The Purdue University/CME Group Ag Economy Barometer for July indicated farmers are slightly concerned about rising input prices and current conditions, but remain cautiously optimistic compared to this time last year.
Notably, the producer sentiment indexes for current and future conditions dropped by six and two points respectively, resulting in the lowest barometer reading since July 2020.
James Mintert, the barometer’s principal investigator and director of Purdue University’s Center for Commercial Agriculture, attributed the drop in current conditions primarily to weakened principal crop prices.
“Producers' sentiment regarding their farms' financial condition was more optimistic when prices for corn, soybeans and wheat were surging last fall, winter and early spring. Still, recent sentiment readings suggest farmers remain cautiously optimistic about financial conditions on their farms," he said.
The Farm Financial Performance Index, which asks farmers to compare their expectation for their operations' financial performance to the previous year, improved slightly, rising three points from last month and resting 43% higher than in July 2020.
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Expectations were lower in the Farm Capital Investment Index, with two-thirds of respondents indicating their construction plans are not as ambitious as a year ago.
Over half the producers also expect input prices to rise over 4% in the next year, just under a third responded that they expected costs to rise 8% or more, and almost one out of five predicted that input prices will increase 12% or more.
Mintert pointed out that these expectations are a large increase from the rate of 1.8% per year that input prices rose over the last decade.
Both the short-term and long-term Farmland Values Expectations Indexes remain near all-time highs, though they dropped a few points from June to July. Thus, there is optimism about farmland values, but the recent rises in farmland values likely contributed to slight decreases in the farmland indexes as producers see further increases to be less likely, according to Mintert.
The Ag Economy Barometer is created using telephone survey responses from 400 U.S. agricultural producers.
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