Farmers more optimistic about ag economy in July

WEST LAFAYETTE, Ind. — Farmers were more optimistic about the ag economy in July, despite lower corn and soybean prices, according to the Purdue University/CME Group Ag Economy Barometer.

The overall index rose eight points to 113. The Index of Current Conditions increased by 10 points and the Index of Future Expectations increased by seven points from June to July.

“Declines in crop prices point to lower producer incomes this year, so the increase in optimism was somewhat puzzling,” said James Mintert, director of Purdue University’s Center for Commercial Agriculture.

“Fewer producers citing rising interest rates as a primary concern for the upcoming year corresponds with the modest improvement in their perspectives on capital investments, but respondents continue to express hesitancy to make large investments.”

High input costs remained the biggest concern for 34% of farmers. Additionally, the risk of lower crop and livestock prices continues to worry producers, with 29% citing it as a top concern, up from 25% in June.

Only 17% of respondents cited rising interest rates as a top concern, down from 23% last month.

Other report highlights:

• The Farm Financial Performance Index dropped four points in July, reflecting farmers’ worries about weakening commodity prices and high input costs.

• Although production costs for principal crops, including corn and soybeans, have decreased year over year, output prices have also fallen, raising the possibility of a cost-price squeeze for U.S. crop producers.

• The Farm Capital Investment Index rose six points in July, but remains weak compared to last year. This improvement was due to a slight decrease in the number of producers who believe it’s a bad time to make large investments, which dropped from 80% in June to 75% in July.

• July saw a small improvement in the Short-Term Farmland Value Expectations Index, rising to 118 from 115 in June.

• The Long-Term Farmland Value Expectations Index dropped six points from June, with fewer farmers expecting values to rise over the next five years and more anticipating they will remain unchanged.

• Nearly three-fourths of crop farmers expect cash rental rates to remain roughly the same as in 2024.

View the complete report at https://ag.purdue.edu/commercialag/ageconomybarometer/.