SOURCE: DTN/The Progressive Farmer

DTN/The Progressive Farmer

September 08, 2014 10:24 ET

Crop Producer Confidence Slumps as Commodity Prices Drop

Producer Confidence Falls to Record Low; Agribusinesses Still Optimistic

OMAHA, NE--(Marketwired - Sep 8, 2014) - Overall agriculture producer confidence has fallen considerably since March following significant drops in ag commodity prices and in anticipation of record corn and soybean harvests this fall, according to the latest DTN/The Progressive Farmer (DTN/PF) Agriculture and Agribusiness Confidence Index (ACI).

Producers' overall confidence dropped from 106.9 in March to 99.8, marking the first time that overall confidence value has fallen below 100 since DTNPF began the ACI survey in April 2010. The value of 100 is considered neutral. Values above 100 indicate optimism, whereas values below signify pessimism.

The confidence index, which surveyed 500 producers Aug.13-22, measures the sentiments of crop and livestock producers on their overall impressions of the agriculture sector. The DTNPF ACI is conducted three times each year -- before planting, prior to harvest and after harvest. Producers are also asked to rate current and long-term input prices and net farm income to gauge their attitudes toward the present situation and future expectations.

Producers viewed their present conditions as declining with a score of 118.0, a drop from 128.1 in March and down from 128.8 in August 2013. Producers' future expectations fell to 87.8 from 92.8 in March and down from 96.2 last August.

There remains a significant disparity in confidence levels between crop and livestock producers. Driven by higher meat prices and lower feed and input costs, livestock producers' confidence was 108.7, nearly even with 108.9 from August 2013 but just down from 116.4 in March. Livestock producers view their present situation as very positive (128.5.1) but were considerably less optimistic for the upcoming year (95.5).

Crop producers' confidence dropped to 96.3 down from the previous low of 102.7 set earlier this year in March. Last August, the crop producers' confidence level was 109.3. Confidence levels were particularly lower with crop producers in the Midwest (92.0) compared with those in the Southeast (107.6) and Southwest (110.8).

Crop producers' expectations for the coming year also declined from 90.7 in March to an all-time low of 84.8 in August. Their feelings on their present situation dropped from 120.8 in March to 113.6, the lowest rating since the ACI started.

"Overall crop producers are much less optimistic about their current situation and immediate future given the considerable drop in commodity prices the past five months," said DTN Markets Editor Katie Micik, director of the confidence index. "The outlook doesn't look much better as prices could be affected even more with projected record corn and soybean crops this fall."

According to Micik, the survey also revealed that 86 percent of farmers expect their incomes to stay the same or get worse. The U.S. Department of Agriculture's recent farm income forecast projected a 14 percent decline year over year, the lowest estimate since 2010 but still the fifth highest on record. Additionally, the ACI indicated 86 percent of farmers think input prices will stay the same or get worse.

While producers' attitudes fell dramatically, agribusinesses were more confident about the industry. According to the DTNPF Agribusiness Confidence Index, which measured the sentiments of 100 agribusiness Aug.12-20, agribusiness confidence dropped slightly to 106.1 in August from 107.3 in March.

Seventy percent of agribusinesses surveyed felt good about current sales, marking a 14.6 percent decrease since March but a 12.6 increase since August 2013. In addition, 76 percent of agribusinesses surveyed believe sales expectations over the next 12 months will remain the same or get better, down from 88 percent in March.

"Ninety-seven percent of agribusiness rated current producers sales as good to normal, with 86 percent expecting sales to be same or better one year from now," noted Micik.

For more on the DTN Agriculture/Agribusiness Confidence Index, visit www.dtnpf.com. Follow DTN on Twitter at @DTNPF, on Facebook at facebook.com/dtnprogressivefarmer or on YouTube at youtube.com/user/DTNProgressiveFarmer.

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