by Whitney Flach
The Purdue University/CME Group Ag Economy Barometer indicated that farmer sentiment improved during September as the fall harvest started, but the Ag Economy Barometer remained well below its early summer reading. The barometer is based on a monthly survey of 400 agricultural producers. The Ag Economy Barometer was moderately above the August value, being 101 this September, but below the July peak value.
Agricultural producers are pessimistic about current conditions, but express optimism about future economic conditions in agriculture.The Index of Future Expectations, was at 109 in September. This is well above the base period value, and is the second-highest reading observed since the start of the 2016 crop-growing season in April. The Index of Current Conditions reading of 83 was well below the base-period average of 100 and was the fourth-lowest value since data collection began in fall 2015.
Over the course of the next year, producers are a bit more optimistic about the future direction of prices for livestock and livestock products, especially beef cattle and milk, than at any time in the last year. Interestingly, the gap between expectations for good times in crops versus livestock has narrowed appreciably since late 2015.
Although expectations for long-term profitability in livestock declined among producers surveyed in September, their perspective on two key short-run indicators for livestock profitability improved. This survey also revealed that fewer producers expect higher, and more producers expect lower, animal-feed ingredient prices than on the June survey.
Finally, the September survey indicates producers have a larger portion of their 2016 crop production unpriced than what is typical at this time of year, suggesting an expectation for positive crop storage returns among producers.
Jim Mintert Director of the center for commercial agriculture said, “An improvement in the index we saw, was peoples expectations about the future. It didn’t change in the midst of the current issues with prices. There is optimism about the future. However, people are pretty pessimistic about current conditions.”
