From staff reports Declining income expectations helped push farmer sentiment down in September as the Purdue University- CME Group Ag Economy Barometer Index fell 12 points to 88. Both subindices of the barometer, the Index of Current Conditions and the Index of Future Expectations also declined.
Current Conditions fell seven points to 76; Future Expectations dropped 14 points to 94. These were the weakest barometer and future expectation readings since March 2016. Current conditions nearly matched those of April 2020, in the early stages of the COVID-19 pandemic. Weak output prices combined with high input costs were key problems cited by respondents of a survey conducted Sept. 9-13.
Farmers are concerned with commodity prices, input costs, the future of agricultural trade and the upcoming election’s effect on their farm operations.
When polled, 34% of farmers chose input prices as their top concern, and 33% chose lower output prices as theirs. Interest rates were the top concern among 17% of respondents. Their concerns about commodity prices are backed up by their lack of confidence in the future of U.S. agricultural exports.
This month, 26% of respondents said they expect U.S. agricultural exports to rise over the next five years. In a related question, 78% of producers in this month’s survey said they are concerned with the fall 2024 elections.
Additionally, the Farm Financial Performance Index fell to 68 in September, down from 72 in August. In 2023, the index was at 86 during the same period. Although this month’s Farm Capital Investment Index rose 4 points compared to August, the index at 35 remains in very weak territory.
The Short-Term Farmland Value Index dropped 10 points to a reading of 95. This is the first time since 2020 that more farmers expect farmland values to weaken in the year ahead than expect it to rise.
The shift to a weaker outlook is attributable to a sharp drop in the percentage of producers who expect values to rise and a concomitant increase among those who expect values to simply hold steady. Unlike the shortterm index, the Long-Term Farmland Values Index remained positive in September, rising to 147, five points higher than in August.
The survey marks the fourth consecutive year that included questions on cover crop usage among corn and soybean producers. More than half of respondents said they plant cover crops on their farm, with one in five saying that have done so in the past. In 2021, 41% of cover crop users said they planted cover crops on more than 25% of their crop acreage. By 2023, that percentage had increased to 50. This year, 68% of cover crop users reported planting cover crops on more than one-fourth of their farms’ acreage.