US farmer sentiment improved in November, buoyed by rising crop prices and export optimism.
The Purdue University-CME Group Ag Economy Barometer Index climbed to 139 points in November, 10 points higher than in October and the highest barometer reading since June. Released monthly, the barometer is based on a survey of 400 farmers across the US.
The November edition of the barometer, with the farmer survey completed Nov. 10- 14, was the first since the late October announcement of a trade pact between the US and China that included provisions for increasing US exports of agricultural products to China. Meanwhile, crop prices increased sharply from mid-October to mid-November, with eastern Corn Belt corn and soybean prices climbing 10% and 15%, respectively.
Responding to a question included in every barometer survey since January 2019, just 7% of respondents said they expect US agricultural exports to weaken in the next five years, down from 14% who felt that way in October and down from 30% who expected exports to weaken back in March. In a related question, 47% of corn producers responding to the November survey said they expect soybean exports to rise over the next 5 years, while just 8% said they expect soybean exports to decline.
“The improved trade outlook appeared to contribute to this month’s sentiment improvement,” the barometer commentary said.
Most producers in November also reported that they still expect to receive a supplementary support payment from USDA, like the 2019 Market Facilitation Program (MFP), but they were less confident of receiving the payment than in September. This month, just 16% of respondents thought an MFP payment was “very likely”, down from 62% who felt that way in September. Still, when the “likely” and “very likely” response categories are combined, just over three-fourths (76%) of farmers in November said they expect an MFP payment, compared to 83% who felt that way in September.
When asked how an MFP payment would be used on their farms, 58% of respondents said they would use it to “pay down debt”, up from 52% who said an MFP payment would be used to reduce debt when surveyed in October.
But while American producers said they are more optimistic about exports, some are still wary about the Trump Administration’s use of tariffs.
More than half of respondents, 59% in November and 58% in October, said they expect that use of tariffs by the US will ultimately strengthen the agricultural economy. However, that is lower than last spring, when 70% of respondents said they expected tariffs to strengthen the agricultural economy in the long run. More producers in recent months reported being uncertain regarding the long-run impact of the US tariff policy. In October and November, 16% and 17% of survey respondents, respectively, said they were uncertain about the impact that tariff policy will have, roughly double the 8% of respondents who felt that way in April and May.
