Farmer sentiment jumps as harvest winds down

Yields were better than expected earlier this year

Agricultural economy sentiment tied with its highest reading of 2019, according to the November Purdue University/CME Group Ag Economy Barometer. Rising for a second month in a row, the barometer improved to a reading of 153 in November, up 17 points from October and matching the previous high set in July.

The Index of Current Conditions saw the biggest boost, soaring 38 points to a reading of 153 in November, while the Index of Future Expectations rose modestly, up 7 points to a reading of 153, as more producers believe that current and future economic conditions will continue to improve. The barometer is based on a mid-month survey of 400 U.S. crop and livestock producers.

“Except in the northern Corn Belt, farmers were wrapping up their fall harvest in November and yields were better than expected earlier this year, which helped boost sentiment along with news that the trade dispute might be settled soon.” said James Mintert, the barometer’s principal investigator and director of Purdue University’s Center for Commercial Agriculture. “Since early fall, cattle prices also rallied substantially, helping make both cattle ranchers and feeders feel better about their operations’ finances.”

Producers’ optimism about making farm capital investments also improved during November. The Farm Capital Investment Index rose to a reading of 71 in November, its highest reading since February 2018 and 12 points above October’s index value. This month’s rise in the investment index coincided with a sharp upward move in the Current Conditions Index, suggesting that, as producers’ perspective regarding their farm’s current situation improved, they were more favorably inclined toward making farm capital expenditures.

Confidence in a quick resolution to the U.S. and China trade dispute increased to its highest point since the question was first posed in March of this year. In November, 57 percent of respondents stated they expect a resolution to the trade dispute soon; as recently as August of 2019, only 29 percent had expected a quick resolution to the dispute. There was also an increase in the percentage of producers who expect the trade dispute to be resolved in a way that favors U.S. agriculture. In November, 80 percent of respondents said they expected a beneficial outcome to the trade dispute with China, up from 75 percent in October.

Read the full November Ag Economy Barometer report at https://purdue.ag/agbarometer. This month’s report also looks at producers’ views on farmland values at both 12-months and 5-years out. The site also offers additional resources – such as past reports, charts and survey methodology – and a form to sign up for monthly barometer email updates and webinars. Each month, the Purdue Center for Commercial Agricultural provides a short video analysis of the barometer results, available at https://purdue.ag/barometervideo.

The Ag Economy Barometer, Index of Current Conditions and Index of Future Expectations are available on the Bloomberg Terminal under the following ticker symbols: AGECBARO, AGECCURC and AGECFTEX.