Agricultural economy sentiment tied with its highest reading of 2019, according to the November Purdue University/CME Group Ag Economy Barometer.
Rising for a second straight month, the barometer grew to a reading of 153 in November, up 17 points from October and matching the previous 2019 high set in July.
CURRENT-CONDITIONS INDEX UP
The Index of Current Conditions saw the biggest boost, soaring 38 points to a reading of 153 in November, while the Index of Future Expectations rose modestly, up 7 points to a reading of 153, as more producers believed current and future economic conditions will continue to improve.
Except in the northern Corn Belt, farmers were wrapping up their fall harvest in November, and yields for many farmers were better than expected earlier this year. This helped boost sentiment along with ideas the US/China trade dispute might be settled soon.
At the same time, cattle prices rallied substantially since early fall, helping make cattle ranchers and feeders feel better about their operations’ finances.
CAPITAL INVESTMENT INDEX RISES
Producers’ optimism about making farm capital investments also rose in November. The Farm Capital Investment Index rose to a reading of 71 in November, its highest since February 2018 and 12 points above October’s value.
November’s rise in the investment index coincided with a sharp upward move in the Current Conditions Index, suggesting that, as producers’ perspective regarding their farm’s current situation improved, they were more favorably inclined to make farm capital expenditures.
Confidence in a quick resolution to the US/China trade dispute increased to its highest point since the question was first posed in March. In November, 57% of respondents stated they expect a resolution soon. Yet, as recently as August, only 29% had expected a quick resolution to the dispute.
There also was an increase in the percentage of producers who expected the trade dispute to be resolved ultimately in a way that favors US agriculture. In November, 80% of respondents said they expected a beneficial outcome to the dispute with China, up from 75% in October.
PRODUCERS OPTIMISTIC ABOUT FARMLAND
Producers had a more optimistic view about farmland values this month than in October. Although the percentage of farmers reporting that they expected to see higher farmland values in the coming 12 months did not change, the percentage expecting values to fall declined from 22% to 11%.
As a group, the shift among respondents was from expecting lower farmland values in the year ahead to expecting farmland values to remain unchanged.
When asked for their perspective on farmland values five years ahead, fewer farmers said they expected values to decline than a month earlier and that shift nearly matched the increase in the percentage of farmers expecting farmland values to increase. So, producers were more optimistic about farmland values in November than in October, but there was a bigger increase in confidence that farmland values would rise over the next five years.
CATTLE, BEEF RECAP
Cash cattle trading last week occurred at $117 to $120 per cwt on a live basis, up $2 to $3 from the previous week. Dressed-basis trade was reported at $187 per cwt, up $3 to $7.
The USDA choice cutout Tuesday was down $2.46 per cwt at $230.15, while select was off $0.67 at $212.31. The choice/select spread narrowed to $17.84 from $19.63 with 110 loads of fabricated product sold into the spot market.
The CME Feeder Cattle index for the seven days ended Monday was $145.03 per cwt, up $0.06 from the previous day. This compares with Tuesday’s Jan contract settlement of $142.37, up $0.22.