Interest rates, prices top ag economic concerns

WEST LAFAYETTE, Ind. — Farmers continued to have concerns about the ag economy — especially future expectations — in June, according to the Purdue University/CME Group Ag Economy Barometer.

The Purdue/CME Group Ag Economy Barometer reading of 105 was three points lower than a month earlier. A five-point decline in the Index of Future Expectations to 112 was responsible for the overall sentiment decline, as the June Current Conditions Index of 90 was one point above the May index value.

High input costs, the risk of lower prices for their products and rising interest rates continue to weigh on farmers.

“The impact of rising interest rates on their farm operations has become a bigger concern for producers in recent months,” said James Mintert, director of Purdue University’s Center for Commercial Agriculture.

“Interest rate risk and high breakeven levels combined with concerns that crop and livestock prices could weaken are holding back producer sentiment and making producers cautious about making large investments.”

Other report highlights:

• The Farm Capital Investment Index declined by three points to a reading of 32, just one point above its historical low.

• More producers indicated June was not a favorable time for large investments compared to May.

• The Short-Term Farmland Value Expectations Index remained steady at 115 for June.

• The Long-Term Farmland Values Index dropped to 152, down seven points from May.

• 8% of farmers reported being approached about carbon capture and storage projects introduced by ethanol plants.

• 16% of respondents reported discussions taking place within the last six months about leasing farmland for solar energy production, a slight decline from April and May.

• 69% of farmers who reported a solar leasing discussion said they were offered a long-term solar lease rate of $1,000 per acre or more.

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