Agricultural Producer sentiment fell sharply in July as the effect of commodity price declines and concerns about agricultural trade prospects weighed on producers’ perceptions of current and future conditions in the ag economy, said a report from Purdue University Agricultural Economists James Mintert and Michael Langemeier in a report for the Center for Commercial Agriculture and the CME Group.
Their Ag Economy Barometer declined 26 points to a reading of 117 in July, driven by sharp reductions in the Index of Current Conditions, which fell from 138 to 99, and the Index of Future Expectations, which fell from 146 in June to 126 in July. This month’s decline, the largest one-month dip in the Ag Economy Barometer’s nearly three-year history, brings it back to the level observed immediately following the November 2016 election, although it still remains well above the low point of 92 reached in October 2016.
PRODUCERS NEGATIVE SHORT TERM, NOT LONGER TERM
When asked whether they expected good or bad time financially in the US agricultural economy in the coming 12 months, producers said they were more negative than they were just one month earlier, the outlook report said. In July, 61% of respondent said they expected bad times in the next year, up 15 points from June. Just 19% expected good times in the upcoming year, down from 26% a month earlier.
However, when the same question was posed regarding the next five years in the agricultural economy, producers’ outlook in July was virtually unchanged from June, the report said. In July, 47% of respondents said they expected good times over the next five years, compared with 45% in June, whereas 32% said they expected bad times, compared with 31% a month earlier.
PRODUCER PULL BACK ON LARGE INVESTMENTS
Producers indicating that now is a bad time for large farm investments jumped to 73% in July from 60% in June, the report said. The percentage of producers who felt it was a good time to make large investments fell to 20% from 26%.
This was the most negative response to this question since March 2016, and it’s indicative of the uncertainty clouding many producers’ outlooks, the economists said.
PRODUCERS’ BEARISH PERSPECTIVE ON CORN, SOYBEAN PRICES
In the July survey, producers were asked for their perspective on the likelihood that December corn futures prices would rise above $45 a bushel or dip below $3.25 between mid-July and the fall. A similar question was posed with respect to November Soybean futures prices asking about the likelihood of prices exceeding $9.50 or falling below $8.
When the survey was conducted, settlement prices for Nov soybeans ranged from $8.45 to $8.64 a bushel and for Dec corn from $3.55 to $3.69.
Producers were decidedly bearish about the future trading range for both.
CATTLE, BEEF RECAP
No fed cattle sales were reported Wednesday on the Livestock Exchange Video Auction. A week ago, 851 head sold at an average price of $110.07 per cwt, down from the last sale at $112 two weeks previous.
Cash cattle traded last week at $113 to mostly $114 per cwt on a live basis, up $1 to $2 from the previous week. Dressed-basis sales were reported at $178 per cwt, steady to up $2.
The USDA choice cutout Wednesday was up $0.24 per cwt at $205.73, while select was up $0.35 at $198.86. The choice/select spread narrowed to $6.87 from $6.98 with 117 loads of fabricated product sold into the spot market.
The CME Feeder Cattle index for the seven days ended Tuesday, was $150.56 per cwt, up $0.50. This compares with Wednesday’s Aug settlement of $150.65, up $0.80.