Analytical Reports

Farmers Remain Cautiously Optimistic About Agricultural Economy

Farmers Remain Cautiously Optimistic About the agricultural economy, according to the Purdue University-CME Group Ag Economy Barometer.

➡️ July’s two-percent rise (compared to June’s) in the barometer was primarily the result of farmers’ improved perceptions of current conditions on their farms.
Looking back to May, however, the percentage of producers rating their farm’s financial performance as better than last year improved from 14% to 17%, while those rating financial performance as worse than a year ago fell from 38% to 30% of respondents.

➡️ When asked to look ahead one year, there was a one percentage point increase in farmers expecting farm financial conditions to improve in July vs. June and, correspondingly, a one-point decline in the percentage of farmers expecting conditions to worsen.
And farmers’ longer-term perspective on the U.S. agricultural economy improved somewhat in July, as the percentage of respondents expecting bad times in the upcoming 5 years fell from 41% in June to 39% in July.

➡️ Farmers’ top concern for their farming operations in the upcoming year is still higher input costs, chosen by 37% of respondents in this month’s survey.

➡️ The number two concern for this month’s survey respondents was rising interest rates, chosen by nearly one out of four (24%) producers, followed by lower output prices, chosen by 19% of farmers in the survey.
Given the volatility in commodity prices, especially crop prices, this spring and early summer, it’s notable that more producers expressed concern about rising interest rates than declining output prices.

➡️ Farmers continue to be optimistic about farmland values, especially over the next 5 years. Confidence among farmers regarding the future direction of farmland values continues even though nearly two-thirds of survey respondents expect interest rates to rise over the next year.

➡️ Once again, corn and soybean producers were also questioned about their farmland cash rental rate expectations for 2024. Similar to last month, nearly one-quarter (24%) of respondents expect rental rates to rise compared to 2023, while just over 7 out of 10 (71%) of producers look for no change in rental rates.

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