Chart courtesy of Purdue/CME Group Ag Economy Barometer/David Widmar.
Ag producer sentiment dropped seven points in November, signaling a slump in U.S. agricultural producers’ confidence compared to the prior month. At a reading of 128, the measure of producer optimism in November was the second weakest observed during 2017 and stood just 4 points above the 2017 low of 124, set in March.
“The Index of Future Expectations declined 10 points compared to October as the index fell to 127,” the survey said. “The decline in optimism about future economic conditions stands in contrast to producers’ assessment of current economic conditions, however, as the Index of Current Conditions reading of 129 in November was unchanged from October.”
Based on a monthly phone survey of 400 agricultural producers from across the U.S., the latest results, although indicating producers were less confident about the agricultural economy than in October, still suggest agricultural producers remain more optimistic than they were prior to the fall 2016 election.
The percentage of producers expecting “bad times” for the agricultural economy in the year ahead climbed to 62% on the November survey. The percentage of producers expecting bad times for the agricultural economy has been increasing since July, when it hit a summertime low of 50%. At the same time, the percentage of producers expecting good times for the agricultural economy in the upcoming year dipped to 28% in November, down from 35% in October.
In the November survey, a record low percentage (17%) of respondents indicated they expect farmland prices in their area to decline over the next 12 months. The decline in producers expecting lower farmland prices was accompanied by a small uptick in the share of respondents (21%) expecting farmland values to turn higher in the year ahead. Notably, for the first time in survey history, more producers expect farmland values to increase in the upcoming year than decline.
“Producer expectations regarding farmland values appear to have strengthened somewhat as more producers expect farmland values to increase than decline in the next 12 months, the first time this has happened since data collection began in October 2015,” the survey said. “More broadly, however, the biggest shift in producer expectations regarding farmland values seems to be a movement away from an expectation of weaker values to an expectation that values are likely to remain unchanged over the next year.”
Throughout 2017, questions about agricultural trade have been posed to producers to gain insight into how proposed policy changes are affecting producer sentiment. The survey showed that with respect to agricultural trade, producers continue to indicate that exports are very important to the U.S. agricultural economy. Producers also indicate that NAFTA is important to the agricultural economy, but producers are not as confident of NAFTA’s importance to agriculture as they are of exports in general.