Producers’ Moods Sour in Recent Ag Barometer

Ag producer sentiment fell sharply during July as the impact of commodity price declines and trade concerns weighed on farmers’ perceptions of current and future conditions in agriculture.

The Ag Economy Barometer declined 26 points to a reading of 117 in July, driven by sharp reductions in both the Index of Current Conditions, which fell from 138 to 99, and the Index of Future Expectations, which fell from 146 in June to 126 in July.

This month’s decline, the largest one-month decline in the Ag Economy Barometer’s nearly three-year history, brings it back to the level observed immediately following the November 2016 election, although it still remains well above the low point of 92 reached in October 2016.

When asked whether they expect good or bad times financially in the U.S. agricultural economy in the next 12 months, producers indicated they were decidedly more negative than they were a month earlier. In July, 61 percent of respondents said they expect bad times in the next year, up 15 points from June, while just 19 percent of respondents expect good times in the upcoming year, down from 26 percent a month earlier.

When the same question was posed regarding the next five years, producers’ outlook in July was virtually unchanged compared to June. In July, 47 percent of respondents said they expect good times over the next five years compared to 45 percent in June, whereas 32 percent of producers said they expect bad times compared to 31 percent a month earlier.

Each month, producers are asked whether now is a good or a bad time to make large farm investments. The percentage of producers indicating it’s a bad time for large farm investments jumped in July to 73 percent from 60 percent in June while the percentage of producers that felt it was a good time to make large investments fell to 20 percent from 26 percent. Analyzing the good and bad time responses jointly, this was the most negative response to this question since March 2016, and it’s indicative of the uncertainty clouding many producers’ outlook.