Post-election confidence in the U.S. economy, the new presidential administration and improvements in prices for key commodities, including soybeans, cattle and hogs, are several factors driving up farmer sentiment, according to the results from the Purdue/CME Group Ag Economy Barometer.
Farmer sentiment in January hit a record high for the second consecutive month. The January reading of 153 is the highest reading in barometer history. The 21-point jump from December represents the largest month-over-month change in sentiment, according to Feedstuffs.
The rise in the Ag Economy Barometer during January marked the third consecutive month the barometer moved higher. The barometer is based on a monthly survey of 400 U.S. farmers and ranchers.
“The biggest contributor to the large uptick in optimism since October has been producers’ increasingly favorable expectations about the future,” principal investigator of the barometer and director of Purdue’s Center for Commercial Agriculture James Mintert said. “This was again the case in January, but it’s worth noting that producer optimism was also supported by a perceived improvement in current conditions.”
The new regulatory environment with the new U.S. presidential administration is also another possible source of farmer optimism, according to David Widmar, senior research associate and leader of research activities for the barometer.
Nearly 41 percent of the farmers surveyed said they thought regulations affecting agriculture would be less restrictive in five years. Only 29 percent believe regulations will be more restrictive.
“Given that regulations affecting agriculture have been increasing over time, it’s noteworthy that 41 percent of the respondents expect a less restrictive regulatory environment in five years than they face today,” Widmar told Feedstuffs.
The improvement in the Ag Economy Barometer was subdued by the fact that more than half of the survey respondents felt that their farm operation’s financial status was worse off today than a year earlier. More than 60 percent of respondents expect their financial condition to be worse a year from now.
Another quarterly in-depth survey conducted by Purdue barometer researchers also surveys 100 agricultural thought leaders, including lenders, retailers, consultants, academics and agribusiness professionals, about their economic expectations.
The results of the thought leader survey were similar to the results of the farmer survey. One difference between farmer and thought leader sentiment was in expectations for new-crop corn and soybean futures prices, Widmar said.
“Overall, thought leaders were a bit less optimistic than producers, as fewer respondents expect new-crop corn futures to reach new contract highs,” Widmar said. “A larger share of thought leaders than producers expect new futures contract lows to be set for both corn and soybeans.”
Widmar told Brownfield there are distinct differences in sentiment between the livestock and crop sectors.
“What we saw most recently is that there is more optimism towards livestock agriculture than there is crop agriculture,” Widmar said. “And that’s been the case for most months of our survey.”