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U.S. Farmer Reading on Future Drops 2 Points

Forward-looking sentiment on agriculture erodes.

U.S. farmers have falling optimism for 2018, according to monthly survey.

The December reading of the Purdue University/CME Group Ag Economy Barometer released Tuesday indicates a 2-point drop from November’s 128 reading and the second straight month of declines in producers’ sentiment toward the health of the agricultural economy.

The barometer is based on a monthly survey of 400 agricultural producers from across the country.

The decline was driven by producers’ thoughts on the future, as measured by the Index of Future Expectations – one of the barometer’s two subindices, according to the Purdue University press release. The Index of Future Expectations fell 7 points in December to 120. The index has fallen 15 points just since October.

“Two specific survey questions capture the recent erosion of producers’ forward-looking sentiment,” stated James Mintert, the barometer’s principal investigator and director of Purdue University’s Center for Commercial Agriculture.

Mintert added, “The share of producers expecting ‘better’ financial positions for their farms fell to just 20% in December, while the share expecting ‘worse’ financial positions climbed to 30%. Both of these responses are the least optimistic levels in more than a year.”

The December Ag Barometer also shows a similar trend occurred with regard to the overall agricultural economy.
“Sixty-three percent of respondents said they ‘expect bad times’ over the next 12 months,” the press release stated.

Bright Spot

Mintert explained that the December report showed improvement in the Index of Current Conditions, which jumped 10 points to 139.

“That reading was supported by subtle changes in producers’ thoughts about large farm investments,” Mintert said.

“When asked if now is a good time to buy large investment items, such as buildings or machinery, 32% of respondents said it was,” he said. “That’s marked improvement from the just 21% of respondents who thought the timing was right for large investments back in August 2017.”

The August reading was a survey low, while the December reading is the second-highest, according to Mintert.
That said, 62% of respondents still believe that now is a bad time for large farm investments.

Read the full December Ag Economy Barometer report at http://purdue.edu/agbarometer. This month’s report includes additional information about farmers’ sentiments toward bringing a new generation into their farming operations.

 

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