Purdue and CME Group’s June Ag Economy Barometer has jumped 7 points from the previous month. The index of 104 was also higher than the average of 100 during the six-month base period from October to March 2016. David Widmar, Senior Research Associate at the Purdue Center for Commercial Agriculture said the move isn’t surprising given the advance of commodity prices.
“One of the important trends that we’ve seen since the early spring is that there’s been a general strengthening in the ag commodity markets,” he told HAT. “One of the things we’ve seen specifically going through June is that the soybean market has been really strong in the early part of that month. Now since we did our survey the third week of June commodity prices have softened as little bit but we saw some pretty strong prices and that was an important driver for producer sentiment to improve.”
An emerging trend in the barometer is the contrast in producer on-farm sentiment versus their thoughts on the overall ag economy. Widmar says producers’ views of their own farms’ financial future over the next year is trending negative.
“We asked them to rate the ag economy as a whole as a bad time for a good time financially, and the percentage of producers reporting bad times has actually trended lower since April to June. So there’s this dichotomy emerging where producers are feeling worse off about their operation and they think that in general the ag economy as a whole is starting to improve a little bit. We need more data points to look at that but thinking about what do stronger commodity prices and how is that impacting my farm and kind of the gravity of the situation and the tight margins now for multiple years are starting to come home for producers.”
In the June survey nearly half said it was at least somewhat likely that extreme weather this year would have a widespread adverse impact on crop yields. Read more on the survey: https://ag.purdue.edu/commercialag/ageconomybarometer/ag-economy-barometer-moves-higher-weather-producers-minds/