The Purdue University/CME Group Ag Economy Barometer marks a second month of sharp declines, down 21 points to a reading of 137 in June, said Purdue University Agricultural Economist James Mintert, in a release.
The Ag Economy Barometer is calculated each month from 400 US agricultural producers’ responses to a telephone survey, the release said. This month’s survey was conducted from June 21-25.
Mintert cited rising input costs for the decline in farmer attitudes.
LOWER EXPECTATIONS
Producers were less optimistic about current conditions on their farming operations as well as their expectations for the future, the release said. The Index of Current Conditions dropped 29 points to a reading of 149 and the Index of Future Expectations fell 17 points to a reading of 132.
Since peaking in April, producers’ view of their farms’ financial performance has fallen sharply, Mintert said. The Farm Financial Performance Index, which is based on a question that asks producers about expectations for their farm’s financial performance this year compared to last year, declined 30 points this month, and 42 points since April, to a reading of 96.
Weakening perceptions of farm financial performance spilled over into the Farm Capital Investment Index, which declined 11 points to a reading of 54, the lowest investment index reading since May 2020, he said.
The decline in the investment index appears to be driven more by plans to hold back on constructing new farm buildings and grain bins than purchasing farm machinery, the survey showed.
In June, 61% of producers said they reduced plans for new construction, while 9% said they increased plans, Mintert said. In comparison, 44% of producers indicated they planned to reduce their machinery purchases, 45% planned to hold purchases constant, and 10% planned to increase purchases, all compared to a year ago.
PRODUCTION COSTS UP
Rapidly rising production costs related to consumer and farm input price inflation were a concern for agricultural producers, the release said. Nearly 30% of producers said they expected farm input prices to rise by 8% or more in the upcoming year, which would be more than four times the average rise over the last 10 years of just 1.8%.
On the other hand, 21% of producers expected prices paid for inputs to increase less than 2%, which would be more in line with recent experience, Mintert said. Producers expected farm input costs to rise more rapidly than prices for consumer items, which could pressure their margins.
Expectation that their input costs will rise much more rapidly in the year ahead than they have over the last decade contributed to concerns about their farm finances and financial future, he said.
CATTLE, BEEF RECAP
Fed cattle traded last week at $120 to $126.50 per cwt on a live basis, down $2 to up $1.50 from the previous week. Dressed-basis trading was at $198 to $203, up $1 to $6.
The USDA choice cutout Tuesday was up $1.24 per cwt at $286.68, while select was off $1.10 at $263.31. The choice/select spread widened to $23.37 from $21.03 with 97 loads of fabricated product and 24 loads of trimmings and grinds sold into the spot market.
The USDA reported Tuesday that basis bids for corn from livestock feeding operations in the Southern Plains were unchanged at $1.07 to $1.15 a bushel over the Sep futures and for southwest Kansas were unchanged at $0.70 over Sep, which settled at $5.52 a bushel, down $0.40.
The CME Feeder Cattle Index for the seven days ended Friday was $146.81 per cwt up $0.85. This compares with Tuesday’s Aug contract settlement of $160.62 per cwt, up $3.57.