Ag Economy Barometer Hits Two-Year Low In September

The Purdue University/CME Group Ag Economy Barometer fell to a reading of 114 in September, 15 points below its August reading of 129 and the lowest since October 2016, the university and the CME Group said in a joint release.

September marked the second large decline in the barometer this summer after a precipitous drop in July, the release said.  The barometer is a sentiment index based on a nationwide monthly survey of 400 US agricultural producers and has been unusually volatile in recent months.

Concerns about the effect of trade conflicts with major agricultural trading partners, especially China, continued to reverberate through US production agriculture, the release said.  Exacerbating concerns about the effect of China’s tariffs on agricultural products has been unusually favorable weather conditions this summer, leading to record potential yields and large domestic supplies of corn and soybeans.

Prices for both crops experienced large price declines since June 1, with nearby corn futures dropping 12% and nearby soybeans falling 19%, the survey found.  The futures price declines were accentuated by unusually negative basis values for both commodities, especially soybeans, pressuring cash prices even further.

In June, the barometer came in at a reading of 143 but then declined sharply to 117 in July before recovering somewhat in August.  This latest decline was driven by declines in the barometers of two sub-indices, the Index of Future Expectations, which fell 10 points from August, and the Index of Current Conditions, which fell 25 points.




Producers indicated that financial conditions on many farms deteriorated significantly this year, and farmers’ expectations for the future weakened as well, the release said.  In the September survey, 54% of respondents said their farms’ financial condition was worse than a year earlier, compared with 47% in August and notably worse than the 36% recorded in May and the 38% reached in June.

Asked to look ahead, 33% said they expected financial conditions on their farm to be worse a year from now, compared with 24% who felt that way in August and just 18% who expected worsening financial conditions as recently as June.

And concerns extended beyond producers’ own farming operations to the broader agricultural economy, the report said.  In September, 69% of producers said they expected bad times in the US ag economy in the coming 12 months, versus 52% in August.  As recently as June, 46% of respondents expected bad times in the coming year.

The percentage of producers expecting a protracted downturn also increased in the September survey, the release said.  Forty-one percent of producers said they expected widespread bad times in US agriculture over the next five years, up six points from August and 10 points from June.




No fed cattle sold last Wednesday on the Livestock Exchange Video Auction, compared with 280 that traded five weeks previous at $109.50 per cwt.

The USDA reported 960 steers sold this week in the five-area range at $111.62 per cwt.

Cash trading was reported last week at $110 to mostly $111, per cwt on a live basis and at $173 to $174 dressed, compared with the previous week’s range of $110.50 to $111 live and $170 to $175 dressed.

The USDA choice cutout Tuesday was down $0.19 per cwt at $204.89, while select was off $0.65 at $193.98.  The choice/select spread widened to $10.91 from $10.45 with 88 loads of fabricated product sold into the spot market.

The CME Feeder Cattle index for the seven days ended Monday, was $157.82 per cwt, up $0.34.  This compares with Tuesday’s Oct settlement of $159.07, up $0.42.