Farmer sentiment improved markedly in August as the monthly Purdue University-CME Group Ag Economy Barometer rose 26 points to a reading of 144, from a month earlier, a university release said.
The improvement was the result of rising perceptions regarding current conditions and especially, better expectations for the future, the university said.
The Ag Economy Barometer is calculated each month from 400 agricultural producers’ responses to a telephone survey. This month’s survey was conducted from Aug. 17-21.
CURRENT CONDITIONS INDEX UP
The Index of Current Conditions rose 13 points in August to a reading of 124 while the Index of Future Expectations rose 33 points to a reading of 154, the release said.
The barometer and its two sub-indices all posted their most positive readings since February, when record highs were established, and before the pandemic began, the university said. The improvement in farmer sentiment was underpinned by expectations for excellent crop yields and nearly across-the-board rallies in key ag commodity prices that took place in August. Compared with lows established in early August, corn, soybeans, wheat, cattle and hog prices all rallied during August.
CAPITAL INVESTMENT INDEX UP
The Farm Capital Investment Index rose five points from a month earlier to a reading of 65, which also was the most positive reading since February, the release said. When asked specifically about plans to purchase farm machinery in the coming year, fewer farmers (48%) in August reported they planned to reduce their purchases this year than in prior months.
It is worth noting that while 48% is a high percentage of farmers who plan to hold back on machinery purchases, this percentage has been declining since reaching a peak of 65% in May.
Farmers became more optimistic about farmland values compared with July, the Purdue survey showed. When asked about their 12-month outlook, the percentage of producers expecting farmland values to increase rose to 20% from 16% in July and compares with just 7% in April.
Producers’ longer-run perspective on farmland values also was more optimistic this month than last, the release said. When the same question was posed on the survey with a five-year time horizon instead of a 12-month horizon, the percentage of producers expecting values to increase rose to 59% from 48% in July and just 40% in May.
Farmers also became more optimistic about agriculture’s trade prospects in August, the university said. For the last several months the percentage of farmers reporting they expected agricultural exports to increase over the next five years ranged from 55% to 57%.
In August, the percentage of producers expecting exports to rise spiked to 67%, the release said. Although this was less optimistic than in late 2019 and early 2020 when 70% to 72% of respondents said they expected to see ag exports increase, it was a notable departure from the April-to-July time frame and could be based in part on rising export sales to China this summer.
CATTLE, BEEF RECAP
Fed cattle trading was reported in the Plains this week at $102.50 to $104 per cwt on a live basis, down $2 to $2.50 from last week. Dressed-trading was done at $163 to $164 per cwt, down $3 to $4.
The USDA choice cutout Tuesday was up $0.39 per cwt at $228.34, while select was off $0.57 at $214.75. The choice/select spread widened to $13.59 from $12.63 with 80 loads of fabricated product sold into the spot market.
The CME Feeder Cattle Index for the seven days ended Monday was at $140.52 per cwt, down $0.43. This compares with Tuesday’s Sep contract settlement of $140.12 per cwt, down $0.17.