AGRIBUSINESS CONFIDENCE INDEX
The DTN/The Progressive Farmer Agribusiness Confidence Index
STABILIZING PRICES BOOST AGRIBUSINESS CONFIDENCE
By Katie Micik
DTN Markets Editor
March 24, 2014
Farmers' healthy balance sheets and stabilizing prices also boosted the agribusiness sector's confidence. The DTN/The Progressive Farmer Agribusiness Confidence Index, a similar survey of 100 agribusinesses conducted between Feb. 28 and March 5, increased to 107.3 from 104.3 last year.
A record 72% of respondents said their current sales of goods and services to farmers were good, while another 27% said sales were normal. Profitability is up from last year, too, and the survey results indicate businesses see strong sales and profits continuing.
Agribusinesses are much more optimistic than they were in December. While businesses' assessments of the current situation increased by less than 1 point to 121.6 from 120.7, their expectations for the future shifted upwards by 7.5 points.
"They know their customers should still be operating with healthy balance sheets and decent margin prospects," Hill said. "Seeing crop prices stabilize likely played a big part in their improved outlook. Fertilizer dealers might be concerned about the loss of fertilizer sales and profits as the growers reduce corn and increase soybean acreage planted, but this seems to have been taken into account before the end of last year."
Rick Dunbar, manager of Edon Farmers Cooperative in Ohio, said fertilizer sales were down last fall, but attributed it to wintry weather bringing fall to an abrupt end. Farmers stick to their rotations in his northwest corner of Ohio, and that helps keep his sales steady from year to year.
"As we go forward here, it looks to me like we're going to be accumulating grain," Dunbar said. "Unfortunately, I think prices are probably going to be lower." That may hurt business a little, likely in form of lower fertilizer use.
Eighty inches of snow fell in Edon this winter, and Dunbar hopes the spring thaw comes soon.
"If it gets late and we have a short spring it's going to hurt us," he said. "It's not because the farmers will change anything, it's just because of the weather delays. It's still early, though. Most farmers, if they're planted by the middle of May, they'll be happy."
Katie Micik can be reached at firstname.lastname@example.org