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The Index of Future Expectations rose 25 points to a reading of
123, while the Index of Current Conditions held flat at a
reading of 116 in June. The Ag Economy Barometer is calculated
each month from 400 U.S. agricultural producers’ responses to a
telephone survey. This month’s survey was conducted June 12-16.
“Optimism about U.S. agriculture’s future and a more sanguine
interest rate outlook help explain producers’ more positive view
of the future expressed in June’s survey; however current
conditions in the farming economy continue to present a
challenge for some producers,” said James Mintert, the
barometer’s principal investigator and director of Purdue
University’s Center for Commercial Agriculture. “This month four
out of 10 producers stated that their financial situation has
deteriorated compared to a year ago.”
To better understand the large month-to-month swing in
producers’ expectations for the future, responses between the
May and June surveys were compared. In June, 20% of respondents
said they expected their financial condition to improve over the
next year, compared to just 13% who said that in May. Meanwhile,
only 32% expect their farm’s financial situation to decline over
the upcoming year, compared to 44% who responded that way in
May. Producers’ improved perspective on the future was not
focused solely on their own farms, but extended to all of U.S.
agriculture. The percentage of producers expecting good times
for U.S. agriculture in the next five years rose 8 points to
33%, while the percentage of producers expecting bad times fell
3 points to 41%.
The Farm Financial Performance Index also rose this month, up 10
points from May, and was likely a result of a late-May to
early-June rally in harvest-time prices for corn and soybeans,
as well as optimism toward positive returns for cattle
producers. In June, 50% of respondents said they expect “good
times” for livestock producers in the next five years, up from
37% in May. Optimism about positive returns for cattle
producers, especially cow-calf operations, was likely a key
factor behind the positive livestock outlook.
The Farm Capital Investment Index rose five points in June to a
reading of 42; however, nearly 75% of respondents still feel now
is a bad time to make large investments in their farming
operation. Respondents in June cited rising interest rates (35%
of respondents) and increasing prices for equipment and new
construction (37% of respondents) as key reasons for viewing now
as a bad time for investments.
Producers were more optimistic about farmland values in June as
both the short and long-run farmland value indices rose. The
short-term index, which asks producers about their outlook over
the next 12 months, jumped 16 points to a reading of 126, its
highest reading since last November. Meanwhile, the long-term
index, which asks producers to look ahead five years, rose a
more modest 6 points to a reading of 151, pushing that index up
to its highest level since February 2022. Additionally, 43% of
producers in the June survey think interest rates have peaked,
and nearly a quarter of survey respondents expect to see lower
interest rates within the next year.
This month’s survey also included a question targeted toward
corn and soybean producers regarding their expectations for
farmland cash rental rates in 2024. Twenty-five percent of the
corn/soybean producers in this month’s survey said they expect
2024 cash rental rates in their area to rise above 2023’s rates.
Of those respondents who said they expect rental rates to rise,
nearly one-third (32%) said they expect 2024 rental rates to
increase up to 5%, while nearly half (49%) look for rates to
rise from 5% to 10%, when compared to 2023.
This month’s survey included questions to learn
more about producers’ thoughts on the passage of a new farm
bill. Among corn and soybean producers, the Crop Insurance title
and the Commodity title remain the two most important farm bill
components. When asked about expectations for PLC reference
prices for corn and soybeans, half of corn and soybean producers
said they expect Congress to raise prices for both. In response
to the recent Supreme Court ruling, which upheld California’s
Proposition 12 mandating housing standards for hogs processed
into pork that will be sold in that state, all survey
respondents were asked about the likelihood Congress would
overturn the proposition as part of a new farm bill.
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Producers were split in their response to this
question, with 36% stating it’s either somewhat or very unlikely
that Congress will try to overturn the proposition, and 25% stating
it is at least somewhat likely Congress will take on Proposition 12
in new farm bill legislation.
Read the full Ag Economy Barometer report at https://purdue.ag/agbarometer.
The site also offers additional resources – such as past reports,
charts and survey methodology – and a form to sign up for monthly
barometer email updates and webinars.
Each month, the Purdue Center for Commercial Agriculture provides a
short video analysis of the barometer results, available at https://purdue.ag/barometervideo.
For more information, check out the Purdue Commercial AgCast podcast
available at https://purdue.ag/agcast, which includes a detailed
breakdown of each month’s barometer and a discussion of recent
agricultural news that affects farmers.
The Ag Economy Barometer, Index of Current Conditions and Index of
Future Expectations are available on the Bloomberg Terminal under
the following ticker symbols: AGECBARO, AGECCURC and AGECFTEX.
About the Purdue University Center for Commercial Agriculture
The Center for Commercial Agriculture was founded in 2011 to provide
professional development and educational programs for farmers.
Housed within Purdue University’s Department of Agricultural
Economics, the center’s faculty and staff develop and execute
research and educational programs that address the different needs
of managing in today’s business environment.
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[Writer: Kami Goodwin
Source: James Mintert]
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