The Purdue University/CME Group Ag Economy Barometer dropped 16 points to a reading of 167 in November, down from its all-time high set a month earlier as pessimism rose after the elections, said James Mintert, Purdue University agricultural economist in a release about the barometer and the survey that provided the data.
The decrease was highlighted by the Index of Future Expectations falling 30 points to a reading of 156 in November, Mintert said. At the same time the on-going rally in commodity prices and CFAP-2 payments continued to support producers’ view of current economic conditions as the Index of Current Conditions rose 9 points in November to 187, an all-time high.
The Ag Economy Barometer is calculated each month from 400 agricultural producers’ responses to a telephone survey, Mintert said. This month’s survey was conducted after the election from Nov. 9-13.
PESSIMISM RISES POST ELECTION
Producers were more pessimistic about future economic conditions on their farms in November than they were a month earlier, which is the opposite of what happened following the 2016 election, he said.
Month-to-month shifts in responses to questions provided some insight into the decline observed in the Index of Future Expectations that took place this month, Mintert said.
Comparing results from October to November, far more producers in November said that, over the next five years, they expected to see: 1) environmental regulations affecting agriculture to tighten; 2) higher income tax rates for farms and ranches; 3) higher estate tax rates for farms and ranches; 4) less government support for the US ethanol industry and 5) a weaker farm income safety net provided by government program policies, Mintert said.
In the November survey, 77% of respondents said they expected more restrictive environmental regulations five years from now vs. 41% in October, he said. When asked about income tax rates, 66% of November respondents said they expected higher rates for farms and ranches five years from now compared with 35% in October.
Similarly, 66% of respondents in November also indicated they expected estate tax rates for farms and ranches to rise compared with 40% in October, Mintert said. The percentage of producers who said they expected government support for the US ethanol industry to decline nearly doubled from October to November with 33% of respondents in November expecting government support to decline over the next five years compared with 17% in October.
That was similar to the shift in attitudes regarding the farm income safety net as 35% of respondents in November said they expected to see a weaker farm safety net five years from now compared with 18% in October, he said.
CATTLE, BEEF RECAP
Fed cattle trading was reported in the Plains Tuesday at $110 per cwt on a live basis, steady to down $1 from last week. Dressed-basis trading was reported last week at $171 to $174 per cwt, down $1 to up $2.
The USDA choice cutout Tuesday was down $0.28 per cwt at $243.40, while select was up $0.65 at $223.08. The choice/select spread narrowed to $20.32 from $21.25 with 92 loads of fabricated product and 38 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 steady to down $0.03 at $1.05 to $1.09 a bushel over the Dec CBOT futures contract, which settled at $4.14 3/4 a bushel, down $0.05.
The CME Feeder Cattle Index for the seven days ended Monday was $140.30 per cwt, up $1.41. This compares with Tuesday’s Jan contract settlement of $141.65 per cwt, up $0.60.