Farmer’s Outlook Improves In November, Ag Barometer Says

(Agriculture.com) – Agricultural producer sentiment about the industry’s economy improved substantially in November, in part because of soybean and corn futures price rallies, according to the December 6 report of the Purdue/ CME Group Ag Economy Barometer.

The barometer, which is based on a monthly survey of 400 U.S. agricultural producers, jumped to 116, the highest reading since October 2015 and up 24 points from the October 2016 reading of 92.

The shift was largely driven by the Index of Future Expectations, one of the barometer’s components, which climbed to 130 in November, up from 95 in October. The Index of Current Conditions increased only slightly, from 85 in October to 87 in November.

“Producer sentiment about the future climbed partly because of a significant rally in futures prices for corn and especially soybeans this fall,” said Jim Mintert, barometer principal investigator and director of Purdue’s Center for Commercial Agriculture. “The rally not only included nearby futures contracts, but also extended to prices for both the 2017 and, to a lesser extent, 2018 harvests.”

The Ag Economy Barometer jumped an unexpected 24 points in November as soybean and corn futures prices rallied.

Recent November 2017 soybean futures prices were as much as 13% higher than August lows. Despite record corn and soybean harvests this fall that were expected to cause prices to decline, strong export demand and uncertainty around the South American crop offered support in November.

It’s important to note that the jump in producer sentiment had more to do with decreased pessimism about the future of the agricultural economy than it did with a notable shift toward a positive outlook, Mintert said.

Each month producers are asked about their expectations for the agricultural economy over the next five years. The share of respondents expecting “bad times financially” declined dramatically from 56% in October to 42% in November. However, the share of respondents expecting “good times financially” increased just 2% in the same period, from 35% to 37%.

“These responses suggest that producers, as a whole, are not necessarily more optimistic; rather, they are less pessimistic about the future than earlier in the year,” Mintert said. “The shift in producer sentiment doesn’t indicate a prosperous time in agriculture, as more producers continue to expect bad times than good.

“One way to look at November’s improvement is that it reveals a slightly more optimistic outlook regarding what could still be characterized as a difficult time for many agricultural producers,” he said.

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