The Purdue University-CME Group Ag Economy Barometer index drifted lower to a reading of 112 in September which was 5 points lower than a month earlier. The decline in farmer sentiment was primarily the result of producers’ weaker perception of current conditions as the Current Conditions Index declined to 109, 9 points lower than in August. The Index of Future Expectations also weakened slightly, declining 3 points from a month earlier to a reading of 113.
Higher input costs are still the number one concern among survey respondents with the shift in U.S. monetary policy rising to the forefront as an issue among U.S. producers. This month 44% of respondents chose “higher input costs” as their number one concern, down from 53% last month. Second on the list of producers’ concerns for the upcoming year was “rising interest rates”, chosen by 23% of respondents, up from 14% in August.
This month’s Farm Financial Performance Index showed that compared to earlier this year, producers clearly feel better about their farm’s financial performance.
The Farm Capital Investment Index declined to a record low of 31 in September as producers continue to indicate that they do not view this as a “good time” to make large investments in their farming operations. Despite that negative perspective, the percentage of producers who plan to reduce their farm machinery purchases declined again this month, down 2 points compared to responses in August. Since peaking in March at 62 percent, the share of producers who plan to reduce their machinery purchases compared to a year earlier has been declining, dipping to 47% this month.
For the third month in a row, producers overwhelmingly said it was primarily because of the increase in prices for farm machinery and new construction. However, interest rates are starting to become a factor influencing producers’ decision making. Throughout the summer the percentage of farmers who chose “rising interest rates” as a primary reason for thinking it’s a bad time to make large investments rose from 14% in August to 21% in September.
Producers are also becoming increasingly worried about the impact of rising interest rates on their farm operations with more of them citing it as a reason why they think now is not a good time to make large investments.
The Purdue University-CME Group Ag Economy Barometer sentiment index is calculated each month from 400 U.S. agricultural producers’ responses to a telephone survey.
See complete survey results here.