WEST LAFAYETTE, Ind. and
CHICAGO, June 4, 2019 /PRNewswire/ -- Ag producer
sentiment dropped to its lowest level since October 2016, erasing all improvements recorded
following the November 2016 election.
The Purdue University/CME Group Ag
Economy Barometer, based on a mid-month survey of 400 agricultural
producers across the U.S., declined 14 points in May to a reading
of 101, down from 115 in April.
The decline in the barometer came about because producers'
perspectives on both current and future economic conditions
worsened considerably compared to a month earlier. The Index of
Current Conditions fell to a reading of 84, down from 99, and the
Index of Future Expectations fell to 108, down from 123.
"Ag producers are telling us the agricultural economy weakened
considerably this spring as the barometer has fallen 42 points
(29%) since the start of this year," said James Mintert, the barometer's principal
investigator and director of Purdue
University's Center for Commercial Agriculture. "Farmers are
facing tough decisions in the midst of a wet planting season and a
lot of uncertainty surrounding trade discussions."
The Large Farm Investment Index, which measures producers'
attitudes toward making large investments in their farming
operation, has ebbed and flowed over the past year; however, since
the beginning of 2019, the index has trended significantly lower.
In May, just 18% of farmers stated it was a "good time" to make
large farm investments while 81% stated it was a "bad time,"
pushing the investment index down to a reading of 37. This is the
lowest Large Farm Investment Index reading since the Ag Economy
Barometer's October 2015
inception.
Farmers' optimism toward short- and long-term farmland values
has also waned since the early part of 2019. For example, the
percentage of farmers that expect farmland values to decline over
the course of the upcoming year jumped from 21% in January to 25%
in March and most recently to 30% in May. Looking farther ahead,
just 39% of producers said they expect farmland values to rise over
the next five years, compared to 48% expecting rising values in the
March survey.
Agricultural trade continues to be a source of concern for
producers. For the past three months, producers were asked whether
they expect the soybean trade dispute with China to be resolved by July 1 and whether they feel the resolution will
benefit U.S. agriculture. When the question was first posed in
March, 45% of respondents expected the dispute to be resolved by
July 1; that number declined to 28%
in April and fell further to 20% in May. Regarding whether they
ultimately expect an outcome favorable to U.S. agriculture, 77%
said yes in March, which declined to 71% in April, and fell further
to 65% in May.
"At this time, a majority of producers still expect a favorable
outcome for agriculture to the trade dispute," said Mintert, "but
that majority appears to be shrinking."
Read the full May Ag Economy Barometer report at
https://purdue.ag/agbarometer. This month's report includes more
information about each of the survey questions, as well as a look
into farmers' perceptions toward their equity positions. The site
also offers additional resources – such as past reports, charts and
survey methodology – and a form to sign up for monthly barometer
email updates and webinars. Each month, Dr. Mintert also provides
an in-depth video analysis of the barometer, available at
https://purdue.ag/barometervideo.
The Ag Economy Barometer, Index of Current Conditions and Index
of Future Expectations are available on the Bloomberg Terminal
under the following ticker symbols: AGECBARO, AGECCURC and
AGECFTEX.
About the Purdue University
Center for Commercial Agriculture
The Center for Commercial
Agriculture was founded in 2011 to provide professional development
and educational programs for farmers. Housed within Purdue University's Department of Agricultural
Economics, the center's faculty and staff develop and execute
research and educational programs that address the different needs
of managing in today's business environment.
About CME Group
As the world's leading and most
diverse derivatives marketplace, CME Group (www.cmegroup.com)
enables clients to trade futures, options, cash and OTC markets,
optimize portfolios, and analyze data – empowering market
participants worldwide to efficiently manage risk and capture
opportunities. CME Group exchanges offer the widest range of global
benchmark products across all major asset classes based
on interest rates, equity indexes, foreign
exchange, energy, agricultural
products and metals. The company offers futures and
options on futures trading through the CME Globex® platform, fixed
income trading via BrokerTec and foreign exchange trading on the
EBS platform. In addition, it operates one of the world's leading
central counterparty clearing providers, CME Clearing. With a range
of pre- and post-trade products and services underpinning the
entire lifecycle of a trade, CME Group also offers optimization and
reconciliation services through TriOptima, and trade processing
services through Traiana.
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Writer: Kami Goodwin,
765-494-6999, kami@purdue.edu
Source: Jim Mintert,
765-494-7004, jmintert@purdue.edu
Related website:
Purdue
University Center for Commercial Agriculture:
http://purdue.edu/commercialag
CME Group: http://www.cmegroup.com/
Photo Caption: Farmer sentiment hits lowest level in over
two years. (Purdue/CME Group Ag Economy
Barometer/James Mintert)
A publication-quality photo is available at
https://news.uns.purdue.edu/images/2019/may-barometer.jpg
CME-G
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SOURCE CME Group