Livestock Sector Optimism Fuels a Modest Rise in Farmer Sentiment in October

By Morgan French

U.S. farmer sentiment edged slightly higher in October, with the Purdue University/CME Group Ag Economy Barometer rising 3 points to a reading of 129. The increase was fueled primarily by a rise in the Index of Current Conditions, which climbed 8 points to 130, while the Index of Future Expectations was virtually unchanged at 129, just 1 point higher than in September.

Farmers’ appraisals of current conditions highlight a “tale of two economies”: Livestock producers remain highly optimistic about their farm conditions, partly supported by record-high profitability in the beef sector, while crop producers report a more pessimistic view of the current situation on their farms due to low profit margins across major crop enterprises. The barometer survey took place Oct. 13-17.

The Farm Financial Performance Index dropped to 78 in October, 10 points lower than in September, reflecting a sharp decline in farmers’ financial performance expectations over the past few months.

In May, the index stood at 109, 31 points above the October reading, before steadily falling through the spring and summer. Similar to the Index of Current Conditions, there continues to be a disparity between crop and livestock producers: Crop farmers expect their financial performance to fall well below that of a year ago, while livestock producers anticipate results similar to the previous year. Despite the overall decline in financial expectations, the Farm Capital Investment Index increased by 9 points to 62, boosted once again by optimism among livestock producers.