WEST LAFAYETTE, Ind. and
CHICAGO, Sept. 3, 2019 /PRNewswire/ -- The Purdue University/CME Group Ag Economy Barometer
weakened significantly in August to a reading of 124, down 29
points from July. The barometer is based on a mid-month survey of
400 agricultural producers across the U.S. and was conducted
between August 12 and August 20,
2019, with nearly all of the responses collected following
USDA's release of the August 12
Crop Production report.
Farmers' expectations for both current and future economic
conditions also took a tumble. The Index of Current
Conditions dropped 19 points and the Index of Future
Expectations dropped 34 points in August, both compared to a
month earlier.
"Sharp declines in most commodity prices during July and early
August weighed heavily on farmer sentiment this month," said
James Mintert, the barometer's
principal investigator and director of Purdue
University's Center for Commercial Agriculture. "While
USDA's announcement of the Market Facilitation Program (MFP)
payment rates did help alleviate concerns about 2019 income for
many famers, the big decline in the Index of Future
Expectations indicates farmers' are becoming more concerned
about the future for U.S. agriculture and their farms."
In late July, USDA announced the per planted acre payment rates
by county for the 2019 MFP, with payments to be made in three
tranches. To learn farmers' views regarding the MFP payments, two
questions were posited on the August survey: first, to what degree
does $16 billion in MFP payments to
U.S. farmers relieve their concerns about the impact of tariffs on
their 2019 farm income; and second, in a follow-up question, do
respondents expect USDA to provide payments to U.S. farmers for the
2020 crop year.
Over two-thirds (71 percent) of respondents stated that they
feel the 2019 MFP program will either "completely or somewhat
relieve" their concerns about tariffs' impact on 2019 farm income.
However, at the same time, nearly three out of ten respondents (29
percent) said "not at all," indicating that a significant minority
of farmers feel the MFP payments fall short of making up for income
losses attributable to the ongoing tariff battles. When looking
ahead to 2020, 58 percent of farmers in the August survey said they
expect another MFP payment to be made to U.S. farmers for the 2020
crop year, suggesting a majority of farmers are counting on
payments from USDA helping to make up future income shortfalls.
Since March 2019, questions were
added to the survey to assess farmers' perspectives on how quickly
they expect the soybean trade dispute with China to be resolved and whether the
resolution will benefit U.S. agriculture. During that time, farmers
were almost evenly spit on this issue with 55 percent indicating
they felt it was unlikely, and 45 percent saying it was likely to
be resolved quickly.
In subsequent months, the percentage of farmers saying they
think it is unlikely that the trade dispute will be resolved soon
increased, ranging from a high of 80 percent in May to a low of 68
percent in June.
In August, there was a modest sentiment shift as the percentage
of producers expecting resolution soon rose to 29 percent from 22
percent in July and the percentage of producers who felt resolution
soon was unlikely declined to 71 percent from 78 percent in
July.
When farmers were asked whether they think the trade dispute
will ultimately be resolved in a way that benefits U.S.
agriculture, the results have been mixed over time. In March, over
three-fourths (77 percent) of farmers in the survey said they
expect a beneficial outcome to the trade dispute; however, that
percentage declined in May to 65 percent before rebounding in July
to 78 percent. In August, despite the decline, the percentage of
farmers who expect a positive outcome to the dispute for U.S.
agriculture slipped to 72 percent.
Read the full August Ag Economy Barometer report at
https://purdue.ag/agbarometer. This month's report includes
insights into whether producers feel now is a good or bad time to
make large investments in their farming operations and their
expectations for farmland values. The site also offers additional
resources – such as past reports, charts and survey methodology –
and a form to sign up for monthly barometer email updates and
webinars. Each month, Purdue Center for Commercial Agricultural
Director James Mintert provides a
short video analysis of the barometer results, available at
https://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,
Globex, and E-mini are trademarks of Chicago Mercantile Exchange
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
trademarks of Dow Jones Trademark Holdings LLC, Standard &
Poor's Financial Services LLC and S&P/Dow Jones Indices LLC, as
the case may be, and have been licensed for use by Chicago
Mercantile Exchange Inc. All other trademarks are the property
of their respective owners.
Writer: Kami Goodwin,
765-494-6999, kami@purdue.edu
Source: Jim Mintert,
765-494-7004, jmintert@purdue.edu
Related website:
Purdue
University Center for Commercial Agriculture:
http://purdue.edu/commercialag
CME Group: http://www.cmegroup.com/
Photo Caption: Ag Barometer Declines Sharply as
Commodity Prices Weaken. (Purdue/CME Group Ag Economy Barometer/James Mintert)
A publication-quality photo is available at
https://news.uns.purdue.edu/images/2019/august-barometer.jpg
CME-G
View original
content:http://www.prnewswire.com/news-releases/ag-barometer-declines-sharply-as-commodity-prices-weaken-majority-of-farmers-expect-mfp-payments-in-2020-300909924.html
SOURCE CME Group