That is the finding of the latest agri economy barometer report , generated by economists at Purdue University along with the CME Group.
The report asks a selection of 400 producers of animals, feed crops and other field crops questions about the industry, markets and their future expectations.
“We’re using math to try and understand how people are feeling,” said David Widmar, senior research associate and leader of research activities for the barometer. “Anecdotally we’ve been doing this for years, this is a tool and a way that we could partner and measure this and drill down to understand what’s been going on.”
Up until recently, sentiment reflected in the data would typically follow the commodity markets, he said. However, Widmar now sees correlation between current positive outlook and an expectation that the new administration will be business friendly.
“The last three months have been quite different,” he told FeedNavigator.
Sentiment for the future rose to 169, up from 146 last month, said the economists.
Producers have positive expectations for future feed crop prices, said Widmar. “In the latest barometer, 38% said they could see a new contract high in corn prices, above $4.25 a bushel, that’s a really strong price when we think about producers’ crop budgets, [and] we also see about the same share, 45%, see new contract highs for soybeans."
“The second element that could be contributing to this is a favorable business climate,” he said. More than 70% of respondents said they expect to see the same or less restriction on agriculture in five years, he added.
However, there were some findings show a less optimistic view of all things agribusiness related, he said.
Although a larger amount of producers, 39%, expect to be better off in a year, the majority do not. Nevertheless, in October, only 17% said they expected to be better off in a year.
A majority, 58%, of those who responded in January found that their farm operations financial conditions were worse than they had been the previous year, however that amount dipped from last month when 65% said that.
“It’s slightly better than last year, there are some improvements in the balance sheet.”
Thought leader data
Results from a select group of 100 agricultural thought leaders whose responses are captured quarterly, as opposed to every month, were less positive than producers, said Widmar. However, they also were less negative than they have been in the past.
On the sentiment index, the group scored a 134, the economists reported. The previous high score for the group was 119, from April 2016, and the current result was 50 points above the October response.
The group includes agriculture lenders, manufacturers, researchers, retailers, academics and others who work with producers on a regular basis, said Widmar. “One of the big takeaways is their sentiment was the lowest in October and now we’re at the highest,” he added.
Although sentiment about the agricultural sector improved, the group was less certain than producers about the potential for a rebound in feed crop prices, he said.
About 30% of the group thought corn would exceed past contract high prices, while 43% thought it would drop below past market lows, the economists said. And 43% thought soybeans would move past previous contract highs, while 51% thought prices would dip below $9 a bushel.