WEST LAFAYETTE — There was a modest improvement in producer sentiment, according to the December Purdue University/CME Group Ag Economy Barometer.

The barometer increased 7 points from November to a reading of 174. Both of the barometer’s sub-indices — the Index of Current Conditions and the Index of Future Expectations — also were higher in December than in November. The Index of Current Conditions climbed 15 points to 202, and the Index of Future Expectations increased by 5 points to a reading of 161.

The Ag Economy Barometer is calculated each month from 400 U.S. agricultural producers’ responses to a telephone survey. This month’s survey was conducted Dec. 7-11.

“The rise in the Ag Economy Barometer was primarily driven by farmers’ perception that the current situation on their farms really improved. The sharp rise in the Index of Current Conditions is correlated with the farm income boost provided by the ongoing rally in crop prices. That appears to be the driving force behind producers’ optimism,” said James Mintert, the barometer’s principal investigator and director of Purdue’s Center for Commercial Agriculture.

Producers were noticeably more inclined to think now is a good time to make large investments in their farming operations than in November. The Farm Capital Investment Index increased 13 points in December to a record high of 93. The percentage of farmers expecting to increase their machinery purchases in the upcoming year rose 5 points to 15% in December, while the percentage expecting to reduce their purchases declined by the same amount.

Farmers also were bullish about farmland values and cash rental rates. In December, the percentage of farmers expecting farmland values to rise over the next year increased 9 points from November to a reading of 35. The percentage expecting farmland values to rise over the next five years increased 11 points from November to a life of survey high 65%.

The full Ag Economy Barometer report is online at purdue.ag/agbarometer. The site also offers additional resources — such as past reports, charts and survey methodology — and a form to sign up for monthly barometer email updates and webinars.

Each month, the Purdue Center for Commercial Agriculture provides a short video analysis of the barometer results, available at purdue.ag/barometervideo, and for even more information, people can check out the Purdue Commercial AgCast podcast. It includes a detailed breakdown of each month’s barometer, in addition to a discussion of recent agricultural news that impacts farmers.

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