Producers’ perception of improved current conditions in the agricultural economy pushed the Purdue University/CME Group Ag Economy Barometer to a record high this month, said Jim Mintert, Purdue agricultural economist, in a release.
The barometer rose to 168 in February, an increase of one point from January, and was 18 points higher than in December, Mintert said.
This month’s increase was attributable to an improvement in the Index of Current Conditions, which rose 12 points from January to a reading of 154, he said.
Meanwhile, the Index of Future Expectations fell just 4 points below the record high set in January to a reading of 175.
The Ag Economy Barometer is based on a mid-month survey of 400 US Agricultural producers, which this month was conducted from Feb. 10-14.
PRODUCERS EXPRESS OPTIMISM
Producers indicated they were more optimistic about current conditions on their farms and in US agriculture while retaining most of the improvement in future expectations exhibited in January, Mintert said. Optimism about the agricultural trade outlook was underpinned by the signing of the USMCA and Phase 1 agreement with China.
To better understand how the USMCA and the China Phase 1 agreements affected sentiment, producers were asked if the agreements relieved their concerns about the effect of tariffs on their farms’ income. Seventy-six percent of respondents said the agreements either “somewhat” (69%) or “completely” (7%) relieved their concerns, while 17% chose “not at all” as their response.
Although concerns about the possible effect of the Coronavirus on agricultural trade existed in mid-February, producers remained relatively optimistic about the resumption of trade with China, Mintert said.
The percentage of producers expecting the soybean trade dispute to be settled soon, which peaked at 69% in January, declined to 61% in February. However, it was still the second most positive response since the question was first posed in March of 2019.
Producers also remained optimistic that the trade dispute will be resolved in a way that’s favorable to US agriculture, with 80% expecting an outcome that is ultimately positive for US agriculture.
FARMLAND VALUES EXPECTED HIGHER
Expectations for an improvement in farmland values also rose to an all-time high in February, Mintert said. When asked to look ahead five years, 59% of producers said they expected farmland values to rise, up from 50% in January.
That was the most positive response to this question since data collection began in 2015, he said. There also was a somewhat more optimistic outlook with respect to making large farm investments as the Farm Capital Investment Index rose from a reading of 68 in January to 72 in February.
This month’s survey focused on the farm program choice intentions of producers who grew soybeans in 2019. Thirty-seven percent said they were still uncertain about which program they would choose.
Nearly 40% said they planned to choose the ARC-County program, the most popular under the 2014 Farm Bill, followed by the Price Loss Coverage program at 19%, and the ARC-Individual Coverage program at 7%.
CATTLE, BEEF RECAP
Cash cattle traded last week at $115 to $119 per cwt on a live basis, down $1 to $4 from the previous week and at $186 to $187 on a dressed basis, down $3.
The USDA choice cutout Tuesday was up $0.09 per cwt at $206.62, while select was up $1.54 at $202.70. The choice/select spread narrowed to $3.92 from $5.37 with 126 loads of fabricated product sold into the spot market.
The CME Feeder Cattle index for the seven days ended Monday was $134.00 per cwt, up $0.48 from the previous day. This compares with Tuesday’s Mar contract settlement of $133.52, down $0.20.