Agricultural producers’ sentiment increased for the second straight month, as the Purdue University/CME Group Ag Economy Barometer index rose five points to a reading of 115, a 12% increase from 2022.
A Purdue University release said, the sentiment growth was attributed largely to farmers’ improved perceptions of their farms’ financial conditions and prospects. This month’s Ag Economy Barometer survey was conducted from Nov. 13-17, the same week Congress voted to extend the 2018 Farm Bill’s provisions to Sep. 30, 2024.
Anticipating the extension by Congress, the November survey gauged the preferences of corn and soybean producers regarding farm safety net programs for 2024. Among respondents who expressed a program preference, just over two-thirds chose the ARC farm program, while nearly one-third leaned toward enrolling in the PLC program, assuming an extension of the current Farm Bill’s provisions, the University said. However, uncertainty prevails, particularly for soybean (52% declining to choose a program) and corn (43% declining) producers when deciding to choose between programs.
CURRENT CONDITIONS INDEX RISES
The Index of Current Conditions rose 12 points to 113 while the Index of Future Expectations improved by two points to 116, the release said. The Farm Financial Performance Index also rose to a reading of 95, which was up three points from October.
The financial conditions index reached its low point in the spring, the university said. The November reading was 25% higher than in May and 10% higher than at the start of fall’s harvest in September.
CAPITAL INVESTMENT INDEX UP
The Farm Capital Investment Index has fluctuated throughout 2023 but rebounded this month to a reading of 42, up seven points from October, the release said. Over the last several months, producers who viewed the investment climate as favorable were asked why they felt that way.
The percentage of respondents choosing “strong cash flows” as a reason to invest has been drifting lower since summer when about 40% of respondents chose that as their primary reason. This time, just 22% chose “strong cash flows” with “higher dealer inventories,” chosen by 29%, claiming the top spot as to why now is a good time to make large investments, implying a potential change in market conditions.
The shift in responses suggests farmers might be seeing a moderation in farm equipment price rises, making it a more favorable time for large investments, the release said.
Perspectives on farmland values changed little from October, the release said. The Short-Term Farmland Values Expectations Index maintained its position at 125, while the long-term index fell five points. Those who expected farmland values to rise over the next five years overwhelmingly attributed their optimism to non-farm investor demand, followed by inflation.
CATTLE, BEEF RECAP
The USDA reported formula and contract base prices for live FOB steers and heifers this week ranged from $174.87 per cwt to $180.00, compared with last week’s range of $174.33 to $178.97 per cwt. FOB dressed steers, and heifers went for $275.29 per cwt to $278.45, compared with $278.23 to $280.42.
The USDA choice cutout Tuesday was down $1.24 per cwt at $293.75 while select was off $3.70 at $259.13. The choice/select spread widened to $34.62 from $32.16 with 114 loads of fabricated product and 41 loads of trimmings and grinds sold into the spot market.
The USDA said basis bids for corn from feeders in the Southern Plains were unchanged at $1.20 to $1.35 a bushel over the Mar corn contract, which settled at $4.90 1/2 a bushel, up $0.05.
No delivery intentions were posted for Dec live cattle Tuesday.
The CME Feeder Cattle Index for the seven days ended Monday was $223.78 per cwt, up $0.51. This compares with Tuesday’s Jan contract settlement of $214.70, up $4.17.