Ag Barometer Charts Growing Farm Pessimism

Purdue University’s monthly Ag Economy Barometer, which records farmer sentiments on a variety of economic issues related to farming, plunged 18 points last month.

The Ag Economy Barometer plummeted to a reading of 115 in April, an 18-point decline from March’s 133, according to a summary of the survey by Purdue University Agricultural Economist Jim Mintert.

The index’s decline was the fourth largest one-month fall since data collection began in October 2015, Mintert said.  The Index of Current Conditions fell 21 points to 99 while the Index of Future Expectations declined 16 points to 123.




Producers also expressed caution about making large investments in their operations, Mintert said.  When asked, only 22% stated it was a “good time” while 74% stated it was a “bad time.”  This combination pushed the Large Farm Investment Index down 9 points compared with March, and the fourth weakest reading of the Investment Index since the fall of 2015.

Producers also expressed less optimism regarding prospects for resolution of the on-going soybean trade dispute with China, he said.  In the April survey, only 28% of respondents felt the dispute would be resolved before July 1, down from 45% in March.

However, 71% still felt the dispute ultimately would be resolved in a way that benefits US agriculture.

In a separate question, when asked whether they felt the US should rejoin the Trans-Pacific Partnership, 47% were favorable, 28% were not in favor and 25% stated they were uncertain, Mintert said.




Since January, there has been an increase in the number of survey respondents indicating they have concerns about commodity prices, he said.  As a result, Purdue University economists have been asking additional questions related to commodity prices in order to understand producers’ perspectives on the future direction of corn and soybean futures prices.

For the past four months, those results have been compared with futures and options market-based probability estimates to determine whether there is a significant difference in sentiment between the producers and futures and options market participants.

Early findings indicated producers had consistently been more pessimistic compared with those who participate directly in the futures and options markets, Mintert said.  Moreover, producers became relatively more pessimistic over the course of the winter and early spring.

That increasingly pessimistic view of corn and soybean prices may be playing a role in the reduction in barometer sentiment as well as the recent drop in the Index of Current Conditions and the Index of Future Expectations, he said.




Farmers’ expectations for farmland prices also weakened as the percentage expecting higher values fell to 13% from 14% while the percentage expecting lower values increased to 28% from 25%.

Those expecting farmland values to remain about the same, fell to 59% from 61%.  This stood in sharp contrast to the perception of farmland values a year earlier when 18% expected higher farmland values, while 64% expected little change and 18% expected values to decline.




Cash cattle trading was reported Tuesday at $120 per cwt on a live basis, down $3 to $4 from last week.  Dressed-basis trading was reported at $195 per cwt, down $5.

The USDA choice cutout Tuesday was down $3.13 per cwt at $223.87, while select was off $2.15 at $211.83.  The choice/select spread narrowed to $12.04 from $13.02 with 129 loads of fabricated product sold into the spot market.

The CME Feeder Cattle index for the seven days ended Monday, was $136.67 per cwt, down $0.74.  This compares with Tuesday’s May contract settlement of $137.30, up $1.27.