U.S. Farmer Sentiment Rises Despite Worries About Financial Performance

By IndraStra Global News Team

Cover Image Attribute: mage by Elias Shariff Falla Mardini from Pixabay

In July, three key indicators of farmer sentiment showed improvement. The Purdue University/CME Group Ag Economy Barometer Index increased by 8 points to 113, the Index of Current Conditions rose by 10 points to 100, and the Index of Future Expectations climbed by 7 points to 119. This boost in sentiment occurred despite a drop in corn and soybean prices—cash prices in the Eastern Corn Belt fell 11% and 5%, respectively, between mid-June and mid-July. The improvement was largely due to fewer respondents reporting worsening conditions compared to a year ago and a decline in those expecting negative future outcomes. This month's Ag Economy Barometer survey was conducted from July 15-19, 2024.
High input costs remained the top concern for 34% of farmers in July, while the risk of declining crop and livestock prices worried 29% of producers, up from 25% in June. Reflecting recent signals from the Federal Reserve that interest rates have likely peaked, only 17% of respondents cited rising interest rates as a major concern, down from 23% the previous month.
The Farm Financial Performance Index dropped 4 points in July to 81, 6 points lower than in July 2023. The decline in financial performance expectations was due to concerns about falling commodity prices and high input costs, despite some improvement in May and June. Although production costs for key crops like corn and soybeans have decreased year over year, lower output prices have raised the possibility of a cost-price squeeze for U.S. crop producers.
Despite concerns about the financial performance of farms, the Farm Capital Investment Index increased by 6 points in July to 38, though it remains weak, 7 points lower than in July 2023. This rise was attributed to a slight decrease in the number of producers who believe it's a bad time for large investments, dropping from 80% in June to 75% in July.
"Although declining crop prices suggest lower producer incomes this year, the increase in optimism was somewhat surprising," said James Mintert, the barometer's principal investigator and director of Purdue University's Center for Commercial Agriculture. "The reduction in concerns about rising interest rates likely contributed to the slight improvement in attitudes towards capital investments, but producers remain cautious about making large investments."
The Short-Term Farmland Value Expectations Index saw a modest increase in July, rising to 118 from 115 in June, driven by more respondents expecting stable farmland values over the next year. Conversely, the Long-Term Farmland Value Expectations Index fell by 6 points to 146, with fewer farmers expecting values to rise over the next five years and more anticipating they will remain steady.
As discussions begin nationwide for the 2025 crop year's farmland leases, the July survey revealed that nearly 72% of crop farmer respondents expect cash rental rates to remain roughly the same as in 2024. Among the remaining respondents, opinions were nearly evenly split, with 15% predicting a rise in rates and 13% expecting a decline.

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