Ag producer sentiment rebounded in June as farmers expressed a more optimistic outlook about the future of the ag economy, said a Purdue University/CME Group release.
The Ag Economy Barometer, a joint effort of Purdue and the CME Group, increased to a reading of 126 in June, up 25 points from May. This was based on a mid-month survey of 400 US agricultural producers.
Increases also were seen in both of the barometer’s sub-indices. While the Index of Current Conditions only saw a modest increase, up 13 points from May to a reading of 97, the Index of Future Expectations jumped 33 points, to a reading of 141.
RISING PRICES, PAYMENTS FUEL OPTIMISM
In June, the prospect of large prevented plantings, combined with expectations for yield reductions attributable to delayed planting, pushed CME corn future prices up 28% and CME soybean future prices up 12%, both compared with their mid-May lows.
Additionally, the USDA announced a Market Facilitation Payment on planted acres in 2019 for a large number of covered crops, including corn and soybeans.
In light of the USDA’s announcement and the historic corn and soybean planting delays this spring, producers who planted corn or soybeans in 2018 were asked whether the MFP announcement affected their decision to take or not take a prevented planting payment this year. Ten percent of respondents said the announcement did affect their prevented planting decision making and one out of five within this group said they intended to plant more corn, while one out of 10 within thae group said they intended to plant more soybeans, because of the MFP program.
One of the big question marks in the 2019 outlook is how many acres will be enrolled in Federal Crop Insurance’s prevented planting program. Thirty-two percent of corn and soybean farmers in the survey said they intended to take prevented planting payments on some of their corn acres. And of these, 51% said they intend to take prevented planting on more than 15% of their 2019 intended corn acreage.
HOPE FOR TRADE NEGOTIATIONS
Ever the hopeful ones, survey respondents said they were slightly more optimistic regarding the possible resolution and effect of the ongoing trade dispute with China in June than they were in May.
From March through May, the percentage of producers expecting a beneficial outcome to the trade dispute declined from 77% to 65%. Yet, on the June survey, this percentage rose slightly to 69%.
Farmers also were asked whether they believed the dispute will be resolved by Sep. 1. In mid-June, 32% of producers expected it to be settled by early September, whereas just 20% expected the dispute to be settled by July 1 when this question was posed in mid-May.
It was not possible to ask whether they expected China to live up to its latest promise to buy large quantities of US agricultural products.
CATTLE, BEEF RECAP
Cash cattle trading was reported last week at $109 to $111.50 per cwt on a live basis down $1 to up $1.50 from the previous week, and at $180 on a dressed basis, down $2 to $3.
The USDA choice cutout Tuesday was up $0.75 per cwt at $220.47, while select was up $0.35 at $195.99. The choice/select spread widened to $24.48 from $24.08 with 100 loads of fabricated product sold into the spot market.
The CME Feeder Cattle index for the seven days ended Friday was $133.21 per cwt, down $0.27 from the previous day. This compares with Tuesday’s Aug contract settlement of $138.37, up $1.35.