Producer sentiment toward the agricultural economy in November tied with the highest reading of 2019, according to the Purdue University/CME Group Ag Economy Barometer, which is based on a mid-month survey of 400 U.S. crop and livestock producers.
Rising for a second month in a row, the barometer improved to a reading of 153 in November, up 17 points from October and matching the previous high set in July.
The Index of Current Conditions saw the biggest boost, soaring 38 points to a reading of 153 in November, while the Index of Future Expectations rose modestly, up seven points to a reading of 153, as more producers believe that current and future economic conditions will continue to improve.
"Except in the northern Corn Belt, farmers were wrapping up their fall harvest in November, and yields were better than expected earlier this year, which helped boost sentiment, along with news that the trade dispute [with China] might be settled soon," said James Mintert, the barometer's principal investigator and director of Purdue's Center for Commercial Agriculture. "Since early fall, cattle prices also rallied substantially, helping make both cattle ranchers and feeders feel better about their operations' finances."
Producer optimism about making farm capital investments also improved during November. The Farm Capital Investment Index rose to 71 in November, its highest reading since February 2018 and 12 points above the October value. This rise in the investment index coincided with a sharp move upward in the Current Conditions Index, suggesting that, as producers' perspective regarding their farm's current situation improved, they were more favorably inclined to make farm capital expenditures.
Confidence in a quick resolution to the U.S.-China trade dispute increased to its highest point since the question was first posed in March of this year. In November, 57% of respondents stated that they expect a resolution to the trade dispute soon; as recently as August 2019, only 29% had expected a quick resolution to the dispute. There was also an increase in the percentage of producers who expect the trade dispute to be resolved in a way that favors U.S. agriculture, with 80% of respondents in November expecting a beneficial outcome to the trade dispute, up from 75% in October.
The survey results also showed a more optimistic view regarding farmland values in November versus October. Although the percentage of farmers reporting that they expect to see higher farmland values in the upcoming 12 months did not change, the percentage expecting lower values declined from 22% to just 11%. When asked for their perspective on farmland values five years ahead, fewer farmers said they expect values to decline compared with the October survey, and that shift nearly matched the increase in the percentage of farmers who expect farmland values to increase.
The full November Ag Economy Barometer report is available here.