OMAHA (DTN) -- Producers surveyed the last week of November are a touch more positive than they were going into the harvest. The post-harvest overall index, based on all questions, all regions and all commodities, is 110, compared with 108 in September.

The DTN/The Progressive Farmer Agriculture Confidence Index is based on farmers' and ranchers' attitudes toward input costs, net farm income and household income. Producers are asked about their current economic situation and whether they think that situation will be better or worse in the next 12 months.

Answers create a numerical rating: numbers greater than 100 mean that producers are more positive than the baseline set by the original survey in April 2010; numbers below 100 indicate producers are more negative.

Producers put their current situation at 134, up from September's 128, while future expectations held steady at 94. Those scores are melded to create the overall index of 110.

"It's pretty hard for producers to believe that the good times they've enjoyed over the past couple of years will continue indefinitely," said Robert Hill, principal of Caledonia Solutions in North Oaks, Minn., which conducted the telephone survey. "Someday, we will talk about these as the good old days in terms of profitability."

In all the surveys DTN/The Progressive Farmer has done, there is a consistent pattern for present confidence to be highest and expectations to be notably more conservative -- not surprising, given the ever-present risks in farming.

One pattern that is emerging is the way attitudes about the present situation jump up between September and December, said Hill. "This reflects the natural tendency of producers to not call it a good year until it's in the books. The Ag Confidence Index establishes this as a fact now."

Noting that the numbers are still well off the highs in December 2010, Hill commented, "The main issue seems to be with input price expectations in that farmers are expecting to get hammered with input price increases versus last year. So next year they are expecting a profit squeeze from inputs. Couple this with the way commodity prices have been sliding and these producers are seeing some dark clouds on the horizon."

L.H. Birchmeier, of Mitchellville, Iowa, confirmed that: "I fear the next 12 months could be a lot more on the downside than the upside. The prices we receive could be dropping. Input costs are getting expensive and once they rise, they seldom come down again. Weather will probably not be a big factor. Where we are in Iowa, we seldom have a complete disaster."

Inputs also may account for the reason that larger farmers are somewhat more negative. While the survey doesn't report breakouts by income, it does indicate less optimism on the part of large producers. "It could be these more aggressive operators already are negotiating inputs for next year and are experiencing increases," said Hill. "They also are more likely to rent a larger share of their acreage and see rents going up. Both of these factors spell narrower margins."

CROPS VERSUS LIVESTOCK

In a reversal from previous Ag Confidence surveys, this survey revealed livestock producers are more optimistic than crop producers.

Crop producers' overall index is unchanged from the pre-harvest level of 108, with the present situation up one point, to 130, and future expectations down one point, to 93.

Livestock producers, on the other hand, jumped from 104 in September to 115 now. Their present situation score is rated at 142, and expectations climbed from 88 to 97.

Behind the divergence: Not only have crop prices drifted lower since September, but livestock prices -- particularly cattle -- have been at relatively high levels.

In Cumming, Ga., cow-calf producer Steve Reagan said: "Cattle prices are good. One thing that's worked out favorably is that when corn prices were high, you can still get distillers grains at a good price. The southern drought has not affected us in north Georgia."

He did add that, "Last year we did pretty good, but the cost of operating is getting extremely high, it's becoming too big of a percentage of the cow's performance. Energy cost is tremendous. Any time you operate equipment, it takes fuel and the cost of fuel has skyrocketed. That margin of profit is getting harder to make. We are seeing the lowest gas prices of the year, but diesel has not come down as much. We've also had a mild winter so far, so heating fuel has not been an issue."

Some are worried about margins going forward: "The next year looks like it should be good for cattle farmers as long as prices hold at recent good levels," said C.D. Hall, of Lake, Miss. "But fuel and feed prices have been getting outrageous. If the prices of cattle hadn't gone up, many couldn't have stayed in it. The future will depend on if we can keep those costs down."

WEST, SOUTHWEST NUMBERS RISE

The differences in crop and livestock prospects also may be influencing regional differences, given that livestock is more heavily weighted in the western and southern regions than in the Midwest.

The overall index for Midwestern producers is 109, versus 112 before harvest. Their rating of the present situation is about unchanged at 134. But future expectations slid from 97 to 92.

The Eastern Corn Belt, where planting started late in 2011 because of excessive moisture, ended the same way. Mary Lou Colley, of Paulding, Ohio, told DTN: "It's been a trying year. We have much more than the normal rainfall. It was wet all the way through. It was trying getting crops into the ground and many in this area were late getting crops out. We got ours harvested in good time, but we have our grounds tiled. Others who didn't have their fields tiled that well had problems getting crops out of the field. There is a farm nearby that still has 200 acres of corn in the field."

Southeast producers, on the other hand, had a confidence index of 110. Their present situation came in at 136 and expectations for the next 12 months match ratings from Midwest producers at 92.

In the West and Southwest, things are looking up, with an overall index of 113. Their present situation is a little lower, at 129, but expectations were considerably higher, at 102.

The U.S. Drought Monitor still shows serious drought conditions in Texas and Oklahoma, but things are becoming better.

"We've seen rain off and on. Ponds are filling and winter pasture is greening up," Oklahoma cow-calf operator Mary Anne Lawson told DTN. "Things are looking good.

Her west-central Oklahoma location, 50 miles west of Oklahoma City, had not had rain in 14 months. On top of that, oil fracking depleted a lot of ground water. "Ponds dried up. We didn't have a wheat crop and (there) was no future in hay production. We were lucky for a while, because we had two creeks, but eventually they dried up," she said. "I sat down with my oldest son and talked it over. We decided to liquidate half our cow herd and battle on with the best cows. Fortunately, about a year ago, I had bought some grassy hay from eastern Oklahoma, and we ordered a large overhead bin to hold pellets, so we were able to supplement it and get through. We brought all the cattle near our house, where we're on city water, and watered them that way."

Now, she's happy to note that calves hitting the ground are at least half heifers and she expects prices to stay strong. "Replacements just aren't there, so heifers are where the market will be as people look to rebuild herds."

The 2012 pre-planting survey results will be issued March 19 by DTN/The Progressive Farmer.

For more on the Index, watch the related Jan. 3 Reporter's Notebook at http://bit.ly/….

For methodology used in figuring the Index, visit the Market Matters Blog http://bit.ly/… and also the main site about the index at http://bit.ly/….

Linda H. Smith can be reached at linda.h.smith@telventdtn.com.

Cheryl Anderson contributed to this article. She can be reached at cheryl.anderson@telventdtn.com.

(ES/AG/GH)

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