News Release

Sentiment falls as producers express concerns about Ag exports

Tue Apr 03 2018

WEST LAFAYETTE, Ind., and CHICAGO, April 3, 2018 /PRNewswire/ -- The Purdue University/CME Group Ag Economy Barometer fell to 135 in March, given uncertainty around trade relations and possible implications for U.S ag exports.

The Purdue/CME Group Ag Economy Barometer fell five points in March to 135 as concerns and uncertainty surrounding agricultural exports continued. (Purdue/CME Group Ag Economy Barometer/David Widmar)

The 5-point decline in sentiment comes as a result of producers' less-optimistic perceptions of both current conditions and future expectations. The Index of Current Conditions fell 9 points in March to 134, while the Index of Future Expectations dropped by 4 points to 135. The barometer and both sub-indices are based on a monthly survey of 400 U.S. agricultural producers.

On the March survey, producers expressed both concern and uncertainty surrounding trade. Nearly half (47 percent) of respondents said that a trade war negatively impacting agricultural exports was somewhat likely, compared with just 28 percent who thought it was unlikely. The remaining 25 percent indicated uncertainty with a neutral rating.

Producers also were asked about the likelihood of a U.S. withdrawal from the North American Free Trade Agreement (NAFTA). More than one-third expressed uncertainty, while 28 percent expected the U.S. to remain in NAFTA and 34 percent said they expect the U.S. to exit the agreement.

"Interestingly, when comparing results from the two trade questions, a larger share of respondents reported a significant decline in agricultural exports from a trade war was more likely than the U.S. withdrawing from NAFTA," said James Mintert, director of Purdue University's Center for Commercial Agriculture and principal investigator on the barometer project. "These results are important for two reasons. First, nearly half of producers rated the risk of a trade war as at least somewhat likely. Second, producers' concerns about risks to agricultural trade are broader than just the ongoing NAFTA situation."

The March survey also asked producers whether they thought now was a good time to make large farm investments, such as machinery or buildings. At 68 percent, the portion of producers indicating now is a bad time to make large investments is the highest level observed since May 2017. Mintert said this could be related to the trade situation.

"Concerns about agricultural exports, especially as they relate to Chinese tariffs on U.S. ag products, could be one reason why fewer producers said now is a good time to make large farm investments," he said.

Read the full March Ag Economy Barometer report at http://purdue.edu/agbarometer. 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.

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Writer: Jennifer Stewart-Burton, 765-496-6032, jsstewar@purdue.edu, Sources: Jim Mintert, 765-494-4310, jmintert@purdue.edu, David Widmar, 765-494-0848, dwidmar@purdue.edu, Matthew Stroud, 312-561-2269, matthew.stroud@cmegroup.com, Related website: Purdue University Center for Commercial Agriculture: http://purdue.edu/commercialag, CME Group: http://www.cmegroup.com/

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