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Producer sentiment drops to lowest score in two years

Producer sentiment continues to decline according the latest Purdue University/CME Group Ag Economy Barometer.

The barometer fell 14 points to 101 in May, the lowest reading since October 2016.

But Purdue University’s Jim Mintert says this month’s survey didn’t capture the extent of planting delays or reaction to the second round of trade mitigation payments. 

“That will be reflected on the current survey, the one we’re doing in June, but obviously the planting situation has deteriorated since that Mid-May survey as well,” he says.

He tells Brownfield sentiment continues to drop as financial conditions decline. When asked if farmers expect their equity position to improve, decline, or stay the same this year…

“Fifty-five percent said they expected to see declines, so people have clearly become more negative about what’s taking place,” he says.

Trade uncertainty continues to negatively impact producer sentiment. Only 20 percent of producers surveyed expect the trade dispute with China to be resolved by July 1 and 30 percent of producers don’t think it will be resolved in a way that benefits agriculture.

The Purdue University/CME Group Ag Economy Barometer is a monthly survey of 400 U.S. ag producers.

The Index of Current Conditions fell to 84 and the Index of Future Expectations fell to 108. A rating below 100 is negative, while a rating above 100 indicates positive sentiment about the ag economy

Farmers were less optimistic about making large farm investments. The Large Farm Investment Index fell to 37, the lowest reading since the survey started in 2015.

Farmer sentiment on farmland values varies in the short-run and long-term view. Thirty percent of producers surveyed expect farmland values decline in the next year, but nearly 40 percent said they expect farmland values to rise in the next five years.

Audio: Jim Mintert, Purdue University