Ag Economy Barometer volatile, drops to two-year lows

A so-called Ag Economy Barometer, a reading of American producer sentiment, has fallen to its lowest level since October 2016.

The Ag Economy Barometer carried out by Purdue University and the CME Group fell 15 points in September to 114 from an August reading of 129.

The Ag Barometer is an index based on a survey of 400 American farmers.

In recent months, it has been unusually volatile.

In June the barometer registered 143, but then fell to 117 in July, and then recovering to 129 in August.

The September decline was based on falls in two sub-indices. The Index of Future Expectations was down 10 points and the Index of Current Conditions fell 25 points from the previous month.

Concerns about trade uncertainty, especially the United States trade war with China dominated concerns. As well, good growing conditions for this year’s crop and record yields have been building up potential for oversupply problems, exacerbating concerns.

Futures prices for both corn and soybeans have faced significant declines since June.

Producers in the survey also said that their financial situations have deteriorated in 2018.

In the survey, 54 percent of respondents said their farm finances were worse than a year ago, compared to 47 percent in August and 36 percent in May.

Looking ahead, 33 percent of those who took part in the survey said they expect that the financial situations on their farms will be worse in a year from now. That compares to 24 percent who said in August that they felt that way and 18 percent in June.

Producers’ negative outlooks translated into fewer expectations that they would make larger investments in farm machinery or buildings. Just 20 percent of respondents said now is a good time to make large farm investments, while 78 percent said it was a bad time.

Purdue University is based in West Lafayette, Indiana.

The CME Group owns large derivatives and futures exchanges in Chicago and New York, including the Chicago Mercantile Exchange and the Chicago Board of Trade.

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