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Ag Confidence Index: Optimism Today Turns to Caution Later

Gregg Hillyer
By  Gregg Hillyer , Progressive Farmer Editor-in-Chief
(DTN/The Progressive Farmer Agriculture Confidence Index)

The Roman poet Horace once said, "Seize the day, trusting as little as possible in the future." That seems to be the philosophy of farmers who responded to the latest edition of the DTN/The Progressive Farmer Agriculture Confidence Index (ACI).

The overall index is an optimistic 124, up 30 points from spring 2020 but down 22 points from the December survey. The drop is somewhat puzzling given the strong corn and soybean prices, and the positive news of the growing number of Americans receiving the coronavirus vaccine. As DTN Editor In Chief Greg Horstmeier reports, the reason for that decline since December seems to be broad concern for the future.

During the telephone survey period (March 17 through 31), farmers felt very optimistic about current conditions. The present situation score was 186, up from December's positive 177 and a whopping 131 points above spring 2020. However, for the future-expectations score, farmers rated their hopes for the year ahead at a slightly pessimistic 90, down 39 points from December and up only slightly from the 73 of a year ago.

Index numbers above the baseline of 100 indicate optimism -- the higher the number, the higher that optimism. Scores below 100 are considered pessimistic. The ACI is created by melding responses to how farmers feel about their present situation and what they expect a year from now.

What are farmers concerned about? Drought, no doubt, is on many growers' minds. DTN long-range weather forecasts continue to point to a La Niña condition through the 2021 growing season. La Niña typically brings hotter, drier conditions to much of the central and western Corn Belt. Western and Northern Plains states are already in drought conditions.

Also likely weighing on farmers' minds is the new Biden administration's proposed national infrastructure overhaul and climate change policies. Farmers applauded when former President Donald Trump pulled the U.S. out of the Paris Agreement in 2017. Biden has since reversed Trump's action. Farmers as a group remain skeptical of climate science and fear increased regulations that could come with meeting world goals.

Regionally, Midwest farmers were slightly more positive, with an overall index of 139, stemming from a present-situation score of 196 and a future-expectations score of 98. Southwest farmers were the most pessimistic, with an ACI of a moderate 101, based on a current score of 157 and future of a very pessimistic 77.

Those surveyed who identified as crop farmers had a confidence index of 128, down 28 from December but up 62 from 2020. Their present-situation score was the highest of any segment, 193, up 18 from December, with their future-expectations score coming in at the same 90 as the broader group. Livestock producers had an index of 116, a present-situation score of 175 and a future-expectations score of 89.

A key feature of the current mood in agriculture is the difference between farmers and the agribusinesses that serve them. DTN also surveys 100 agribusinesses to create the DTN/The Progressive Farmer Agribusiness Index.

The overall agribusiness index is 123, a record, up 13 points from December and 19 points from spring 2020. The previous record, 119, was in the farmer buying-spree days of spring 2011. Agribusinesses also are much more optimistic about the future, turning in a 122 for expectations a year from now, also a record. Farm-equipment companies have been reporting increased sales, which, along with higher fertilizer prices (see DTN's weekly fertilizer price reports on our subscription products) and strong sales of seed and other inputs are likely fueling the agribusiness optimism.

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-- Write Gregg Hillyer, 2204 Lakeshore Dr., Suite 415, Birmingham, AL 35209, or email gregg.hillyer@dtn.com.

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Gregg Hillyer