Ag Economy Barometer July Results

 
Tuesday’s sharp selloff in the grain and oilseed markets coincided with the release of the Purdue University/CME Group Ag Economy Barometer. Unlike the markets the barometer is up, and it moved up to 139 for July, the highest since January. The monthly barometer measures farmer sentiment about the agricultural economy, and Purdue’s David Widmar says the rise comes largely on expectations of a rally in prices in the future…

“What we’ve really seen is an increase in producer’s expectations in what they think commodity prices are going to do in the next few months, as well as the next year, and they’re more optimistic in both cases.  It’s really important to note that producers thought that a year from now commodity prices would be stronger; corn, wheat and soybeans, they thought all would have higher prices, thinking about July ’18.

“So, just because we’ve had some ups and downs in June and July, it’s important to note that in the third week of July producers were more optimistic about   a year out from now.  So, I think it was a little more of a  long term shift in producer optimism about commodity prices.”               

An example of producer price optimism is the survey question about whether December corn futures would go above 4.25 between now and this fall…

“Forty-five percent of producers thought that was possible.  That’s the highest share we’ve seen compared to previous times we’ve asked that, back in January and in April.  It’s also the fewest percent of producers about 32%, thought, that futures contact would fall below $3.50 a bushel.  Very similar story for soybeans.

“So, more thinking there’s a rally coming between now and the fall, and fewer thinking that there could be a drop in the futures price between now and the fall.”

The July index is the second-highest since the barometer began in October of 2015. It is based on a survey of 400 U.S. agricultural producers. July exceeded recent barometer readings by eight to nine points, breaking out from a range of 130 to 131 during the months of April, May and June.

The barometer’s two sub-indices also were higher in July, with the Index of Current Conditions rising from 132 in June to 142 in July, and the Index of Future Expectations climbing from 131 in June to 138 in July. The July Ag Economy Barometer report is at Purdue dot EDU slash Ag Barometer (http://purdue.edu/agbarometer).


A native of the Texas Panhandle, Rhonda was born and raised on a cotton farm where she saw cotton farming evolve from ditch irrigation to center pivot irrigation and harvest trailers to modules. After graduating from Texas Tech University, she got her start in radio with KGNC News Talk 710 in Amarillo, Texas.