The Purdue University/CME Group Ag Economy Barometer dropped 9 points in December as both the current conditions and future outlook indexes fell.
The overall barometer reading dropped to 136, with the Current Conditions index falling 13 points to 100. However, while the Current Conditions Index declined this month, it remains 24 points above its low in September and 5 points higher than in October.
The Index of Future Expectations also fell in December, dropping 8 points to 153. However, it remains 59 points above its September low and 29 points higher than the October reading.
While sentiment regarding the current situation and the one-year outlook was more cautious than in November, expectations for the agricultural sector over the next five years were more positive.
Specifically, the percentage of producers that are optimistic about U.S. agriculture over the next five years increased to 57 percent, from 52 percent in November and 34 percent in October. This optimism extended across both the crop and livestock sectors, with 4-point and 5-point increases, respectively.
In contrast, views on the near-term outlook were less favorable. Some 51 percent of farmers expressed concern about the U.S. agricultural economy over the next 12 months, an increase from 40 percent in November.
Further, the Farm Capital Investment Index fell 7 points to a reading of 48 in December. The weakening in investment sentiment was reflected in a lower percentage of farmers who believe it is a good time to invest, dropping to 17 percent from 22 percent in November. Further, the percentage of producers who viewed it as a bad time to invest increased to 69 percent, up from 67 percent.
This dip in investment sentiment mirrored the decline in the Farm Financial Performance Index, which fell 8 points in December to 98.
Finally, the Short-Term Farmland Value Expectations Index dropped 5 points to a reading of 110, following a similar 5-point decrease the previous month. Despite these two consecutive decreases, the short-term index remains well above its low of 95 in September.
In addition, the Long-Term Farmland Value Expectations Index, which reflects producers’ outlooks for farmland values over the next five years, fell 1 point to 155.