Ag Economy Barometer Dips to 115, Producer Sentiment Weakens

Producer sentiment in the United States dipped in August, as the Purdue University/CME Group Ag Economy Barometer index fell 8 points to a reading of 115. This month's decline was driven by producers' weaker perception of current conditions both on their farms and in U.S. agriculture.

The Index for Current Conditions fell 13 points to a reading of 108. The Index of Future Expectations also declined 5 points in August to a reading of 119.

"Rising interest rates and concerns about high input prices continue to put downward pressure on producer sentiment," said James Mintert, the barometer's principal investigator and director of Purdue University's Center for Commercial Agriculture. "This month over half (60%) of the producers we surveyed said they expect interest rates to rise in the upcoming year."

When asked about their 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). Even though crop prices weakened significantly this summer, only one in five producers (20% of respondents) chose declining commodity prices as one of their top concerns.

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 commonly cited reasons for their negative view. Meanwhile, producers' rating of farm financial conditions changed little in August, as the Farm Financial Conditions Index declined just one 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 one 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. 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.

Read the full Ag Economy Barometer report at https://purdue.ag/agbarometer

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