WEST LAFAYETTE, Ind. and
CHICAGO, Jan. 7, 2020 /PRNewswire/ -- Producer
sentiment regarding current economic conditions of the agricultural
economy dropped 12 points in December, according to the
Purdue University/CME Group Ag Economy
Barometer. The Index of Current Conditions registered a
reading of 141, down from 153 in November. Meanwhile, the Index
of Future Expectations remained strong, up 2 points in December
to a reading of 155. The Ag Economy Barometer, which encompasses
results from both indices and is based on a mid-month survey of 400
U.S. crop and livestock producers, dropped 3 points in December to
a reading of 150, down from 153 in November.
"Agricultural producers in December were less optimistic about
current economic conditions on their farms than a month earlier but
remained optimistic about future economic conditions," said
James Mintert, the barometer's
principal investigator and director of Purdue
University's Center for Commercial Agriculture.
In the December survey, producers were asked whether their
farm's 2019 financial performance was better, as expected, or worse
than their initial budget projections. Just over-half (52 percent),
stated that their initial projections matched their farm's
financial performance; 30 percent stated it was worse; and 19
percent stated it was better than expected. "These results are
indicative of the variability in economic conditions on U.S. farm
operations, with some farms performing better than expected and
others worse than expected," said Mintert.
To better assess the level of financial stress among U.S. farms,
producers were asked in both the November and December surveys
whether they expected their farm's 2020 operating loan to be
larger, about the same, or smaller than in 2019. In a follow-up,
those who expected a larger loan were asked the reason why they
expected their loan to increase. Approximately, 1 out of 5 farmers
on the two surveys indicated that they expect to have a larger
operating loan in 2020 compared to 2019 and, of those, 3 out of 10
indicated that the reason for the larger loan is unpaid operating
debt from 2019. Carrying over unpaid operating debt from
year-to-year is an indicator of financial stress and these results
suggest that about 6 percent of farms surveyed for the Ag Barometer
in late 2019 were experiencing financial stress.
Most producers surveyed said they expect stable cash rental
rates in 2020. From October through December, producers were asked
whether they expect changes in rental rates in the coming year.
More than three-quarters of survey respondents did not expect a
change, between 8-9 percent expected a rise, and between 13-14
percent expected a decline in rental rates.
Producers remained relatively optimistic that a resolution to
the ongoing trade dispute with China will take place soon and that the
outcome of the dispute will benefit U.S. agriculture. In December,
54 percent of respondents stated they expect a resolution to the
trade dispute soon which, although down from 57 percent in
November, was still the second most positive response to this
question since last March. The percentage of producers who expect
the outcome will ultimately favor U.S. agriculture dropped to 72
percent down from 80 percent in November. Since this question was
first posed in March 2019, over 70
percent of respondents have, on average, indicated they expect a
favorable outcome to the trade dispute for U.S. agriculture.
Read the full December Ag Economy Barometer report at
https://purdue.ag/agbarometer. This month's report also looks at
producers' views on future farmland values, both 1-year and 5-years
out, as well as whether they think now is a good time to make large
capital expenditures on farm machinery and buildings. 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 &
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of their respective owners.
Writer: Kami Goodwin,
765-494-6999, kami@purdue.edu
Source: Jim Mintert,
765-494-7004, jmintert@purdue.edu
Related website:
Purdue
University Center for Commercial Agriculture:
http://purdue.edu/commercialag
CME Group: http://www.cmegroup.com/
Photo Caption: Farmers optimistic about the future,
even as their perception of current economic conditions drops.
(Purdue/CME Group Ag Economy
Barometer/James Mintert)
A publication-quality photo is available at
https://news.uns.purdue.edu/images/2020/dec-barometer.jpg
CME-G
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SOURCE CME Group