{"id":1873,"date":"2018-04-03T09:30:25","date_gmt":"2018-04-03T13:30:25","guid":{"rendered":"https:\/\/ag.purdue.edu\/commercialag\/ageconomybarometer\/?p=1873"},"modified":"2018-04-02T16:49:11","modified_gmt":"2018-04-02T20:49:11","slug":"concerns-about-future-of-ag-trade-driving-sentiment-lower","status":"publish","type":"post","link":"https:\/\/ag.purdue.edu\/commercialag\/ageconomybarometer\/concerns-about-future-of-ag-trade-driving-sentiment-lower\/","title":{"rendered":"Concerns About Future of Ag Trade Driving Sentiment Lower?"},"content":{"rendered":"<p><em>James Mintert, David Widmar and Michael Langemeier<\/em><\/p>\n<p>The Purdue\/CME Group Ag Economy Barometer slipped to 135 in March, down 5 points compared to February, but unchanged from January\u2019s results (Figure 1). The decline in the sentiment index, which is based upon a monthly a survey of 400 agricultural producers from across the U.S, was attributable to ag producers\u2019 weakening perceptions of current conditions and a decline in their expectations for the future. The Index of Current Conditions fell to 134 in March, a 9-point drop from February, and the Index of Future Expectations slipped to 135, down 4 points compared to a month earlier (Figure 2). Despite the decline in March, the barometer\u2019s first quarter average was unchanged from 2017\u2019s first quarter and was nearly 50 percent higher than during the first quarter of 2016.<\/p>\n<p>&nbsp;<\/p>\n<div id=\"attachment_1877\" style=\"width: 660px\" class=\"wp-caption aligncenter\"><img loading=\"lazy\" decoding=\"async\" aria-describedby=\"caption-attachment-1877\" class=\"wp-image-1877\" src=\"https:\/\/ag.purdue.edu\/commercialag\/ageconomybarometer\/wp-content\/uploads\/2018\/04\/fig1.png\" alt=\"Figure 1.\" width=\"650\" height=\"439\" srcset=\"https:\/\/ag.purdue.edu\/commercialag\/ageconomybarometer\/wp-content\/uploads\/2018\/04\/fig1.png 960w, https:\/\/ag.purdue.edu\/commercialag\/ageconomybarometer\/wp-content\/uploads\/2018\/04\/fig1-300x203.png 300w, https:\/\/ag.purdue.edu\/commercialag\/ageconomybarometer\/wp-content\/uploads\/2018\/04\/fig1-768x519.png 768w, https:\/\/ag.purdue.edu\/commercialag\/ageconomybarometer\/wp-content\/uploads\/2018\/04\/fig1-348x235.png 348w\" sizes=\"auto, (max-width: 650px) 100vw, 650px\" \/><p id=\"caption-attachment-1877\" class=\"wp-caption-text\"><strong>Figure 1.<\/strong> Purdue\/CME Group Ag Economy Barometer, October 2015-March 2018.<\/p><\/div>\n<p>&nbsp;<\/p>\n<div id=\"attachment_1878\" style=\"width: 660px\" class=\"wp-caption aligncenter\"><img loading=\"lazy\" decoding=\"async\" aria-describedby=\"caption-attachment-1878\" class=\"wp-image-1878\" src=\"https:\/\/ag.purdue.edu\/commercialag\/ageconomybarometer\/wp-content\/uploads\/2018\/04\/fig2.png\" alt=\"Figure 2.\" width=\"650\" height=\"439\" srcset=\"https:\/\/ag.purdue.edu\/commercialag\/ageconomybarometer\/wp-content\/uploads\/2018\/04\/fig2.png 960w, https:\/\/ag.purdue.edu\/commercialag\/ageconomybarometer\/wp-content\/uploads\/2018\/04\/fig2-300x203.png 300w, https:\/\/ag.purdue.edu\/commercialag\/ageconomybarometer\/wp-content\/uploads\/2018\/04\/fig2-768x518.png 768w, https:\/\/ag.purdue.edu\/commercialag\/ageconomybarometer\/wp-content\/uploads\/2018\/04\/fig2-348x235.png 348w\" sizes=\"auto, (max-width: 650px) 100vw, 650px\" \/><p id=\"caption-attachment-1878\" class=\"wp-caption-text\"><strong>Figure 2.<\/strong> Index of Current Conditions and Index of Future Expectations, October 2015-March 2018.<\/p><\/div>\n<p>&nbsp;<\/p>\n<p><strong>Fewer Producers Think Now is a Good Time to Make Large Farm Investments<\/strong><\/p>\n<p>The March survey suggests there is an undercurrent of concern among producers regarding the ag economy. Each month, producers are asked if they think now is a good time or bad time to make large investments in assets, such as machinery or buildings. In March, fewer producers indicated now is a good time, and more producers said it is a bad time, to make large farm investments than one month earlier (Figure 3). Interestingly, the percentage of producers indicating now is a bad time to make large investments \u2013 68 percent \u2013 is the highest level observed since May 2017.<\/p>\n<p>&nbsp;<\/p>\n<div id=\"attachment_1874\" style=\"width: 660px\" class=\"wp-caption aligncenter\"><img loading=\"lazy\" decoding=\"async\" aria-describedby=\"caption-attachment-1874\" class=\"wp-image-1874\" src=\"https:\/\/ag.purdue.edu\/commercialag\/ageconomybarometer\/wp-content\/uploads\/2018\/04\/fig3.png\" alt=\"Figure 3.\" width=\"650\" height=\"439\" srcset=\"https:\/\/ag.purdue.edu\/commercialag\/ageconomybarometer\/wp-content\/uploads\/2018\/04\/fig3.png 960w, https:\/\/ag.purdue.edu\/commercialag\/ageconomybarometer\/wp-content\/uploads\/2018\/04\/fig3-300x203.png 300w, https:\/\/ag.purdue.edu\/commercialag\/ageconomybarometer\/wp-content\/uploads\/2018\/04\/fig3-768x518.png 768w, https:\/\/ag.purdue.edu\/commercialag\/ageconomybarometer\/wp-content\/uploads\/2018\/04\/fig3-348x235.png 348w\" sizes=\"auto, (max-width: 650px) 100vw, 650px\" \/><p id=\"caption-attachment-1874\" class=\"wp-caption-text\"><strong>Figure 3.<\/strong> Percentage of producers who think now is a good time and bad time to make large farm investments, October 2015-March 2018.<\/p><\/div>\n<p>&nbsp;<\/p>\n<p><strong>Producers Express Concern About a Possible Trade War<\/strong><\/p>\n<p>Previous surveys have posed various questions to producers regarding the importance of agricultural trade and NAFTA. Respondents to those surveys indicated trade was important to both the ag economy and to their farms. They also expressed a willingness to renegotiate NAFTA with the expectation that renegotiations would prove favorable to U.S. agriculture. Two questions were included on the March 2018 survey to learn more about producers\u2019 perspectives on agricultural trade, especially in light of the Trump administration\u2019s announcements regarding tariffs on steel and aluminum.<\/p>\n<p>Specifically, we asked producers the likelihood that a trade war would significantly reduce U.S. agriculture\u2019s exports (Figure 4). One-fourth of survey respondents provided a neutral rating (a rating of 5 on a 1 to 9 scale), suggesting much uncertainty among producers regarding a possible trade war and its impact on agriculture. However, nearly half of survey respondents (47 percent) indicated that a trade war negatively impacting ag exports was somewhat likely (a rating of 6 or higher on a 1 to 9 scale). This compared to just 28 percent of survey respondents who indicated a trade war negatively impacting agricultural trade was unlikely (a rating of 4 or less on a 1 to 9 scale).<\/p>\n<p>In the midst of ongoing negotiations between the U.S. and both Canada and Mexico regarding NAFTA, we also asked producers about the likelihood the U.S. would withdraw from NAFTA. Once again, producers expressed much uncertainty, as more than one-third of respondents provided a neutral response (rating of 5 on a 1 to 9 scale), suggesting they think the likelihood of staying in and withdrawing from NAFTA are about equal (Figure 5). Remaining responses were split between producers expecting the U.S. to remain in NAFTA (28 percent with a score of 4 or less) and those expecting the U.S. to exit NAFTA (34 percent with a score of 6 or higher).<\/p>\n<p>Interestingly, when comparing results from the two trade questions, a larger share of respondents (47 percent) reported a significant decline in ag exports from a trade war was more likely than was the likelihood of the U.S. withdrawing from NAFTA (34 percent).<\/p>\n<p>These results are important for two reasons. First, nearly half of producers rated the risk of a trade war as at least somewhat likely. Second, producers\u2019 concerns about risks to agricultural trade are broader than just the ongoing NAFTA situation. Taken a step further, these results indicate there is a good deal of uneasiness among producers regarding ag trade prospects, which in turn could be one reason behind the recent downturn in the percentage of producers indicating now is a good time to make large investments on their farms.<\/p>\n<p>&nbsp;<\/p>\n<div id=\"attachment_1875\" style=\"width: 660px\" class=\"wp-caption aligncenter\"><img loading=\"lazy\" decoding=\"async\" aria-describedby=\"caption-attachment-1875\" class=\"wp-image-1875\" src=\"https:\/\/ag.purdue.edu\/commercialag\/ageconomybarometer\/wp-content\/uploads\/2018\/04\/fig4.png\" alt=\"Figure 4.\" width=\"650\" height=\"437\" srcset=\"https:\/\/ag.purdue.edu\/commercialag\/ageconomybarometer\/wp-content\/uploads\/2018\/04\/fig4.png 959w, https:\/\/ag.purdue.edu\/commercialag\/ageconomybarometer\/wp-content\/uploads\/2018\/04\/fig4-300x202.png 300w, https:\/\/ag.purdue.edu\/commercialag\/ageconomybarometer\/wp-content\/uploads\/2018\/04\/fig4-768x517.png 768w, https:\/\/ag.purdue.edu\/commercialag\/ageconomybarometer\/wp-content\/uploads\/2018\/04\/fig4-349x235.png 349w\" sizes=\"auto, (max-width: 650px) 100vw, 650px\" \/><p id=\"caption-attachment-1875\" class=\"wp-caption-text\"><strong>Figure 4.<\/strong> Producers\u2019 rating of how likely U.S. agriculture is at risk of a \u201ctrade war\u201d that results in a significant decrease in U.S. agricultural exports, March 2018.<\/p><\/div>\n<p>&nbsp;<\/p>\n<div id=\"attachment_1876\" style=\"width: 660px\" class=\"wp-caption aligncenter\"><img loading=\"lazy\" decoding=\"async\" aria-describedby=\"caption-attachment-1876\" class=\"wp-image-1876\" src=\"https:\/\/ag.purdue.edu\/commercialag\/ageconomybarometer\/wp-content\/uploads\/2018\/04\/fig5.png\" alt=\"Figure 5.\" width=\"650\" height=\"439\" srcset=\"https:\/\/ag.purdue.edu\/commercialag\/ageconomybarometer\/wp-content\/uploads\/2018\/04\/fig5.png 975w, https:\/\/ag.purdue.edu\/commercialag\/ageconomybarometer\/wp-content\/uploads\/2018\/04\/fig5-300x202.png 300w, https:\/\/ag.purdue.edu\/commercialag\/ageconomybarometer\/wp-content\/uploads\/2018\/04\/fig5-768x518.png 768w, https:\/\/ag.purdue.edu\/commercialag\/ageconomybarometer\/wp-content\/uploads\/2018\/04\/fig5-348x235.png 348w\" sizes=\"auto, (max-width: 650px) 100vw, 650px\" \/><p id=\"caption-attachment-1876\" class=\"wp-caption-text\"><strong>Figure 5.<\/strong> Producers\u2019 rating the likelihood of a U.S. withdraw from NAFTA, March 2018.<\/p><\/div>\n<p>&nbsp;<\/p>\n<p><strong>Concluding Thoughts<\/strong><\/p>\n<p>Producer sentiment drifted lower in March as both the Index of Current Conditions and the Index of Future Expectations declined. Although sentiment in March was lower than in February, it\u2019s worth noting that sentiment during the first quarter of 2018 was, on average, equal to that observed during the first quarter of 2017. Perhaps more importantly, sentiment in early 2018 remains much more positive than it was during most of 2016.<\/p>\n<p>The dip in ag producer sentiment noted in the March survey comes on the heels of the U.S. announcing plans to levy tariffs on imported steel and aluminum and amid press reports of other countries considering imposition of tariffs on U.S. exports, including ag products. From the March survey results, it\u2019s clear that a large portion of producers are concerned about the possibility of a trade war erupting that could negatively impact ag exports. Concerns about ag exports could be one reason why fewer producers said now is a good time to make large farm investments in assets such as machinery and buildings.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>James Mintert, David Widmar and Michael Langemeier The Purdue\/CME Group Ag Economy Barometer slipped to 135 in March, down 5 points compared to February, but unchanged from January\u2019s results (Figure 1). The decline in the sentiment index, which is based upon a monthly a survey of 400 agricultural producers from across the U.S, was attributable&hellip;<\/p>\n","protected":false},"author":6,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","_links_to":"","_links_to_target":""},"categories":[2],"tags":[],"class_list":["post-1873","post","type-post","status-publish","format-standard","hentry","category-report"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.7 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Concerns About Future of Ag Trade Driving Sentiment Lower?<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/ag.purdue.edu\/commercialag\/ageconomybarometer\/concerns-about-future-of-ag-trade-driving-sentiment-lower\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Concerns About Future of Ag Trade Driving Sentiment Lower?\" \/>\n<meta property=\"og:description\" content=\"James Mintert, David Widmar and Michael Langemeier The Purdue\/CME Group Ag Economy Barometer slipped to 135 in March, down 5 points compared to February, but unchanged from January\u2019s results (Figure 1). The decline in the sentiment index, which is based upon a monthly a survey of 400 agricultural producers from across the U.S, was attributable&hellip;\" \/>\n<meta property=\"og:url\" content=\"https:\/\/ag.purdue.edu\/commercialag\/ageconomybarometer\/concerns-about-future-of-ag-trade-driving-sentiment-lower\/\" \/>\n<meta property=\"og:site_name\" content=\"Ag Economy Barometer\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/purdueagribusiness\/?fref=ts\" \/>\n<meta property=\"article:published_time\" content=\"2018-04-03T13:30:25+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/ag.purdue.edu\/commercialag\/ageconomybarometer\/wp-content\/uploads\/2018\/04\/fig1.png\" \/>\n<meta name=\"author\" content=\"CCA General\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@PUCommercialAg\" \/>\n<meta name=\"twitter:site\" content=\"@PUCommercialAg\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"CCA General\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"5 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\\\/\\\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\\\/\\\/ag.purdue.edu\\\/commercialag\\\/ageconomybarometer\\\/concerns-about-future-of-ag-trade-driving-sentiment-lower\\\/#article\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/ag.purdue.edu\\\/commercialag\\\/ageconomybarometer\\\/concerns-about-future-of-ag-trade-driving-sentiment-lower\\\/\"},\"author\":{\"name\":\"CCA General\",\"@id\":\"https:\\\/\\\/ag.purdue.edu\\\/commercialag\\\/ageconomybarometer\\\/#\\\/schema\\\/person\\\/045f3d601bcacb9a9c5a95fcbaddfd5b\"},\"headline\":\"Concerns About Future of Ag Trade Driving Sentiment Lower?\",\"datePublished\":\"2018-04-03T13:30:25+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\\\/\\\/ag.purdue.edu\\\/commercialag\\\/ageconomybarometer\\\/concerns-about-future-of-ag-trade-driving-sentiment-lower\\\/\"},\"wordCount\":982,\"image\":{\"@id\":\"https:\\\/\\\/ag.purdue.edu\\\/commercialag\\\/ageconomybarometer\\\/concerns-about-future-of-ag-trade-driving-sentiment-lower\\\/#primaryimage\"},\"thumbnailUrl\":\"https:\\\/\\\/ag.purdue.edu\\\/commercialag\\\/ageconomybarometer\\\/wp-content\\\/uploads\\\/2018\\\/04\\\/fig1.png\",\"articleSection\":[\"Reports\"],\"inLanguage\":\"en-US\"},{\"@type\":\"WebPage\",\"@id\":\"https:\\\/\\\/ag.purdue.edu\\\/commercialag\\\/ageconomybarometer\\\/concerns-about-future-of-ag-trade-driving-sentiment-lower\\\/\",\"url\":\"https:\\\/\\\/ag.purdue.edu\\\/commercialag\\\/ageconomybarometer\\\/concerns-about-future-of-ag-trade-driving-sentiment-lower\\\/\",\"name\":\"Concerns About Future of Ag Trade Driving Sentiment Lower?\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/ag.purdue.edu\\\/commercialag\\\/ageconomybarometer\\\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\\\/\\\/ag.purdue.edu\\\/commercialag\\\/ageconomybarometer\\\/concerns-about-future-of-ag-trade-driving-sentiment-lower\\\/#primaryimage\"},\"image\":{\"@id\":\"https:\\\/\\\/ag.purdue.edu\\\/commercialag\\\/ageconomybarometer\\\/concerns-about-future-of-ag-trade-driving-sentiment-lower\\\/#primaryimage\"},\"thumbnailUrl\":\"https:\\\/\\\/ag.purdue.edu\\\/commercialag\\\/ageconomybarometer\\\/wp-content\\\/uploads\\\/2018\\\/04\\\/fig1.png\",\"datePublished\":\"2018-04-03T13:30:25+00:00\",\"author\":{\"@id\":\"https:\\\/\\\/ag.purdue.edu\\\/commercialag\\\/ageconomybarometer\\\/#\\\/schema\\\/person\\\/045f3d601bcacb9a9c5a95fcbaddfd5b\"},\"breadcrumb\":{\"@id\":\"https:\\\/\\\/ag.purdue.edu\\\/commercialag\\\/ageconomybarometer\\\/concerns-about-future-of-ag-trade-driving-sentiment-lower\\\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\\\/\\\/ag.purdue.edu\\\/commercialag\\\/ageconomybarometer\\\/concerns-about-future-of-ag-trade-driving-sentiment-lower\\\/\"]}]},{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\\\/\\\/ag.purdue.edu\\\/commercialag\\\/ageconomybarometer\\\/concerns-about-future-of-ag-trade-driving-sentiment-lower\\\/#primaryimage\",\"url\":\"https:\\\/\\\/ag.purdue.edu\\\/commercialag\\\/ageconomybarometer\\\/wp-content\\\/uploads\\\/2018\\\/04\\\/fig1.png\",\"contentUrl\":\"https:\\\/\\\/ag.purdue.edu\\\/commercialag\\\/ageconomybarometer\\\/wp-content\\\/uploads\\\/2018\\\/04\\\/fig1.png\",\"width\":960,\"height\":649,\"caption\":\"Figure 1. 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