The Purdue University/CME Group Economic Barometer index showed a modest improvement in sentiment for agricultural producers in October, up four points to a reading of 110. Farms and what they expect in the future. The current conditions index rose three points to 101 and the future prospects index rose five points to 114. This month’s Ag Economy Barometer survey was conducted October 16-20.
“In this month’s survey, farmers were slightly less likely to experience lower prices for crops and livestock and felt better about the financial situation of agriculture than they did a month ago,” said James Minter, principal investigator of the Barometer and director of Purdue University’s Center for Commercial Agriculture.
Farmers’ more optimistic view of the financial condition of their farms was reflected in the Farm Financial Performance Index, which rose six points in October compared to September. This month’s index of 92 was the highest reading for agricultural financial performance since April and was up 7% from the reading a year earlier. The increase in the index compares with the USDA forecasting that 2023 net farm income will fall below 2022 income levels.
“Reports of better-than-expected corn and soybean yields in some areas of the Corn Belt and a modest rally in corn prices contributed to this month’s financials and barometer indices,” Mintret said.
Although financial conditions were stronger than a month ago, the farm capital investment index fell four points to a reading of 35 in October. This was the lowest reading of the year for the investment index. In October, nearly eight in 10 (78%) people said it was a bad time to make a big investment in their farm, while 13% of farmers said it was a good time to make a big investment.
Among those who say it’s a bad time to invest, the most-cited reason was chosen by 41% of respondents, up one point from September. Among those who say it’s a good time to make a big investment in their farm, 24% point to “strong cash flow,” down from 32% who felt that way in September, and 20% point to “expansion opportunities,” down from 6. % in September.
In a survey conducted this month, more than one-third (35%) of producers say they expect farmland prices in their area to rise in the coming year, while nearly two-thirds (65%) of survey respondents expect farmland prices to rise next year. five years.
As a result, the short-term farmland value index was little changed, down just one point from a month ago, while the long-term farmland value expectations index rose three points. The main reasons cited by producers for the optimistic outlook for farmland prices over the next five years is interest from off-farm investors, followed by rising prices.
Dry weather last spring and summer prompted discussions among producers about long-term climate change. This month’s survey specifically asked corn and soybean producers whether they have made any changes to their farming operations in response to long-term changes in weather conditions in their area. In the October survey, nearly one in four corn/soybean farmers (24%) indicated that they have implemented changes in their farming practices to cope with changing weather conditions.
A follow-up question was only given to farmers who claimed to have made a change. Responses suggest that farmers are choosing between different technologies and capital investments to adapt to changing weather conditions, including: to no-till use (25 percent of respondents). A mix of crops planted (23% of respondents); More drought resistant varieties were planted (20% of respondents); Installed clay drain (9% of respondents); and installed irrigation (9% of respondents).