U.S. agricultural businesses are more optimistic about their economic situation than in November, according to a survey-based index produced by industry researcher and publisher DTN/The Progressive Farmer.
Farmers, veterinarians and sellers of seed, chemicals, feed and machinery gave their economic circumstances an index score of 111.1 as of mid-February, up from 100.2 in November, DTN said today in a statement. The result was down from 113.2 a year earlier. Eighty-seven percent of respondents expected their profitability a year from now to be little changed or better, while 13 percent expect it to be worse.
Farm profits will fall 6.5 percent to $91.7 billion this year from last year’s record, the U.S. Department of Agriculture said Feb. 13 in a report. Still, agribusinesses don’t expect a crash in the farm economy even as income growth slows, said Katie Micik, an analyst at DTN, a unit of Madrid-based Telvent GIT SA.
Years of record and near-record profits mean farmers may be more willing to invest in machinery and inputs, Micik said. “You’ve got money to buy a tractor, or you have more to pay for fertilizer,” she said. Unlike the November survey, conducted shortly after MF Global Holdings Ltd. declared bankruptcy Oct. 31 and left farmers nationwide with missing investment money that may never be recovered, producers now are focused on getting crops in the ground, she said.
“Pre-planting, everyone is hopeful,” she said.
The report is based on a survey of 100 agribusiness professionals conducted Jan. 30-Feb. 3, before planting begins in Farm-Belt states. The company conducts its surveys three times a year: before planting and then before and after the harvest. A benchmark sentiment of 100 was established in the initial survey in August 2010.
A record corn crop in 2012 may boost U.S. inventories that shrank to a 16-year low in the past year, the USDA said last week. Farmers in 2012 will receive $5 a bushel for the grain, down 19 percent from last year, while wheat prices will slide 14 percent and soybeans may drop 1.7 percent, the USDA said.