Livestock Prices Push Down Ag Economy Index in May

06:00PM Jun 08, 2016
( Purdue/CME Ag Economy Barometer )

But producers still see farmland as worthwhile investment.

Concerns about livestock prices took some air out of the Purdue/CME Ag Economy Barometer, pushing the new index down to 97 in May from April’s 106.

“During May, 36% of respondents reported an expectation of widespread 'good times' for livestock producers over the next five years, which was well below the 46% expecting good times when surveyed in April. Recent declines in livestock prices, especially feeder cattle and live cattle, could help explain the decline in producers’ sentiment regarding the livestock sector,” according to the report for the monthly barometer, which was launched in April.

The situation was very different for row-crop farmers, who are currently enjoying a bullish trend in corn and soybeans. “The relatively large shift in producer sentiment regarding the livestock sector stands in contrast to the sentiment regarding the crop sector, which exhibited only a modest decline from April to May,” the report said.

Farmland Prices

The May survey also asked producers about farmland prices and the value of such land. While their expectations for price movements varied—just 33% said in May that they thought farmland prices would drop in the next 12 months, compared to 46% earlier this year—more than half (52%) of producers continue to see farmland as a worthwhile investment for the years to come.

“While it might seem paradoxical that a majority of farmers continue to view farmland as a good investment when so few producers expect farmland values to increase over the next 12 months, it’s likely attributable to the time horizon,” the report explained. “Although most farmers do not view the short-run prospects for farmland prices favorably, their long-run perspective continues to be relatively positive.”

What do you think will happen with farmland prices in the next 12 months? Let us know in the comments. 

AgBarometer Shows Less Optimism Among Farmers

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