by Whitney Flach
The Purdue/CME Group Ag Economy Barometer is based on a monthly survey of 400 U.S. agricultural producers and includes measures of sentiment toward current conditions and future expectations. The August reading of the barometer showed declining commodity prices that are weighing on producers. The past months have been full of increase in producer sentiment, but it declined sharply to 95 this month. That is down 17 points compared to the July reading. In its August Crop Production report, the U.S. Department of Agriculture indicated that record corn and soybean yields are expected this fall. If that’s the case, carryover stocks for both crops will grow, potentially resulting in the lowest corn prices in a decade.
From July, The Index of Current Conditions dropped 13 points, and The Index of Future Expectations dropped 19 points. Corn futures have fallen by more than $1 per bushel and November soybean futures by $1.75 per bushel.
More producers expected input prices to rise in 2017 than decline. This was especially true for crop protection products. Almost one third of respondents expected prices to increase for herbicides, insecticides and fungicides.
Jim Mintert, the barometer’s principal investigator and director of Purdue’s Center for Commercial Agriculture said, “Farmer sentiment in late spring and early summer was buoyed by a spring rally in key commodity prices, but near-ideal growing conditions for corn and soybeans this summer helped push yield prospects up and crop prices down sharply.”