Less Optimism, Less Pessimism, More Uncertainty in Ag

Ag producer sentiment improved slightly during June. The Ag Economy Barometer index rose to a reading of 143 compared to 141 a month earlier. The rise, which is based on a nationwide monthly survey of 400 U.S. producers, was underpinned by a rise in the Index of Current Conditions, which climbed from 132 to 138 in a month.

Researchers characterized the uptick as “surprising” in the context of falling commodity prices.

The percentage of producers expecting good times in U.S. agriculture during the year ahead fell from 32 percent in May to 26 percent in June, suggesting an erosion in producers’ optimism. But at the same time, the percentage of producers expecting bad times declined from 54 percent in May to 46 percent in June. The same question about the next five years revealed the same shifts: fewer optimistic, fewer pessimistic, more uncertain.

The percentage of producers indicating it’s a bad time for large farm investments has been trending lower since October 2016, falling to 60 percent in June compared to 67 percent a month earlier. However, it is also worth noting that the percentage of producers indicating that it is a good time for large farm investments dropped to 26 percent, down slightly compared to a month earlier and 8 percentage points below its most recent peak of 34 percent in February.

Responding to an additional question on the June survey, 13 percent of respondents indicated they plan to make a large investment on their farm this year.

To learn more about their plans, the survey asked producers who plan on investing what their motivation was for the investment. Over half of respondents said it was because a building or piece of equipment needed to be replaced. Another 18 percent of respondents cited farm expansion as a reason for investing, and 10 percent said it was to reduce their tax liabilities.

The Ag Barometer for July will publish later this week. We’ll post results at FarmEquip.org.