Drop in commodity prices drives producer sentiment lower

An ag economist says a decline in commodity prices is the driver in the downward shift in producer sentiment in August.

David Widmar says the Purdue University/CME Group Ag Economy Barometer, a monthly survey of 400 U.S. farmers, dropped seven points to 132. A rating below 100 is negative, while a rating above 100 indicates positive feelings about the ag economy.

“From our July survey to our August survey, the December 2017 corn futures price declined by 6 percent,” he says. “It had traded for as high as $4.15 now to closer to $3.50, really thinking about the last 60 or 70 days. Similar story in soybeans and wheat as well.”

He tells Brownfield the barometer is a measure of the health of the nation’s ag economy based on farmers representing corn, soybeans, wheat, cotton, beef cattle, dairy cattle, and pork producers across the country.

New to the August survey, producers were asked if neighboring farmers are optimistic or pessimistic about the current farm economy. More than 70 percent of the respondents said they are pessimistic.

“This particular question helped us underscore how difficult of a situation the current ag economy is,” he says.

Despite the decline in the index of current conditions, producers remain more upbeat than they were at this time last year.

A new report is released the first Tuesday of every month.

Audio: David Widmar, Purdue University 

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