Farmer sentiment drifted lower in June as the Purdue University-CME Group Ag Economy Barometer reading of 105 was 3 points lower than a month earlier. A five-point decline in the Index of Future Expectations to 112 was responsible for the overall sentiment decline, as the June Current Conditions Index of 90 was one point above the May index value. High input costs and the risk of lower prices for the products they produce continue to weigh on farmer sentiment, along with concerns about rising interest rates. This month’s Ag Economy Barometer survey was conducted from June 17-21, 2024.
The “Farm Financial Performance Index” rose 3 points month-over-month to 85 inJune, following a 6 point gain in May, and in-line with last year’s trend, says J.P. Morgan analyst Tami Zakaria in a note to investors. She says:
"Recall, last year the index improved from spring into summer and again into the fall, as revenue expectations increased on the back of good crop yields and a fall price rally. Meanwhile, the Farm Capital Investment Index fell 3 points month-over-month in June, leaving the index just 1pt above its all-time low. Notably, over the last several months interest rate concerns have been rising. In February, 18% of farmers cited interest rates as a top concern for farm operations, inching up every month since to 23% in June."
The capital investment outlook weakened slightly in June as the Farm Capital Investment Index fell 3 points to a reading of 32, which leaves the index just one point higher than its all-time low. More producers this month said now is a bad time to make large investments than in May, with no change in the percentage of producers who said it’s a good time to invest. Interest rate concerns appear to be affecting farmers’ investment outlook. Over the last several months, the percentage of producers citing rising interest rates as a top concern for their farm operation has been rising. In February, 18% of survey respondents chose rising interest rates as a top concern. That percentage has been rising every month since then, reaching 23% in the June survey.
