Farmer sentiment saw an unexpected surge in October ahead of the US election, according to the latest Purdue University/CME Group Ag Economy Barometer.
This month’s survey was conducted from Oct. 14-18.
FUTURE EXPECTATIONS JUMP
In a release, Purdue University Agricultural Economist James Mintert said, the index rose to 115, marking a 27-point increase from September. This boost in sentiment was driven primarily by a rise in producers’ confidence in the future, with the Future Expectations Index jumping 30 points to 124.
While the Current Conditions Index also rose, reaching 95, it still reflected farmers’ concerns that economic conditions this year were worse than last year and weaker than the barometer’s base period of 2015-16 during the early days of a multiyear downturn in the US farm economy, Mintert said.
Despite current challenges, the October survey indicated some optimism among producers that economic conditions may strengthen, avoiding an extended downturn in the farm economy, he said.
The Farm Financial Performance Index, which measures producers’ expectations regarding their farm’s financial performance over the next 12 months compared to the past year, surged to 90, reflecting a 22-point jump from September and falling just two points shy of last year. Contributing factors likely include high fall crop yields and a stress-free harvest in the Corn Belt and Plains states.
Producers seemed to view 2024’s weak income prospects as transitory, as there also was a modest rise in the Farm Capital Investment Index, which reached 42 — a seven-point increase from September.
DIVING DEEPER
In October, only 53% of producers anticipated challenging times for the US agricultural economy in the year ahead, a decrease from 73% in September, Mintert said. Similarly, concerns about the next five years eased, with just 33% of producers expecting tough times, down from 48% the previous month.
Additionally, fewer producers expected worsening financial conditions on their farms over the next 12 months, dropping to 23% in October from 38% in September, he said. While producer sentiment improved in October, many respondents indicated they still felt financial strain from the deterioration of their financial situation throughout 2024.
POLITICS PLAY A ROLE
Many expressed worries about potential policy changes affecting their farms and the agricultural economy, with regulation, environment and taxes featured prominently alongside price concerns, Mintert said. Respondents continued to point to higher input costs and lower output prices as their primary concerns.
The trend of producers’ decreasing concern over interest rates continued, with only 15% citing it as a top worry in October, down from 26% in late 2023, he said.
CATTLE, BEEF RECAP
The USDA reported formula and contract base prices for live FOB steers and heifers this week ranged from $189.73 per cwt to $192.50, compared with last week’s range of $189.82 to $200.00 per cwt. FOB dressed steers, and heifers went for $299.11 per cwt to $299.80, compared with $294.97 to $301.45.
The USDA choice cutout Tuesday was up $0.30 per cwt at $317.21 while select was down $1.92 at $285.24. The choice/select spread widened to $31.97 from $29.75 with 125 loads of fabricated product and 16 loads of trimmings and grinds sold into the spot market.
The USDA-listed weighted average wholesale price for fresh 90% lean beef was $345.71 per cwt, and 50% beef was $75.09.
The USDA said basis bids for corn from feeders in the Southern Plains were unchanged at $1.40 to $1.56 a bushel over the Dec corn contract and unchanged in Kansas at $0.25 over Dec, which settled at $4.18 1/2 a bushel, up $0.02.
The CME Feeder Cattle Index for the seven days ended Monday was $250.73 per cwt, down $0.27. This compares with Tuesday’s Nov contract settlement of $246.15, down $0.20.