This week Purdue University and CME Group released the October Ag Barometer, which was up 22 points from September. Not only was producer sentiment up across the board, but soybean farmers remain optimistic about better prices in 2019.
“We asked people, ‘What are your expectations for soybean prices 12 months from now?’ and the responses we gave them [as] choices were higher, lower or about the same as current prices,” Jim Mintert, Purdue University ag economist, explained to AgriTalk host Chip Flory. “And, you know, roughly half, I think 49%, said that they thought prices a year from now [would] be about the same as they are now. But when you compare the higher versus the lower, what was interesting [is] 12% thought prices a year from now would be lower, but a little more than three times that number, 39%, expected to see higher prices a year from now.”
Mintert is not only an economist but also the director of the Purdue University Center For Commercial Agriculture and is in charge of the Ag Barometer, that surveys 400 farmers nationwide every month. He says the October data related to future expectations stands out the most.
“We break out the data and look at an index of current conditions, as well as an index of future expectations and both of them improved in October, relative to September. But the real driver there is people are more optimistic about the future,” Mintert explained. “When we look at the current condition index, although it improved in October compared to September, it's still well below where it was last spring before all the trade disruptions took place. When we look at the future expectation index, it's essentially back to the peaks that we had last spring before the trade disputes really dominated the news.”
According to Mintert, the USMCA and optimism around other free trade agreements is influencing producers’ abilities to remain optimistic about the future. Still, many are taking a wait and see approach when it comes to the USMCA.
“One of the questions on that last month survey was ‘To what extent does the recent trade agreement with Mexico and Canada relieve your concerns about farm income in the next 12 months?’ and 55% said that they were somewhat relieved, 7% said they were completely relieved, and when you combine those two, you got 62%,” he explained. “On the other hand, 25% of the people the survey said, this doesn't relieve our concerns at all. So, when you look at it, I would characterize those results as mixed but definitely leaning toward the positive side.”
Soybean producers included in the survey don’t intend to change their crop rotations for 2019.
“We said, ‘Compared to 2018, what are your plans with respect to planting soybeans and 2019?’ roughly three fourths of them said they'd keep their soybean acreage unchanged in 2019,” he said.