COVID-19 Continues to Impact Farmer Sentiment; Majority Indicate Economic Assistance Bill Necessary

Farmer sentiment improved slightly in May after falling sharply in both March and April, according to the Purdue University/CME Group Ag Economy Barometer. The index was up 7 points from April to a reading of 103, but it remained nearly 40 percent below its all-time high of 168 set in February. The Ag Economy Barometer is based on responses from 400 U.S. agricultural producers and this month’s survey was conducted May 18-22.

The Index of Current Conditions improved in May, up 11 points from April to a reading of 83, as did the Index of Future Expectations, up 4 points to a reading of 112. In May, farmers were also somewhat more inclined to think now is a good time to make large investments in their farming operations. The Farm Capital Investment Index rose to a reading of 50 compared to just 38 a month earlier. While collectively all three of these indices improved in May, each was down more than 30 percent compared to February, before coronavirus impacted markets.

“This month’s survey was conducted the same week that USDA announced the details of the Coronavirus Food Assistance Program (CFAP) so awareness of that program’s details could be one of the key reasons for this month’s barometer improvement,” said James Mintert, the barometer’s principal investigator and director of Purdue University’s Center for Commercial Agriculture. “Yet some farmers remain worried about their bottom line and are still looking for options to alleviate those concerns.”

In the May survey, more than 70 percent of respondents indicated they were “very worried” (34 percent) or “fairly worried” (37 percent) about the impact of coronavirus on their farm’s profitability, up from 67 percent in April. Their two biggest concerns were market access (42 percent) and financial (39 percent), with health and safety (11 percent) coming in third. Providing further evidence of their financial concerns, two-thirds of farmers surveyed indicated they think it will be necessary for Congress to pass another bill to provide more economic assistance to U.S. farmers.

When asked about expectations for their financial position over the next 12 months, over 60 percent said they expect farmers’ equity positions to decline over the next year, up sharply compared to 28 percent of farmers who felt that way in February. Meanwhile, over 25 percent of farmers surveyed who rent farmland said they expect to ask their landlords to lower their cash rental payments in 2021 as a result of COVID-19. Mintert suggested this could lead to downward pressure on cash rental rates next year.

Read the full Ag Economy Barometer report at https://purdue.ag/agbarometer. This month’s report includes insight into producers concerns over the ethanol demand and expectations for farmland values. The site also offers additional resources – such as past reports, charts and survey methodology – and a form to sign up for monthly barometer email updates and webinars. Each month, the Purdue Center for Commercial Agricultural provides a short video analysis of the barometer results, available at https://purdue.ag/barometervideo.

The Ag Economy Barometer, Index of Current Conditions and Index of Future Expectations 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) enables clients to trade futures, options, cash and OTC markets, optimize portfolios, and analyze data – empowering market participants worldwide to efficiently manage risk and capture opportunities. CME Group exchanges offer the widest range of global benchmark products across all major asset classes based on interest rates, equity indexes, foreign exchange, energy, agricultural products and metals. The company offers futures and options on futures trading through the CME Globex® platform, fixed income trading via BrokerTec and foreign exchange trading on the EBS platform. In addition, it operates one of the world’s leading central counterparty clearing providers, CME Clearing. With a range of pre- and post-trade products and services underpinning the entire lifecycle of a trade, CME Group also offers optimization and reconciliation services through TriOptima, and trade processing services through Traiana.

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