Farmer Sentiment Rises In June

The Purdue University/CME Group Ag Economy Barometer index rose in June, rising 17 points to a reading of 121, said Purdue Agricultural Economist James Mintert, in a report.

The sentiment upswing was driven by producers’ more optimistic view of the future, Mintert said.  However, their perception of current conditions remained unchanged from May.

The Ag Economy Barometer is calculated each month from 400 US agricultural producers’ responses to a telephone survey, the report said.  This month’s survey was conducted from June 12 to 16.

 

EXPECTATIONS INDEX UP

 

The Index of Future Expectations rose 25 points to a reading of 123, while the Index of Current Conditions held flat at a reading of 116 in June, he said.

Optimism about US agriculture’s future and a more sanguine interest rate outlook helped explain producers’ more positive view of the future expressed in June’s survey, Mintert said.  However current conditions in the farming economy continue to present a challenge for some.

This month four out of 10 producers stated their financial situation has deteriorated from a year ago.

To better understand the large month-to-month swing in producers’ expectations for the future, responses between the May and June surveys were compared, the report said.  In June, 20% of respondents said they expected their financial condition to improve over the next year, compared with just 13% in May.

 

FINANCIAL EXPECTIONS UP

 

Meanwhile, only 32% expected their farm’s financial situation to decline over the upcoming year, compared with 44% in May, Mintert said.  Producers’ improved perspective on the future was not focused solely on their own farms, but extended to all of US agriculture.

The percentage of producers expecting good times for US agriculture in the next five years rose eight points to 33%, while the percentage of producers expecting bad times fell three points to 41%, he said.

The Farm Financial Performance Index also rose this month, up 10-points from May and was likely a result of a late-May to early June rally in harvest time prices for corn and soybeans, as well as optimism toward positive returns for cattle producers, Mintert said.

In June, 50% of respondents said they expected “good times” for livestock producers in the next five years, up from 37% in May, he said.  Optimism about positive returns for cattle producers, especially cow-calf operations, likely was a key factor behind the positive livestock outlook.

The Farm Capital Investment Index rose five points in June to 42, he said.

However, nearly 75% of respondents still felt now was a bad time to make large investments in their operations, Mintert said.  Respondents in June cited rising interest rates (35%) and increasing prices for equipment and new construction (37%) as key reasons for viewing now as a bad time for investments.

 

CATTLE, BEEF RECAP

 

The USDA reported formula and contract base prices for live FOB steers and heifers this week ranged from $179.40 per cwt to $184.64, compared with last week’s range of $179.83 to $186.11 per cwt.  FOB dressed steers, and heifers went for $282.57 per cwt to $289.54, compared with $284.16 to $289.29.

The USDA choice cutout Wednesday was down $5.56 per cwt at $322.78 while select was off $1.61 at $292.69.  The choice/select spread narrowed to $30.09 from $34.04 with 80 loads of fabricated product and 22 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 $1.30 to $1.50 a bushel over the Jul corn contract, which settled at $5.47 1/4 a bushel, down $0.01.

The CME Feeder Cattle Index for the seven days ended Monday was $232.78 per cwt, up $1.37.  This compares with Wednesday’s Aug contract settlement of $244.70 per cwt, down $3.20.