WEST LAFAYETTE, Ind. and
CHICAGO, July 3, 2018 /PRNewswire/ -- Agricultural
producer sentiment rose slightly in June according to the
Purdue University/CME Group Ag Economy
Barometer. The increase was unexpected given unresolved trade war
concerns and sharp price declines for key commodities, including
corn, wheat and, especially, soybeans during the month. The June
barometer reading of 143 was only 2 points higher than May. The
barometer is based on a monthly survey of 400 agricultural
producers from across the country.
"In June, we saw a sizeable drop in commodity prices that caught
many observers by surprise," said James
Mintert, the barometer's principal investigator and director
of Purdue University's Center for
Commercial Agriculture, "But, despite the price decline, producers'
appraisal of current economic conditions improved compared to May.
However, it was clear from survey responses that uncertainty
regarding the agricultural outlook increased considerably."
The barometer's rise was underpinned by an increase in the Index
of Current Conditions, which climbed to 138 compared to a reading
of 132 a month earlier. The Index of Future Expectations remained
nearly unchanged with a reading of 146 in June, 1 point higher than
in May.
Each month the survey asks producers whether they expect "good
times" or "bad times" in U.S. agriculture, both one-year and
five-years ahead. This month, respondents provided mixed responses
with many producers shifting to "neutral" and away from a "good" or
"bad" response, that suggests a rise in uncertainty for the future.
Several times a year, the barometer also asks producers if they
expect prices for key commodities to move higher, lower or remain
unchanged over the next 12 months. Compared to the beginning of
2018, producers have been slowly signaling that they expect
commodity prices to recede and this trend continued in June with an
increase in the percentage of producers expecting lower prices.
The June barometer survey also asked producers how much their
crop acreage changed in 2018 and whether or not they use flexible
cash rental leases to rent farmland. As expected, most farmers'
crop acreage did not change in 2018 compared to a year earlier, but
the survey revealed that some farms were expanding crop acreage
rapidly. For example, 8 percent of farms increased their crop
acreage by more than 10 percent, and 6 percent of farms increased
their crop acreage by up to 10 percent in 2018, compared to 2017.
Usage of flexible cash rental leases has been increasing recently
and, among the farms in the survey that rent cropland, 36 percent
reported they plan to use a flexible cash rent lease on some of
their acreage.
"Flexible cash rent leases provide a way for farm operators to
share some risk with land owners, while also providing landowners
some of the stability that comes with a cash rental agreement. The
increase in volatility in crop agriculture could be stimulating
interest in flexible cash rent leases," said Mintert.
Read the full June Ag Economy Barometer report at
http://purdue.edu/agbarometer. This month's report includes
additional information on producer's motivations for utilizing
flexible cash rents and making large investments in their farm
operations.
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) is where the world comes to manage
risk. CME Group exchanges offer the widest range of global
benchmark products across all major asset classes, including
futures and options based on interest rates, equity indexes,
foreign exchange, energy, agricultural products and metals. Around
the world, CME Group brings buyers and sellers together through its
CME Globex® electronic trading platform. CME Group also operates
one of the world's leading central counterparty clearing providers
through CME Clearing, which offers clearing and settlement services
across asset classes for exchange-traded and over-the-counter
derivatives. CME Group products and services ensure that businesses
around the world can effectively manage risk and achieve
growth.
CME Group, the Globe logo, CME, Chicago Mercantile Exchange,
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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
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other trademarks are the property of their respective owners.
Related website:
Purdue
University Center for Commercial Agriculture:
http://purdue.edu/commercialag
CME Group: http://www.cmegroup.com/
Photo Caption: The Purdue/CME
Group Ag Economy Barometer records rise in producer sentiment
despite a fall in crop prices. (Purdue/CME Group Ag Economy Barometer/James Mintert)
A publication-quality photo is available at
https://news.uns.purdue.edu/images/2018/june-barometer.jpg
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SOURCE CME Group