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Ag Confidence Index Released

by Katie Micik, DTN Markets Editor

OMAHA (DTN) — Farmers’ feelings about the ag economy continue to fade while agribusinesses’ sentiment took a steep dive, according to the latest results of the DTN/The Progressive Farmer Agriculture and Agribusiness Confidence Indexes.

The latest reading of the DTN/The Progressive Farmer Agriculture Confidence Index came in at 91.5, the lowest since DTN began surveying farmers in 2010. (DTN graphic by Nick Scalise)

The latest reading of the Agriculture Confidence Index, which measures the attitudes of 500 farmers across the country, came in at 91.5, the lowest since DTN began surveying farmers in 2010.

That compares to an index value of 92.7 in December and 98.8 in March 2015. An index value of 100 is considered neutral, while higher values indicate optimism and lower values reflect pessimism. Calls were made from March 1 to March 10. DTN conducts the survey before planting, before harvest and at the end of the year to gauge farmer attitudes at key times of the growing season.

“Farmers are very sour on their economic prospects,” said economist Robert Hill, the index’s creator and owner of consulting firm Caledonia Solutions. “The biggest change we see from a year ago at pre-plant time is a big surge in the portion of farmers who are calling current net farm income ‘bad,’ and a large drop-off in those calling it ‘good.’ Their view on current input prices has also eroded since last year.”

Farmers aren’t expecting a turnaround within the next 12 months, and “they hear many commodity market analysts saying it could be three more years before things bounce back,” Hill said.

The confidence index is an average of farmers’ and ranchers’ assessments of their present situations and their expectations of conditions 12 months from now. Farmers’ expectations for the year ahead, pegged at 89.5, show they’re settling in for a prolonged down cycle.

Experts estimate the average Kansas farmer’s net income for 2015 will see a loss of $30,000. The forecast is for more of the same in 2016.

“As far as overall outlook, we’re very concerned about things,” Vance Ehmke, who farms in Healy, Kansas, told DTN. “Virtually all markets are below cost of production, and we’re just really worried about that.”

One headwind is the strong U.S. dollar, which Ehmke thinks will stick around for another two years.

“I’m not looking for any major recovery at all for at least one more year and most likely two. Then we’ll see where we’re at in terms of what’s happened to land and that type of thing.”

AGRIBUSINESS BLUES

The Agribusiness Confidence Index came in at 83.4, down more than 15 points from December’s 98.3 reading and more than 21 points from the previous March’s 104.7 reading. DTN surveyed 100 local agribusinesses between Feb. 29 and March 10.

The survey included grain elevators, seed salesmen, crop insurance agents, bankers, agronomists and a wide variety of other local agribusinesses that provide goods and services directly to farmers.

“This could be one of those years where farmers might be able to strike good deals on last-minute input purchases, since the channel seems to be well-stocked with inputs that are not spoken for,” Hill said. “This makes for nervous suppliers and manufacturers, and at least a few growers may work this to their advantage.”

Only 33% of businesses consider sales to be good, while another 46% think they’re normal. Those numbers are down sharply from December’s 55% and 37%, respectively. A full 18% think sales are bad, and that’s up 11 points from December’s survey.

Location and other circumstances can affect the opinions of business owners.

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