US farmers' sentiment has weakened in August compared to July, as indicated by the Purdue University-CME Group Ag Economy Barometer. The barometer dipped 8 points to a reading of 115, reflecting producers' weaker perception of current conditions both on their farms and in US agriculture. The Current Conditions Index fell 13 points to a reading of 108, while the Future Expectations Index also declined by 5 points to a reading of 119.
The Farm Financial Performance Index declined marginally by one point to a reading of 86, suggesting that the rating of farm financial conditions changed little in August. However, this figure was noticeably weaker than a year earlier when the index stood at 99. This weaker producer sentiment translated into a decline in the Farm Capital Investment Index which fell to 37, eight points lower than in July and two points lower than a year earlier.
Producers cited increasing prices for farm machinery, new construction and rising interest rates as the most common reasons for their negative view of the investment climate. In fact, over half (60%) of producers surveyed said they expect interest rates to rise in the upcoming year.
Despite these concerns, producers remain cautiously optimistic about farmland values. The Short-Term Farmland (NYSE:FPI) Value Expectations Index rose one point to 126, while the long-term index was unchanged at a reading of 151.
The survey also revealed that higher input prices and rising interest rates continue to be top concerns for farming operations in the next 12 months for 34% and 24% of respondents respectively. Despite significant weakening of crop prices this summer, only one in five producers chose declining commodity prices as one of their top concerns.
The Ag Economy Barometer survey was conducted from August 14-18, 2023. Purdue University's Center for Commercial Agriculture and CME Group (NASDAQ:CME) jointly conduct this monthly survey to assess producer sentiment and its potential impact on agricultural economy.
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