WEST LAFAYETTE, Ind. — After two months of increased optimism, farmer sentiment about the ag economy declined in August, according to the Ag Economy Barometer.
The barometer, based on a survey of 400 U.S. agricultural producers, weakened to a reading of 124 — down 29 points compared to July.
Weaker sentiment was fueled in part by both crop and livestock price declines that took place in late July and early August.
Prices for corn and soybeans fell sharply as crop conditions improved and U.S. Department of Agriculture released larger than expected crop production estimates on the August Crop Production report.
“That was one of the largest single-month declines we’ve had since we started collecting data for the Ag Economy Barometer,” said Jim Mintert, director of the Center for Commercial Agriculture at Purdue University.
“The Index of Future Expectations was the biggest driver of the decline. It fell to a reading of 125 compared to 159 a month earlier. The Index of Current Conditions also fell from a reading of 141 to 122.”
Over two-thirds of U.S. farmers said they expected USDA’s 2019 Market Facilitation Program payments to either completely or at least somewhat relieve their concerns regarding tariffs impact on farm income.
Looking ahead to the next crop year, 58% of farmers expect to receive an MFP payment for their 2020 crop.
According to the survey, producers were much less inclined to think now is a good time to make capital investments on their farms.
They had a more negative outlook on short-run changes in farmland values than they had one month earlier.
However, producers’ long-run outlook for farmland values on the August survey was virtually unchanged from July.
Farmers were slightly more optimistic about the trade dispute with China.
“Since March, we’ve been asking farmers whether or not they think the soybean trade dispute with China will be settled soon,” Mintert said. “Initially, 45% of farmers said that they expected a quick resolution. But that’s dropped off significantly in recent months.
“In the August survey, the percentage expecting a quick resolution rose a little bit to 29% compared to 22% a month earlier.”
The percentage of farmers who expect the trade dispute to be resolved in a way that favors U.S. agriculture has ranged from a low of 65% in May to a high of 78% in July, with the August reading falling in the middle at 72%.
Read the full August Ag Economy Barometer report at http://purdue.ag/agbarometer.