The July agricultural producer sentiment improved slightly over the last month, according to the Purdue University/CME Group Ag Economy Barometer. The index increased two points rising to 123, according to a release. Farmers remained optimistic about the current and future conditions.
“The Index of Current Conditions rose five points to a reading of 121, while the Index of Future Expectations was up one point to 124,” the release said.
On a monthly basis the Ag Economy Barometer is calculated by using 400 U.S. agricultural producers’ responses. This month’s survey was conducted between July 10 and 14.
“Producers were slightly more confident about the farming economy in July, despite recent crop price volatility and continued concerns about rising interest rates,” said James Mintert, the barometer’s principal investigator and director of Purdue University’s Center for Commercial Agriculture.
There was also an increase in the July’s Farm Capital Investment Index recorded — this rose three points to 45, marking a great improvement over November 2022. Up from 10% in November, 17% of farmers now feel like it’s a good time for a large investment. The number who feel it’s a bad time has also decreased by seven percent since November.
A large percent of producers are anticipating an increase in interest rates which is up from June numbers by an increase of eight percent. The top concern when making a large investment is rising interest rates.
This spring and early summer saw a lot of volatility in commodities, including crop prices. Producers are significantly more concerned about rising interest rates instead of declining output prices. The top concerns are higher input costs according to 37% of respondents, then interest rates at 24% of respondents, and lastly lower output prices at 19% of respondents.
Farmers are confident farmland values will continue to increase in the future. The Long-Term Farmland Value Expectations Index didn’t change in July at 151 points. The Short-Term Farmland Value Expectations Index only saw a one-point decline.
When asked about farmland cash rental rate expectations, 24% of corn and soybean producers are expecting rates to rise while 71% are anticipate them to remain the same.
According to the release, “Farmers’ rating of financial conditions on their farms was virtually unchanged in July, as the Farm Financial Conditions Index rose just one point to a reading of 87.”
There wasn’t much change recorded when respondents were asked about farm financial conditions. A one percent increase was found in farmers expecting both worsening and improving conditions. The long-term perspective saw a two-percentage point improvement.
For the cover crop portion, it was found 45 percent of corn and soybean farmers are currently using cover crops. The top reasons for cover crop use was to improve soil health and erosion control at 65%. Four out of five farmers that were asked said they did see improvement in soil health and yields with 15% recording improvement in soil health without yield improvement.
The full report can be found here.
