Farmers became much more pessimistic about current conditions on their own farms and in the U.S. agricultural economy in late summer, according to the September Purdue University/CME Group Ag Economy Barometer. While the overall Ag Economy Barometer reading dipped slightly to a reading of 121, down three points from August, the Index of Current Conditions, a sub-index of the barometer, dropped 22 points to a reading of 100. The barometer is based on a mid-month survey of 400 agricultural producers across the U.S.
Farmers' outlook on making large investments such as for machinery or buildings also declined in September. The Farm Capital Investment Index dropped for the second month in a row, down nine points from August, leaving it 20 points below the July 2019 reading taken when corn and soybean prices were peaking. Producers' expectations for farmland values over the next 12 months and five years both also drifted lower in September, results showed.
Despite the weak near-term outlook, farmers still expressed some optimism about the future, as the Index of Future Expectations, another sub-index of the Ag Economy Barometer, rose six points from August.
"Even though farmers are concerned about the near term both on their own farms and for the ag economy, improved crop growing conditions during the last half of the summer appeared to boost optimism regarding the future," said James Mintert, the barometer's principal investigator and director of Purdue University's Center for Commercial Agriculture.
In the September survey, only one in five producers said they expect profitability to decline over the next year, compared to 41% who expected a profitability decline when the same question was posed back in May. "Considered jointly with this month's decline in the Index of Current Conditions, this could be a signal that growers expect better times in 2020 compared to 2019, possibly because they are looking forward to a return to more normal growing conditions and crop production in 2020," Mintert said.
The barometer also continues to monitor producers’ perspective on the trade dispute and tariff battle with China. Interestingly, September’s survey found that the number of producers who expect the dispute to be settled soon increased over the summer, rising from just 22% in July to 41% in September. At the same time, the percentage of farmers who expect a favorable outcome to the trade dispute remained above 70% throughout the summer, after dipping down to 65% in May.