The Purdue University/CME Group Ag Economy Barometer continued to slide in June, down two points to a reading of 97, 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. This month’s survey was conducted from June 13 to 17.
FUTURE EXPECTATIONS WEAKEN
Producers’ expectations for the future also weakened, Mintert said. The Index of Future Expectations fell five points to a reading of 96, marking the lowest level for the index since October 2016.
Meanwhile, producers were slightly more optimistic regarding current conditions; the Index of Current Conditions rose five points to a reading of 99, he said. Rising input costs and uncertainty about the future continue to weigh on farmer sentiment.
Many producers also remained concerned about the ongoing escalation in production costs as well as commodity price volatility, which could lead to a production cost/income squeeze in 2023.
The Farm Financial Performance Index, which is primarily reflective of income expectations for the current year, improved two points to a reading of 83 in June, yet remains at one of the index’s lowest readings over the past two years, Mintert said.
When asked about expectations for their farm’s financial condition in June 2023 compared with June 2022, 51% of survey respondents said they expected their farms to be worse off financially a year from now, he said. This was the most negative response received to this question since data collection began in 2015.
CAPITAL INVESTMENT PLANS STABLE
For the second straight month, the Farm Capital Investment Index held at a record low of 35, as producers continued to say now is not a good time to make large investments in their farm operation, Mintert said. Supply chain issues continued to frustrate farmers.
In May and June, 50% of producers said tight machinery inventories were impacting their farm machinery purchase plans, he said.
The top concerns for producers in the coming year continued to be input prices (43%), followed by input availability (21%), government policies (18%) and lower output prices (17%), Mintert said.
Looking to 2023, a majority of farmers expected to see another round of large input cost increases with 63% expecting higher costs, on top of the large increases experienced this year, he said. Nearly four out of 10 farmers expected input prices to rise 10% or more next year. Only one out of 10 expected input prices in 2023 to fall below 2022.
Producers also expected inflation to push up the cost of living for farm families next year, Mintert said.
CATTLE, BEEF RECAP
The USDA reported formula and contract base prices for live FOB steers and heifers this week ranged from $138.00 to $151.00 per cwt, compared with last week’s range of $138.00 to $151.00. FOB dressed steers, and heifers went for $217.54 to $229.38 per cwt, versus $217.54 to $229.38.
The USDA choice cutout Tuesday was up $0.84 per cwt at $264.66, while select was down $0.60 at $239.87. The choice/select spread widened to $24.79 from $23.35 with 86 loads of fabricated product and 22 loads of trimmings and grinds sold into the spot market.
The USDA said basis bids for corn from feeders in the Southern Plains were at $2.65 to $2.85 a bushel over the Sep futures and for southwest Kansas were steady at $0.10 under Sep, which settled at $5.92 ¼, down $0.27 1/2.
The CME Feeder Cattle Index for the seven days ended Thursday was $165.67 per cwt down $0.77. This compares with Friday’s Aug contract settlement of $174.50, up $0.90.