Concerns about a possible trade war with China are fueling a second straight decline in the Purdue University/CME Group Ag Economy Barometer. The April reading of 125 was 10 points lower than a month earlier and 15 points below the February reading. The barometer is based on a monthly survey of 400 agricultural producers. The soybean trade is the biggest issue in the trade dispute with China, with a majority of producers saying they expect a sharp decline in the November futures price, possibly to below breakeven. The drop in producer sentiment was driven by declines in both the Index of Current Conditions, which fell 11 points to 123, the lowest since last May, and the Index of Future Expectations, which fell 9 points to 126, the lowest since March 2017. The survey also showed a decline in the number of producers expecting good times for the livestock sector, with just 45 percent saying they felt optimistic about the future compared to 59 percent a month earlier. This is the largest one-month drop since data collection began in fall 2015. "There was already a sharp drop in hog prices that took place from mid- to late-winter, then add to that the impact of China's 25 percent tariff on U.S. pork imports," said James Mintert, the barometer's principal investigator and director of Purdue University's Center for Commercial Agriculture. "It adds a layer of doubt regarding the profitability of pork production and appears to be affecting producers' plans to increase hog production."
Access our premium content, receive daily and weekly news updates in addition to our industry-valued newsletters.