For only the second time since May, the Ag Economy Barometer rose in December. This month’s index climbed to a reading of 125, 9 points higher than in November. Both the Index of Current Conditions and the Index of Future Expectations rose in December with the rise in the barometer attributable mostly to an improved perspective on current conditions in the agricultural sector. December’s Index of Current Conditions stood at 146, 18 points higher than a month earlier, while the Index of Future Expectations rose just 4 points to 114. A more positive outlook regarding their farm’s financial situation by ag producers was a major contributor to this month’s rise in both the Index of Current Conditions and the barometer.

For just the third time this year, the Farm Capital Investment Index rose in December. The index climbed 10 points to a reading of 49, the most positive value for the investment index since August, but still 47% lower than in December 2020. The investment index’s improvement was primarily the result of fewer producers saying now is a bad time to make large investments in buildings and machinery. When asked more specifically about their farm machinery and construction plans, fewer producers this month said they plan to reduce their machinery purchases in the upcoming year, responding instead that they plan to hold their investments steady with the prior year. However, compared to responses recorded in November, a larger number of producers this month said they plan to reduce their investments in farm buildings and grain bins vs. a year earlier. Supply chain issues continue to hamper producers’ capital investment plans. This month 45% of survey participants said that low farm machinery inventory levels impacted their farm machinery purchase plans.