A Purdue University gauge of farmer confidence plunged by 18 points, its largest drop since the start of the Sino-U.S. trade war, amid rising doubts that a resolution is near, said two economists who oversee the Ag Economy Barometer on Tuesday. The monthly poll of crop and livestock producers was conducted well before the Trump administration decision for sharply higher tariffs on $200 billion of Chinese-made imports, effective Friday.
“Producers are less optimistic that the trade dispute with China will be resolved by July 1 than they were a month earlier but remain optimistic that it will ultimately be resolved with terms favorable to U.S. agriculture,” wrote economists James Mintert and Michael Langemeier. Some 28 percent of respondents said a settlement was likely by mid-summer, compared to 45 percent in the previous month.
The “ongoing uncertainty” of U.S.-China trade relations “is unacceptable to U.S. farmers,” said president Davie Stephens of the American Soybean Association on Tuesday. “With depressed prices and unsold stocks forecast to double before the 2019 harvest begins in September, we need the China market reopened to U.S. soybean exports within weeks, not months or longer.” The soybean group urged the White House to reach an agreement that will remove China’s retaliatory tariffs on U.S. soybeans. In the past, China bought 1 of 3 bushels of U.S. soybeans grown.
A Chinese delegation is expected in Washington for ministerial-level meetings this week. President Trump announced over the weekend that tariffs would rise to 25 percent on $200 worth of Chinese products that now face duties of 10 percent. U.S. officials said China wanted to re-open discussions on topics that supposedly were decided.
The Purdue barometer has been on the decline since early this year. During the same period, producers indicated increasing concern about the likelihood of low corn and soybean prices. More than half—54 percent—of respondents in the latest poll, conducted in April, say their farm operation is worse off than it was a year ago and two-thirds expect bad times financially in the year ahead.
Asked if they expect the Sino-U.S. trade dispute “will ultimately be resolved in a way that benefits U.S. agriculture,” 71 percent said yes and 24 percent said no. A month earlier, 77 percent said yes.
Purdue said the ag barometer fell by 18 points in April, to 115 points from 133 in March. The largest preceding drop was 26 points in July 2018, reflecting the mid-summer barrage of tit-for-tat tariffs between China and the United States.