U.S. Producer Optimism in December Slumped from Both November and Year Earlier

Posted on 01/08/2019 12:06 PM

Ag Economy Barometer declined moderately in December to 127, down from 134 in November. The December 2018 barometer was slightly higher than the 126 reading a year earlier, according to a survey of producers by Purdue University. This month’s decline occurred because producers’ perceptions of current conditions and their expectations for the future both drifted lower this month compared to November.

The Index of Current Conditions declined six points this month to 109 and the Index of Future Expectations fell to 135 compared with 143 in November as worries about trade with China and general weak profitability weighed on sentiment.

An interesting shift in producer perceptions took place in the past year. The December 2018 Index of Current Conditions was substantially below a year earlier, registering a year-to-year decline of 30 points. In contrast, the Index of Future Expectations were 15 points higher in December 2018 than in December 2017.

This divergence in perceptions has been especially notable since last spring as producers continue to exhibit more confidence in future conditions for their farms in the face of weakening perceptions regarding current economic conditions. That indicates long-term optimism remains for production agriculture with the rising global demand for food and fiber.

Producers interest in making large investments in their farm operations waned in December as the Large Farm Investment Index fell to a reading of 51, five points below a month earlier but still 9 points higher than in September, when it reached its lowest reading of the last three years. investment index remains well below a year ago, when it reached a reading of 70, suggesting farmers are wary of making substantial farm investments given current financial conditions on their farms.

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