WEST LAFAYETTE, Ind. and
CHICAGO, May 5, 2020 /PRNewswire/ -- Coronavirus
concerns, commodity price declines and supply-chain disruptions
sink producer sentiment to a three-year low, according to the April
Purdue University/CME Group Ag Economy
Barometer. The barometer recorded a reading of 96, marking the
first time the barometer has fallen below 100 since October 2016 registering 72 points below its
record-high just two-months prior. The Ag Economy Barometer
is based on responses from 400 U.S. agricultural producers and this
month's survey was conducted from April
19-24, 2020.
Producers' expectations for current and future agricultural
economic conditions also declined sharply. The Index of Current
Conditions suffered its largest one-month drop, down 39 points
in April to a reading of 72, and the Index of Future
Expectations fell 18 points to a reading of 108. April's
decline pushed the Current Conditions Index 53 percent below
its all-time high set back in February, while the Future
Expectations Index fell 39 percent over the same two-month time
period.
"Over the past two-months, producers have felt the first
shockwaves being created by the coronavirus," said James Mintert, the barometer's principal
investigator and director of Purdue
University's Center for Commercial Agriculture. "Disruptions
in the supply-chain are causing many to look at ways they can
mitigate risk in this uncertain environment and sharp declines in
commodity prices have added significant financial pressure on many
U.S. farming operations."
In the April survey, two-thirds of respondents indicated they
were "very worried" (39 percent) or "fairly worried" (28 percent)
about the impact of coronavirus on their farm's profitability and
over half (54 percent) said they anticipate applying for one of the
federal government's COVID-19 related financial assistance
programs. When asked their number one concern regarding their farm
and COVID-19, 42 percent of respondents said they were worried
about their farm's access to markets, 37 percent said financial,
while just 13 percent said health and safety. However, 35 percent
of this month's respondents said they have already implemented
changes in their farm's operations in response to COVID-19
concerns.
Underpinning the rise in pessimism among farmers was a swift
decline in principal commodity prices over the last couple of
months. Commodity futures prices declined sharply from early March
through late April. Over the course of less than two months, July
corn futures declined 15 percent and July soybean futures prices
fell by 8 percent while June live cattle and June lean hog futures
prices declined 21 percent and 33 percent, respectively. The sharp
drop in commodity prices added to an already strained financial
situation for many farmers. When asked to compare their farms'
expected financial performance in 2020 to 2019, 55 percent of
respondents in the April survey said they expect a worse financial
performance in 2020 than in 2019.
That pessimism also trickled down to producers' near-term
farmland price expectations. When asked to look 12-months
ahead, 35 percent of respondents said they expect farmland values
to decline, up from only 13 percent expecting a decline on both the
January and February of 2020 surveys. However, producers'
longer-term farmland price expectations were more optimistic.
When asked to look ahead five years, 44 percent of producers expect
higher farmland values, up from 41 percent who said they expect
higher values in the March survey.
"The divergence between producers 12-month and 5-year ahead
expectations for farmland values suggests they view the current
disruption in agriculture and food markets to be temporary and are
looking for markets to rebound down the road," said Mintert.
Read the full Ag Economy Barometer report at
https://purdue.ag/agbarometer. The site also offers additional
resources – such as past reports, charts and survey methodology –
and a form to sign up for monthly barometer email updates and
webinars. Each month, the Purdue Center for Commercial Agricultural
provides a short video analysis of the barometer results, available
at https://purdue.ag/barometervideo.
The Ag Economy Barometer, Index of Current Conditions and Index
of Future Expectations are available on the Bloomberg Terminal
under the following ticker symbols: AGECBARO, AGECCURC and
AGECFTEX.
About the Purdue University
Center for Commercial Agriculture
The Center for Commercial
Agriculture was founded in 2011 to provide professional development
and educational programs for farmers. Housed within Purdue University's Department of Agricultural
Economics, the center's faculty and staff develop and execute
research and educational programs that address the different needs
of managing in today's business environment.
About CME Group
As the world's leading and most
diverse derivatives marketplace, CME Group (www.cmegroup.com)
enables clients to trade futures, options, cash and OTC markets,
optimize portfolios, and analyze data – empowering market
participants worldwide to efficiently manage risk and capture
opportunities. CME Group exchanges offer the widest range of global
benchmark products across all major asset classes based
on interest rates, equity indexes, foreign
exchange, energy, agricultural
products and metals. The company offers futures and
options on futures trading through the CME Globex® platform, fixed
income trading via BrokerTec and foreign exchange trading on the
EBS platform. In addition, it operates one of the world's leading
central counterparty clearing providers, CME Clearing. With a range
of pre- and post-trade products and services underpinning the
entire lifecycle of a trade, CME Group also offers optimization and
reconciliation services through TriOptima, and trade processing
services through Traiana.
CME Group, the Globe logo, CME, Chicago Mercantile Exchange,
Globex, and E-mini are trademarks of Chicago Mercantile Exchange
Inc. CBOT and Chicago Board
of Trade are trademarks of Board of Trade of the City of Chicago, Inc. NYMEX, New York
Mercantile Exchange and ClearPort are trademarks of New York
Mercantile Exchange, Inc. COMEX is a trademark of Commodity
Exchange, Inc. BrokerTec, EBS, TriOptima, and Traiana are
trademarks of BrokerTec Europe LTD, EBS Group LTD, TriOptima AB,
and Traiana, Inc., respectively. Dow Jones, Dow Jones
Industrial Average, S&P 500, and S&P are service and/or
trademarks of Dow Jones Trademark Holdings LLC, Standard &
Poor's Financial Services LLC and S&P/Dow Jones Indices LLC, as
the case may be, and have been licensed for use by Chicago
Mercantile Exchange Inc. All other trademarks are the property
of their respective owners.
Writer: Kami Goodwin,
765-494-6999, kami@purdue.edu
Source: James Mintert, 765-494-7004,
jmintert@purdue.edu
Related websites:
Purdue University Center for Commercial
Agriculture: http://purdue.edu/commercialag
CME Group: http://www.cmegroup.com/
Photo Caption: Ag Barometer index drops below 100 as coronavirus
disrupts agriculture. (Purdue/CME Group
Ag Economy Barometer/James
Mintert)
A publication-quality photo is available at
https://news.uns.purdue.edu/images/2020/april-barometer.jpg.
CME-G
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SOURCE CME Group