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Trade Agreement, Crop Prices Push Up Farmers’ Optimism, Ag Barometer Shows
U.S. farmers are a lot more optimistic about the current conditions of the ag economy and future expectations, according to the The Purdue University/CME Group Ag Economy Barometer.
October’s reading of the monthly barometer rebounded to 136, a 22-point increase in the index compared with September, leaving the barometer nearly equal to its level one year ago, according to a Purdue University press release.
“This month’s recovery in the barometer was underpinned by improved perceptions of both current conditions and future expectations as the Index of Current Conditions rose 19 points to a reading of 115 and the Index of Future Expectations rose 24 points to a reading of 146,” the Purdue University spokesperson stated in the release. “Month-to-month shifts in barometer readings continue to be quite large as U.S. agricultural producers are buffeted by shifts in major commodity prices and news about trade negotiations with key ag trade partners.”
Crop prices and trade agreements propped up some of the optimism, according to the press release.
In early October, the Trump administration announced that a new trade agreement, referred to as the U.S.-Mexico-Canada Agreement, had been reached.
On the October survey, the barometer asked producers to what extent the agreement relieved their concerns about farm income in the upcoming year.
“Over 60% of producers said the agreement at least somewhat relieved their farm income concerns, whereas 25% of producers said it did not relieve any of their concerns,” the Purdue University spokesperson stated in the release.
Finally, some of the optimism about the future was probably attributable to producers’ relatively optimistic perspectives regarding the future direction of crop prices, Purdue University barometer officials stated.
“In October we asked producers about their expectations for corn, soybean, wheat, and cotton prices, looking ahead 12 months. In each case, more producers said they expect to see higher prices than lower prices and for corn, soybeans, and wheat, the ratio of producers expecting higher prices to those expecting lower prices was just over 3 to 1. For example, 34% of producers said they expect to see higher corn prices, while just 11% said they expect lower corn prices. Results were similar for soybean and wheat with 39% expecting higher soybean prices and 34% expecting higher wheat prices, while just 12% and 10% expect lower soybean and wheat prices, respectively,” Purdue Univeristy Ag Barometer officials stated.