Purdue University’s agriculture (MOO) economy barometer measures producer sentiment and the health of the agriculture (DBA) economy based on a monthly survey of 400 producers across the United States.
After a slight rebound in September 2016, the index fell to a reading of 92 in October, one of its lowest in 2016. This fall reflected producer pessimism regarding the long-term prospects of the US agricultural economy. When asked about their financial situations for the next 12 months, 79% of producers surveyed said they expected bad times ahead. In September, this figure was 68%.
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Once per quarter, 100 leading agricultural thinkers are surveyed so that their views can be compared to producers’ views. In the October survey, their views were more optimistic compared to producers’ views in terms of crop price expectations for 2017.
For example, 40% of leading thinkers expected soybean futures to exceed $10 per bushel compared to 30% of producers. Similarly, 13% of leading thinkers expected corn futures to fall below $3 per bushel, while 27% of producers expected the same.
While yields are improving and farmers are producing more, lower prices on produce may keep farm incomes low. This means that the equipment sales of manufacturers such as AGCO (AGCO), CNH Industrial (CNHI), and Deere & Company (DE) likely won’t improve without a stimulus to farm incomes.