The new Purdue and CME Group report measuring the sentiment about the ag economy has been released, and the February barometer is down seven points from January to a reading of 136. Both the Index of Current Conditions and the Index of Future Expectations declined, but the current conditions index was most significant.
Jim Mintert, the barometer’s principal investigator and director of the Purdue Center for Commercial Agriculture said fewer farmers said they expect their operation to grow in the future compared to their statements a year ago. He says that could be a sign of increasing financial stress.
Considering the current trade war with China and soybean price erosion, Mintert says producers again were asked how their 2019 soybean planted acres might compare to last year.
“We focused on producers who told us they planted soybeans last year,” he said. “Twenty-three percent of those producers indicated they plan to reduce their soybean acreage in 2019 vs. 2018. We followed up those producers and asked by how much they plan to reduce their soybean acreage, and two-thirds of them said that they plan to reduce soybean acreage by more than ten percent, a rather substantial decline in acreage.”
Mintert says there were revealing responses when farmers were asked what kind of farm operation growth they expected in the next five years.
“Fifty percent of the producers in our survey said they have no plans to grow or might actually reduce the size of their farming operation,” he said. “On the other hand though, there is a group of people who are planning fairly rapid growth. Thirty-seven percent said that they plan to increase the size of their operation on an annual basis of five percent or more, and importantly, five percent of those producers said they actually plan to increase the size of their operation by more than fifteen percent per year, very rapid growth plans on the part of those farming operations.”
In the new barometer, producers were slightly more optimistic about evaluating farmland as a long-term investment and the future growth of agricultural exports. They do remain concerned about risk with marketing risk the most critical to their farming operation.
Four hundred producers are surveyed each month, and the full report is here.