The Purdue University/CME Group Ag Economy Barometer rose 27 points to a reading of 183 in October to set a record high, said Purdue University Agricultural Economist James Mintert, in a release about the barometer.
Farmers were more optimistic about the future and current financial situations on their farms as the Current Conditions Index rose 36 points to a reading of 178 and the Future Expectations Index rose 23 points to a reading of 186, Mintert said.
The Ag Economy Barometer is based on survey responses from 400 US Agricultural producers and was conducted between October 19 and 23.
DRAMATIC COMEBACK
Since bottoming this summer, the ag economy has rebounded sharply, and the dramatic improvement in sentiment mirrors the turnaround in the farm income picture, he said. The late summer/early fall rally in commodity prices combined with government program payments arising from the second round of the Coronavirus Food Assistance Program provided a boost to many producers’ farm income, and the sharp rise in sentiment among producers reflects this improvement.
Corn and soybean prices continued to rally even though US corn yields were expected to set record highs and the USDA projected soybean yields to be the fourth highest on record, Mintert said. The combination of good yields, a rally in crop prices and CFAP 2 payments set the stage for an all-time-high in the Ag Economy Barometer.
Comparing their farm’s financial condition today to one-year ago, 25% of survey respondents said their farm was better off financially, he said. This was the most positive response from producers to this question in the history of the barometer survey.
The Farm Capital Investment Index also hit an all-time high in October, up nine points from September to a reading of 82, Mintert said. The percentage of producers expecting to increase their purchases of machinery in the upcoming year rose to 14% from 11% a month earlier, and up from just 4% in May. Even more importantly, the percentage of respondents who planned to reduce their purchases in the next year was 33%, down from 40% in September.
CHINA VIEWS IMPROVE
Producers also became more optimistic about trade with China this month, he said. Fifty-nine percent of respondents, said they expected to see China fulfill the food and agricultural import requirements outlined in the Phase 1 trade agreement with the US, compared with just 47% in September.
When asked for their overall perspective on US ag exports, the percentage of producers expecting exports to rise over the next five years increased to 65% in October, up from 58% in September, he said.
CATTLE, BEEF RECAP
Fed cattle trading last week was seen at $103 to $106.25 per cwt on a live basis, down $1 to up $0.25 from the previous week. Dressed-basis trading was at $160 to $162 per cwt, down $3 to $4.
The USDA choice cutout Tuesday was up $0.79 per cwt at $209.44, while select was up $2.83 at $195.45. The choice/select spread narrowed to $13.99 from $16.03 with 120 loads of fabricated product and 31 loads of trimmings and grinds sold into the spot market.
The USDA reported Tuesday that basis bids for corn from livestock feeding operations in the Southern Plains were unchanged at $1.20 to $1.25 per bushel over the Dec CME futures contract, which settled at $4.01 a bushel, up $0.03 1/2.
The CME Feeder Cattle Index for the seven days ended Tuesday was $138.03 per cwt, up $1.55. This compares with Tuesday’s Nov contract settlement of $136.12 per cwt, down $0.85.