In June, farmer sentiment drifted lower as high input costs, the risk of lower prices for their products, and rising interest rates continue to weigh on farmers.
According to the Purdue University/CME Group Ag Economy Barometer, last month’s reading of 105 was 3 points lower than in May. The overall decline in sentiment was due to a 5-point drop in the Index of Future Expectations, which fell to 112, while the June Current Conditions Index increased to 90, 1 point higher than the May index.
“The impact of rising interest rates on their farm operations has become a bigger concern for producers in recent months,” said James Mintert, the barometer’s principal investigator and director of Purdue University’s Center for Commercial Agriculture. “Interest rate risk and high breakeven levels combined with concerns that crop and livestock prices could weaken are holding back producer sentiment and making producers cautious about making large investments.”
This month’s Farm Capital Investment Index declined by 3 points to a reading of 32, just one point above its historical low. More producers indicated it is not a favorable time for large investments compared to May, while the percentage of producers who viewed it as a good time remained the same.
But there was a notable shift in producers’ longer-term outlook on farmland values. The Long-Term Farmland Values Index dropped to 152, down 7 points from May. Fewer producers expect that farmland values will increase over the next five years, coinciding with a rise in those anticipating values holding steady.
The new Ag Economy Barometer survey was conducted from June 17-21.