Farmer sentiment about the economy and the future improved in June for the second straight month, continuing a rebound from sharp declines in March and April, according to the Purdue University/CME Group Ag Economy Barometer.
Purdue Agricultural Economist James Mintert, commented on the results in a release and said the overall index was up 14 points from May to a reading of 117. The barometer is based on responses from 400 US agricultural producers with this month’s survey conducted from June 22-26 after the USDA announced details about the Coronavirus Food Assistance Program.
A more favorable spring planting season combined with assistance available from the assistance program help to explain this month’s improvement in farmer sentiment, Mintert said.
CURRENT CONDITIONS INDEX UP
Farmers became more optimistic about their current situation and the future of their farming operations compared with a month earlier, he said. The Index of Current Conditions rose 19% from May to a reading of 99, and the Index of Future Expectations climbed 12% from May to a reading of 126.
Over the last two months, farmers’ perspective regarding making large investments in their farming operations improved markedly, Mintert said. The Farm Capital Investment Index recovered to a reading of 60 in June, compared with just 50 a month earlier and a reading of 38 in April.
Although much improved since bottoming in April, the recovery still left the Farm Capital Investment Index 12 points below the 2020 high established in February before the coronavirus affected markets, he said.
Although farmers still are worried about the effect the virus will have on the economy and their operations, they showed a bit less concern in June than in May, Mintert said. When asked about the effect of the virus on their farms’ profitability, 64% of respondents indicated they were “very worried” or “fairly worried,” down from 71% in May.
The June survey provided the first opportunity to survey farmers after details about the Coronavirus Food Assistance Program were made available, he said. Sixty percent of surveyed farmers indicated that the program “somewhat” (53%) or “completely” (7%) relieved their concerns about the effect of the virus on their 2020 farm income, while 26% of respondents responded “not at all.”
However, 64% of farmers surveyed indicated they thought it will be necessary for Congress to pass another bill to provide more economic assistance to US farmers, Mintert said.
LAND VALUE OUTLOOK UP
When asked about their short-run outlook for land values, farmers’ perspective improved over the last two months, he said. Respondents expecting land values to decline over the next 12 months fell to 21% in June, down from 29% in May and 35% in April.
The shift in perspective was even more pronounced when farmers were asked about farmland values in five years, Mintert said. Fifty-five percent of respondents said they expected farmland values to rise over the next five years, up from just 40% in May, while 17% expected to ask for lower rent payments.
CATTLE, BEEF RECAP
Fed cattle sold this week at $95 per cwt on a live basis, up $2 to down $1 from last week. Dressed-basis sales last week were at $152 to $155 per cwt, steady to down $1.
The USDA choice cutout Tuesday was down $0.16 per cwt at $205.30, while select was down $0.13 at $196.84. The choice/select spread narrowed to $8.46 from $8.49 with 89 loads of fabricated product sold into the spot market.
The CME Feeder Cattle index for the seven days ended Monday was $130.13 per cwt, up $1.15. This compares with Tuesday’s Aug contract settlement of $134.92, down $1.22.