Although still generally strong, US farmer sentiment slipped in December amid rising fears of a potentially damaging trade war.
Purdue University-CME Group Ag Economy Barometer – which is based on a survey of 400 producers across the country - was reported at 136 points in December, down 9 points from a month earlier when it surged to the highest since May 2021 following Donald Trump’s win as the next US president.
The December barometer survey took place from December 2-6, 2024.
But while producers continue to be markedly more optimistic about the future than they were as recently as September – with expectations for more favourable regulatory, estate tax and income tax policies over the next several years explaining much of the optimism - the possibility of a trade war was cited as an increasing worry.
In December, 48% of farmers said they think a trade war that negatively impacts agricultural exports is either likely (32%) or very likely (16%). That’s up from 42% of respondents who felt that way in November. On the other end of the spectrum, just 21% of December’s respondents said that a “trade war” was either unlikely (17%) or very unlikely (4%), down from 26% of farmer respondents who felt that way in November.
A joint study by the American Soybean Association (ASA) and National Corn Growers Association (NCGA) estimated that another trade war with China could cost corn and soybean farmers roughly $5 billion to $8 billion per year. The trade war with China during Trump’s first presidency saw soybean prices tumble to near $8/bu in 2019.
Meanwhile, farmers’ views about the current situation and the one-year outlook differed noticeably from their five-year outlook. Overall, responses to questions focused on the current situation and outlook over the next 12 months were weaker than a month earlier, while responses to questions focused on the outlook over the next five years tended to be more positive than in November. For example, the percentage of respondents who expect widespread good times in U.S. agriculture over the next five years rose to 57%, up from 52% a month ago and 34% in October.
On the other hand, when asked about financial conditions on their farms today compared to a year ago, the percentage of respondents reporting worse conditions today rose to 57% in December compared to 51% in November. When asked for their outlook for the US agricultural economy over the next 12 months, 51% of producers in December said they expect bad times compared to 40% of respondents who felt that way in November.
The full barometer report can be seen here:
https://ag.purdue.edu/commercialag/ageconomybarometer/farmer-sentiment-drifts-lower-while-producers-remain-optimistic-about-the-future/
