Farmer sentiment improved slightly in May after falling sharply in March and April, according to the monthly Purdue University/CME Group Ag Economy Barometer.
James Mintert, Purdue University Agricultural Economist, outlined the highlights of the monthly survey of 400 agricultural producers from May 18 though 22 in a release. He said the index was up seven points from April to a reading of 103, but it remained nearly 40% below its all-time high of 168 set in February 2020.
The latest survey was conducted the same week that USDA announced the details of the Coronavirus Food Assistance Program so awareness of this program’s details could be one of the key reasons for the barometer’s rise, Mintert said.
The survey also indicated that farmer sentiment was virtually unchanged from May 2019 when the index reached its lowest reading of the year, the survey said. At that time, farmers were in the middle of struggling through a historically difficult spring planting season.
CURRENT, FUTURE CONDITIONS INDICES UP
The Index of Current Conditions rose in May, up 11 points from April to a reading of 83, Mintert said. Improvements in sentiment probably were motivated in part by increasing awareness of details regarding payments farmers were likely to receive for losses incurred during the first two quarters of the year.
The Index of Future Expectations also rose, he said, up four points to a reading of 112.
In May, farmers also were somewhat more inclined to think now is a good time to make large investments in their farming operations, Mintert said. The Farm Capital Investment Index rose to a reading of 50 compared with just 38 a month earlier.
While all three of these indices improved in May, each was still down more than 30% from February, before coronavirus affected markets, he said.
In the May survey, more than 70% of respondents indicated they were “very worried” (34%) or “fairly worried” (37%) about the effect of coronavirus on their farm’s profitability, up from 67% in April, Mintert said.
Their two biggest concerns were market access (42%) and financial (39%), with health and safety (11%) coming in third, he said.
Providing further evidence of their financial concerns, two-thirds of farmers surveyed indicated they think it will be necessary for Congress to pass another bill to provide more economic assistance to US farmers.
When asked about expectations for their financial position over the next 12 months, more than 60% said they expected farmers’ equity positions to decline over the next year, up sharply from 28% of farmers who felt that way in February, Mintert said. This marked a trend reversal of farmers becoming more optimistic regarding farm finances going back to mid-2019.
Meanwhile, more than 25% of farmers surveyed who rent farm land said they expected to ask their landlords to lower their cash rental payments in 2021 as a result of COVID-19, suggesting there will be pressure on cash rental rates next year, he said.
CATTLE, BEEF RECAP
Fed cattle trading was reported this week at $118 per cwt on a live basis, up $6 to down $2 from last week’s range. Dressed-basis trading was seen at $178 to mostly $187 per cwt, steady to down $3.
The USDA choice cutout Tuesday was down $22.42 per cwt at $318.73, while select was off $26.25 at $290.58. The choice/select spread widened to $28.15 from $24.32 with 97 loads of fabricated product sold into the spot market.
The CME Feeder Cattle index for the seven days ended Monday was $128.25 per cwt, down $0.71. This compares with Tuesday’s Aug contract settlement of $133.42, down $2.70.