US farmers’ outlook improved in March as the Purdue University/CME Group Ag Economy Barometer index increased to 114, three points higher than in February, said James Mintert, Purdue agricultural economist, in a release Tuesday.
The March survey was conducted from March 11-15,.
FUTURE EXPECTATIONS UP
While the Index of Current Conditions fell by two points to 101, the Index of Future Expectations climbed to 120, up by five points compared with February, Mintert said. The disparity primarily was attributable to farmers’ perceptions that a financial downturn took place over the past year, coupled with expectations for some improvement over the next 12 months.
Producers’ expectations for interest rate changes shifted, which could help explain why they look for financial conditions to improve, he said. This month 48% of respondents said they expected a decline in the US prime interest rate over the next year, up from 35% in December.
Just one-third (32%) of producers foresaw an interest rate increase compared with 43% last month, Mintert said. Only 20% of respondents this month identified the risk of rising interest rates as a primary concern, a decrease from the 24% recorded in December 2023.
High input costs continued to be producers’ No. 1 concern, with 36% of respondents expressing worry, he said.
CAPITAL INVESTMENT OPTIMISM
The Farm Capital Investment Index increased by seven points this month, indicating a rise in optimism among producers about making large investments, Mintert said. Producers who said it was a good time for a large investment rose to 15%, up from 11% at the start of the year.
Producers who said it was a good time to invest pointed to strong cash flows on their farms coupled with higher dealer inventories for farm machinery as key reasons, he said.
However, a majority of producers still felt hesitant to invest because of concerns about high costs for machinery and construction as well as high interest rates.
Producers displayed a more optimistic short-term outlook on farmland values in March, with the Short-Term Farmland Values Index rising to 124, a nine-point increase from the previous month, Mintert said. This month, 38% of producers expected farmland values to increase in the coming year, compared with 31% in January and February.
Factors contributing to the optimism included non-farm investor demand, inflation expectations and strong cash flows, he said. An improved interest rate outlook might have been a factor as well, although producers didn’t point to that explicitly in this month’s survey.
More farmers this month (24%) said they believed farmland prices would go up because of inflation expectations compared with last month’s 18%.
CATTLE, BEEF RECAP
The USDA reported formula and contract base prices for live FOB steers and heifers this week ranged from $186.26 per cwt to $190.27, compared with last week’s range of $188.79 to $194.99 per cwt. FOB dressed steers, and heifers went for $295.42 per cwt to $299.46, compared with $294.13 to $302.18.
The USDA choice cutout Tuesday was down $1.58 per cwt at $304.16 while select was off $2.80 at $298.99. The choice/select spread widened to $5.17 from $3.95 with 109 loads of fabricated product and 16 loads of trimmings and grinds sold into the spot market.
The daily weighted average USDA listed wholesale price for fresh 90% lean beef was $347.00 per cwt, and 50% beef was $95.16.
The USDA said basis bids for corn from feeders in the Southern Plains were unchanged at $1.40 to $1.55 a bushel over the May corn contract, which settled at $4.26 1/2 a bushel, down $0.09.
The CME Feeder Cattle Index for the seven days ended Monday was $248.27 per cwt, up $0.60. This compares with Tuesday’s Apr contract settlement of $243.50, up $3.07.