Farmer Sentiment Improves Despite Bleak Financial Outlook

According to this leading derivatives marketplace, the Purdue University/CME Group Ag Economy Barometer Index increased by eight points, the Index of Current Conditions by 10 points, and the Index of Future Expectations by seven points. Although the Eastern Corn Belt soybean and corn prices fell by 11% and 5% respectively, farmer sentiment is positive.

High input costs remain an issue for 34% of farmers, while 29% said that lower crop and livestock prices worry them. Interest rate concerns dropped from 23% to 17% as many feel that interest rates have crested and can only improve in the future.

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A year-on-year comparison showed that the Farm Financial Performance Index was six points lower than in July 2023. According to CME, this fall reflects farmer concerns about weaker commodity prices and “high input costs following improvements in the May and June indices”.

Although the Farm Capital Investment Index increased by six points, it is still on the back foot. CME maintained that the overall outlook seems positive. James Mintert, director of Purdue University’s Centre for Commercial Agriculture and the lead investigator on the barometer, commented:

Declines in crop prices point to lower producer incomes this year, so the increase in optimism was somewhat puzzling. Fewer producers citing rising interest rates as a primary concern for the upcoming year corresponds with the modest improvement in their perspectives on capital investments, but respondents continue to express hesitancy to make large investments.