Farmers became much more pessimistic about current financial conditions on their farms and in the US agricultural economy in late summer, according to the September Purdue University/CME Group Ag Economy Barometer.
The barometer is based on a mid-month survey of 400 agricultural producers across the US. This month’s survey was conducted from September 9-13, 2019.
Purdue Agricultural Economist Jim Mintert said in a summary of the report that while the overall Ag Economy Barometer reading dipped slightly to a mark of 121, down three points from August, the Index of Current Conditions, a sub-index of the barometer, dropped 22 points to a reading of 100.
Although the barometer’s decline was small, there was a relatively large sentiment shift among producers as they were noticeably more pessimistic about current conditions on their farms and in the US ag economy than they were in August, the report said.
However, they were somewhat more optimistic about future economic conditions, compared with a month earlier, the report said.
The Index of Current Conditions declined from a reading of 122 in August to 100 in September, the report said. This was in contrast to the Index of Future Expectations, which rose 6 points compared with August, with a September reading of 131.
Producer expectations for farmland values drifted lower in September compared with August as the 12-month and five-year indices of farmland values weakened, the report said.
CAPITAL INVESTMENT INDEX DOWN
Farmers’ outlook toward making large investments such as machinery or buildings also declined in September, Mintert said.
The Farm Capital Investment Index dropped for the second straight month, down nine points from August, which left it 20 points below the July reading taken when corn and soybean prices were peaking.
Producers’ farmland value expectations for the next 12 months and five years also drifted lower in September, Mintert said.
FUTURE EXPECTATIONS RISE
Despite the weak near-term outlook provided by farmers, they expressed some optimism about the future as the Index of Future Expectations, another sub-index of the Ag Economy Barometer, rose 6 points compared with August, Mintert said.
So, even though farmers were concerned about near-term conditions on their farms and for the ag economy, improved crop growing conditions during the last half of the summer appeared to boost optimism regarding the future, he said.
HOPES GENERALLY STEADY
In the September survey, only one in five producers said they expected profitability to decline over the next year, compared with 41% that expected a profitability decline when the same question was posed in May, Mintert said.
Considered jointly with this month’s decline in the Index of Current Conditions, that could be a signal that growers expected better times in 2020 compared with 2019, possibly because they were looking forward to a return to more normal growing conditions and crop production in 2020, he said.
CATTLE, BEEF RECAP
Cash cattle trade took place in the Plains last week at $103 up to $107 per cwt on a live basis, up $3 from the previous week, and at mostly $165 per cwt on a dressed basis, steady to up $5.
The USDA choice cutout Tuesday was up $1.03 per cwt at $213.47, while select was down $1.06 at $186.05. The choice/select spread widened to $27.42 from $25.33 with 102 loads of fabricated product sold into the spot market.
The CME Feeder Cattle index for the seven days ended Monday was $142.95 per cwt, up $0.44 from the previous day. This compares with Tuesday’s Oct contract settlement of $140.97, down $1.42.