The Purdue University-CME Group Ag Economy Barometer rose four points in October to 110. The modest improvement in farmer sentiment resulted from farmers’ improved perspective on current conditions on their farms as well as their expectations for the future. The Index of Current Conditions rose three points to 101, while the Index of Future Expectations rose five points to 114.
Farmers in this monthly survey were a bit less concerned about the risk of lower prices for crops and livestock and felt somewhat better about their farms’ financial situation than a month earlier, although that did not translate into a more favorable investment outlook among survey respondents. Farmers remain cautiously optimistic about farmland values, particularly when asked to look ahead five years. Nearly one in four farmers responding to the survey reported making changes in their farm operations in response to long-term weather pattern changes. Changes implemented by farmers were wide-ranging, and some reported making multiple changes in response to shifting weather patterns.
(From the National Association of Farm Broadcasters)
November 7, 2023
James Mintert and Michael Langemeier, Purdue Center for Commercial Agriculture
The Purdue University-CME Group Ag Economy Barometer rose 4 points in October to a reading of 110. The modest improvement in farmer sentiment resulted from farmers’ improved perspective on current conditions on their farms as well as their expectations for the future. The Index of Current Conditions rose 3 points to 101 while the Index of Future Expectations rose 5 points to 114. Farmers in this month’s survey were a bit less concerned about the risk of lower prices for crops and livestock and felt somewhat better about their farms’ financial situation than a month earlier. This month’s Ag Economy Barometer survey was conducted from October 16-20, 2023.
Farmers’ more sanguine view of their farms’ financial situation was reflected in the Farm Financial Performance Index which rose 6 points in October compared to September. This month’s index value of 92 was the highest farm financial performance reading since April and pushed the index 7% above a year ago. The index’s rise stood in contrast to USDA’s’ forecast for 2023 net farm income to fall below 2022’s income level. Reports of higher than expected corn and soybean yields in some Corn Belt locations, along with a modest rally in corn prices, likely contributed to this month’s rise in the financial conditions index.
Despite the perception that financial conditions were stronger than a month earlier, the Farm Capital Investment Index fell 4 points in October to a reading of 35. This was the lowest reading of the year for the investment index. In October, nearly 8 out of 10 (78%) respondents said it was a bad time to make large investments in their farm operation, while just 13% of farmers responding to the October survey said it was a good time to make large investments. Among those who said it’s a bad time to invest the most commonly cited reason was rising interest rates, chosen by 41% of respondents. October was the fourth month in a row that a follow-up question was posed to respondents who said it’s a good time to invest. In July and August “strong cash flows” was the most commonly chosen reason for saying it’s a good time to make investments. However, that slipped to 32% in September and fell again in October to just 24% of respondents who felt strong cash flows was a good reason to invest. Interestingly, in October more producers with a favorable view of investing in their farms pointed to expansion opportunities as a key reason than in prior months, rising to 20% of respondents, up from an average of just over 6% in the July through September surveys.
Just over one-third (35%) of producers in this month’s survey said they expect farmland values to rise in their area in the upcoming year while nearly two-thirds (65%) of survey respondents expect farmland values to rise over the next 5 years. As a result, the Short-Term Farmland Value Index changed …..