A trade deal with China continues to weigh on the minds of producers in the new ag barometer from Purdue University and CME Group. The barometer has a December reading of 150, and that's compared to 153 in November. Although just a small change month to month, researchers say producers expressed less confidence than a month earlier about the present economic conditions with the index of current conditions dropping 12 points.
“There was a significant decline in the index of current conditions that dropped to 141 from 153 a month earlier,” Jim Mintert, professor and extension economist at Purdue, told AgriTalk host Chip Flory on Wednesday. “The future expectation index actually drifted higher at 155 versus 153, so what we saw was people’s sentiment regarding what was going on in their farm and in the ag economy in general today weaker in December than it was in November but retaining optimism about what's going to take place down the road. I think that ties back to trade.”
The survey includes a question about whether or not the trade dispute with China will be settled soon. In December 54% of respondents said yes, compared to just 22% last July.
“People are markedly more optimistic about the possibility of resuming trade in a more normal fashion with China than they were earlier in the year, and they continue to think that at the end of the day this trade dispute is going to be resolved in a way that's beneficial to U.S. agriculture,” Mintert said.
The survey found some farmers are carrying debt into the new year.
“There's a lot of concern about financial stress on farms today, so we asked producers whether or not they expected to have a larger operating loan in 2020 versus 2019, and if they expect to have a larger operating loan, what was the reason for that,” Mintert said on AgDay TV. “About 21% of the farms in our survey expect a larger operating loan, and 29% of those said it was because they were expected to carry over unpaid operating debt from 2019 into 2020. That means about 6% of the farms in our survey are going to carry over unpaid operating debt and that's a clear sign that those farms are suffering significant financial stress in December.”
Still, Mintert said history suggests the financial stress in farm country is lower than it was in the early 2000s and significantly lower than it was in the 1980s.