In July, all three broad-based measures of farmer sentiment saw improvement. The Purdue University/CME Group Ag Economy Barometer index rose by 8 points to 113, the Index of Current Conditions increased by 10 points to 100, and the Index of Future Expectations climbed 7 points to 119.
This boost in sentiment occurred despite a decline in corn and soybean prices from mid-June to mid-July, with Eastern Corn Belt cash corn and soybean prices dropping 11 percent and 5 percent, respectively. The improvement was driven by fewer respondents reporting worsened conditions compared to a year ago and a decrease in those expecting negative future outcomes. The Ag Economy Barometer survey was conducted from July 15-19, 2024.
High input costs remained the primary concern for 34 percent of farmers surveyed, with 29 percent citing the risk of lower crop and livestock prices, up from 25 percent in June. Reflecting the Federal Reserve’s signals that interest rates have peaked, only 17 percent of respondents listed rising interest rates as a top concern, down from 23 percent last month.
The Farm Financial Performance Index dropped 4 points to 81, 6 points lower than in July 2023. This decline reflects farmers’ concerns about weakening commodity prices and high input costs. Although production costs for crops like corn and soybeans have decreased year-over-year, output prices have also fallen, suggesting a potential cost-price squeeze for U.S. crop producers.
Despite these concerns, the Farm Capital Investment Index rose by 6 points to 38, though it remains 7 points lower than in July 2023. This increase was due to a slight reduction in the number of producers who believe it’s a bad time for large investments, dropping from 80 percent in June to 75 percent in July. The increase in optimism, despite lower crop prices, was somewhat puzzling but aligns with fewer producers citing rising interest rates as a primary concern.
The Short-Term Farmland Value Expectations Index saw a small increase to 118 from 115 in June, driven by more respondents expecting stable farmland values over the next year. Conversely, the Long-Term Farmland Value Expectations Index dropped 6 points to 146, with fewer farmers expecting values to rise over the next five years and more anticipating they will remain unchanged.
As discussions begin for the 2025 crop year’s farmland leases, the July survey revealed that nearly 72 percent of crop farmers expect cash rental rates to remain roughly the same as in 2024. Among the remaining respondents, views were nearly evenly divided, with 15 percent anticipating a rise in rates and 13 percent expecting a decline.