Farmer sentiment about the agricultural economy rose 24 points from last month’s low to 116 and reached its highest level since October 2015, according to Purdue/CME Group’s Ag Economy Barometer Dec. 6 report.
The barometer is based on a monthly survey of 400 U.S. agricultural producers across the country. Factors driving the improvement in this month’s barometer were improving corn and soybean price rallies.
“Producer sentiment about the future climbed partly because of a significant rally in futures prices for corn and especially soybeans this fall,” Jim Mintert, barometer principal investigator and director of Purdue’s Center for Commercial Agriculture, said in a statement. “The rally not only included nearby futures contracts, but also extended to prices for both the 2017 and, to a lesser extent, 2018 harvests.”
The price rally occurred despite record-large harvests of both corn and soybeans this fall, which had been expected to put downward pressure on futures prices.
November soybean futures rose as much as 13 percent higher than August lows. Strong export demand and uncertainty around the South American crop gave futures a boost.
“The combination of strengthening commodity prices and record yields is improving the crop revenue picture for producers, providing support not only to their perspective on near-term economic conditions, but also fueling a change in perspective about the future,” according to the report.
The number of respondents expecting “bad times financially” declined dramatically from 56 percent in October to 42 percent in November. The share of respondents expecting “good times financially” increased just 2 percent in the same period, from 35 to 37 percent.
“These responses suggest that producers, as a whole, are not necessarily more optimistic; rather, they are less pessimistic about the future than earlier in the year,” Mintert said.
“Perhaps one way to view November’s improvement in producer sentiment is that it reveals a slightly more optimistic outlook regarding what could still be characterized as difficult time for many agricultural producers,” Mintert added.
Read the full November report at http://purdue.edu/agbarometer.