There was a slight uptick in agricultural producers’ sentiment in October, as the Purdue University/CME Group Ag Economy Barometer index rose four points to a reading of 110, said Purdue Agricultural Economist James Mintert, in a release.
The modest improvement in farmer sentiment resulted from farmers’ improved perspective on current conditions on their farms as well as their expectations for the future, Mintert said.
This month’s Ag Economy Barometer survey was conducted from Oct. 16-20.
LOWERED PRICE CONCERNS
Farmers in this month’s survey were slightly less concerned about the risk of lower prices for crops and livestock and felt somewhat better about their farms’ financial situation than a month earlier, the release said. The Index of Current Conditions rose three points to 101 while the Index of Future Expectations rose five points to 114.
Farmers’ more optimistic view of their farms’ financial situation was reflected in the Farm Financial Performance Index, which rose six points from September, he said. This month’s index value of 92 was the highest farm financial performance reading since April and pushed the index 7% above its year-ago reading. The index’s rise stood in contrast to the USDA’s forecast for 2023 net farm income to fall below 2022.
CAPITAL INVESTMENT INDEX DOWN
Despite the perception that financial conditions were stronger than a month earlier, the Farm Capital Investment Index fell four points in October to a reading of 35, Mintert said. This was the lowest reading of the year for the investment index.
In October, 78% of respondents said it was a bad time to make large investments in their farm operation, while just 13% said it was a good time to make large investments, he said. Among those who said it’s a bad time to invest, the most commonly cited reason was rising interest rates, chosen by 41% of respondents, up one point from September.
Of those who said it was a good time to make large investments in their farm operation, 24% stated “strong cash flows,” down from 32% who felt that way in September, and 20% pointed to “expansion opportunities” up from 6% in September.
Thirty-five percent of producers said they expected farmland values to rise in 2024, while 65% expected farmland values to rise over the next five years, Mintert said. As a result, the Short-Term Farmland Value Expectations Index changed little, dropping just one point from September, while the Long-Term Farmland Value Expectations Index rose three points.
Key reasons cited by producers for optimism about farmland values continued to be non-farm investor demand, followed by inflation.
Farmers indicated they were adapting to changing weather patterns, including: increased no-till (25%); changed mix of crops planted (23%); planted more drought-resistant varieties (20%); installed drainage (9%), and installed irrigation (9%).
CATTLE, BEEF RECAP
The USDA reported formula and contract base prices for live FOB steers and heifers this week ranged from $185.00 per cwt to $185.97, compared with last week’s range of $183.70 to $187.04 per cwt. FOB dressed steers, and heifers went for $290.71 per cwt to $291.57, compared with $290.70 to $293.67.
The USDA choice cutout Tuesday was down $1.34 per cwt at $300.38 while select was off $0.88 at $269.48. The choice/select spread narrowed to $30.90 from $31.36 with 167 loads of fabricated product and 39 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 $1.35 to $1.45 a bushel over the Dec corn contract, which settled at $4.68 1/2 a bushel, down 8 3/4.
The CME Feeder Cattle Index for the seven days ended Monday was $238.89 per cwt, down $0.03. This compares with Tuesday’s Nov contract settlement of $232.22, down $4.95.