The Purdue University/CME Group Ag Economy Barometer slipped five points in November to a reading of 116 as producer pessimism about the current and future outlook of the agricultural economy continued, said James Mintert, director of the Purdue University Center for Commercial Agriculture, in a release.
The Ag Economy Barometer is calculated each month from 400 US agricultural producers’ responses to a telephone survey, the release said. This survey was conducted from Nov. 15 to 19.
CURRENT CONDITIONS INDEX DOWN
The Index of Current Conditions declined seven points in November to a reading of 128 and the Index of Future Expectations fell four points to 110, Mintert said. November marked the lowest reading of 2021 for all three measures of producer sentiment, and, comparing year-over-year, the barometer was 30% lower than in November 2020.
Farmers were facing sharp rises in production costs coinciding with fluctuating crop and livestock prices, the prospect of changing environmental and tax policy, uncertainty over COVID-19, as well as a host of other issues, all of which were affecting farmer sentiment negatively, the barometer said.
Rising production costs, including those for fertilizer, farm machinery, seed and fuel, were of increasing concern to farmers.
For example, in November 43% of survey respondents said they expected farm input prices to rise by more than 16% in the coming year. This compared with the actual average rate of farm input price inflation over the past decade of less than 2%.
SUPPLY CHAIN PROBLEMS
Supply chain problems could be responsible for a drop in the Farm Capital Investment Index, Mintert said. The index declined seven points to a reading of 39, the lowest reading since April of 2020.
In November, 44% of producers said their farm machinery purchase plans were affected by low farm machinery inventories. When asked what their biggest concerns were for their operation in the coming year, nearly half (47%) of survey respondents chose higher input costs.
Unlike the broader sentiment measures, the Farm Financial Performance Index rose two points to 106 in November, 10% above its low reading in June of 2021, the release said. Compared with late spring, strong crop yields for fall-harvested crops and strength in wheat prices helped push 2021 crop revenue and profitability estimates.
Producers remained very optimistic about farmland values over the next five years, as both the short-term and long-term farmland value expectation indices remained near their peaks, Mintert said. Strong cash flows from 2021 crops, low interest rates and rising concerns about inflation continued to push farmland values.
CATTLE, BEEF RECAP
The USDA reported formula and contract base prices for live FOB steers and heifers this week ranged from $141.72 to $143.75 per cwt, compared with last week’s range of $138.98 to $140.92. FOB dressed steers and heifers went for $219.44 to $222.88 per cwt, versus $209.66 to $220.75.
The USDA choice cutout Tuesday was down $4.50 per cwt at $268.03, while select was off $2.17 at $255.68. The choice/select spread narrowed to $12.35 from $14.68 with 120 loads of fabricated product and 38 loads of trimmings and grinds sold into the spot market.
The USDA reported Tuesday that basis bids for corn from livestock feeding operations in the Southern Plains were down $0.05 at $1.30 to $1.40 a bushel over the Dec futures and for southwest Kansas were unchanged at $0.40 over Dec, which settled at $5.86 1/4 a bushel, up $0.02 3/4.
No delivery intentions were posted against the Dec live cattle contract Tuesday.
The CME Feeder Cattle Index for the seven days ended Monday was $160.96 per cwt down $1.15. This compares with Tuesday’s Jan contract settlement of $165.02 per cwt, down $0.22.