Farmers and those who follow agriculture have a new tool to measure the health of the national farm economy.
Based on surveys of 400 “large agricultural producers” and combined with economic data on farmland values, input costs, and crop and livestock prices, the Purdue/CME Group Ag Economy Barometer is designed to provide a regular monthly snapshot of the national farm economy and producers’ attitudes toward it.
According to Jim Mintert, director of Purdue’s Center for Commercial Agriculture, the barometer is based on the survey’s results from late 2015 and early 2016, with the base equaling 100. A reading above 100 means that producers are feeling more optimistic than they were during that time frame; a reading lower than 100 would indicate producers are feeling more pessimistic than they did during winter 2015 to spring 2016.
According to the April results of 106 released Tuesday, producers are feeling more optimistic about the state of the agricultural economy than they were earlier this year.
“Recent events, especially in crop agriculture, appear to be driving the improvement in the Ag Economy Barometer,” researchers said, pointing to the recent rally in grain prices. “After several months of trending lower, and a sharp decline in corn prices following release of USDA’s March Prospective Plantings report, corn, soybean and wheat prices all increased during April. For example, July corn futures prices rose to levels last seen in early November 2015 and soybean futures prices increased by approximately $1 per bushel from early April to mid-month when the survey was conducted.”
They added: “Improvements in crop prices are not the only factor leading to an improvement in producer sentiment. The uptick in sentiment corresponds to several other factors as well.”
What factors? Weather, weather, and more weather. “Timely rains in the Great Plains beneficial to the wheat crop improved the yield and revenue outlook for many wheat producer. Favorable spring weather in the Corn Belt, which boosted planting progress above the five-year average, encouraged optimism among producers about 2016 yield prospects. Weather issues in South America, particularly in Argentina (excessive rain) and Brazil (heat and dryness), combined with a weaker U.S. dollar, could boost prospects for U.S. grain and oilseed exports.”
The next Purdue/CME Group Ag Economy Barometer will be released Tuesday, June 7. The new index will be released on the first Tuesday of each month.