Farmer sentiment drifted downward in June as the Purdue University/CME Group Ag Economy Barometer reading of 105 was 3 points lower than a month earlier. The overall decline in sentiment was due to a five-point drop in the Index of Future Expectations, which fell to 112, while the June Current Conditions Index increased to 90, 1 point higher than the May index. High input costs, the risk of lower prices for their products, and rising interest rates continue to weigh on farmer sentiment. This month’s Ag Economy Barometer survey was conducted from June 17-21, 2024.
The impact of rising interest rates on their farm operations has become a bigger concern for producers in recent months. Interest rate risk and high breakeven levels combined with concerns that crop and livestock prices could weaken are holding back producer sentiment and making producers cautious about making large investments. This month’s Farm Capital Investment Index declined by 3 points to a reading of 32, just one point above its historical low. More producers indicated this month that it is not a favorable time for large investments compared to May, while the percentage of producers who viewed it as a good time remained the same.
The Short-Term Farmland Value Expectations Index remained steady at 115 for June. However, there was a notable shift in producers’ longer-term outlook on farmland values, with the Long-Term Farmland Values Index dropping to 152, down 7 points from May. Fewer producers expect that farmland values will increase over the next five years, coinciding with a rise in those anticipating values holding steady. Among those expecting a long-term increase in farmland values, 57% attributed their confidence to non-farm investor demand, while 16% cited inflation as a driving factor. June marked the third consecutive month to include “Energy Production” as a potential driver of farmland values, with 10% of optimistic respondents pointing to energy production as a key driver of farmland values.
