Live at the Fair: Jeff French

Welcome in to this live MToM show podcast taping. I'm Paul Yeager at the Iowa State Fair. Jeff French, regular market analyst with us. How are you doing, Jeff?

[French] Excellent. How are you, Paul?

[Yeager] Well, We're dry. I can't say everybody else is dry here today.

[French] As I get a dripped on.

[Yeager] Right. Yeah, I should say, I think there was a drop that just came down right as we recorded. We are at the Iowa Pork Producers. We call it a tent, but it's anything but a tent. This is a brand new structure. Second year of it here. and you haven't seen it in person?

[French] No I haven't it looks excellent. And it smells delicious.

[Yeager] Oh, it always does. We are in the area. If you're familiar with the Iowa State Fair, this is where all the politicians would cook. Would they would do their photo opportunities, photo ops, as we call it, or celebrity is they'd come up and grill right here, but they did some renovations and now this is patio space. Inside, people are able to hear us and we have a live audience that we're going to kind of see. They can kind of hear, but really, this is a chance to just do something we haven't done. We're getting ready for 50 years of market to market. We're kicking off here next week. Jeff, I guess I'll start by asking, what's your first market to market memory?

[French] You know, I just remember it, it was always on in our house. But, I mean, if you have one specific and I don't know exactly, I mean, just probably 10 or 12 years old, but just Virgil Robinson. I just remember hearing his voice, and it's just a voice that you don't. And his analysis, it's just something that you don't forget.

[Yeager] Well, as I was looking just a minute ago, I swear I saw a guy who looked like Virgil Robinson. And if it is Virgil, come on in, Virgil, because it sure looks like him. And, I just don't know. it is a guy who looks a lot like him, but it's not. But know that's the fun thing at the fair. I've already done that to myself twice this week. doing that. It's a chance to see your friends. So Virgil is one of those people. how you came to be on Market to Market was. I won't say an accident, but it was, I, mean just a health diagnosis. Right?

[French] Well, I mean, I was with Top Third Ag Marketing before starting the year, and, I think there was a scheduling conflict where, my previous boss couldn't be on the show, so I was the next up. And I think that was now 4 or 5 years ago.

[Yeager] Longer than that. We've had you a lot longer than that already. Gosh. Time flies.

[French] Yes it does.

[Yeager] yeah. Mark Gold called me one day. I can say his name. Mark said, I got this guy, young guy, handsome. Looks like he could just be straight off TV. You're going to love him. So I was waiting for a handsome guy to show up. What happened to him?

[French] I don't know who that guy is.

[Yeager] Yeah, but you spent time in Illinois, spent time in Chicago, worked basically the shadow of the Board of Trade, there weren't traders. There were traders when you started there. But, they've gone away. What were your impressions of working in Chicago? Let's not talk about anything else, but working in Chicago. Did it match what you thought trading commodities was going to be like?

[French] So when I got down there, I think it was 2006, 2007. It was kind of the first part of the electronic trading just was getting going. And I was interviewing, I got license and I interviewed for about 6 to 8 months, and there was opportunities to go on the floor, but I knew guys that were working down there that said, you know, the writing's kind of on the wall. I mean, the volume is starting to disappear, but, you know, Chicago during that time, that is definitely the hub of commodities, no question. In the world. Now, with the electronics and internet, you are able to be outside of Chicago and, you know, with zoom and everything, it's an instantaneous mass market.

[Yeager] You were able to move back into Iowa. Johnston native. what's it like now being back there on the family farm?

[French] Well, I'm very happy to be back. I mean, it took about, five years of convincing to get my wife to move back, but, we've been back now, going on three years, and, couldn't be happier. you know, Chicago's a great place, but, I have three young kids, and, in my opinion, it was a great place to raise a family.

[Yeager] And this is a spot where you can get a sense of exactly what's happening in the in the corn fields, the bean fields, the the hog pen, the cattle barn, whatever it is, you you don't have to go very far to find someone deep in what it is that you're doing.

[French] No. And actually, I was in a soybean field yesterday. I had friends coming in through Sturgis. they were from Idaho. They got to do some work around here, but, they've never been in a soybean field. Never seen a soybean in his life. So we walked some beans there yesterday, and just explaining the process. The crops look excellent. Yeah. it's at least in western Iowa. It's some of the best crops that we've seen in a long, long time.

[Yeager] I've had conversations here at the fair, been here most days, and I just talked to someone who told me I won't say the area because I don't want to give it away completely. But one crop estimate, 300, is going to be pretty easy. Are you hearing that? 

[French] Yeah, I mean, there's going to be fields that can do that. And I think you will hear 90 to 100 bushel beans. I mean, look at this weather in August. I mean, this is not normal. we're getting rain in the high temperature. I think today was 71 or 72 degrees. I mean, this is just not normal weather for August, especially during the fair. I mean, it's usually 95 degrees this week.

[Yeager] You really wanted it to be 95, didn't you?

[French] I'm glad it is not.

[Yeager] You'll take the rain. We'll take all the rain. I do thank the pork producers for finding a spot here that is out of the rain. it is, it is fun to get a chance to see people when they already make a commitment to come to the fair. They don't know if it's going to be dry or wet. And they're trudging through it right now.

[French] Well, and and especially if you've driven 2 or 3 hours to come to the fair, you're going to go no matter what the weather is.

[Yeager] And I take a drink of water. The crops don't need much of a drink of water right now. Is this crop made? Did it need any rain?

[French] You know, I think some of the beans could use some of the rain down in southwest Iowa. There's reports I mean, locally on our farm, we got about seven tents, which was, well, welcome. but all in purposes, I mean, it's is we got a big crop coming. The question is, how big? we did have the USDA report today. You know, the US government thinks it's a record breaking crop out there from a national yield standpoint.

[Yeager] Well, we have estimates that are happening all the time. And, we're going to continue to get those. We always take questions, Jeff, on the TV show through Market to Market. And I know sometimes you're like, oh, what are they going to ask me now? We're taking some in person. And Dale in LeClaire, Iowa, Dale is actually watching us right over here to the side. Had a chance to talk to Dale and his family and hopefully they can hear it. They see they're all excited. The grandkids are excited now I'm going to start. you will enjoy it. Dale. Question is Corn or soybeans. Which one will have the best chance for a post harvest rally?

[French] Well, I think if you look at, after the report today and the headline today will be, the bean acreage, the Harvest Acres, they added a million more acres of beans into the harvest in acres, and then they increase the yield. so it's kind of a double negative on the bean report. So personally, I think the beans have the most downside here. And then you had the corn. They reduced corn acres harvested acres by 700,000. they did increase the yield. So that was kind of a wash. but, you know, you had the corn make a new life of contract low down here at 390, reverse and close above Friday's high of 3.99. We actually closed it at 401 and a half. From a technical standpoint, that's a key reversal higher. So that's a good start. I want to see some follow through, but I think I think the beans right now for what we know potentially at the more downside here.

[Yeager] This is not specific to Dale, but I'm sure that there are people who have some old crop still. Are you smarter? This was and this was a question posed to me over the weekend. Is it smarter to sell the bin? Empty the bin and refill it with this cheap corn? Or just keep what you have there? Save that expense. Wait for the next rainy day when the price might go up and just sell everything that's going to come in here in a month or two.

[French] Well, you know, we're sitting here down at three, four year lows for prices. So I don't like to be selling at lows. But I mean if you have to make a choice and sell the corn, I would just advise you to get some real ownership back on paper. I mean, the upside doesn't look good, but, you know, perception can change very quickly in these markets and you have a big short position that the funds and, I mean, if they have to cover 250, 300,000 contracts, that's probably good for a 40 or 60 cent move. in this market, that would be an excellent marketing opportunity, in my opinion.

[Yeager] The question that came up and will continue to come up is how long do we stay with numbers that start with three and numbers that start with nine? You already mentioned we've had that reversal at this taping, which we know things can change back about four, but we know that that's just kind of always flirting out there. How long are we stuck in this?

[French] You know we're going to have to see. But I mean, we have a good crop coming. and harvest is fast approaching. What's going to be the biggest influence of. Does $3 corn last or $9 beans? will be what happens here during the winter when South America goes to plant their crop.

[Yeager] Right.

[French] So if they have a good crop, an average crop, then it could prolong, you know, these lower prices. but I think, you know, we had a very good two and a half, three year bull market. we've obviously come off of that. so I think, you know, we're in this time here, but the next 6 to 8 months will tell us if this could last over a year. In my opinion, that's a long way to hold, and that's a long thing that people are going to have to do. Maybe duck in as long as they can, but we're coming off of a good couple of years here. 

[Yeager] Maybe some people are going to be withstand it, but it's going to be a lot of a lot of pencil sharpening, I'm guessing here.

[French] Well, you know, fortunately we're going to have the bushels. I mean, we don't have the price. But if you look at the crops now and what the government is telling us, I mean, we should have very good yields. So, I mean, we can grow, grow us out of it. you can market out of it. You could have market this crop, you know, a year ago at much higher prices. but at least we're going to have the bushels. we'll see what happens here in the next six, eight months.

[Yeager] We got people walking by behind us. We're just off of Grand Avenue. We can see the sky glider, I think, behind us here. let's talk about the people who are eating pork. What is the outlook for that industry right now? I know you were just on a couple of weeks ago, with Ross Baldwin. You both get a chance to have those back and forth, outlook here near term for pork. And I know you're in a tough audience here.

[French] Well, I mean, it's it, but we've all we all know when we look at these markets and it's a very well defined five month downtrend I mean that's just what it is. And you know you can say more numbers heavier animals. But I think it's you know we're now we're into 12 months of prop 12. And the realization of how that affects the market. You know, we're kind of in uncharted territory and waters when it comes to that. So are consumers. Are they changing their demand? I mean, with what's available in California. So I think that all processing but I it's it's a well-defined downtrend. And I just it's a market that needs more demand.

[Yeager] As the as Pope folks come in they're getting a chance to have a product, that is grown here in this state. And they are they're hard working. They're all hoping that they can, again, just withstand some certain things. I mean, what's the hog producer to do here? long term, though?

[French] Well, I mean, the one benefit is you got corn prices and meal prices down here at four year lows.

[Yeager] What do we call that, a buying opportunity.

[French] That is absolutely I mean, that's what we're telling our clients, you know, lock some of this stuff in, get some upside protection for, you know, if potentially higher prices come. But, you know, if you look at the demand, I mean, it's been solid. I mean, we could use some more export demand. The exports are off, you know, 8 to 9%.

but that is a market that we could gain some territory. So, you know, it's we're getting close to the bottom here, I think. But we need it that October to probably test that $0.71 in my opinion.

[Yeager] Buying opportunity testing lower. I'm not hearing a lot of good things, but I'm hearing optimism, which is what we're always supposed to have here. Right?

[French] Absolutely.

[Yeager] Okay. let's get into some fair talk. we'll come back to agriculture in a minute. state fair first. I mean, you grew up in this area, so do you have memories of being dropped off at at nine in the morning and not picked up until midnight? Is that the way your parents operate?

[French] no.

[Yeager] What did you get one day a year to come?

[French] No, we. I mean, we would. My dad and I, we we'd love to run the machinery, turn the equipment. I think our we still have the cattle chutes, working chutes that we bought from the fair, probably, probably 25 years ago. so, yeah, I remember walking around seeing all the animals. it's just a great time. It's a great family time, fun environment. And, we look back, we look forward to coming every year. Absolutely.

[Yeager] And we appreciate meeting families. I see Dale’s families getting ready to head out, but we appreciate them for it. Thank you for asking the question. Nice meeting all of you. Thank you so much. as we continue to have some people cycle through here and get a chance to, to talk, now, you come through a different lens as the guy who has got to open up the wallet. So now are you is it the family all tries one thing or does everybody get their own thing? And you just kind of swap the. That's the French.

[French] My son, he's 11 and he is a, roller coaster ride. And I mean, he loves it.

[Yeager] Okay, so.

[French] He plans a hit on hit everything at least once and then whatever his favorites are. But, we we were too late to get the unlimited ride package, so at least we can limit it, to see how far. But, yeah, everybody's looking forward to it. It's just it's great to be here.

[Yeager] It's. It's good time. It's a good time to come out. we're going to do this again later. By the time you see this, we have already have done that other recording, but we're going to do other 50th anniversary things you talked about. Virgil Robinson is a thing coming on to the show. do you feel pressure when you come on? Do you feel relaxed?

[French] Oh, I feel a lot of pressure.

[Yeager] I'm pretty easy to talk to.

[French] I think it's just, you know, I grew up watching it with my family, and it's just, surreal that I get to be on the show. I mean, I can tell you. I mean, the first time I came, I came in from Chicago. I stayed at my brother's house on his couch. And I'm not joking. I don't think I slept more than 40 minutes that night. I was extremely nervous. and I still get nervous, but it's gotten better over the years. But, Yeah, it's it's definitely a big deal, and it's just the weight of it. I mean, everybody in the industry watches this show, and, I'm I'm very happy to be on.

[Yeager] We appreciate when you come in. And a little secret behind the scenes. Jeff is one of those local ones. You're the snow. You're the snow guy. You're the one. If it snows and nobody can come in from Wisconsin or Illinois or Florida. Hey, Jeff. Can you. We had to call you this year to come in and then. But then we went and bailed on that show. We couldn't even get us to get in there, let alone you.

[French] Yeah, well, that's one benefit of being 15 minutes away from the studio. So, keep asking back. Thank you.

[Yeager] The here's the thing, too. We get them out of baling hay sometimes, right? Didn't you get out of baling hay once?

[French] Oh, no. We have. We had come out of the people. That can do.

[Yeager] Oh, okay. You're supposed to say that it was a big, big deal. I'm sorry. My brother, my my family, I just can't. I got to do the show. That's work calls.

[French] Absolutely.

[Yeager] When you have this family operation of agriculture, do you feel that being involved has more involved again? I mean, you had that time where it was this father being away, do you feel like you're more attached and each decision weighs on you more?

[French] Well, I mean, I'm not you know, my dad's still heavily involved. so he, like most farmers, you know, they don't want to give up too much control, too quickly. So, but, yeah, I'm there to do whatever I can to make the operation better. And, I'm glad I. I hope we can continue. I have two other brothers that are, very interested in growing the operation. We feel the benefit firsthand. We know, you know, we all have kids ourselves. So, we're working for the next generation as well.

[Yeager] Do you feel that you make decisions differently in your day job versus what you see in the the non day job?

[French] You know, I can yeah I mean it's you know when it's your corn your beans you can get a little more emotional about that. But you got to separate that because you got to make decisions on dollars and cents. And what makes more money for the operation?

[Yeager] Do you get that weight? Then when you call a producer and say, this is a good price, I think you should sell and they're holding out for a certain thing. You now have that. No, I think I, I, this is worth more. You have that emotion now locked in.

[French] Well, yeah. And we know, you know, the price is right now they're not working. but they were working previously, not too long ago. So, when we can, you know, write in a profit, lock in a profit, we're going to look to do that either with some cash sales or locking in. The downside, if what happened here the last couple of months does happen.

[Yeager] Yeah.

[French] we want to be taking some money out as these markets move lower and we can do that.

[Yeager] Is this the toughest time that you had right now in commodities trading?

[French] No. I mean, you know, we're three months, four months and, you know, lower prices. You know, we had 2015 through 2019, four years of a bear market. it's always the toughest. The first couple months, you know, when you come off of that bull market, it always hits the hardest. And we have an expensive crop that gone in the ground. So, you know, our breakeven is, you know, I'm using generals, but, you know, $5 on corn, you know, and cash is down here at 380. You know, that doesn't make sense. I mean, you cannot make money on that. So, Yeah, it's always the hardest when it's fresh. And right now it's definitely fresh.

[Yeager] Do you get the sense that there's enough memory of those times, or we've already forgotten those times?

[French] Well, I think it's I think you got to look at, you know, the cattle producer or the hog producer or the grain producer. I mean, the cattle producer definitely remembers it, because in 2014, 2014 into 2015, I mean, that cattle market shed 40% of its value in less than a year. and we've shown some signs of top and here in this cattle market. And there's definitely some questions of just the general economy. So, I think you got to look at it per producer. but, you know, when you have big downsides like this, it perks up everybody's attention.

[Yeager] Do you think the producer has changed their view of how knowing that, yes, 2014 and 15 can happen, 28 can happen, that they are already cautious enough and conservative enough on keeping back.

[French] Well, I think you look at, you know, use machinery sales. I mean, I think that's one of the fastest indicators. so I think yeah, I think guys are tightening the belt. I mean, they have to, because yeah, this is painful. But if you put a good South American crop on top of the crop, which we'll know here in the next six, eight months, you know, this thing could last longer. So, you know, we're still advising downside protection at these levels because, we can certainly go lower.

[Yeager] All right. Happy. Jeff. you got anything else? that, can can boost our spirits?

[French] Well, I mean, again, I'll go back to the. At least we're going to have the bushes. The bushes. I mean, that that will make up for some of this price decline. I mean, I expect, a lot of our producers, especially in Iowa, could have many records on a lot of their farms, which is a great thing.

[Yeager] We're coming off of. I mean, the crop, we were able to grow even in dry times the last couple of years. We've had these moments where it is, we've barely made it through. I can think of last year's State Fair looking at all the lawn here. And it was all brown. And now it's, it's it's a much better situation. And we're getting the grain, the rain on the grain that we need. do you get the sense everybody's happier out here because of growing more or is it still all about price?

[French] Well, you know, I think it's double sided. I mean, they are happy that they have a good crop. but, you know, a lot of them have regrets of not selling it earlier. you know, that's human nature.

[Yeager] I mean.

[French] You can't stop that. but the prospects, I mean, you know, this industry is not going away, you know? So, we're going to put a crop in the ground next year, and we'll see what Mother Nature brings.

[Yeager] Another question has come in. and it is about, chewing through what's going to chew through all of this corn.

[French] Well, yeah, I mean, it's the exports have been solid. so that's that's one we had a flash sale of unknown here today. unknown typically is China. we're starting our new, marketing year here September 1st. Their sales are lagging, but they can make them up quickly. ethanol industry, their margins are excellent. but we got, you know, lower cattle on feed numbers, lower hog numbers, from the last couple of years. But we have a 2 million bushel carryout. I mean, and it might be, you know, by the time it's all said and done, it could be two 1 or 2, two. so you look back through history, you know, you're in that 370 to 430 range historically when we have a carry out that way. So, we just need to continue to grow demand, no question about it.

[Yeager] One question comes up every once in a while. So why do we just grow less, take some acres out of production?

[French] Well, and that's where the saying, you know, high prices cure high prices. And that's part of the market. It certainly will. I mean, it will take fringe corn acres out of it because, you know, you just can't make money. And guys are, you know, without the prospect of making money, they're not going to plant the crop. So, yeah, I think we will definitely plant lower corn acres next year, unless something drastically were to happen down South America during the winter.

[Yeager] And it's always a gamble no matter what happens. You might lean into something one year saying, I'm going to grow more corn, because there's going to be a need. But by the time you get to that time to harvest, things change.

[French] Well, and if you look at this year from a rotation standpoint, this year was a heavier corn here. Right. So next year we are going to flop I know guys new quote on quote unquote. But if you just do that 5050 rotation we will have less corn acres next year. Which and then you know depending on the price, I would anticipate, you know, some of the French states, they're going to plant drastically less corn.

[Yeager] All right. I have teased you long enough. I think it's time to let you go and have that food that you have been wanting, because it is tough to sit here when you're when you start getting hungry. If you sit here long enough, you eat multiple times, right?

[French] Well, and and just as you get hunger and the smell, it's just better and better. I mean, it just smells delicious. So, yeah.

[Yeager] You're a big fan. If you've ever followed Jeff on X at AG Hedgers, there's an occasional picture of you grilling.

[French] Yeah, I like to cook, no question about it.

[Yeager] What is your best way on the pork product with the. Are you a rib guy? Are you a pork chop guy? Are you a loin? Long time smoker.

[French] Number one. ribs? No question. Okay. meat off the bone for me. but we do pork chops at least once a week, if not every other week. there's not too many pork products that I will say. No. I mean, we are at weekly. Twice weekly Baconator. Absolutely.

[Yeager] Well, yeah, I was going to say I didn't even mention bacon, so. Yeah. So.

[French] we are a big pork family. Absolutely.

[Yeager] Appreciate it. And we appreciate the Iowa Pork Producers for hosting us here today. we found a dry spot. I guess the rain has finally stopped. I see smiles again. everybody's just enjoying. I'm in long sleeves. Didn't think I'd actually be able to wear this without sweating. You're braving it and short sleeves I got dumped on earlier today.

[Yeager] so I kind of needed a warm back up.

[French] Yeah. No, I it's comfortable. I mean, it's it's not. It's not hot, that's for sure. Yeah. But, very comfortable.

[Yeager] Yeah. So my thanks to the Iowa Pork Producers, Caroline Clark, from Iowa PBS Dave Miller for helping set this up. Kevin Hall has helped us out a ton here from Iowa. Pork. Jeff French, thanks for making your trip and making us a part of your fair experience. Not everybody gets to come to the fair and say, and give me 30 minutes on TV.

[French] Paul, thank you for the invite. And I will come back anytime. Thank you very much.

[Yeager] We'll see him soon again on a future episode of Market to Market, which is a production of Iowa PBS. David Miller is our executive producer. I'm Paul Geiger, your host and editor. We'll see you next Tuesday when the next new episode comes in. It'll be from here at the Iowa State Fair. And it will be Don Roose will be our guest. So we'll see you next time. Thank you. And bye bye.

Contact: Paul.Yeager@iowapbs.org