Trade progress boosts producer sentiment in latest ag economy barometer
Producer sentiment is up after the signing of the phase one trade agreement and expectations for improved trade with China.
Jim Mintert, with the Purdue Center for Commercial Agriculture, says the latest Purdue University/CME Group Ag Economy Barometer jumped 17 points to 167.
“Our survey in January was conducted the week that President Trump signed the phase one agreement with China, and you could see that to some extent in our results,” he says. “One of the questions we’ve been asking is do you think it’s likely or unlikely that the soybean trade dispute with China will be settled soon and the percentage of people who thought it would be settled soon rose to 69 percent from 54 percent in December. That percentage has been rising going all the way back to last summer.”
The Index of Future Expectations climbed 24 points to 179 and the Index of Current Conditions held steady at 142.
Mintert tells Brownfield he was somewhat surprised by how much sentiment improved considering the uncertainties facing agricultural trade…
“It remains to be seen what’s going to take place this month as we have a lot of uncertainty with China right now— African Swine Fever, the coronavirus, and this week’s new story about the avian influenza outbreak in the bird population in China,” he says. “There are a lot of ifs there as far as what could take place going forward with respect to trade.”
Despite the improvement in future expectations, the farm capital investment index fell to 68. Mintert says that indicates that although people are optimistic in the future, they aren’t willing to make big investments based on that optimism.
Producers were also asked about future plans for their operation and what they consider a reasonable growth rate for their farming operations over the next five years. In January, 44 percent of respondents said they have no plans to grow.
The monthly survey of 400 agricultural producers was conducted from January 13-17.
Audio: Jim Mintert, Purdue University