U.S. farmers feel more confident about the economy and a favorable outcome to the tariff trade dispute with China, and revealed that more prevent planting acreage was registered than many thought, according to the Ag Economy Barometer.
In July, the latest reading of farmer sentiment, the Ag Economy Barometer jumped to a reading of 153, an increase of 27 points compared with June. July was the second month in a row that the barometer rose sharply, leaving the barometer 52 points higher than in May, according to The Purdue University/CME Group Ag Economy Barometer, a nationwide measure of the health of the U.S. agricultural economy.
While farmers are asked to rate current conditions and future expectations, the barometer’s July readings showed that the big driver of the overall sentiment improvement was producers’ improved perspective on current conditions.
“The Current Conditions Index rose 44 points in July, the largest one-month movement since the barometer’s inception, and was actually 57 points higher than in May. For many producers the improvement in the Current Conditions Index coincided with completion of a long, drawn out spring planting season and an improvement in crop conditions. The Future Expectations Index rose to 159, 18 points higher than in June. This month’s Ag Economy Barometer nationwide survey of 400 U.S. agricultural producers was conducted from July 15 through July 19, which was prior to USDA’s late July announcement of the 2019 Market Facilitation Program (MFP) per-acre payment rates,” the Ag Barometer researchers said in a press release Tuesday.
Prevent Planting Acres
Though the USDA will release its findings of a resurvey of farmers’ prevent planting (corn and soybean acres left unplanted in 2019) acres and enrolled instead in Federal Crop Insurance’s prevented plantings program, the Ag Barometer’s survey shows a rise in corn prevent-plant acres.
The Ag Barometer found that 25% of corn/soybean growers indicated that they are filing a prevented-planting claim on some of their intended corn acreage and 24% reported that they are filing a prevented-planting claim on some of their soybean acreage.
Furthermore, farmers participating in the survey who submitted a prevented-planting claim were asked what percentage of their intended acreage they will claim as prevented planting.
As a result, 61% of the farmers reported that their prevented planting totaled 15% or more of their intended corn acreage, and 42% said that they did not plant 25% or more of their intended acreage.
According to the Purdue University/CME Group press release, the percentage of intended acreage not planted by soybean growers who are filing a prevented planting claim was not as large as for corn, but was still substantial.
“39% of soybean growers filing a prevented planting claim said they did not plant between 15% and 25% of their intended soybean acreage; however, only 2% of producers said they were not able to plant 25% or more of their intended soybean acreage,” survey sources said.
The Ag Barometer’s July results showed that farmers are more optimistic about making large investments in their farming operations.
The Large Farm Investment Index jumped 25 points in July to a reading of 67 vs. 42 a month earlier, according to the reading. Compared to May, the index improved by 30 points, the largest two-month improvement in the index since data collection began in fall 2015.
“The increase in the investment index pushed it above where it was at the start of this year and was actually the highest reading for the index since February 2018,” Purdue University/CME Group spokespersons said.
Farmers are also significantly more optimistic about farmland values, according to the July results of the Ag Barometer.
“The percentage of producers expecting land values to increase in the upcoming 12 months jumped from just 10% in June to 21% in July, which was the highest percentage since February 2018. Producers’ longer-range view of farmland values also improved as 53% of producers said they expect values to rise over the next five years compared with 45% who felt that way in June and 39% back in May,” according to the press release Tuesday.
Regarding the settlement of the U.S., China trade tariffs, farmers’ opinions waver.
Compared with the June survey, producers were less optimistic that the trade dispute will be resolved quickly, according to the Ag Barometer press release.
“In July, 78% of producers said they thought it unlikely the trade dispute would be resolved by September 1, compared with 68% who felt that way in June. Just 15% thought it likely the trade dispute would be resolved by September 1 in July compared with 32% of respondents who felt that way in June,” survey authors wrote.