Agricultural producer sentiment improved slightly in July as the Purdue University/CME Group Ag Economy Barometer index rose two points to a reading of 123, said Purdue Agricultural Economist James Mintert, in a University release.
Farmers also were more optimistic about their perception of current conditions and future expectations on their farms, Mintert said.
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 July 10 through July 14.
CURRENT CONDITIONS INDEX UP
The Index of Current Conditions rose five points to a reading of 121, while the Index of Future Expectations was up one point to 124, Mintert said. Producers were slightly more confident about the farming economy in July, despite recent crop price volatility and continued concerns about rising interest rates.
The improvement in farmers’ perspectives on current conditions spilled over into a modest rise in July’s Farm Capital Investment Index, which was up three points to a reading of 45, he said. However, the index has improved greatly, up 14 points, since bottoming out in November 2022.
INVESTMENT INDEX UP
Comparing July’s responses to last fall’s low point, the percentage of producers saying now is a good time for large investments has risen from 10% who felt that way in November to 17% in July, Mintert said. Additionally, the percentage of farmers who felt it’s a bad time to invest was down from 79% in November to 72% in July.
The improvement in this month’s investment index occurred despite a rise in the percentage of producers who expected interest rates to rise over the next year, he said. Nearly two-thirds (65%) of producers in July said they expected interest rates to increase, up from 57% in June.
Among those who indicated that now was a bad time to make large investments, their top reason was concern about rising interest rates, Mintert said.
Given the volatility in commodity prices, especially crop prices, this spring and early summer, it’s notable that more producers expressed concern about rising interest rates than declining output prices, he said. Producers’ top concern for their farming operations in the upcoming year still was higher input costs (37% of respondents), followed by rising interest rates (24% of respondents) and lower output prices (19% of respondents).
Confidence among farmers regarding the future direction of farmland values continued, even as nearly two-thirds of survey respondents expected interest rates to rise, Mintert said. The Long-Term Farmland Value Expectations Index remained unchanged in July at a reading of 151 while the Short-Term Farmland Value Expectations Index declined just one point to 125.
CATTLE, BEEF RECAP
The USDA reported formula and contract base prices for live FOB steers and heifers this week ranged from $174.90 per cwt to $189.24, compared with last week’s range of $179.20 to $190.48 per cwt. FOB dressed steers, and heifers went for $284.28 per cwt to $292.33, compared with $284.31 to $292.45.
The USDA choice cutout Wednesday was down $2.92 per cwt at $303.18 while select was down $2.13 at $277.47. The choice/select spread narrowed to $25.71 from $26.50 with 104 loads of fabricated product and 30 loads of trimmings and grinds sold into the spot market.
The USDA said basis bids for corn from feeders in the Southern Plains were steady at $1.85 to $2.05 a bushel over the Sep corn contract, which settled at $4.88 1/4 a bushel, down $0.08 3/4.
The CME Feeder Cattle Index for the seven days ended Tuesday was $244.88 per cwt, up $0.19. This compares with Wednesday’s Aug contract settlement of $246.82 per cwt, down $1.65.