Producers expressed lower sentiment toward the agricultural economy in November on the heels of fall harvest, according to the Purdue University/CME Group Ag Economy Barometer.

The November barometer reading was 128, a seven-point decline from 135 in October and the second-lowest reading of 2017. The barometer is based on a monthly survey of 400 agricultural producers from across the country.

"The November slide in sentiment was primarily driven by reduced optimism about the future," said James Mintert, the barometer's principal investigator and director of Purdue University's Center for Commercial Agriculture. "We saw the Index of Future Expectations fall by 10 points, while the barometer's other sub-index, the Index of Current Conditions, held steady at 129."

In one of the survey questions, producers were asked whether they thought the next 12 months would be good times or bad times financially for the agricultural economy as a whole. Sixty-two percent said they think the next 12 months will be bad times financially in U.S. agriculture. The percentage of producers expecting bad times in agriculture has been increasing since July, when 50% of survey respondents said they were expecting bad times.

Throughout 2017, survey respondents have been asked about agricultural trade in an effort to understand how proposed policy changes might be affecting producer sentiment. When asked about the importance of agricultural exports to the overall U.S. agricultural economy, 96% rated them as important.

The survey also asked producers about the North American Free Trade Agreement (NAFTA).

"When we asked producers about NAFTA specifically, they were less confident about its importance to the U.S. agricultural economy," Mintert said. "While 70% did rate it as important, a substantial 20% rated NAFTA as neutral, meaning neither important or unimportant."

On a regular basis, the survey asks respondents about their expectations for farmland prices. For the first time in survey history, more producers said they expect higher farmland values than lower farmland values, with 21% anticipating farmland values to turn higher in the next 12 months, whereas 62% think values will remain unchanged and 17% expect lower farmland values.

Producers were also asked to provide their expectations for farmland values over the next five years. In November, 46% of producers said they expect farmland values in their area to be higher, whereas only 9% expect lower farmland values five years from now. The report noted that, interestingly, the percentage of respondents expecting higher farmland values in five years was more than double the percentage of producers expecting higher values in 12 months.

“Responses to this question imply that there remains strong underlying support for farmland values among producers, even though margins in crop agriculture have been very narrow for several years in a row,” the authors noted.