Producer sentiment was slightly lower in August, as the Purdue University/CME Group Ag Economy Barometer index dipped 8 points to a reading of 115. The decline was fueled by producers’ weaker perception of current conditions both on their farms and in U.S. agriculture. The Current Conditions Index fell 13 points to a reading of 108. The Future Expectations Index also declined, down 5 points to a reading of 119.
Rising interest rates and concerns about high input prices continue to put downward pressure on producer sentiment. Over half (60%) of the producers surveyed said they expect interest rates to rise in the upcoming year.
When asked about their top concerns for their farming operations in the next 12 months, producers continue to point to higher input prices (34% of respondents) and rising interest rates (24% of respondents). Only one in five producers (20% of respondents) chose declining commodity prices as one of their top concerns.
Meanwhile, producers’ rating of farm financial conditions changed little, as the Farm Financial Performance Index declined just one point to a reading of 86.
Despite increasing concerns about rising interest rates, producers remain cautiously optimistic about farmland values. The Short-Term Farmland Values Expectation Index rose one point to 126, while the long-term index was unchanged at a reading of 151. Four out of ten respondents (39%) said they expect farmland values to rise over the next year, while 13% said they look for values to decline in the next year. When asked about their longer-term view of farmland values, six out of ten (63%) of respondents said they expect values to rise over the next five years, while 12% said they expect values to fall.
EDITOR’S TAKE:
Since this survey was conducted, fertilizer prices have fallen even further and commodity prices have risen in response to lower potential yields in some parts of the corn-belt and weather concerns in South America. In addition, farmers/ranchers are entering the second busiest time of the year – harvest. Their thoughts and concerns are very focused on getting the crop out in a safe, yet timely manner. With good weather, good yields and prices improving modestly, farmers/ranchers are much more likely to be in a better mood once harvest is complete. Also, we can’t overlook the optimism over land values expressed in this report and other informative sites. All that said, let’s not be blind to the opportunity to help farmers/ranchers calm their fears over rising input costs. Let’s see, what do we have in our bag of tricks? That’s right - AgPack®, which offers up to $32,000 in exclusive rebates and discounts from brands and suppliers they may already be familiar with. Don’t let another day go by - let them know about AgPack® today!
