The index rose 8 factors to 113
7 August 2024
3 minute learn
Three broad-based measures of farmer sentiment improved in July because the Purdue College/CME Group Ag Financial system Barometer index rose 8 factors to 113, the Index of Present Situations elevated by 10 factors to 100, and the Index of Future Expectations at 119 was 7 factors greater than a month earlier. Regardless of declines in corn and soybean costs from mid-June to mid-July — Jap Corn Belt money costs fell 11% and 5%, respectively — farmer sentiment improved in July. Responses to the person questions attribute this optimistic shift to fewer respondents reporting worsened circumstances in comparison with a yr in the past and a lower in these anticipating detrimental future outcomes. This month’s Ag Financial system Barometer survey was performed from July 15-19, 2024.
The July survey confirmed that prime enter prices remained the largest concern for 34% of farmers. Moreover, the danger of decrease crop and livestock costs continues to fret producers, with 29% citing it as a high concern, up from 25% in June. Reflecting the alerts from the Federal Reserve that rates of interest have peaked, solely 17% of respondents cited rising rates of interest as a high concern, down from 23% final month.
The Farm Monetary Efficiency Index dropped 4 factors in July to 81, 6 factors decrease than in July 2023. The decline in monetary efficiency expectations mirrored farmers’ worries about weakening commodity costs and excessive enter prices following enhancements within the Could and June indices. Though manufacturing prices for principal crops, together with corn and soybeans, have decreased yr over yr, output costs have additionally fallen, elevating the potential of a cost-price squeeze for U.S. crop producers.
Regardless of considerations about farms’ monetary efficiency, the Farm Capital Funding Index rose 6 factors in July to 38, although it stays weak, at 7 factors decrease than in July 2023. This enchancment was because of a slight lower within the variety of producers who consider it’s a nasty time to make giant investments, which dropped from 80% in June to 75% in July.
“Declines in crop costs level to decrease producer incomes this yr, so the rise in optimism was considerably puzzling,” stated James Mintert, the barometer’s principal investigator and director of Purdue College’s Middle for Industrial Agriculture. “Fewer producers citing rising rates of interest as a major concern for the upcoming yr corresponds with the modest enchancment of their views on capital investments, however respondents proceed to precise hesitancy to make giant investments.”
July noticed a small enchancment within the Quick-Time period Farmland Worth Expectations Index, rising to 118 from 115 in June. This was pushed by extra respondents anticipating secure farmland values over the following yr. On the similar time, the Lengthy-Time period Farmland Worth Expectations Index dropped 6 factors from June to 146, with fewer farmers anticipating values to rise over the following 5 years and extra anticipating they’ll stay unchanged.
As nationwide discussions start for the 2025 crop yr’s farmland leases, the July survey revealed that just about three-fourths (72%) of crop farmer respondents anticipate money rental charges to stay roughly the identical as in 2024. Among the many remaining respondents, views had been practically evenly divided, with 15% anticipating an increase in charges and 13% anticipating a decline.
