The latest report from the Purdue University/CME Group Ag Economy Barometer indicated US farmers’ inflation expectations have subsided while overall producer sentiment changed little, said Purdue Agricultural Economist James Mintert in a release.
This month’s Ag Economy Barometer survey was conducted from Dec. 4 through 8.
The December barometer recorded a reading of 114, just one point lower than in November, Mintert said. The two sub-indices of the barometer, the Index of Current Conditions and the Index of Future Expectations, mirrored this slight decline, settling one point below their respective November figures at 112 and 115.
Looking ahead to 2024, farmers inflation expectations in December were notably lower than those at the beginning of 2023, he said.
FINANCIAL PERFORMANCE UP
Farmers reported another improvement in their farms’ financial performance in December, Mintert said. The Farm Financial Performance Index rose two points from November.
Since late summer, the Farm Financial Performance Index has climbed 11 points, and at year-end, it was 21 points above the low point for 2023, which occurred in May, he said. The shift in farmers’ perception of financial performance during the fall quarter corresponded with USDA’s more optimistic 2023 farm income outlook released in late November which was $10 billion more than its previous forecast.
The Farm Capital Investment Index reading of 43 was only one point above November’s, but it marked a 13-point increase from the same period last year, he said. Respondents endorsing the notion that now is a favorable time for substantial investments in their farm operation cited “higher dealer inventories” and “strong cash flows” as key factors supporting this perspective.
While the percentage of respondents selecting “strong cash flows” as a rationale for investment rebounded from the previous month, it remained less popular than in July and August, Mintert said. Conversely, in December, the percentage of producers citing “higher dealer inventories” as a primary motivation for investment was more than double the proportion who expressed a similar sentiment in July.
INPUT COSTS CONCERN
High input costs continued to be concerning for US farmers, although a notable shift in concerns took place as 2023 unfolded, he said. Farmers’ concerned about the risk of lower prices for crops and livestock increased from 16% of respondents in January to 26% by December.
Number three on the list of concerns for the upcoming year was “rising interest rates,” chosen by 24% of farmers in December’s survey, Mintert said.
Producers’ inflation expectations moderated, with 70% expecting inflation in 2024 to be less than 4%, he said. By comparison, 50% anticipated an inflation rate of 6% or more a year ago.
When asked about interest rates, about one-third of respondents said they anticipated rates declining in 2024 while 22% expected no change, Mintert said.
CATTLE, BEEF RECAP
The USDA reported formula and contract base prices for live FOB steers and heifers this week ranged from $172.24 per cwt to $175.59, compared with last week’s range of $171.19 to $174.19 per cwt. FOB dressed steers, and heifers went for $269.19 per cwt to $272.31, compared with $267.22 to $271.38.
The USDA choice cutout Thursday was down $2.13 per cwt at $275.90 while select was down $0.03 at $258.82. The choice/select spread narrowed to $17.08 from $19.18 with 165 loads of fabricated product and 37 loads of trimmings and grinds sold into the spot market.
The USDA said basis bids for corn from feeders in the Southern Plains were unchanged at $1.25 to $1.35 a bushel over the Mar corn contract, which settled at $4.66 1/2 a bushel, up $0.01 1/4.
The CME Feeder Cattle Index for the seven days ended Wednesday was $228.65 per cwt, up $3.60. This compares with Thursday’s Jan contract settlement of $224.67, down $1.40.