The Purdue University-CME Group Ag Economy Barometer rose 4 points in October to a reading of 110. The modest improvement in farmer sentiment resulted from farmers’ improved perspective on current conditions on their farms as well as their expectations for the future.
The Index of Current Conditions rose 3 points to 101 while the Index of Future Expectations rose 5 points to 114. Farmers in this month’s survey were a bit less concerned about the risk of lower prices for crops and livestock and felt somewhat better about their farms’ financial situation than a month earlier.
Farmers’ more optimistic view of their farms’ financial situation was reflected in the Farm Financial Performance Index which rose 6 points in October compared to September. This month’s index value of 92 was the highest farm financial performance reading since April and pushed the index 7% above a year ago. The index’s rise stood in contrast to USDA’s’ forecast for 2023 net farm income to fall below 2022’s income level. Reports of higher-than-expected corn and soybean yields in some Corn Belt locations, along with a modest rally in corn prices, likely contributed to this month’s rise in the financial conditions index.
Some 78% of farmers said now is a bad time to make large investments in their farm operation, while 13% said now was a good time for such investments. Among those who said it was a bad time, 41% chose rising interest rates as their primary reason, the most popular choice and the highest percentage to date who have selected it as their primary reason. Among those who said it’s a good time to make large investments, 24% pointed to strong cash flows as their primary reason for thinking it’s a good time and another 24% pointed to higher dealer inventories.
There was a modest improvement in farmer sentiment in October as farmers reported a small improvement in current conditions on their farms along with better expectations for the future. In particular, producers reported better financial conditions on their farms in October than in September, although that did not translate into a more favorable investment outlook among survey respondents. Farmers continue to be cautiously optimistic about farmland values, particularly when asked to look ahead five years. Nearly one in four corn and soybean farmers responding to this month’s survey reported making changes in their farm operation in response to long-term weather pattern changes in their area. Changes implemented by farmers were wide ranging and some farms reported making multiple changes to their farm operations in response to shifting weather patterns.