Agricultural producers’ sentiment declined for the second straight month, as the Purdue University/CME Group Ag Economy Barometer index fell nine points to a reading of 106 in September, wrote James Mintert, agricultural economist at Purdue, in a report on its monthly producer survey.
This month’s Ag Economy Barometer survey was conducted from Sep. 11-15.
CURRENT SITUATION, FUTURE PROSPECTS CONCERNING
Producers expressed concern about their current situation as well as future prospects for their farms, he said. The Current Conditions and Future Expectations Indices declined 10 points to a reading of 98 and 109, respectively.
Notably, all three indices stand below their readings from one year ago, Mintert said.
Weakening prices for major crops and ongoing concerns about high production costs and interest rates weighed on producers’ minds this month, the survey showed. Producers continued to point to high input costs as a top concern for their farming operations in the year ahead with a third of respondents citing it as their number one concern, followed by rising interest rates, chosen by 25% of respondents, and lower crop and/or livestock prices, chosen by 22% of farmers.
The percentage of producers concerned about lower crop and/or livestock prices has increased since the beginning of the year, when just 16% of producers cited it as a top concern, Mintert said.
CAPITAL INVESTMENT INDEX UP
There was a small uptick in the Farm Capital Investment Index, up two points to a reading of 39 in September, he said. However, 75% of the producers still said now is a bad time for large investments.
The primary reasons among those who felt now was a bad time for large investments were rising interest rates and the high cost of machinery and new construction, Mintert said. Notably, 40% of producers who felt it’s a bad time to invest cited rising interest rates as a key reason, up from 35% last month, and up from 14% when this question was first posed in July 2022.
This month, there was a slight rise in the percentage of producers who said now was a good time to make investments, citing strong cash flows on their farm operations as their primary reason.
FINANCIAL PERFORMANCE UNCHANGED
The Farm Financial Performance Index was unchanged in September compared with August, leaving the index at a reading of 86, Mintert said. In a nod to how variable conditions have been around the country during this growing season, there were small increases in the percentages of producers who 1) expected better conditions and 2) expect worse financial conditions compared with last year.
Producers remained relatively optimistic about farmland values, which was surprising to Mintert given the percentage of respondents who expressed concerns about high input costs, rising interest rates and the risk of lower crop and livestock prices.
CATTLE, BEEF RECAP
The USDA reported formula and contract base prices for live FOB steers and heifers this week ranged from $182.69 per cwt to $186.00, compared with last week’s range of $182.50 to $187.80 per cwt. FOB dressed steers, and heifers went for $288.46 per cwt to $290.20, compared with $287.19 to $292.38.
The USDA choice cutout Tuesday was down $3.01 per cwt at $300.07 while select was off $1.39 at $275.59. The choice/select spread narrowed to $24.48 from $26.10 with 94 loads of fabricated product and 36 loads of trimmings and grinds sold into the spot market.
The USDA said basis bids for corn from feeders in the Southern Plains were unchanged at $1.37 to $1.50 a bushel over the Dec corn contract, which settled at $4.87 1/2 a bushel, down $0.01 1/4.
The CME Feeder Cattle Index for the seven days ended Monday was $251.79 per cwt, down $0.42. This compares with Tuesday’s Oct contract settlement of $248.60, down $4.72.