Producers express more favorable view towards making large farm investments.
The Purdue University/CME Group Ag Economy Barometer jumped 16 points from December to January, according to the latest results. The barometer, which is based on 400 survey responses from agricultural producers across the country, rebounded to a reading of 143.
“This survey provided us with the first opportunity to measure farmers’ sentiment following the announcement of USDA’s second round of Market Facilitation Program payments and the passage of the 2018 Farm Bill,” said James Mintert, the barometer’s principal investigator and director of Purdue University’s Center for Commercial Agriculture. “It appears that these two announcements provided a significant boost to producer sentiment regarding both current and future economic conditions.”
In January, both of the barometer’s two sub-indices saw an uptick since December, with the Index of Current Conditions rising to 132 from 109 and the Index of Future Expectations rising to 148 from 135.
Increases were also seen in the Large Farm Investment Index, which measures whether producers feel this is a “good time” or a “bad time” to make large farm investments like machinery or buildings. Over the past few months, producers have been slowly expressing a more favorable view towards making large investments in their farming operations, with the index climbing 11 points from December and up 20 points from September, when the index bottomed out.
However, the same cannot be said for farmland values. According to the January survey, the percentage expecting higher farmland values over the next 12 months declined from 17% to 13% in December and, when asked to look ahead 5 years, producers expecting higher farmland values declined 2 points to 48%.
The survey asked farmers who planted soybeans in 2018 what their plans are for 2019. Two-thirds of respondents said their soybean acreage will be the same as in 2018, but 25% of soybean producers said they intend to reduce their soybean acreage in 2019 compared to last year. Looking specifically at farmers who plan to reduce their soybean acreage in 2019, 58% of them said they will reduce acreage by more than 10%, while 42% said they would reduce acreage by 10% or less. This represented a shift in attitudes among soybean farmers from last fall. Back in November, among farmers that plan to reduce their soybean acreage, 69% of them said they planned to reduce their 2019 soybean acreage by more than 10%.
Lastly, when producers were asked about soybean futures, four out of ten respondents (43%) said they expect November 2019 soybean futures to fall below $8.50 sometime between mid-January and summer 2019.