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Ag Economy Barometer Highlights Farmers’ Bleak Outlook
U.S. farmers can’t shake their pessimistic feelings surrounding current farm conditions and the U.S. agricultural economy.
In its September survey, Purdue University/CME Group Ag Economy Barometer indicates a reading that dropped to a 121-point level, down 3 points from August.
Meanwhile, the Index of Current Conditions, a subindex of the barometer, dropped 22 points to a reading of 100. The barometer is based on a midmonth survey of 400 agricultural producers across the U.S.
Also, last month’s data shows that U.S. farmers are becoming increasingly pessimistic about making large investments such as machinery or buildings.
According to the barometer findings, the Farm Capital Investment Index dropped for the second month in a row, down nine points from August, which left it 20 points below the July 2019 reading taken when corn and soybean prices were peaking.
Producers’ farmland value expectations for both the next 12 months and five years also drifted lower in September, according to the Purdue University/CME Group press release.
“Despite the weak near-term outlook provided by farmers, they expressed some optimism about the future as the Index of Future Expectations, another subindex of the Ag Economy Barometer, rose 6 points compared with August. Even though farmers are concerned about the near term, both on their own farms and for the ag economy, improved crop growing conditions during the last half of the summer appeared to boost optimism regarding the future,” said James Mintert, the barometer’s principal investigator and director of Purdue University’s Center for Commercial Agriculture.
The Ag Economy Barometer shows that one in five farmers expect profitability to decline over the next year, compared with 41% in May.
“Considered jointly with this month’s decline in the Index of Current Conditions,” said Mintert, “this could be a signal that growers expect better times in 2020 compared with 2019, possibly because they are looking forward to a return to more normal growing conditions and crop production in 2020,” according to Tuesday’s Purdue University/CME Group press release.