WEST LAFAYETTE, Ind. — Farmers were happier in October than they have been for a while. The October edition of the Purdue University-CME Group Ag Economy Barometer climbed to a reading of 183, a 27-point increase compared to September, and its highest reading to date. The number easily eclipsed the previous record high set back in February, before the onset of COVID-19.

The late summer and fall rally in commodity prices, along with government program payments arising from the second round of the Coronavirus Food Assistance Program (CFAP 2), appeared to be the primary drivers behind the sentiment improvement. Corn and soybean prices continued to rally despite the fact U.S. corn yields are expected to set a record high and soybean yields are projected by USDA to be the fourth highest on record. The combination of good yields and rallying crop prices set the stage for an additional boost in farmer sentiment. Of particular note this month was producers’ response to the question regarding their farms’ financial condition today versus a year earlier. 

“Every month has about a minimum of 53 percent of respondents who had either corn or soybean enterprise,” says James Mintert, professor of Agricultural Economics and director of the Center for Commercial Agriculture at Purdue. “So what happens in corn or soybean country really matters in the barometer. And if you look at the yield, the USDA is still projecting either record or near record (corn and soybean) yields.”

Twenty-five percent of survey respondents said their farm was better off financially now than at the same time last year. Although at first glance that might not sound very positive, it’s by far the most positive response farmers have provided since the inception of the barometer survey in fall 2015, and was up 11 points compared to a month earlier. The previous record high response to this question occurred in November 2019 when just 16 percent of respondents said their farm was better off financially than in the year ago period.

Producers also became more optimistic about trade with China this month. Minert says that when asked for their overall perspective on U.S. ag exports, the percentage of producers expecting exports to rise over the next five years increased.

“In September, when we asked about trade with China, it was basically a coin toss,” he commented “Fourty-seven percent said that they thought it was likely that China would fulfill the Stage One requirements. In October, that jumped up to 59 percent. That’s kind of an inkling that people think there’s reasons to be optimistic about exports.”

The short-run outlook toward farmland values was also a factor toward the improved sentiment. Respondents expecting land values to rise over the next 12 months rose to 27 percent, up from 23 percent in September. The percentage expecting lower farmland values declined to nine percent from 12 percent. There was also a big shift in sentiment in the October survey regarding 2021 cash rental rates for farmland. Nearly four out of 10 respondents said they expect cash rental rates to increase in 2021. In September, just eight percent of producers said they expected to see higher cash rental rates for farmland in 2021.