Despite some bigger challenges facing farmers in the next few months, e.g., higher input costs, higher cash rents, etc., they continue to be optimistic about their future, according to the most recent DTN/The Progressive Farmer Agriculture Confidence Index. This survey, conducted quarterly, is based on farmers’ and ranchers’ attitudes toward farm profitability. Producers are asked about their current economic situation and whether they think that situation will be better or worse in the next 12 months.
One of the biggest surprises in the survey was the positive outlook of livestock producers, the result of lower grain prices coupled with higher livestock prices. For years, the livestock sector was battered while the grain farmers prospered and it appears that that trend has finally changed.
The attitude of grain farmers is a little more cautious, especially compared with a year ago. The underlying concern remains the cost of inputs for 2012. Current crop prices are also worrisome, but there’s still plenty of time to sell 2012 grain. The cost of producing the crop, on the other hand, has escalated and will soon be locked in at much higher levels. Fortunately, lower interest rates and stronger balance sheets are helping to mitigate the cost issue somewhat.
As has been discussed here on numerous occasions, land prices often follow farmers’ expectations for future profitability. Though not as confident as only 12 months ago (after all, farmers are pessimistic by nature), I do not foresee their interest in land abating any in the near future.
