Producers cautiously optimistic, regardless of crop worth volatility

Agricultural producer sentiment improved barely in July because the Purdue College/CME Group Ag Financial system Barometer index rose two factors to a studying of 123. Farmers have been additionally extra optimistic about their notion of present situations and future expectations on their farms. The Index of Present Situations rose 5 factors to a studying of 121, whereas the Index of Future Expectations was up one level to 124. The Ag Financial system Barometer is calculated every month from 400 U.S. agricultural producers’ responses to a phone survey. This month’s survey was performed between July 10-14.

“Producers have been barely extra assured concerning the farming economic system in July, regardless of latest crop worth volatility and continued issues about rising rates of interest,” mentioned James Mintert, the barometer’s principal investigator and director of Purdue College’s Heart for Business Agriculture.

The development in farmers’ perspective on present situations spilled over right into a modest rise in July’s Farm Capital Funding Index, up three factors to a studying of 45. Nevertheless, the index has tremendously improved, up 14 factors, since bottoming out in November 2022. Evaluating July’s responses to final fall’s low level, the share of producers saying now is an efficient time for big investments has improved from 10% who felt that manner in November to 17% in July. Moreover, the share of farmers who really feel it is a unhealthy time to take a position was down from 79% who felt that manner in November to 72% in July.

Surprisingly, the advance on this month’s funding index occurred regardless of an increase within the share of producers who count on rates of interest to rise over the following yr. Practically two-thirds (65%) of producers in July mentioned they count on rates of interest to extend, up from 57% in June. Amongst those that indicated that now’s a nasty time to make giant investments, their high cause was concern about rising rates of interest.

Given the volatility in commodity costs, particularly crop costs, this spring and early summer season, it is notable that extra producers expressed concern about rising rates of interest than declining output costs. Producers’ high concern for his or her farming operations within the upcoming yr remains to be greater enter prices (37% of respondents), adopted by rising rates of interest (24% of respondents) and decrease output costs (19% of respondents). 

Confidence amongst farmers concerning the longer term path of farmland values continues, whilst almost two-thirds of survey respondents count on rates of interest to rise over the following yr. The Lengthy-Time period Farmland Worth Expectations Index remained unchanged in July at a studying of 151 whereas the Quick-Time period Farmland Worth Expectations Index declined only one level to 125. This month, corn and soybean producers have been as soon as once more requested about their farmland money rental charge expectations for 2024. Much like final month, almost one-quarter (24%) of respondents count on rental charges to rise, in comparison with 2023, whereas simply over 7 out of 10 (71%) of producers search for no change in rental charges.

Farmers’ ranking of monetary situations on their farms was nearly unchanged in July, because the Farm Monetary Situations Index rose only one level to a studying of 87. When requested to look forward one yr, there was a one share level enhance in farmers anticipating farm monetary situations to enhance over the earlier month and a one-point decline within the share of farmers anticipating situations to worsen. Farmers’ longer-term perspective on the U.S. agricultural economic system did enhance considerably in July. The proportion of respondents anticipating unhealthy instances within the upcoming 5 years fell two-percentage factors to 39% in July.

This month’s survey included a number of questions on crop farmers’ views on cowl crop utilization. Practically-half (45%) of corn/soybean farmers on this month’s survey indicated they at the moment use cowl crops. This compares with responses from 2021 and 2022 barometer surveys, the place a variety between 41 to 57% of respondents reported planting cowl crops. Amongst cowl crop customers, the 2 mostly cited causes for utilizing cowl crops have been to enhance soil well being and erosion management (65% of July respondents), which is in keeping with prior barometer surveys in 2021 and 2022 when 58 to 70% of respondents select soil well being and erosion management as their motivation for utilizing cowl crops.

Those that indicated utilizing cowl crops have been additionally requested to explain their expertise. 4 out of 5 (80%) farmers mentioned it improved soil well being and yields, whereas 15% of respondents mentioned cowl crops improved soil well being, however didn’t enhance yields. In prior barometer surveys, a variety of 74 to 84% of respondents mentioned cowl crops improved soil well being and yields, whereas 9 to 18% of respondents mentioned it improved soil well being, however didn’t enhance yields.