Farmer optimism declined in August, as indicated by the Purdue University/CME Group Ag Economy Barometer index dipping 8 points to a reading of 115.
This month’s decline was fueled by producers’ weaker perception of current conditions both on their farms and in U.S. agriculture, according to a news release.
“Rising interest rates and concerns about high input prices continue to put downward pressure on producer sentiment,” James Mintert, the barometer’s principal investigator and director of Purdue University’s Center for Commercial Agriculture, said in the release. “This month over half (60%) of the producers we surveyed said they expect interest rates to rise in the upcoming year.”
When asked about top concerns for their farming operations in the next 12 months, producers continue to point to higher input prices (34% of respondents) and rising interest rates (24% of respondents).
The Farm Capital Investment Index was lower this month, falling 8 points to a reading of 37. Increasing prices for farm machinery and new construction along with rising interest rates continue to be the two most-cited reasons for their negative view, the release said. Meanwhile, producers’ rating of farm financial conditions changed little in August, as the Farm Financial Conditions Index declined just 1 point to a reading of 86.
Despite increasing concerns about rising interest rates, producers remain cautiously optimistic about farmland values. The Short-Term Farmland Value Expectations Index rose 1 point to 126, while the long-term index was unchanged at a reading of 151. About 4 out of 10 (39%) respondents said they expect farmland values to rise over the next year, while 13% said they look for values to decline in the next year, according to the release.
When asked about their longer-term view of farmland values, more than 6 out of 10 (63%) respondents said they expect values to rise over the next five years, while 12% said they expect values to fall.
