Italy Well, in Asia, when Asians started moving into Canada they noticed convenience foods, the demand going up They noticed red meat demand going up And they noticed that sugar added beverages went up So I think we’re looking at a market here that has long-term good demand underneath it Howell: Great Sue, we’re going to hit feeders and hogs during our Market Plus section But thank you so much for being here Martin: Thank you Howell: That wraps up the broadcast portion of Market to Market You can catch more market discussion in Market Plus available in podcast and video form on our website Market to Market may be airing in different timeslots due to fundraising on PBS If you find value in our program please consider making an investment in a service that provides you with news and market analysis you have come to trust and know Join us again next week when we’ll examine how federal forces have joined the fight against the nationwide opioid epidemic So until then, thanks for watching I’m Delaney Howell Have a great week ♪♪ Market to Market is a production of Iowa Public Television which is solely responsible for its content Wherever your operation takes you, or who you share it with, we’ll be where we’ve been all along, with you from the word go Proud sponsor of Market to Market Tomorrow, for over 100 years we have worked to help our customers be ready for tomorrow Trust in tomorrow Information is available from a Grinnell Mutual agent today 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

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