Rising soybean prices and expectations of extreme weather this summer pushed up producer sentiment in June, according to the Purdue/CME Ag Economy Barometer released Tuesday.
The index rose to 104 in June, an increase of 7 percentage points over the previous month.
“A key driver supporting an improvement in producer sentiment, especially their perspective regarding current conditions, has been strength in corn and soybean markets. During June, corn and soybean prices both traded in ranges not observed since summer 2015. This was especially the case for soybean prices, which approached $12 per bushel, well above the $8.75 observed in late April and $9.80 last July,” said ag economists James Mintert and David Widmar in their written Ag Economy Barometer comments.
November soybeans did touch $12 per bushel in June, but grain and soybean prices have softened after Thursday’s USDA Acreage report. Additionally, there is a still a fair amount of uncertainty about the economic effects of Britain’s June 23 vote to leave the European Union and the consequences for the U.S. dollar and ag exports.
With acreage numbers now established, growers and the market are now focused on the weather and how it will affect production for corn and soybeans this year.
According to the Ag Economy Barometer, more farmers this year (53% compared to 47% in 2015) anticipate that extreme weather will affect crop yields in 2016. A sizable proportion—nearly 30%--said they had revised their marketing plans due to their worries about weather.
“While weather is always a source of concern for agricultural producers during the growing season, discussion of adverse growing conditions, and the possible impact on U.S. corn and soybean production, received more attention than typical this past winter and spring,” said Mintert and Widmar. “Much of the attention focused around waning El Niño conditions and anticipated La Niña conditions. Additionally, the possibility of dry, warm conditions in the Midwest this summer has been cited as a source of recent strength in grain and oilseed prices.”