Agricultural producer sentiment improved in December according to the monthly Purdue University/CME Group Ag Economy Barometer.
Purdue University Agricultural Economist James Mintert, said in a release that the barometer increased seven points from November to a reading of 174. The barometer’s sub-indices, the Index of Current Conditions and the Index of Future Expectations, also were higher in December.
The Ag Economy Barometer is calculated each month from 400 US agricultural producers’ responses to a telephone survey. This survey was conducted from Dec. 7-11.
CURRENT CONDITIONS CLIMB
The Index of Current Conditions climbed 15 points to 202 and the Index of Future Expectations increased by five points to a reading of 161. The rise in the Ag Economy Barometer was driven primarily by farmers’ perception that the current situation on their farms really improved.
The sharp rise in the Index of Current Conditions was correlated with the farm income boost provided by the ongoing rally in crop prices and appears to be the driving force behind producer optimism.
CAPITAL INVESTMENT INDEX UP
Producers were noticeably more inclined to think it was a good time to make large investments in their farming operations than in November. The Farm Capital Investment Index increased 13 points in December to a record-high 93.
The percentage of farmers expecting to increase their machinery purchases rose five points to 15%, while the percentage expecting to reduce their purchases declined by the same amount.
The percentage of farmers expecting values to rise over the next year increased nine points to a reading of 35.
The percentage expecting farmland values to rise over the next five years increased 11 points to a life-of-survey high 65%. Reflecting the improvement in crop profitability, more producers said they expected farmland cash rental rates to rise in 2021 when compared with survey results from late summer.
In December, 18% of respondents said they expected cash rental rates to rise in 2021, double the results in August and September. Moreover, it was clear that any pressure on cash rental rates evident earlier in the year had nearly disappeared, as just 5% of farmers said they expected to see cash rental rates decline in 2021 compared with 17% in August.
TRADE DISPUTES CONCERNING
Farmers were less optimistic when asked about the ongoing trade dispute with China. In the first quarter of 2020, an average of 76% thought the dispute’s ultimate resolution would favor US agriculture, by spring the average declined to 62%, and by December it dropped to an all-time low of 47%.
When asked whether they expected US ag exports to increase over the next five years, only 51% said they expected growth.
CATTLE, BEEF RECAP
Limited fed cattle trading was reported in the Plains this week at $112. Trading was reported in the Plains last week at $111 to $112 per cwt up $1 to $2 from the previous week. Dressed-basis trading was reported last week at $176 per cwt, up $4.
The USDA choice cutout Wednesday was down $0.63 per cwt at $205.27, while select was off $0.41 at $196.08. The choice/select spread narrowed to $9.19 from $9.41 with 172 loads of fabricated product and 33 loads of trimmings and grinds sold into the spot market.
The USDA reported Wednesday that basis bids for corn from livestock feeding operations in the Southern Plains were unchanged at $1.21 a bushel over the Mar CBOT futures contract, which settled at $4.95 a bushel, up $0.03 1/4.
The CME Feeder Cattle Index for the seven days ended Tuesday was $134.92 per cwt, down $0.21. This compares with Wednesday’s Jan contract settlement of $135.77 per cwt, down $0.90.