“Rapidly fluctuating commodity prices” and poor current conditions for farmers led to the lowest recorded polling data on farmer sentiment in more than a year.
According to the Purdue University/CME Group Ag Economy Barometer report issued by Purdue University, farmers are not optimistic about future conditions either, according to the results collected from 400 interviews with farmers in Indiana and across the country. Purdue University agriculture researchers say a detailed look at the responses shows a major shift in farmers’ current financial performance.
While the reading on farm financial performance remained relatively steady from last month, researchers say September’s data showed increasing divergence in expectations for future financial performance, with some farmers who were less optimistic last month are now more optimistic while others shifted from feeling optimistic to more pessimistic.
“The increasing divergence in expectations among respondents from August to September could reflect differences in how individual farms managed risk in a period of rapidly fluctuating commodity prices,” James Minert, of the Purdue Center for Commercial Agriculture, said.
The drop in optimism resulted in a downward trend regarding farm capital investment, with more producers saying they expect to hold off on farm machinery purchases currently. The investment index has dropped at least 50 percentage points since the beginning of the year.
Supply and demand of farm machinery also affected the investment index, researchers say.
“Over half of respondents said that their farm machinery purchase plans have been impacted by low farm machinery inventories, which helps explain weak sentiment regarding whether or not now is a good time to make large improvements in their farm operation,” Minert said.
Inflation and rising input costs are also to blame for the change in sentiment, Purdue experts say, noting that nearly one-third of respondents expect input prices to rise by more than 12 percent in the upcoming year, which is more than six times the average inflation rate in the last 10 years.
While many farmers expected trade to improve and experts to rise at the beginning of the year, the percentage of farmers optimistic about trade has slowly fallen month-by-month.
Researchers for U.S. Commodities say the corn and soybean markets were oversold this year and that while production increased this year the input costs also increased, resulting in price-negative results. Volatility is expected to remain as the strength of the U.S. dollar, actual yield counts, weather and China’s demand will all affect this year’s harvest.
“Farmer optimism about future growth in agricultural exports continues to wane, and that, combined with concerns about a squeeze on operating margins, could be contributing to weakness in farmer sentiment,” Minert said. “Despite the weakness in farmer sentiment, farmers do remain bullish about farmland values, which reached a record high this month.”
Copyright © 2024 Peru Tribune