Farmer sentiment plunged in May to its lowest level in nearly three years as the trade war with China escalated and concerns about economic conditions grew, according to a survey released Tuesday.
May's Purdue University/CME Group Ag Economy Barometer declined 14 points from the prior month to a reading of 101, which is the lowest point since October 2016. It said the sentiment index is now at levels that have erased all gains recorded following President Donald Trump's election.
"Ag producers are telling us the agricultural economy weakened considerably this spring as the barometer has fallen 42 points (29%) since the start of this year," said James Mintert, director of Purdue's Center for Commercial Agriculture and the barometer's principal investigator.
Farmers have been facing one of the wettest spring seasons in decades as a result of heavy rains and flooding in large sections of the Midwest and Eastern Plains region. Corn and soybean planting paces are the slowest on record since the mid-1990s, according to the U.S. Department of Agriculture.
The later planting means the crops are considered more susceptible to risk of injury and lower yields from summer heat and early fall frost damage. Also, some producers may switch to shorter season varieties of corn and soybeans, but that also comes at the risk of lower-yielding crops.
"Farmers are facing tough decisions in the midst of a wet planting season and a lot of uncertainty surrounding trade discussions," Mintert said.
Soybean farmers have been among the hardest hit in the China trade war in terms of dollar value. Last year, China put retaliatory tariffs in place on a variety of U.S. agricultural and food products, from soybeans, corn and wheat to dairy and certain meat products.
Before the trade war, China bought roughly half of the U.S. soybean exports. But the value of soybean exports to China fell 74% to $3.1 billion in 2018 from about $12.2 billion the previous year, according to the USDA.
In addition, the U.S.-China trade fight has affected the Chinese buying of two corn-based products, U.S. dried distillers grains and ethanol.
On Monday, the Trump administration issued a statement accusing China of pursuing a "blame game" and "misrepresenting the nature and history of trade negotiations between the two countries." It followed Beijing officials on Sunday accusing the U.S. of being responsible for the lack of progress in talks.
The Purdue ag barometer, a monthly survey of the health of the U.S. farm economy, is based on a poll of 400 U.S. agricultural producers.
The May survey found only 20% of the respondents expected the trade dispute with China to be resolved by July 1. By comparison, 28% of those asked in April expected the resolution of the trade war by July 1 and 45% of those asked in March, when the question was first posed.
Even so, 65% of farmers polled in May remained confident the trade dispute will have a positive impact for American agriculture. That number stood at 77% in March and 71% in April.
"At this time, a majority of producers still expect a favorable outcome for agriculture to the trade dispute," Mintert said. "But that majority appears to be shrinking."