Agricultural producer sentiment improved slightly in July as the Purdue University/CME Group Ag Economy Barometer index rose two points to a reading of 123. Farmers were also more optimistic about their perception of current conditions and future expectations on their farms. The Index of Current Conditions rose 5 points to a reading of 121, while the Index of Future Expectations was up one point to 124. Producers were slightly more confident about the farming economy in July, despite recent crop price volatility and continued concerns about rising interest rates.
The improvement in farmers’ perspective on current conditions spilled over into a modest rise in July’s Farm Capital Investment Index, up 3 points. However, the index has greatly improved, up 14 points, since bottoming out in November 2022. Comparing July’s responses to last fall’s low point, the percentage of producers saying now is a good time for large investments has improved.
Surprisingly, the improvement in this month’s investment index occurred despite a rise in the percentage of producers who expect interest rates to rise over the next year. Nearly two-thirds (65%) of producers in July said they expect interest rates to increase, up from 57% in June. Among those who indicated that now is a bad time to make large investments, their top reason was concern about rising interest rates.
Producers’ top concern for their farming operations in the upcoming year is still higher input costs (37% of respondents), followed by rising interest rates (24% of respondents) and lower output prices (19% of respondents).
Confidence among farmers regarding the future direction of farmland values continues, even as nearly two-thirds of survey respondents expect interest rates to rise over the next year. The Long-Term Farmland Value Expectations Index remained unchanged in July at a reading of 151 while the Short-Term Farmland Value Expectations Index declined just one point to 125.
Farmers’ rating of financial conditions on their farms was virtually unchanged in July, as the Farm Financial Conditions Index rose just one point. When asked to look ahead one year, there was a one percentage point increase in farmers expecting farm financial conditions to improve over the previous month and a one-point decline in the percentage of farmers expecting conditions to worsen. Farmers’ longer-term perspective on the U.S. agricultural economy did improve somewhat in July. The percentage of respondents expecting bad times in the upcoming 5 years fell two-percentage points in July.
EDITOR’S TAKE:
And the beat goes on! Farmers remain optimistic about both the current and future agricultural economy and their finances. Plus, it now is looking more and more like another bumper crop of both corn and soybeans this fall, with continued support for good commodity prices. In addition, outlook for land values in both the short and longer terms is exceedingly positive.
All of that said, this latest survey by Purdue University once again underscores why we believe so strongly that farmers/ranchers are indeed your best customer prospects. Be sure you keep your dealership in front of them on AgTruckTrader.com. More and more farmers/ranchers are shopping on AgTT when they are looking for that new or qualified used truck.
