The new Purdue/CME Group Ag Economy Barometer has resulted in a second straight month of a record high in agricultural producer sentiment. The January barometer was released Tuesday. It’s score of 153 jumped 21 points past the previous record from December for the largest month-over-month sentiment change.
Purdue’s David Widmar, senior research associate and leader of research activities for the barometer, noted this is the third straight month of improvement since election day.
“I think it’s just as continuation of this post-election upward swing that we’ve been in,” he told HAT. “Producers are optimistic about the future of the U.S. economy and the direction that’s going.”
The barometer showed improving sentiment in both the current and future expectation indices, aided by improving prices for soybeans, hogs and cattle. But with the Trump administration set to tackle burdensome regulations on the ag industry, future expectations are the most impactful on the overall barometer performance.
“We asked in this month’s survey do you believe in five years from now the regulations impacting agriculture will be more restrictive, less restrictive, or about the same. Seventy-one percent said they thought it would be about the same or less restrictive. I think that’s signaling that a majority of producers think there will be a pause or a reduction in some of the regulations they might be facing, which could be a positive signal for their businesses performance.”
Optimism and pessimism seemed to be evenly split when producers were asked about the direction of commodity prices in the future.
“Throughout the summer and next fall about 40 percent thought we’d set new contract highs for the December corn contract, or breaking $4.25 per bushel, and about the same proportion, 40 percent, thought we’d fall below $3.50 per bushel and set contract lows.”
The barometer is based on a monthly survey of 400 U.S. agricultural producers.
Quarterly, barometer researchers also survey 100 agricultural thought leaders—including lenders, retailers, consultants, academics and agribusiness professionals—about their economic expectations. Results of this quarter’s thought-leader survey were similar to the results of the producer survey, increasing sharply since the last thought-leader survey in October.
One difference between producer and thought-leader sentiment was in expectations for new-crop corn and soybean futures prices, Widmar said.
“Overall, thought leaders were a bit less optimistic than producers, as fewer respondents expect new-crop corn futures to reach new contract highs,” he said. “A larger share of thought leaders than producers expect new futures contract lows to be set for both corn and soybeans.”
Read the full January Ag Economy Barometer report here. The site offers additional resources, such as past reports, charts and survey methodology, and a form to sign up for monthly barometer email updates and quarterly webinars.
On Thursday (Feb. 9), Jim Mintert, director of Purdue’s Center for Commercial Agriculture, Widmar and Purdue Professor of Agricultural Economics Michael Langemeier will present a barometer update webinar at 1:30 p.m. EST/12:30 p.m. CST. They will discuss current factors impacting the industry and drivers of agricultural producer sentiment. Register here for the free webinar.
Source: Purdue/CME Group