The Purdue University/CME Group Ag Economy Barometer farmer sentiment index reached a value of 103 in July, up 6 points from its previous reading of 99. When compared to the previous month of June, producers’ attitudes on the existing and future economic circumstances on their farms were slightly more hopeful. Both the Index of Current Conditions (now reading 109), and the Index of Future Expectations (now reading 100), both saw significant increases in their respective readings. Even while all three indexes moved upward this month, they remained 23-24 percent lower than they were a year ago. The Ag Economy Barometer is derived from the replies of four hundred agricultural producers in the United States to a monthly telephone poll. The dates July 11-15 were chosen for the survey that was carried out this month.
According to James Mintert, the lead investigator of the barometer and director of Purdue University’s Center for Commercial Agriculture, “even though we witnessed a little rise in attitude this month, there is still a significant amount of uncertainty in the agricultural industry.” “Key commodity prices, including wheat, maize, and soybeans, all declined throughout the month, and farmers remain worried about growing input costs and supply availability,”
The respondents to this month’s survey of farm operators expressed concern about a number of significant issues that have an impact on their business, including: rising input prices (42 percent of respondents), falling crop prices (19 percent of respondents), rising interest rates (17 percent of respondents), and availability of inputs (15 percent of respondents).
The Farm Financial Performance Index, which is mostly representative of income projections for the current year, increased by 5 points to a value of 88 in the month of June. However, this month, 49 percent of respondents indicated they anticipate their farm to be financially worse off a year from now. This number is lower than the 51 percent of respondents who felt this way in June. This is a noticeably more negative perspective than producers supplied a year ago, when just 30 percent of respondents indicated they anticipate their financial status to deteriorate in the future year. This is an alarmingly more dismal outlook than producers provided a year ago.
The producers’ forecasts for the pricing of agricultural inputs over the next year continue to be fraught with uncertainty. 18 percent of crop farmers stated their expectation in July that the prices of agricultural inputs in 2023 would be lower by between 1 and 10 percent when compared to 2022’s prices, which is an increase from the 12 percent who held this view in June. Comparatively, 38 percent of respondents in June anticipated an increase in agricultural input costs of that size, but just 26 percent of respondents in July stated they expect prices to climb by at least 10 percent or more in 2023.
The increase in the price of inputs is prompting some farmers to rethink their planting strategies for the following year. According to a poll conducted earlier this month, almost one out of every four crop farmers (24 percent) said that as a consequence of the increase in input prices, they want to alter the crop mix on their farm in the year 2023.
The Farm Capital Investment Index increased by one point to a value of 36 in July, which places it close to its all-time low. We wanted to throw light on why this is the case, so we asked respondents who thought that today is a terrible time for significant investments the main reason they felt this way.
This month, the Short-Term Farmland Value Index dropped 9 points, bringing it down to 127, while the Long-Term Farmland Value Index gained 9 points, bringing it up to 150. Producers’ perspectives on the value of farmland contrasted as a result of these two indices’ contrasting movements. The reading on the short-term index is now 20% lower than when it reached its height in 2021, although the reading on the long-term index is just 6% lower than when it reached its top in the previous year.
The short-run and long-term agricultural indexes don’t often move in tandem, but the extent of this month’s divergence between the short and long-term indices is remarkable, said Mintert.
You can get the whole Ag Economy Barometer report right here. Additionally, the website provides access to supplementary information, such as archived reports, infographics, and survey methodology, as well as a sign-up form for monthly barometer email updates and webinars.