CommStock Report

Thursday, February 4, 2016
David Kruse, president of CommStock Investments, Inc

I don't think that I am any more concerned today over the prospects of Ted Cruz winning the GOP nomination or becoming president than I was before the caucuses. They identified 28 percent of evangelical conservative Iowans and effectively got them to the caucuses to win a plurality and that will have been the easy part for the Cruz campaign going forward. Four years ago 600 people attended the GOP caucus here in Dickinson County. There were over 1,200 there this time. Voters are divided up into precincts and you get to see how some of your neighbors voted, good or bad.

Someone in my precinct wanted to nominate me to a party position and I quickly turned it down telling them that they should pick someone who had been a Republican for longer than two hours, having just registered as such for the caucus. Gosh, they just let anybody join their party. They also should pick someone who could support the party nominee, which I could not do if it were Cruz. In that stead I would probably choose not to vote. Both parties choose the nominees but the independents choose who wins in the fall.

In Dickinson County, home of the University of Okoboji for which I serve as the designated chief economist, Donald Trump won with 28 percent of the vote, Marco Rubio was second with almost 24 percent and Cruz came in third with 21 percent. That was the outcome that I was actually hoping for, on behalf of the entire state. I wanted Cruz in third place. Bernie Sanders won in Dickinson County too.

In what I would describe as the most ag-oriented/evangelical Christian county in the state, Sioux County, Cruz did win with 33 percent -- with Rubio a close second with 32 percent. Trump came in fourth with just 11 percent of the vote behind Ben Carson. You can tell from that vote that the evangelicals did not warm up to Trump and do not love Trump quite as much as he thinks they do. You can also tell that they fulfilled their religion obligation while supporting Sioux County being the top agriculture county in the state. In 2008 Huckabee won 53 percent of the vote in Sioux County. In 2012, Santorum, who like Huckabee, was also not anti-agriculture, won 46 percent of the vote in Sioux County. You can see how Cruz with 33 percent of the vote in Sioux County this time underperformed with evangelicals. Cruz should have blown out the vote in Sioux County and didn't, barely squeaking out a win by a single percent point over Rubio because of his anti-agriculture positions.

Polls also showed that the immigration issue did not win over as many voters in Iowa as the noise suggested. The candidates trash immigration reform while polls have shown that the public supports it except for a few hard core ideologues. That hurt Trump. I think that there are four Democrats in Sioux County and two of them voted for Sanders and the other two voted for Hillary Clinton.

In the agriculture central county of Story, home of Iowa State University our land-grant agriculture university, Rubio won with 32 percent of the vote. Rubio also won in Johnson County where the University of Iowa is located as well as in Polk County with the capital city of Des Moines.

While 68 percent of GOP caucus voters voted for candidates that supported the RFS, that vote was split between too many candidates for one to beat Cruz. Therefore, we get headlines such as, "Cruz victory breaks must-be-pro-ethanol-to-win linkage." Twenty-eight percent of Iowans did throw the agriculture sector under the bus voting for Cruz. That confirms what we are up against.

In 2012, Dickinson, Story, Polk and Johnson counties all voted for Mitt Romney -- choosing the nominee while the state picked Santorum. Rubio, who won three of those counties this time, can take that for what it is worth.

Ted Cruz says that he would treat ethanol and oil interests the same. First off, he has not done that in the past as he has voted for oil subsidies and against the RFS. He took millions of dollars from Big Oil donors now chuckling how Iowa voters bought the bill of goods they helped Ted sell them. I noted that given the combined vote of Cruz and Paul that they got 32 percent of the total vote as anti-RFS candidates while the other 68 percent of the GOP vote was pro-RFS. Rand Paul has since suspended his campaign. Growth Energy added in the vote for Democrats' caucus night, who are all pro-RFS, and that boosted the total to 80 percent of the total vote going for pro-RFS candidates. Support for the RFS is strong in Iowa.

Over 60 percent of Iowa voters claim to be evangelical Christians and over 80 percent of GOP voters claim to be very conservative. It just doesn't get any better than that anywhere else in the country for a candidate like Cruz. As noted, in past caucuses Huckabee and Santorum both received much higher percentages of the evangelical/ag vote than Cruz got. Cruz's anti-agriculture, anti-RFS, anti-TPP, anti-work visa positions trimmed his vote total and I don't think that was because of Trump.

Protectionism/nativism may sell in New Hampshire but it should not have sold in Iowa when the state wins big because of trade and exports. Both parties sported protectionists. I have to scold Iowa farm and commodity organizations a bit for not stepping up with a higher profile to defend trade and the TPP than they did. They all tout the importance of trade and TPP but efforts to educate their members on the candidates stance on trade came too little too late and they made virtually no effort to educate the larger public. I don't think that Cruz was ever challenged on his anti-TPP position. An opportunity was missed to educate the public on the value of trade and the necessity and benefit the TPP brings to the Iowa economy. Farm and commodity groups should have done much more than they did to force agriculture issues to the forefront. It was like they were not ready for the caucuses. They have four years now to think about it.

* David Kruse is president of CommStock Investments Inc., author and producer of "The CommStock Report," an ag commentary and market analysis available daily by radio and by subscription on DTN/FarmDayta and the Internet. CommStock Investments is a registered CTA, as well as an introducing brokerage.