Farmer Sentiment Improves As Trade Deals Are Signed

There was a sharp rise in agricultural producer sentiment in January as the Purdue University/CME Group Ag Economy Barometer rose 17 points from December to a reading of 167, a Purdue University release said.

Although the Index of Current Conditions essentially was unchanged, up one point to a reading of 142, the Index of Future Expectations jumped 24 points since December to a reading of 179, the release said.

The higher sentiment took place as the Phase 1 Trade Agreement between the US and China was being discussed and signed in mid-January, the release said.

The Ag Economy Barometer is based on a mid-month survey of 400 US agricultural producers and was conducted Jan. 13 through 17, 2020.




Although few details are available regarding how the additional $200 billion in purchases by China that is referenced in the agreement will be distributed over the next two years, and just how much effect it will have on the US farm sector, signing of the agreement did appear to provide a boost in sentiment among producers, the university said.

For example, in January, 69% of farmers surveyed felt the soybean trade dispute with China would be settled soon, up from 54% in December, and 80% felt the outcome would be favorable to US agriculture, up from 72% in December, the release said.

At the same time, producers’ expectations for an increase in US agricultural exports over the next five years also rose steadily, the survey revealed.  As recently as October, only 55% of producers expected agricultural exports to increase in the coming five years.

However, starting in November, and continuing through January 2020, about 70% of those surveyed said they expected to see an increase in US agricultural exports in the next five years.




Each winter producers are asked about the rate of growth they expect for their farming operation over the next five years, the release said.  Since the question was first posed in 2015, there has been a small but consistent percentage of farmers who plan to grow rapidly and a relatively large group that either has no plans to grow or plans to exit or retire from farming.

However, the number of those indicating they have no growth plans and/or expect to exit or retire has been rising steadily since 2018, the release said.  For example, in January 2020, a combined 56% of farmers said they have no plans to grow or plan to exit or retire, up from 50% in 2019 and up from 39% in 2018.

Those results could be an indication that the volatility the ag sector has experienced the last couple of years has been interpreted by producers as a sign to be more cautious regarding future expansion plans, the release said.

And, farmers who felt now was a good time to buy new machinery or buildings fell four points.




Cash cattle trading was reported in the Plains last week at $122 to $122.50 per cwt on a live basis, down $1 to $4.50 from the previous week.  Dressed-basis trades were reported at $194 to $195 per cwt, down $4 to $4.50.

The USDA choice cutout Tuesday was down $0.63 per cwt at $210.93, while select was down $0.09 at $207.51.  The choice/select spread narrowed to $3.42 from $4.14 with 71 loads of fabricated product sold into the spot market.

The CME Feeder Cattle index for the seven days ended Monday was $141.74 per cwt, down $0.24.  This compares with Tuesday’s Mar contract settlement of $137.50, up $0.85.