By Lynne Hayes
There must be something about summer that sparks an optimistic outlook. The just released July Producer Sentiment survey shows an eight-point jump from June—up from 104 to 112—despite declines in key commodity markets.
The barometer's principal investigator and director of Purdue's Center for Commercial Agriculture, Jim Mintert, points to a brief price rally that occurred in the spring as the possible reason for the optimism.
“It was short-lived and prices retreated in late June and July, it appears that the price rally boosted producers' expectations about future economic conditions," Mintert said. "In other words, the spring rally didn't substantially improve producers' perspectives regarding near-term economic conditions, but it did affect how they viewed the future."
The July survey queried producers about their expectations regarding commodity prices. Twenty-three percent of respondents said they expected higher corn prices a year from now, 20 percent said soybean prices would be higher, and 25 percent said they thought wheat prices would be higher.
However, that optimism about the future didn’t carry over to feelings about current conditions. While the index known as The Index of Future Expectations increased to 121 in July—well above June's 107 and is the highest reading of the index since data collection began in the fall of 2015—another key index known as The Index of Current Conditions came in at 93, a five-point drop since June.
When asked about their feelings regarding grain, 23 percent of the producers in the survey indicated they expect higher farmland values in a year. That's the highest percentage recorded since data collection began. Furthermore, the 25 percent expecting lower farmland values in a year is the lowest percentage recorded in the same timeframe.
The index, conducted by the Purdue/CME Group Ag Economy Barometer, is based on a monthly survey of 400 U.S. agricultural producers. It includes measures of sentiment surrounding both current conditions and future expectations.
UPDATE…
Growers must have a sixth sense when it comes to optimistic outcomes based on Thursday’s latest figures for futures. In the early hours of Thursday morning, soybean futures rose on signs of strong demand for U.S. supplies.
Soybean futures for November delivery rose 8 ¾ cents to $9.64 ¼ a bushel on the Chicago Board of Trade. Soymeal futures for December delivery added $2.40 to $328.80 a short ton, and soy oil gained 0.29 cent to 31.10 cents a pound.
In addition, Corn futures for December delivery rose ¼ cent to $3.35 ¼ a bushel, and Wheat futures for September delivery rose 4 ½ cents to $4.14 ¾ a bushel in Chicago, while Kansas City wheat added 2 ¾ cents to $4.15 a bushel.
As for exports, according to the Department of Agriculture, Exporters sold a total of 546,200 metric tons of soybeans to unknown buyers and another 441,000 tons to China, all but 66,000 tons for deliver in the 2016-2017 marketing year.
These are all good reasons for producer sentiments (and also those of exporters) to be high. We’ll see if next month’s Ag Barometer once again reflects a similar “feel good” attitude.
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