Seven of 10 farmers participating in a Purdue poll said they expect lower net income this year due to the tit-for-tat tariff war – a dour outlook that pulled down the monthly Ag Economy Barometer to its lowest reading since President Trump was elected in November 2016. The 26-point drop wiped out the remnants of “Trump bump” agricultural euphoria that propelled the barometer to a record high as Trump took office.
“Commodity prices dropped sharply in June and July, and there is real concern among producers that those prices will remain low and, possibly, fall even further,” said Purdue economist James Mintert, who oversees the Ag Barometer. Results of the July poll of producers were released on Tuesday.
A solid majority of farmers—60 percent—believe bad financial times are in store in the year ahead. Around 40 percent say corn and soybean futures prices will fall to punishingly low levels by this fall. And 54 percent said there was risk of a trade war that resulted in significant decrease in farm exports.
“Responses indicated many farms are already feeling the impact of reduced ag exports as 70 percent of producers said they expect reduced farm income as a result of trade conflicts,” said Purdue.
A quarter of farmers participating said they expect their net income will plunge by more than 20 percent, an additional 25 percent said they expect a decline for 10-20 percent, and 20 percent said they expect less than a 10 percent drop in income.
The USDA forecast an 11 percent decline in soybean exports in the year ahead because of steep Chinese tariffs on the oilseed. It is scheduled to update its forecasts on Friday and in late August to make its first estimate of farm exports for the year beginning October 1. Soybeans are the major U.S. farm export to China. Besides China, Canada, Mexico and the European Union have put tariffs on U.S. farm goods in retaliation for American duties on imported steel and aluminum.
German oilseed analyst Oil World said China may have to buy some U.S. soybeans in coming weeks because there are not enough backup suppliers to meet its needs, reported Reuters. Oil World said China would need 15 million tonnes of U.S. soybeans from October through March—during and after the U.S. harvest—”even if the current trade war is not resolved.”
Trump remains popular among farmers, a staunchly Republican group, but support is eroding because of the trade war, said a Farm Futures poll on Monday. Sixty percent would vote for him now, compared to 75 percent who said they voted for him in 2016.
Both surveys found that producers believe they will be better off in the long run despite the financially painful outlook now.