The overall sentiment of 400 of the nation’s agricultural producers is mostly flat in the new Purdue and CME Group Ag Economy Barometer. In the November barometer released Tuesday, the 134 reading is a drop of two points, and the two sub-indices also held steady. Current Conditions remained at 115, and Future Expectations dropped 3 points to 143.
Jim Mintert, director of Purdue University’s Center for Commercial Agriculture puts those numbers in perspective.
“If you look at those from a longer-term perspective, the Index of Future Expectations is back in the neighborhood of where we were last spring before the trade disruptions hit U.S. agriculture. The Index of Current Conditions remains well below where it was last spring, so conditions in the current environment are a little worse than they were last spring and future expectations are relatively strong, back to where they were last spring.”
He says there are indications farmers might be more willing to consider making large long-term investments now as compared to a couple of months ago.
“If you look at some longer-term questions, in particular the advisability of making large investments in machinery and buildings, we have seen another improvement there,” Mintert explains. “That index bottomed out two months ago at a reading of 42, improved last month to a reading of 52, and then improved again this month to a reading of 56. That index remains below where it was last fall for example and below where it was last winter.”
Producers also have a more optimistic long-term perspective on farmland values, with 50 percent expecting higher farmland values over the next five years. Last month just 21 percent said they expected higher farmland values. But any confidence is not borne of sentiment towards profits. Only 13 percent of respondents said they expect farm profitability to improve in the next 12 months.
When asked about farmers’ equity position, 44 percent expect to see equity diminish in the upcoming year. Rising interest rates could also be a factor in these perceptions as that can impact profitability and the value of large farm assets. When asked, 85 percent of producers said they expect interest rates to rise in the next year, and 76 percent expect to see a rise in the next five years compared to 2018.
With November marking an end to the mid-term election cycle, producers were asked whether they were concerned that Congress had not passed new farm bill legislation. Seventy-five percent of respondents said they were either “somewhat or very concerned,” 33 percent said they were “very concerned,” and 24 percent said they were “not at all concerned” about the lack of new Farm Bill legislation.
Read the full November Ag Economy Barometer report at https://purdue.edu/agbarometer. This month’s report includes additional information on producers’ future expectations for agricultural exports and an update on producers’ intentions to reduce their soybean acreage in the 2019 season. Additional November barometer analysis can also be found in a video from Mintert at https://youtu.be/Q-9NqD14EdE.
Source: Purdue News