Current grain prices, which bolster farm income, continue to give farmers optimism about current economic conditions. But they are also still concerned about the future of the farm economy. The February reading of the Purdue University/CME Group Ag Economy Barometer dropped two points from the previous month to a reading of 165.
Conducted by the Purdue Center for Commercial Agriculture, the barometer calculates farmer sentiment based on responses from 400 producers nationwide.
“The ongoing strength in ag commodity prices and farm income continue to support producers’ perspective on current conditions,” said James Mintert, director of Purdue University’s Center for Commercial Agriculture.
The Index of Current Conditions, a sub-index of the barometer, remained near its all-time high of 200. However, Mintert says the Index of Future Expectations has now dropped for four-straight months. It is down 20% from October.
“Concerns about possible policy changes affecting agriculture, and eroding confidence in future growth in ag trade, continue to weigh on producers’ future expectations,” said Mintert.
Mintert says the drop stems from concerns about the long-term future for agricultural trade and uncertainty about a variety of policies affecting agriculture.
In February, only 45% of farmers expected ag exports to increase over the next 5 years, down from 65% in October.
Purdue says farmers are growing more pessimistic about the chances for a favorable outcome in the U.S. trade dispute with China.
“Even though we have seen a recent ‘ramp-up’ in ag exports to China, producers remain worried about the future of ag trade,” said Michael Langemeier, associate director of the Center for Commercial Agriculture. “They are also concerned about the possibility of more restrictive environmental regulations as well as higher estate and income taxes, all expressed on previous barometer surveys.”
Langemeier says uncertainty about all these factors appears to be the motivation for the divergence between farmers’ perspective on the current versus the future situation.
Mintert provides an analysis of the monthly report in the video below.