WEST LAFAYETTE, Ind. and
CHICAGO, Feb. 4, 2020 /PRNewswire/ -- There was a sharp
rise in agricultural producer sentiment in January as the
Purdue University/CME Group Ag Economy
Barometer rose 17 points from December to a reading of 167.
Although the Index of Current Conditions was essentially
unchanged, up one point to a reading of 142, the Index of Future
Expectations jumped significantly, up 24 points since December
to a reading of 179. The sentiment improvement took place as the
Phase One Trade Agreement between the U.S. and China was being discussed and signed in
mid-January. The Ag Economy Barometer is based on a mid-month
survey of 400 U.S. agricultural producers and was conducted from
January 13-17, 2020.
"The Phase One Trade Agreement has largely been considered a win
for U.S. exporters, although few details are available regarding
how the additional $200 billion in
purchases by China will be
distributed over the next two years and how much impact it will
have on the U.S. farm sector," said James
Mintert, the barometer's principal investigator and director
of Purdue University's Center for
Commercial Agriculture.
One topic that was not directly addressed in the Phase One
agreement was the soybean trade dispute. Despite that, producers
remain optimistic about the dispute's resolution. In January, 69
percent of those surveyed felt that the soybean trade dispute would
be settled soon, up from 54 percent in December, and 80 percent
felt that the outcome will be favorable to U.S. agriculture, up
from 72 percent in December.
At the same time, producers' expectations for an increase in
U.S. agricultural exports over the next five years has steadily
improved. As recent as October of 2019, only 55 percent of
producers expected agricultural exports to increase; however,
starting in November 2019 and
continuing through January 2020,
about 70 percent of those surveyed expect to see an increase in
U.S. agricultural exports in the next five years.
Back at the farm level, each winter producers on the survey are
asked about the rate of growth they expect for their farming
operation over the next five years. Since the question was first
posed in 2015, there has consistently been a small percentage of
farmers who plan to grow rapidly and a relatively large group that
either has no plans to grow or plans to exit or retire from
farming. However, those who indicated they have no growth plans
and/or expect to exit/retire has been rising steadily since 2018.
For example, in January 2020, a
combined 56 percent of farmers said that they have no plans to grow
or plan to exit/retire, up from 50 percent in 2019, and up from 39
percent in 2018.
Mintert states, "The tremendous volatility the ag sector has
experienced the last couple of years could be interpreted as a
signal to producers to be more cautious regarding future expansion
plans."
Read the full January Ag Economy Barometer report at
https://purdue.ag/agbarometer. This month's report also asks
producers if they think now is a good time to make large capital
expenditures and whether they are leaning towards USDA's
Agriculture Risk Coverage (ARC) or the Price Loss Coverage (PLC)
program under the 2018 Farm Bill, ahead of the March 15, 2020 sign-up deadline. 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, the Purdue Center for
Commercial Agricultural provides a short video analysis of the
barometer results, 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
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of pre- and post-trade products and services underpinning the
entire lifecycle of a trade, CME Group also offers optimization and
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Writer: Kami Goodwin,
765-494-6999, kami@purdue.edu
Source: James 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: Expectations for improved trade with
China sends farmer sentiment
soaring. (Purdue/CME Group Ag Economy
Barometer/James Mintert)
A publication-quality photo is available at
https://news.uns.purdue.edu/images/2020/barometer-january.jpg
CME-G
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SOURCE CME Group