The Purdue University—CME Group Ag Economy Barometer Index climbed to 139 in November, 10 points higher than in October and the highest barometer reading since June of this year, said Purdue University Agricultural Economists Michael Langameier and James Mintert, in a release.
The improvement in farmer sentiment was attributed to producers’ more optimistic outlook for the future, as the November Future Expectations Index reading of 144 was 15 points higher than in October, whereas the Current Conditions Index fell two points to a reading of 128, the economists said.
This month’s survey was the first since the late October announcement of a trade pact between the US and China that included provisions for increasing US exports of agricultural products to China. Survey respondents also were notably more optimistic about future prospects for US agricultural exports.
Sentiment also was buoyed by a sharp rise in crop prices from mid-October to mid-November, they said. The November barometer survey took place from Nov. 10 through 14.
FINANCIAL OUTLOOK IMPROVES
Producers were more optimistic about their farms’ financial performance as the Farm Financial Performance Index climbed 14 points to a reading of 92, the release said. In particular, the percentage of producers who expected better financial performance this year rose to 24% from just 16% in October.
A sharp rise in crop prices from mid-October to mid-November was a key reason behind the expectation for better financial performance, the economists said. For example, eastern Corn Belt prices for fall delivery of corn and soybeans rose 10% and 15%, respectively, during the period.
The stronger financial outlook in the crop sector outweighed a weaker outlook from livestock producers, who were feeling the brunt of a decline in cattle prices that took place during the same time frame, they said. Despite the stronger financial outlook, the Farm Capital Investment Index fell six points to a reading of 56, with just 16% of respondents saying it was a good time to make large investments in their farm operations.
Producers became more optimistic about future agricultural trade prospects in November. Just 7% of respondents said they expected US agricultural exports to weaken in the next five years, down from 14% in October and down from 30% in March.
In a related question, 47% of corn producers responding to the November survey said they expected soybean exports to rise over the next five years, while just 8% said they expected soybean exports to decline. The improved trade outlook appeared to contribute to this month’s sentiment improvement.
SUPPORT EXPECTATIONS
A majority of producers in November reported they still expected to receive supplementary support from the USDA, similar to the 2019 Market Facilitation Program, but they were less confident of receiving the payment than in September, the release said. This month, just 16% of respondents thought an MFP payment was “very likely”, down from 62% in September.
Still, when the “likely” and “very likely” response categories are combined, 76% said they expected an MFP payment, compared with 83% in September, they said.
CATTLE, BEEF RECAP
The USDA reported formula and contract base prices for live FOB steers and heifers this week ranged from $218.52 per cwt to $223.98, compared with last week’s range of $216.36 to $228.00 per cwt. FOB dressed steers and heifers went for $338.10 per cwt to $348.26, compared with $345.25 to $356.88.
The USDA choice cutout Tuesday was down $4.177 per cwt at $364.72 while select was down $7.10 at $350.78. The choice/select spread widened to $13.94 from $11.01 with 93 loads of fabricated product and 22 loads of trimmings and grinds sold into the spot market.
The USDA-listed the weighted average wholesale price for fresh 90% lean beef as $399.62 per cwt, and 50% beef was $158.60.
The USDA said basis bids for corn from feeders in the Southern Plains were unchanged at $1.05 to $1.20 a bushel over the Dec corn contract, which settled at $4.38, up $0.05 1/4.
The CME Feeder Cattle Index for the seven days ended Monday was $332.36 per cwt, up $12.66. This compares with Tuesday’s Jan contract settlement of $329.87, up $8.80.