Posted on February, 5, 2025 at 10:30 am
An improvement in crop prices improved US farmers’ optimism in January even with the possibility of a looming trade war, according to the January Purdue University/CME Group Ag Economy Barometer Index. The index rose five points in January from the prior month to a reading of 141.
The barometer’s rise primarily was attributable to a 9-point rise in the Current Conditions Index. Compared to recent surveys, fewer producers this month pointed to lower crop and livestock prices as a top concern, which helped explain why producers felt better about the current situation.
“The January survey reflects a notable sense of optimism among US farmers, particularly regarding their expected financial performance in 2025,” said Michael Langemeier, the barometer’s principal investigator and director of Purdue University’s Center for Commercial Agriculture. “Recent improvements in crop and livestock prices have provided a boost to farmers’ current sentiment.”
Farmers expect conditions to improve as the Future Expectations Index remains well above the Current Conditions Index. US producers expect 2025 to be better than 2024, as the Farm Financial Performance Index is at its highest level since late 2021, said index authors.
The Investment Index had the second highest reading of the last three years, with optimistic expectations for the future behind the strength. However, it remains to be seen if this improved attitude translates into more investments.
“Although farmers are optimistic about the future, there are some clouds on the horizon,” Langemeier said. “For example, more farmers this month reported challenges in paying off operating loans compared to the last couple of years, and many producers are worried about the future of agricultural trade, with 40% of this month’s respondents saying they think a trade war is either likely or very likely.”
Over the last three months, the percentage of US producers who think a trade war is either “likely” or “very likely” has ranged from a high of 48% in December to this month’s low of 40%. Meanwhile, the percentage of producers who think a trade war is either “unlikely” or “very unlikely” rose to 29%, up from 21% in December.
Source: World Grain