Agricultural producers’ sentiment declined for the second month in a row during September. The Purdue University-CME Group Ag Economy Barometer fell nine points to a reading of 106. Producers expressed concern about both their current situation as well as future prospects for their farms. The Current Conditions and Futures Expectations Indices both declined ten points in September, leaving the Current Conditions Index at a reading of 98 while the Future Expectations Index stood at 109.
Weakening prices for major crops and ongoing concerns about high production costs and interest rates weighed on producers’ minds this month. September’s declines left all three indices below year-ago levels. Despite the weak sentiment reading, producers remain relatively optimistic about farmland values as expressed by both the short and long-term farmland values indices.
The September survey also included several questions to learn more about cover crops. Just over half of the corn and soybean growers surveyed said they currently plant cover crops on a portion of their acreage.
(From the National Association of Farm Broadcasters)
Weakening Crop Prices and High Production Costs Weigh on Farmer Sentiment
October 3, 2023
James Mintert and Michael Langemeier, Purdue Center for Commercial Agriculture
Agricultural producers’ sentiment declined for the second month in a row during September as the Purdue University-CME Group Ag Economy Barometer fell 9 points to a reading of 106. Producers expressed concern about both their current situation as well as future prospects for their farms. The Current Conditions and Futures Expectations Indicesboth declined 10 points in September leaving the Current Conditions Index at a reading of 98 while the Future Expectations Index stood at 109. Weakening prices for major crops and ongoing concerns about high production costs and interest rates weighed on producers’ minds this month. September’s declines left all three indices below year-ago levels. This month’s Ag Economy Barometer survey was conducted from September 11-15, 2023.
The Farm Financial Performance Index was unchanged in September compared to August, leaving the index at a reading of 86. Although the index didn’t change, there was a shift in responses to the question the index is based upon, with fewer producers reporting that they expect financial performance to be about the same as last year. In a nod to how variable conditions have been around the country this growing season, there were small increases in the percentages of producers who 1) expect better conditions and 2) expect worse financial conditions compared to last year.
There was a small uptick in the Farm Capital Investment Index, which rose from a reading of 37 in August to 39 in September. The increase resulted from a slight rise in the percentage of producers who said now is a good time to make investments. However, three-fourths of the producers in this month’s survey still said it’s a bad time for large investments, pointing to the high cost of machinery and new construction along with rising interest rates as primary reasons why they feel that way. Notably, 40% of producers who feel it’s a bad time to invest cited rising interest rates as a key reason, up from 35% last month and up from 14% when this question was first posed in July 2022. Starting in July 2023, the survey has posed an additional question to producers who say ……….
Read the full report: Weakening Crop Prices and High Production Costs Weigh on Farmer Sentiment here.