Farmer Sentiment Declines In January

Farmer sentiment weakened in January as the Purdue University/CME Group Ag Economy Barometer declined six points to a reading of 119, its second-lowest reading since July 2020, 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 Jan. 17 to 21.

Producers surveyed added that they were concerned about rising costs and supply-chain disruptions.

 

CURRENT CONDITIONS INDEX DOWN

 

The Index of Current Conditions fell 13 points to a reading of 133, while the Index of Future Expectations changed little in January, down two points to a reading of 112, Mintert said.  Rising farm input costs and ongoing supply chain disruptions appeared to be contributing to producers’ weaker perception of current conditions and expectations of their farm’s financial performance in 2022 when compared with last year.

The Farm Financial Performance Index fell sharply in January to a reading of 83, a 30% decline compared with a year earlier and 27% lower than in December, he said.  The financial index is generated based upon producer responses to whether they expected their farm’s current financial performance to be better than, worse than or about the same as the previous year.

In the December survey, producers were focused on comparing a very positive income year, 2021, to 2020, which really supported the index at year end, Mintert said.  In the January survey, producers were asked to compare 2022 to 2021.  The sharp drop in the financial performance index this month indicated producers expected a sharp decline in income in 2022.

 

INVESTMENT INDEX WEAKENS

 

The Farm Capital Investment Index also weakened this month, falling four points to a reading of 45, he said.  In January, 52% of respondents said they planned to reduce their farm machinery purchases in the upcoming year.

Supply chain issues continued to hamper farmer investment plans as, for the third month in a row, more than 40% of producers reported that low farm machinery inventories were holding back their purchase plans. Mintert said.

Farm construction plans also were weaker in the latest survey as 66% of respondents reported reducing their construction plans in the year versus last year, he said.

Supply chain concerns extend beyond farm machinery and farm building/grain bin construction plans, Mintert said.  Supply chain disruptions for many inputs, coupled with strong demand, were pushing production costs higher.

Fifty-seven percent of respondents said they expected input prices to rise by 20% or more in 2022, and 34% said they expected prices to rise by 30% or more, he said.

 

CATTLE, BEEF RECAP

 

The USDA reported formula and contract base prices for live FOB steers and heifers this week ranged from $137.00 to $138.26 per cwt, compared with last week’s range of $136.74 to $139.41.  FOB dressed steers and heifers went for $214.60 to $216.14 per cwt, versus $213.43 to $218.04.

The USDA choice cutout Tuesday was down $4.96 per cwt at $285.44, while select was off $3.05 at $280.22.  The choice/select spread narrowed to $5.22 from $7.13 with 101 loads of fabricated product and 26 loads of trimmings and grinds sold into the spot market.

The USDA reported that basis bids for corn from feeders in the Southern Plains were steady at $1.40 to $1.55 a bushel over the Mar futures and for southwest Kansas were down $0.10 at $0.20 over Mar, which settled at $6.34 3/4 a bushel, up $0.08 3/4.

The CME Feeder Cattle Index for the seven days ended Friday was $158.77 per cwt up $0.33.  This compares with Tuesday’s Mar contract settlement of $163.70 per cwt, up $0.67.