Ag barometer: Producer sentiment skyrockets again

Media | Wednesday, February 8th, 2017

WEST LAFAYETTE, Ind. and CHICAGO – Agricultural producer sentiment hit a record high for the second consecutive month, according to the January Purdue/CME Group Ag Economy Barometer.

The January reading of 153 marked a substantial increase over December’s record-breaking 132. Not only is 153 the highest reading in barometer history, but the 21-point jump also represents the largest month-over-month sentiment change.

Figure 1. Purdue/CME Group Ag Economy Barometer. October 2015 to January 2017.

Producer sentiment about the agricultural economy skyrocketed to an all-time high in January, jumping from 132 to 153, according to the latest reading of the Purdue/CME Group Ag Economy Barometer. (Purdue/CME Group Ag Economy Barometer/David Widmar)

January is the third straight month the barometer increased after sentiment fell to 92 in October 2016. The barometer is based on a monthly survey of 400 U.S. agricultural producers.

While the Index of Current Conditions contributed to the jump, climbing from 102 in December to 118 in January, it was the Index of Future Expectations that had the biggest impact with a 23-point increase from 146 in December to 169 in January.

“The biggest contributor to the large uptick in optimism since October has been producers’ increasingly favorable expectations about the future,” said James Mintert, the barometer’s principal investigator and director of Purdue’s Center for Commercial Agriculture. “This was again the case in January, but it’s worth noting that producer optimism was also supported by a perceived improvement in current conditions.”

Part of that perception was driven by improvements in prices for key commodities, including soybeans, cattle and hogs.

Another possible source of producer optimism is the potential for a new regulatory environment with the new U.S. presidential administration, said David Widmar, senior research associate and leader of research activities for the barometer.

Surveyed producers were asked whether they thought regulations impacting agriculture would be more or less restrictive or about the same in five years. Forty-one percent said less, while only 29 percent said regulations would be more restrictive.

“Given that regulations affecting agriculture have been increasing over time, it’s noteworthy that 41 percent of the respondents expect a less restrictive regulatory environment in five years than they face today,” Widmar said.

Quarterly, barometer researchers also survey 100 agricultural thought leaders—including lenders, retailers, consultants, academics and agribusiness professionals—about their economic expectations. Results of this quarter’s thought-leader survey were similar to the results of the producer survey, increasing sharply since the last thought-leader survey in October.

One difference between producer and thought-leader sentiment was in expectations for new-crop corn and soybean futures prices, Widmar said.

“Overall, thought leaders were a bit less optimistic than producers, as fewer respondents expect new-crop corn futures to reach new contract highs,” he said. “A larger share of thought leaders than producers expect new futures contract lows to be set for both corn and soybeans.”

Read the full January Ag Economy Barometer report at http://purdue.edu/agbarometer. The site offers additional resources, such as past reports, charts and survey methodology, and a form to sign up for monthly barometer email updates and quarterly webinars.

On Thursday (Feb. 9), Mintert, Widmar and Purdue Professor of Agricultural Economics Michael Langemeier will present a barometer update webinar at 1:30 p.m. EST/12:30 p.m. CST. They will discuss current factors impacting the industry and drivers of agricultural producer sentiment. The webinar is free. Register here.

The Ag Economy Barometer, Index of Current Conditions and Index of Future Expectations also are available on the Bloomberg Terminal under the following ticker symbols: AGECBARO, AGECCURC and AGECFTEX. 

About the Purdue University Center for Commercial Agriculture

The Center for Commercial Agriculture was founded in 2011 to provide professional development and educational programs for farmers. Housed within Purdue University’s Department of Agricultural Economics, the center’s faculty and staff develop and execute research and educational programs that address the different needs of managing in today’s business environment.

About CME Group

As the world’s leading and most diverse derivatives marketplace, CME Group (www.cmegroup.com) is where the world comes to manage risk. CME Group exchanges offer the widest range of global benchmark products across all major asset classes, including futures and options based on interest rates, equity indexes, foreign exchange, energy, agricultural products and metals. Around the world, CME Group brings buyers and sellers together through its CME Globex® electronic trading platform and its exchanges based in Chicago, New York and London. CME Group also operates one of the world’s leading central counterparty clearing providers through CME Clearing and CME Clearing Europe, which offer clearing and settlement services across asset classes for exchange-traded and over-the-counter derivatives. CME Group’s products and services ensure that businesses around the world can effectively manage risk and achieve growth.

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d its products can be found at www.cmegroup.com.

Writer: Jennifer Stewart-Burton, 765-496-6032, jsstewar@purdue.edu

Sources: Jim Mintert, 765-494-4310, jmintert@purdue.edu

David Widmar, 765-494-0848, dwidmar@purdue.edu

Chris Grams, 312-930-3435, chris.grams@cmegroup.com


Media Contacts

Purdue University
Jennifer Stewart-Burton
(765) 496-6032
jsstewar@purdue.edu
CME Group
Chris Grams
(312) 930-3435
chris.grams@cmegroup.com

Laurie Bischel
(312) 648-8698
laurie.bischel@cmegroup.com

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