Farmers Indicate Greater Willingness to Invest in Equipment

Volatility continues in the monthly survey administered by Purdue University and the CME Group. The Ag Economy Barometer rebounded in October to a reading of 136—a 22-point increase in the index compared to September and a level nearly equal to a year ago.

This bounce was underpinned by improved perceptions of both current and future conditions, although it is a relatively positive view of the future that most influenced the higher index.

This month’s Index of Future Expectations reading returned to the peak attained this spring—before the trade conflict with China erupted. In contrast, the Index of Current Conditions, even with this month’s rebound, remains well below the levels recorded in winter and spring.

Month-to-month shifts in barometer readings continue to be significant as U.S. agricultural producers are buffeted by shifts in major commodity prices and news about trade with key partners.

Producers’ views with respect to making farm investments improved in October, but they remain cautious. The percentage of producers indicating now is a bad time to make large investments declined in October, while the percentage that said now is a good time to make large investments rose.

Combining these two responses into a diffusion index that characterizes farmers’ perspectives on making investments yielded a reading of 52 in October, up 10 points compared to September, but still below readings from last winter and spring, which were in the 60s and low 70s.

Looking ahead to 2019 planting intentions, nearly one out of five farmers who grew soybeans in 2018 said they plan to reduce their soybean acreage next year.