Purdue Ag Barometer Drops to Second Lowest Level

November 1, 2016 02:06 PM

Producers’ fading hopes for a turnaround in the ag economy pushed down the Purdue/CME Group October Ag Economy Barometer to its second lowest reading yet, according to a report issued Tuesday by Purdue University’s Center for Commercial Agriculture.

The survey results came as the farm economy struggles with lower commodity prices and record crops. In early trading Tuesday, December corn futures fell 6 ¼ cents at $3.48 1/2, and November soybeans dropped 5 ½ cents to $9.86 ¾.

The result, based on a survey of 400 agricultural producers nationwide, was down from 109 in September to 92 in October. It has fallen 29 points from its July peak of 121.

Respondents who said they expect bad times financially over the next 12 months rose to 79% in October, which is 11% higher than eptember.

Twenty-seven percent of respondents said they believed that corn prices would fall below $3 per bushel, while 25% said soybean prices could fall below $8 per bushel next year. If prices fell that low, it would be “below breakeven for the vast majority of U.S. farm operations,” according to the report.

However, a third of producers were more optimistic, predicting corn prices would rise above $4 per bushel and soybean prices would surpass $10 per bushel. Prices in that range would allow most farmers to at least break even, according to the report.

Producers said they plan to offset lower commodity prices by cutting back on production costs. Decreasing fertilizer rates led these planned cost cutting measures, with 46% of respondents. Another 35% said they will change trait packages of seed they purchase. Nineteen percent said they planned to decrease seeding rates next year.

When asked what would improve their farm’s financial situation over the next 12 months, only a fourth of the respondents expected rising crop prices to improve their financial situation. Slightly more than a fifth of producers surveyed expected variable expenses to decline enough to have a positive financial Impact.

In contrast, a separate survey of 100 agribusiness leaders showed more optimism for the ag economy, but less hope for higher commodity prices.

The quarterly Ag Thought Leader Survey found that 40% of respondents expected July soybean prices to rise above $10.

However, while thought leaders think expense reductions will be larger and have a greater impact than producers, only 8% of them said that higher grain prices would improve financial conditions.

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Spell Check

anywhere, TX
11/1/2016 08:50 PM

  these "experts" as AG WEB calls them are guessing. it is 100% anyone's guess on what will happen. go to your local school and ask these questions to the pre-k class and the answers will be just as credible. but probably a lot more interesting.

Western, NE
11/2/2016 09:57 AM

  Nothing has changed in my 44 years of farming. Sure, technology has gotten better, but you pay for it. Fertilizer has gotten more scarce. I'm getting less for my commodities today than I did in 1986. My costs are far higher today than they were in 1986. What is annoying, is the cost of a bag of seed. Costs the seed company maybe $15 per bag to produce, but they charge over $500 per bag to the farmer. Recoup of technology fees they tell me. But, when the local seed dealer has the best of everything, it tells me there is a huge mark up to pay for sales and administrative costs. Just like insurance. Now we have a change in administration coming up. None of the candidates give a hoot about agriculture. They seem to be more interested in leaving their mark on America. I think it's time to head off to Tahiti, sit on the beach, drink mai tais and watch the bikini clad girls walk by and snicker at the beached whale enjoying the sun!!

Craigville, IN
11/2/2016 06:24 AM

  And still Big Ag denigrates anyone who dares to try something different in the name of searching for profit. If the market for non-GMO crops and non-GMO fed livestock already exists, and I can lower my input costs by not having to pay extortion level prices for seed, I am attacked by endless trade and commodity groups for ignoring "safe science" (yeah, right). They use the profits from the racketeering seed industry and the money they extract by compulsion from commodity check offs to proclaim to the world that you are poisoning the environment, an ignorant science denier, and probably drowning defenseless puppies behind the barn. See http://www.milkbusiness.com/blog/gmo-debate-about-consumers-not-sustainability. They really don't care whether you can make a profit or not, they just want to make sure you have to buy their overpriced inputs to produce breakeven or less commodities.


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