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Producers confident at beginning of new year

Photo Courtesy of Purdue University

A monthly report indicates producers entered the new year with more confidence.

The Purdue University/CME Group Ag Economy Barometer shows an increase in producer sentiment heading into the new year. David Widmar, agricultural economist with Purdue University, says producer sentiment climed in January, hitting 135 points.

“It’s worth noting that we’ve kind of returned to the normal trading range we were in throughout most of 2017, between 130 and 140 points,” Widmar said. “More broadly speaking, producer sentiment is much stronger than what it was in late 2015 and throughout most of 2016, but we traded on 100 points.”

Widmar says the uptick in sentiment was driven by an improvement in both of the barometer’s sub-indices: the Index of Current Conditions and the Index of Future Expectations.

The Index of Current Conditions has slowly, but steadily increased since August 2016. The index reached an all-time high in January of 2018 at 144 points, five points higher than months previous.

“Producers are telling us they’re feeling better about their current condition today than what we’ve seen over the last 18 months,” Widmar said. “It’s still a tough farm economy. Four out of ten producers are telling us they’re in a worse financial state today than they were a year ago, but that’s improved (from) the eight out of ten producers that were telling us that eighteen months ago.”

The Index of Future Expectations also rebounded in January, after turning lower later in 2017. Producer’s future expectations, off from their peak in January of 2016, hit 135 points. Widmar says producers today seem more concerned about the upcoming months than they were a year ago.

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