Producer sentiment about the agricultural economy jumped to an all-time high in January, the latest Purdue/CME Group Ag Economy Barometer said.
The reading skyrocketed to 153 in January, up from 132 in December – the largest one month increase ever. December’s reading had been the previous barometer record. January marks the third straight month that the reading increased after it fell to 92 in October.
The barometer is based on a survey of 400 U.S. agricultural producers.
The Index of Current Conditions climbed to 118 in January from 102 in December, while the Index of Future Expectations jumped to 169 from 146 in December.
“The biggest contributor to the large uptick in optimism since October has been producers’ increasingly favorable expectations about the future,” James Mintert, the barometer’s principal investigator and director of Purdue’s Center for Commercial Agriculture, said. “This was again the case in January, but it’s worth noting that producer optimism was also supported by a perceived improvement in current conditions.”
Improvements in prices for key commodities, like soybeans, cattle and hogs, helped increase the reading.
“Another possible source of producer optimism is the potential for a new regulatory environment with the new U.S. presidential administration,” David Widmar, senior research associate and leader of research activities for the barometer, said.
Forty-one percent of producers said they expected less regulatory restrictions and 29 percent said they expected more restrictive regulations.
“Given that regulations affecting agriculture have been increasing over time, it’s noteworthy that 41 percent of the respondents expect a less restrictive regulatory environment in five years than they face today,” Widmar said.
A survey of 100 agricultural thought leaders—including lenders, retailers, consultants, academics and agribusiness professionals—revealed similar sentiments with one exception in expectations for corn and soybean futures prices.
“Overall, thought leaders were a bit less optimistic than producers, as fewer respondents expect new-crop corn futures to reach new contract highs,” Widmar said. “A larger share of thought leaders than producers expect new futures contract lows to be set for both corn and soybeans.”