Farmers continue to report strong current conditions on their farms, according to the February Purdue University/CME
Group Ag Economy Barometer.
James Mintert, Purdue University Agricultural Economist, wrote in a release on the survey that while the overall reading for the Ag Economy Barometer changed very little compared with January, down two percentage points to a reading of 165 in February, the Index of Current Conditions remained near its all-time high at of 200.
Meanwhile, the Index of Future Expectations continued a four-month decline, down 20% from its October peak, to a reading of 148. The Ag Economy Barometer was calculated each month from 400 US agricultural producer responses to a telephone survey conducted from Feb. 15-19.
FARM INCOME SUPPORTS ATTITUDES
Ongoing strength in agricultural commodity prices and farm income continue to support producer perspectives on current conditions. Yet concerns about possible policy changes affecting agriculture, and eroding confidence in future growth in ag trade, continue to weigh on producers’ future expectations.
The Farm Capital Investment Index drifted lower in February to a reading of 88%, five points below its December and January readings. Still, the index in February stood at its third highest reading since data collection began in 2015 and was 16 percentage points higher than a year earlier, just before the pandemic got underway.
Farmers in February were a bit less optimistic regarding their upcoming farm machinery purchase plans than they were the last couple of months as the percentage of producers intent on raising their machinery purchases in the upcoming year dipped to 9%, compared with 15% who expected to increase purchases when surveyed in December and January.
BULLISH ABOUT LAND VALUE
Producers were very bullish about farmland values. Fifty-one percent of respondents in February said they expected land values to rise during the next year, up eight percentage points from the January survey.
US farmers also were optimistic about the long-run trend in farmland values, as 62% of respondents indicated land values were likely to rise over the next five years.
That same bullishness spilled over into expectations for rising farmland cash rental rates in 2021. In February, more producers (36%) said they expected cash rental rates to increase, compared with 18% in December.
The percentage of farms expecting to see a better financial performance in 2021 compared with 2020 has been rising since last summer and on the February survey reached 37%, up four percentage points from January and 25 points higher than last July.
When asked about their perception of the most critical risk facing their operation, 29% ranked production, up 8% from February 2020, and 18% ranked financial risk, down 8% from one year ago.
CATTLE, BEEF RECAP
Fed cattle trading was reported last week at mostly $114 up to $115.50 per cwt on a live basis, down $0.50 to up $1 from the previous week. Dressed-basis trading was seen at $181, to $182, steady to up $1.
The USDA choice cutout Tuesday was down $4.35 per cwt at $234.68, while select was off $1.47 at $226.17. The choice/select spread narrowed to $8.51 from $11.38 with 94 loads of fabricated product and 18 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 $1.05 to $1.07 a bushel over the May CBOT futures contract, which settled at $5.45 a bushel, up $0.13 1/4.
The CME Feeder Cattle Index for the seven days ended Monday was $137.54 per cwt, down $0.81. This compares with Tuesday’s Mar contract settlement of $136.52 per cwt, down $0.67.