The Purdue University/CME Group Ag Economy Barometer improved 15 points to a reading of 136 in October. The upswing is attributable to 15-point increases in both of the barometer’s sub-indices. The Index of Current Conditions rose to a reading of 155 and the Index of Future Expectations rose to a reading of 146. The barometer is based on a mid-month survey of 400 U.S. crop and livestock producers.
There are a couple of trade deals with major trading partners in the hopper that have major implications for U.S. agriculture. As a result, questions were added to this month’s barometer survey to gauge whether farmers feel these agreements are important to the U.S. agricultural economy.
The U.S.-Mexico-Canada Trade Agreement is still waiting on approval by the U.S. Congress. When asked whether they felt the trade deal was important to the U.S. agricultural economy, 96 percent of producers indicated it was either important or very important. However, only 55 percent expect it to be approved by Congress soon. At the same time, 97 percent of producers felt a recently announced trade deal with Japan was also important or very important to U.S. agriculture.
Since last spring, we have been tracing producers’ perceptions regarding the soybean trade dispute between the U.S. and China–specifically, whether they think the dispute will be resolved soon and the outcome will ultimately benefit U.S. agriculture. In October, 51 percent of respondents said that an imminent resolution was unlikely, which is down from a reading of 59 percent in September and 71 percent in August. At the same time, 75 percent of farmers in the October survey said they expect the final outcome will ultimately prove beneficial to U.S. agriculture. October marked the fourth month in a row that over 70 percent of producers said they expected a beneficial outcome to the trade dispute.
Farmers were more optimistic about farmland values increasing, and less inclined to think cash rental rates would decline, than in September. When asked to look ahead in the farmland market, both 12 months and 5 years into the future, more producers said they expect farmland values to increase than in September. Meanwhile, just 14 percent of producers expect cash rental rates to decline in the upcoming year compared to 22 percent who thought a decline likely when surveyed in September. The Farm Capital Investment Index also saw an uptick, rising 12 points in October, after a two-month decline, as farmers were more favorably disposed toward making large investments in their farming operations.
