Farmer sentiment following the U.S. election reaches highest levels since May 2021

Rhea-AI Summary

The Purdue University/CME Group Ag Economy Barometer surged 30 points to 145 in November 2024, reaching its highest level since May 2021. The increase was driven by significant gains in both Future Expectations (up 37 points to 161) and Current Conditions (up 18 points to 113) indices. Farmers showed increased optimism about their operations, with 33% expecting improved financial performance, up from 19% in October. The Farm Capital Investment Index rose 13 points to 55, while 52% of respondents predicted prosperity for U.S. agriculture in the next five years. However, 42% of farmers expressed concerns about potential trade war risks affecting agricultural exports.

Positive

• Ag Economy Barometer reached highest level since May 2021, jumping 30 points to 145
• Future Expectations Index increased significantly by 37 points to 161
• 33% of producers expect improved farm financial performance, up from 19%
• Farm Capital Investment Index rose 13 points to 55
• Farm Financial Performance Index increased by 16 points to 106

Negative

• 42% of farmers concerned about potential trade war impacts on agricultural exports
• Short-Term Farmland Value Expectations Index dropped 5 points
• Long-Term Farmland Value Expectations Index decreased 3 points

Insights

Market Research Analyst

The significant surge in farmer sentiment, marked by a 30-point jump in the Ag Economy Barometer to 145, signals a potentially transformative shift in the agricultural sector. The data reveals compelling trends:

• Future Expectations Index soared by 37 points to 161
• Current Conditions Index increased by 18 points to 113
• 33% of producers expect improved farm financial performance
• 52% predict long-term agricultural prosperity

This optimism, particularly in capital investment intentions and financial outlook, could drive increased trading volumes in agricultural futures and options on CME's platforms. However, trade war concerns from 42% of respondents present a significant counterbalance to the overall positive sentiment.

Policy Analyst

The dramatic shift in regulatory expectations represents a pivotal moment for agricultural markets. The drop from 41% to 9% of farmers expecting stricter regulations, coupled with 55% anticipating a less restrictive environment, suggests potential structural changes in agricultural operations and compliance costs. The stable tax outlook, with 55% expecting unchanged income tax rates, provides a foundation for more predictable business planning. These regulatory and tax expectations could significantly influence agricultural futures pricing and trading patterns on CME's exchange.

WEST LAFAYETTE, Ind., Dec. 3, 2024 /PRNewswire/ -- Farmer sentiment jumped again in November, with the Purdue University/CME Group Ag Economy Barometer climbing 30 points to a reading of 145. This marked the highest level of farmer optimism since May 2021, driven by considerable gains in both the Current Conditions and Future Expectations indices. The Future Expectations Index saw the largest jump, rising 37 points to 161, while the Current Conditions Index increased 18 points to 113.

The November sentiment boost reflects growing optimism about a more favorable regulatory and tax environment for agriculture following the U.S. election. This month's survey was conducted from Nov. 11-15, 2024.

In November's survey, farmers reported a notably more positive outlook for their operations and the broader agricultural economy. The percentage of producers expecting their farm's financial performance to improve over the next year climbed to 33%, up from 19% in October. Optimism about the U.S. agricultural sector also surged, with 34% of farmers anticipating good times financially in the next 12 months, more than double October's 15%.

Looking ahead five years, over half of November's respondents (52%) predicted widespread prosperity for U.S. agriculture, a noticeable increase from 34% the previous month. This growing confidence was also reflected in farmers' investment plans, as 22% reported that it's a good time for large capital investments, compared to 15% in October.

Farmers' improved sentiment also carried over to their investment outlook, as the Farm Capital Investment Index rose 13 points in November to a reading of 55 — the highest level since May 2021. The change in investment sentiment was partly driven by expectations of stronger financial performance in 2025 compared to 2024. For the second consecutive month, the percentage of producers expecting better financial conditions in the year ahead increased, climbing to 25% in November from 16% in October. This positive shift drove the Farm Financial Performance Index up to 106, marking a 16-point increase from October and a substantial 38-point jump since September.

Following the improvements in the short-term and long-term farmland value indices in October's survey, both indices saw modest declines in November. The Short-Term Farmland Value Expectations Index dropped by 5 points, while the Long-Term Farmland Value Expectations Index decreased by 3 points. Despite these small decreases, the indices remained relatively strong, with the short-term index at 115 and the long-term index at 156.

To gain insight into how farmers' sentiment might align with potential policy shifts following a change in presidential administrations, barometer surveys included several policy-related questions before and after the 2020 and 2024 elections.

In the wake of the 2024 election, farmers' views on environmental regulations experienced a sharp reversal. In October, 41% of respondents anticipated a more restrictive regulatory environment over the next five years, while only 10% expected less restrictive regulations. However, the November survey saw a dramatic shift, with just 9% of surveyed farmers expecting stricter regulations and 55% predicting a more favorable, less restrictive regulatory landscape.

There was a modest shift from October to November 2024 when asked about tax expectations, but a notable contrast with responses following the 2020 election. In November 2024, more than half (55%) of respondents expected income tax rates to remain unchanged, compared to just 25% in 2020. Similarly, 57% of respondents in the November survey anticipated estate tax rates to stay the same over the next five years, a large increase from 28% in November 2020.

"While optimism is up, farmers are also expressing concerns about the potential risks to agricultural trade, with many fearing that a trade war could significantly impact U.S. exports," said James Mintert, the barometer's principal investigator and director of Purdue University's Center for Commercial Agriculture.

Forty-two percent of November's survey respondents indicated they believe it is "likely" or "very likely" that U.S. agriculture could face a "trade war," potentially leading to a significant decline in agricultural exports.

"As we move into 2025, farmers' outlook for agriculture remains positive, but they are closely monitoring the evolving political landscape and its potential impact on both policy and international trade," Mintert said.

About the Purdue University Center for Commercial Agriculture

The Center for Commercial Agriculture was founded in 2011 to provide professional development and educational programs for farmers. Housed within Purdue University's Department of Agricultural Economics, the center's faculty and staff develop and execute research and educational programs that address the different needs of managing in today's business environment.

About CME Group

As the world's leading derivatives marketplace, CME Group enables clients to trade futures, options, cash and OTC markets, optimize portfolios, and analyze data — empowering market participants worldwide to efficiently manage risk and capture opportunities. CME Group exchanges offer the widest range of global benchmark products across all major asset classes based on interest rates, equity indexes, foreign exchange, energy, agricultural products and metals. The company offers futures and options on futures trading through the CME Globex platform, fixed income trading via BrokerTec and foreign exchange trading on the EBS platform. In addition, it operates one of the world's leading central counterparty clearing providers, CME Clearing.

CME Group, the Globe logo, CME, Chicago Mercantile Exchange, Globex, and E-mini are trademarks of Chicago Mercantile Exchange Inc. CBOT and Chicago Board of Trade are trademarks of Board of Trade of the City of Chicago, Inc. NYMEX, New York Mercantile Exchange and ClearPort are trademarks of New York Mercantile Exchange, Inc. COMEX is a trademark of Commodity Exchange, Inc. BrokerTec is a trademark of BrokerTec Americas LLC and EBS is a trademark of EBS Group LTD. The S&P 500 Index is a product of S&P Dow Jones Indices LLC ("S&P DJI"). "S&P®", "S&P 500®", "SPY®", "SPX®", US 500 and The 500 are trademarks of Standard & Poor's Financial Services LLC; Dow Jones®, DJIA® and Dow Jones Industrial Average are service and/or trademarks of Dow Jones Trademark Holdings LLC. These trademarks have been licensed for use by Chicago Mercantile Exchange Inc. Futures contracts based on the S&P 500 Index are not sponsored, endorsed, marketed, or promoted by S&P DJI, and S&P DJI makes no representation regarding the advisability of investing in such products. All other trademarks are the property of their respective owners.

About Purdue University

Purdue University is a public research institution demonstrating excellence at scale. Ranked among top 10 public universities and with two colleges in the top four in the United States, Purdue discovers and disseminates knowledge with a quality and at a scale second to none. More than 105,000 students study at Purdue across modalities and locations, including nearly 50,000 in person on the West Lafayette campus. Committed to affordability and accessibility, Purdue's main campus has frozen tuition 13 years in a row. See how Purdue never stops in the persistent pursuit of the next giant leap — including its first comprehensive urban campus in Indianapolis, the Mitch Daniels School of Business, Purdue Computes and the One Health initiative — at https://www.purdue.edu/president/strategic-initiatives.

Sources and Notes block:

Author: Morgan French
Source: James Mintert, jmintert@purdue.edu, 765-494-7004

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SOURCE CME Group

FAQ

What was the CME Group Ag Economy Barometer reading in November 2024?

The CME Group Ag Economy Barometer reached 145 in November 2024, marking its highest level since May 2021.

How much did the Future Expectations Index increase in November 2024?

The Future Expectations Index increased by 37 points to 161 in November 2024.

What percentage of farmers expect improved financial performance in 2024-2025?

33% of farmers expect their farm's financial performance to improve over the next year, up from 19% in October 2024.

What are farmers' concerns about trade according to the November 2024 CME survey?

42% of farmers believe it is 'likely' or 'very likely' that U.S. agriculture could face a trade war, potentially leading to significant export declines.