Broad-based measures of farmer sentiment improved in July as the Purdue University/CME Group Ag Economy Barometer index rose eight points to 113.
The Index of Current Conditions increased by 10 points to 100 and the Index of Future Expectations at 119 was seven points higher than a month earlier.
James Mintert, at the Purdue Center for Commercial Ag, said in a release that farmer sentiment improved in July despite declines in corn and soybean prices from mid-June to mid-July. For example, Eastern Corn Belt cash corn and soybean prices fell 11% and 5%, respectively, over that time frame.
This month’s Ag Economy Barometer survey was conducted from July 15-19.
Responses to the individual questions used to compute the indices indicate that the sentiment improvement was attributable to fewer respondents reporting worsened conditions compared with a year ago along with a decline in those expecting negative future outcomes.
HIGH INPUT COSTS CONCERNING
The July survey showed that high input costs remained the biggest concern as it was cited as a top worry by 34% of farmers surveyed, Mintert said. Additionally, the risk of lower crop and livestock prices continued to worry producers, with 29% citing it as a top concern, up from 25% in June.
Reflecting the signals from the Federal Reserve that interest rates have peaked, only 17% of respondents pointed to rising interest rates as a top concern, down from 23% last month, Mintert’s release said.
The Farm Financial Performance Index dropped four points in July to 81, six points lower than in July 2023, Mintert said. The decline in financial performance expectations reflected farmers’ worries about weakening commodity prices and high input costs.
Although production costs for principal crops have decreased, output prices also have fallen, raising the possibility of a cost-price squeeze for producers, he said.
INVESTMENT INDEX UP SLIGHTLY
Despite concerns about farms’ financial performance, the Farm Capital Investment Index rose six points to 38, though it remains weak, at seven points lower than in July 2023, the release said. This month’s improvement was linked to a slight decrease in the number of producers who believed it’s a bad time to make large investments, which dropped from 80% in June to 75% in July.
Declines in crop prices point to lower producer incomes this year, so the increase in optimism was somewhat puzzling, Mintert said. Fewer producers citing rising interest rates as a primary concern for the upcoming year corresponded with the modest improvement in their perspectives on capital investments, but respondents continued to express hesitancy to make large investments.
CATTLE, BEEF RECAP
The USDA reported formula and contract base prices for live FOB steers and heifers this week ranged from $188.00 per cwt to $197.25, compared with last week’s range of $188.53 to $200.62 per cwt. FOB dressed steers, and heifers went for $295.76 per cwt to $307.30, compared with $296.77 to $310.09.
The USDA choice cutout Thursday was down $1.73 per cwt at $312.12 while select was down $0.80 at $298.03. The choice/select spread narrowed to $14.09 from $15.02 with 103 loads of fabricated product and 21 loads of trimmings and grinds sold into the spot market.
The weighted average USDA listed wholesale price for fresh 90% lean beef was $374.93 per cwt, and 50% beef was $164.92.
The USDA said basis bids for corn from feeders in the Southern Plains were unchanged at $1.45 to $1.60 a bushel over the Sep corn contract, which settled at $3.79 1/4 a bushel, down $0.04.
No live cattle contracts were tendered for delivery Thursday.
The CME Feeder Cattle Index for the seven days ended Wednesday was $252.84 per cwt, down $1.88. This compares with Thursday’s Aug contract settlement of $242.37, down $0.25.