The Purdue University/CME Group Ag Economy Barometer recorded its largest one-month drop in farmer sentiment during March, Jim Mintert, Purdue University Agricultural Economist said in a release Tuesday.
The barometer dipped 47 points to a reading of 121, as concerns over the effect of the Covid-19 global pandemic on the agricultural economy weighed on farmers’ minds, Mintert said.
The Ag Economy Barometer is based on a mid-month survey of 400 US agricultural producers and was conducted from March 16-20 as the coronavirus crisis escalated.
Two sub-indices, the Index of Current Conditions and the Index of Future Expectations also recorded their largest one-month declines, the release said. Farmer sentiment regarding current conditions fell 43 points to a reading of 111 and future expectations fell 49 points to a reading of 126.
Collectively, this month’s decline in the barometer and its sub-indices pressured the index to levels last seen in September 2019, when weak commodity prices and an unresolved trade dispute left many farmers concerned over their financial futures.
FARMERS WORRIED
Farmers in this month’s survey said they were concerned about how the coronavirus will affect their farms in 2020 leaving little doubt that it was the leading driver for this month’s sharp sentiment decline, Mintert said. Seventy-four percent of respondents said they were either “fairly worried” (34%) or “very worried” (40%) about the effect of the virus on their farm’s profitability this year.
That sentiment also spilled over into their perceptions of financial performance, with 40% expecting a worse year compared with 2019.
Farmers also became less optimistic in March about the outcome of the trade dispute with China and whether it would be resolved in a way that benefits US agriculture, he said. The percentage of farmers expecting the soybean trade dispute with China to be resolved soon, which peaked in January at 69%, fell to 47% in March.
Meanwhile, the percentage of producers that expected the trade dispute to be resolved in a way that ultimately is beneficial to US agriculture was down to 68% this month from an average of more than 80% who felt that way in January and February.
In another sign that farmers were less confident that the trade dispute with China would be resolved soon, more farmers in the March survey said they expect to receive an MFP payment on their 2020 crop production than a month earlier, Mintert said. In March, 62% of survey respondents said they anticipated USDA providing MFP payments to US farmers for the 2020 crop year.
That was a significant increase compared with February when just 45% said they expected to receive an MFP payment this year.
INVESTMENT INDEX FALLS
Farmer concerns also were evident in the Farm Capital Investment Index, which fell 18 points to a value of 54, its lowest reading since June 2019 when the Midwest had too much rain.
CATTLE, BEEF RECAP
Cash cattle traded in the Plains this week at $105 per cwt on a live basis, down $7 to $8 from last week. Dressed-basis trade last week was at $178 to $180, down $10 from the previous week.
The USDA choice cutout Tuesday was down $2.17 per cwt at $227.88, while select was up $2.72 at $217.75. The choice/select spread narrowed to $10.13 from $15.02 with 107 loads of fabricated product sold into the spot market.
There were no deliveries against the Apr futures contract tendered on Tuesday.
The CME Feeder Cattle index for the seven days ended Monday was $117.05 per cwt, down $2.33. This compares with Tuesday’s Apr contract settlement of $114.92, up $4.50.