The Purdue University/CME Group Ag Economy Barometer was virtually unchanged in April from March, up one point to a reading of 178, said Purdue Agricultural Economist James Mintert, in a release.
The Ag Economy Barometer is calculated each month from 400 US agricultural producers’ responses to a telephone survey. This month’s survey was conducted from April 19-23, 2021.
Producers in April were becoming more optimistic about the future, the Index of Future Expectations continued its upward trend from last month, up five points to a reading of 169, Mintert said.
However, their views on current conditions slipped. The Index of Current Conditions dropped seven points in April, to a reading of 195, he said.
FINANCIAL PERFORMANCE RECORD HIGH
The Farm Financial Performance Index hit a record high in April, up 13 points from March to a reading of 138, 83 points higher than one year ago, Mintert said. This month 50% of producers indicated they expected better financial performance in 2021 compared with 2020, up from 39% who felt that way in March.
Strength in commodity prices continued to drive improving expectations for strong financial performance, even as many producers faced rising input costs.
Despite expectations for their farms’ strong financial performance, farmers were less inclined to think now is a good time for large investments in buildings and equipment than they were in March, he said. However, in a follow up question, when asked more specifically about their farm machinery investment plans, more producers in April said they planned to increase their farm machinery purchases than in March.
Divergence between the two responses could be reflective of the run-up in building costs and difficulty in scheduling construction projects across the US, Mintert said.
TAX POLICY CONCERNS
Possible changes in US tax policy were on the minds of ag producers, he said. Ninety-five percent of respondents were either somewhat or very concerned that changes in tax policy would make it more difficult to pass their farms on to the next generation.
Eighty-seven percent expected capital gains rates to rise over the next five years, Mintert said. Three-fourths said they were “very concerned” about the possible elimination of the step-up in cost basis for farmland in inherited estates and 68% said they were “very concerned” about a possible reduction in the estate tax exemption for inherited estates.
Farmers expected the rise in farmland values to continue unabated over the next year as the Short-Run Farmland Value Expectations Index rose to a record high reading of 159, 11 points higher than a month earlier, he said.
Producers were less optimistic, however, when asked about the five-year outlook for farmland values as the Long-Term Farmland Values Expectations Index declined nine points to a reading of 148.
CATTLE, BEEF RECAP
Fed cattle traded this week at $117 to $119 per cwt on a live basis, down $1 from last week. Dressed-basis trading was seen at $188 to $190 per cwt, down $1 to $3.
The USDA choice cutout Tuesday was up $1.92 per cwt at $301.22, while select was up $0.12 at $283.91. The choice/select spread widened to $17.31 from $13.51 with 94 loads of fabricated product and 35 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 unchanged at $1.04 to $1.18 a bushel over the May CBOT futures contract, which settled at $7.44 3/4 a bushel, up $0.12 1/2.
The CME Feeder Cattle Index for the seven days ended Monday was $132.76 per cwt up $0.13. This compares with Tuesday’s May contract settlement of $129.75 per cwt, down $3.30.