Purdue University/CME Group’s Ag Economy Barometer Index rose 17 points in June to a reading of 121. The upswing in farmer sentiment was driven by producers’ more optimistic view of the future. However, their perception of current conditions remained unchanged from May.
The Index of Future Expectations rose 25 points to 123, while the Index of Current Conditions held flat at 116 in June. Optimism about U.S. agriculture’s future and a more optimistic outlook on interest rates helped explain producers’ more positive view of the future in the June survey.
But current conditions continue to present challenges for some producers. This month, four out of ten producers stated that their financial situation has deteriorated compared to a year ago. The Farm Financial Performance Index also rose this month, up ten points from May. The Farm Capital Investment Index rose five points in June to 42, while optimism on farmland values also rose.
(From the National Association of Farm Broadcasters)
Farmer Sentiment Rebounds on More Optimistic View of Future
July 5, 2023
James Mintert and Michael Langemeier, Purdue Center for Commercial Agriculture
Farmer sentiment rebounded in June as the Purdue University-CME Group Ag Economy Barometer rose 17 points to a reading of 121. June’s sentiment improvement left the index near the April reading of 123 after a one-month swoon in May. The swing in sentiment was driven by producers’ more optimistic view of the future as the Index of Future Expectations rose 25 points to 123, while their perception of the current situation was unchanged. The Index of Current Conditions reading, at 116, was the same as in May. This month’s Ag Economy Barometer survey was conducted from June 12-16, 2023.
The contrast in producers’ perspectives on current conditions vs. future expectations was made clear when examining responses to individual questions in the June survey. When asked to compare their farm operation’s situation today with a year ago, 40% of respondents said their operation was “worse off” financially than a year earlier vs. 37% who felt that way in May while just 15% chose “better off” vs. 17% who made that choice in May. But when asked to look ahead one year, respondents’ attitudes changed. In June, 20% of respondents said they expected their financial condition to improve over the next year, compared to just 13% who said that in May. Meanwhile 32% expect their farm’s financial situation to decline over the upcoming year, compared to 44% who responded that way in May. Producers improved perspective on the future was not focused solely on their own farms, but extended to all of U.S. agriculture. The percentage of producers expecting good times for U.S. agriculture in the upcoming 5 years rose 8 points to 33% while the percentage expecting bad times fell 3 points to 41%.
A more optimistic view of the future was also reflected in the Farm Financial Performance Index which rose 10 points in June to a reading of 86. The rally in corn and soybean prices for harvest time delivery that got underway in late May and extended into June was likely a contributing factor to the financial performance index rise. Although respondents were more optimistic about both crop and livestock returns this month, expectations for “good times” for livestock producers increased more than for crop producers. For example, 50% of respondents said they expect “good times” for livestock producers in the next 5 years, up from 37% who felt that way in May which was nearly double the increase in the percentage of respondents expecting “good times” for crop producers. Optimism about positive returns for cattle producers, especially cow-calf operations, was likely a key factor behind the positive livestock outlook.
The Farm Capital Investment Index rose 5 points in June to a reading of 42 which put the index back into the range it fluctuated within from January through April. Nearly three-fourths of respondents said they view this as a bad time to make large investments in their farm operation while just 16% of producers this month said it’s a good time to make investments. The rise in interest rates shares responsibility with …..
Read the rest of James Mintert and Michael Langemeier’s report.