WEST LAFAYETTE, Ind. and
CHICAGO, March 5, 2019 /PRNewswire/ -- Uncertainty
looms behind a weakened Purdue
University/CME Group Ag Economy Barometer reading in
February, with producers less optimistic about current conditions
and the commodity price outlook. The barometer, which is based on a
survey of 400 U.S. agricultural producers, declined 7 points to a
reading of 136, down from 143 in January.
"Last month we saw a significant boost in optimism among
agricultural producers after the announcement of the second round
of MPF payments; however, it appears the positive impact eroded
quickly," said James Mintert, the
barometer's principal investigator and director of Purdue University's Center for Commercial
Agriculture. "Compared to responses from a year ago, fewer farms
said they expect their operation to grow in the future, which could
be a sign of increasing financial stress. We're also seeing a
growing number of farms concerned about marketing risk, ranking it
as the biggest risk facing their operations."
The monthly survey includes measures of producer sentiment
toward current conditions and future expectations. In February,
both indexes declined from their January reading. The Index of
Current Conditions saw the biggest drop, down from 132 to 119,
whereas the Index of Future Expectations weakened slightly, down
from 148 to 145.
Last summer, the tariff battle disrupted commodity markets and,
as a result, producers' perspective on whether now is a "good" time
or a "bad" time to make large farm investments has significantly
fluctuated. From January 2018 through
June 2018, before the trade
disruptions emerged as a major market factor, the Large Farm
Investment index averaged a reading of 65. However, since that
time, the index has had an average reading of 53 points and, in
February 2019 alone, the index fell
to a reading of 50, down 12 points from January, as uncertainty
about commodity prices continues to make farmers wary of large
investments in their operations.
Additionally, when producers were asked whether they have plans
to grow or increase the size of their current operation in 2019, 50
percent of respondents said that they either "have no plans to
grow" or "plan to reduce in size," compared to 39 percent in 2018.
Last month, when 25 percent of farmers surveyed indicated they
expected to take out a larger operating loan in 2018 versus 2019, a
follow-up question found that 27 percent of those farms were taking
out larger loans due to unpaid operating debt carryover, suggesting
they were experiencing financial stress.
In February, producers were slightly more optimistic about
evaluating farmland as a long-term investment and the future growth
of agricultural exports; yet, they remain concerned about risk.
When asked what type of risk was most critical to their farming
operation, producers overwhelmingly chose marketing risk (56
percent) over both financial (27 percent) and production (17
percent) risk, which explains their uncertainty regarding the
commodity price outlook.
Read the full February Ag Economy Barometer report at
http://purdue.edu/agbarometer. In this month's report, we continue
to follow up with producers who planted soybeans in 2018 on their
soybean acreage intentions for 2019 and ask producers, who planted
corn in 2018, whether they plan to use one of the commodity support
programs when sign-up becomes available. Each month Dr. Mintert
also provides an in-depth analysis of the barometer. That video can
be viewed at http://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 central counterparty clearing providers, CME
Clearing. With a range of pre- and post-trade products and
services underpinning the entire lifecycle of a trade, CME Group
also offers optimization and reconciliation services through
TriOptima, and trade processing services through Traiana.
CME Group, the Globe logo, CME, Chicago Mercantile Exchange,
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Inc. CBOT and Chicago Board
of Trade are trademarks of Board of Trade of the City of Chicago, Inc. NYMEX, New York
Mercantile Exchange and ClearPort are trademarks of New York
Mercantile Exchange, Inc. COMEX is a trademark of Commodity
Exchange, Inc. BrokerTec, EBS, TriOptima, and Traiana are
trademarks of BrokerTec Europe LTD, EBS Group LTD, TriOptima AB,
and Traiana, Inc., respectively. Dow Jones, Dow Jones
Industrial Average, S&P 500 and S&P are service and/or
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the case may be, and have been licensed for use by Chicago
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property of their respective owners.
Writer: Kami Goodwin,
765-494-6999, kami@purdue.edu
Source: Jim Mintert,
765-494-4310, jmintert@purdue.edu
Related website:
Purdue
University Center for Commercial Agriculture:
http://purdue.edu/commercialag
CME Group: http://www.cmegroup.com/
Photo Caption: Farmer sentiment weakens amid increasing
marketing risk concerns and continued uncertainty around tariffs.
(Purdue/CME Group Ag Economy
Barometer/James Mintert)
A publication-quality photo is available at
https://news.uns.purdue.edu/images/2019/february-barometer.jpg
CME-G
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SOURCE CME Group