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00:00What is the single key driver that people have to understandabout why the cause of so many of these ag goods are on the rise.China is the number one answer. They've already bought over two billion bushels of corn and soybeans for the current marketingyear. And there are other factors. But that's the key. And if we see the prices surge does that why are they drawing itfrom. Is there a key issue that it's that we're going to see the price increases here in the UnitedStates when you're just going out and buying a cereal for example. Because it's so interesting that we speak about foodprices on the rise but that doesn't seem to show up in the inflationary pressures.Right. Excellent question. That's because sometimes there's a little confusion about terminology. Well we're talking about theprice of basically raw materials that go into making things that you buy at the grocery store except for milk meat and eggs.About 80 percent of the cost of the eye food items you buy at the grocery store are processing transportation marketing andadvertising. So you can increase the price on the 20 percent that the farm level value of the crop orcommodity represents and not increase the overall inflation level to the grocery store very much. I'm curious here aboutScott's about some of the supply issues. I mean on one hand I've seen some data out in the USDA that shows that we're not reallyseeing a huge increase in plantings or least not anticipated increase in plantings here in the U.S. And then of course weknow down in Latin America there are some weather issues that are holding back plantings there. How much of that is going tofactor into any sort of further price appreciation that we see going forward. Well sure. Going to be interesting. That's one ofthe limitations. When you have one of these kind of big unexpected demand shocks you could argue whether it wasunexpected or not with China. It does take a while for the world to respond. It typicallytakes a couple crop cycles. We have a huge USDA reporting report on prospective plantings coming out at the end of March. We'llget our first readings. I expect U.S. farmers to kind of go back to a monitor from the 70s which was Fence Row. Defense Row Ithink worked on the plant a lot of everything but particularly corn and soybeans. Do we have a sense. So we talked about thisChinese demand cycle the restocking of their you know they're there you know their goods. Do we have a sense of how long thiscycle can last or how long such cycles have lasted in the past. Well you knowChina's soybean appetite is voracious and it was just up and up and up for10 years just kept setting records until we went into the trade war with China. So that's a you know he can't go on a while. Myown personal belief is that we'll see a continued strong buying from China. Soybeans corn is the real wildcard. We really don'tknow how much that is. They're just rebuilding stocks feeding more because of rebuilding their hog herd after the Africanswine fever. So there's just a lot of uncertainty about where this corn is going into China.Scott speaks that a little bit more on the trade breakdown that we saw between the U.S. and China. People are farmersanticipating that that's well heeled now when they're gonna be trying to drive out their plantings and assuming that China canbe that buyer of choice so that China hasn't pivoted away in the longer term to Latin America for example.Well farmers here are very well attuned to the long term possibility that China is going to try to diversifyits suppliers. I don't think there's any doubt that China is going to do that. But they're such big buyers right now that Ithink that that's a secondary consideration.

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China Is The Driver of Agricultural Prices Rising: Scott Irwin

Scott Irwin, Laurence J. Norton chair of agricultural marketing at the University of Illinois at Urbana-Champaign, speaks with Bloomberg's Caroline Hyde, Romaine Bostick and Joe Weisenthal on "What'd You Miss?" about the recent rise in agricultural prices. (Source: Bloomberg)

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