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Low commodity prices, trade dispute weakens producer sentiment

Low commodity prices and the trade dispute with China continue to take a toll on producer sentiment according to the latest Purdue University/CME Group Ag Economy Barometer.

Jim Mintert, director of the Purdue’s Center for Commercial Ag, says farmers are becoming more pessimistic regarding commodity prices and the impact a late spring could have on them.

“If the prospect of potentially shifting some acreage away from corn to soybeans starts to take place, I suspect we’ll see even more concern about where prices are headed and what that means for farm profitability in 2019,” he says.

Mintert says the survey was completed before the extent of planting delays was known.

He tells Brownfield farmers are also less optimistic about the possibility of completing a U.S.-China trade deal soon.

“A month ago, 55 percent of the respondents said they thought it was unlikely we would settle by July 1^st,” he says. “On this month’s survey that number jumped to 72 percent, so people became more pessimistic about the prospects of resolving the trade disputes with China at least in the short run.”

In the long run, he says most farmers surveyed believe a trade deal will ultimately be resolved with terms favorable to U.S. agriculture.

The barometer, a monthly survey based on 400 farmers across the U.S., fell 18 points to 115. The decline was driven by worsening perceptions of current and future economic conditions.

Producers also expressed caution about making large investments. More than 70 percent of farmers said it was a bad time to make an investment, which pushed the Large Farm Investment Index down 9 points.

Audio: Jim Mintert, Purdue University