Agricultural producers’ sentiment increased for the second consecutive month, as the Purdue University/CME Group Ag Economy Barometer index for November rose 5 points to a reading of 115, a 12% increase compared to the previous year. The sentiment growth is largely attributed to farmers’ improved perceptions of their farms’ financial conditions and prospects.
Also in November’s survey, the Index of Current Conditions rose 12 points to 113 while the Index of Future Expectations improved by 2 points to 116. The Farm Financial Performance Index also rose to a reading of 95, which is up 3 points from October. The financial conditions index reached its low point back in the spring. The November reading was 25% higher than in May and 10% higher than at the start of fall harvest in September. Farmers’ expectations regarding financial performance improved this fall, with fewer producers expecting their farms' performances to be worse than a year ago.
The Farm Capital Investment Index has fluctuated throughout 2023 but rebounded in November, up 7 points from October. Over the last several months, producers who view the investment climate as favorable were asked why they feel that way. In November, “higher dealer inventories,” claimed the top spot as to why now is a good time to make large investments, implying a potential change in market conditions. The shift in responses suggests that farmers might be seeing a moderation in farm equipment price rises, making it a more favorable time for large investments.
Perspectives on farmland values changed little compared to October. The Short-Term Farmland Values Expectations Index maintained its position at 125, while the long-term index fell 5 points. Among respondents who expect farmland values to rise over the next five years, they overwhelmingly attribute their optimism to non-farm investor demand, followed by inflation.
Top concerns for the upcoming year include higher input costs, rising interest rates and lower crop and/or livestock prices. Notably, however, there has been a shift in concerns throughout the year, with fewer producers expressing worry over higher input costs compared to the beginning of the year. Instead, more producers are now concerned about rising interest rates and lower crop and livestock prices.
EDITOR'S TAKE:
As noted in prior editorial reactions to the results of the Ag Barometer survey, farmer/rancher optimism waxes and wanes at certain times of the year. Now that harvest is complete, yields, for the most part, were better than expected. And prices, while not the peak of a year ago, were still very good. Now farmers/ranchers are looking ahead optimistically to 2024 from a position of financial strength. They expect lower input prices going into spring planting. Plus, despite concerns over rising interest rates, there seems to be a growing consensus that the Federal Reserve will begin easing rates sometime in the second half of 2024, if not sooner.
Farmers/ranchers once again have had a very, very good year overall in 2023 and are feeling good about the prospects for next year. Equipment purchases and new trucks will be on their agenda. Make certain you have them at the top of your customer prospect list. And be sure to put your inventory on AgTruckTrader.com where they will be looking for their next purchase!
