KANSAS CITY – Agricultural producers’ sentiment surged in November on post-harvest grain price rallies, according to a monthly survey reflected in the Purdue University/CME Group Ag Economy Barometer.
“Agricultural producers’ sentiment improved markedly in November, reaching the highest level since October 2015,” Purdue University agricultural economists said concerning the latest results. “At 116, the (barometer) was considerably higher than October 2016’s value of 92 and also compared favorably with the early summer reading of 112. Reduced pessimism about the future, motivated in part by improving corn and especially soybean prices, was the driving force behind the improvement in this month’s barometer.
“Importantly, the price rally included not just nearby futures contracts, but extended to prices for both the 2017, and to a lesser extent, the 2018 harvest. The impact of the price rally was magnified for many corn and soybean producers by their harvest of record yields in 2016.”
The monthly reading is based on a survey of 400 agricultural producers from across the country and is considered a measure of the health of the U.S. agricultural economy.
The barometer has two component indexes: the Index of Future Expectations and the Index of Current Expectations. The November increase was attributed primarily to a boost in the Index of Future Expectations, at 130 compared with 95 in October. The economists noted the November jump in the index was driven by fewer respondents with a negative outlook rather than a shift toward a positive outlook for the agricultural economy, suggesting producers overall are not necessarily more optimistic but rather are less pessimistic about the future. Sixty-one per cent of producers indicated they expect “bad times financially” for the general agricultural economy over the next 12 months.The Index of Current Expectations continued a slow but steady climb from a recent low of 80 in August to a reading of 87 in November.