Worries about declining crop prices and weakening farm income are denting US producer sentiment.
The Purdue University/CME Group Ag Economy Barometer fell to 100 points in August, a 13-point decline from July as the outlook for a bountiful fall harvest was more than offset by lower crop prices.
The August decline in the barometer takes farmer sentiment back to the average level observed from fall 2015 to winter 2016, a period when farm incomes were falling sharply. “The weakness in farmer sentiment could indicate that farmers expect this year’s farm income downturn to last for an extended period,” the barometer said.
The ag economy barometer is based on a monthly survey of 400 producers nationwide. The August survey was conducted Aug. 12-16.
Over the last several months, farmer concerns about weakening commodity prices have become more evident in barometer surveys. In the August survey, producers’ concerns about commodity prices nearly eclipsed what has consistently been their top concern: high input prices. In August, 30% of respondents picked lower commodity prices as a top concern compared to 33% who chose high input costs. That is a marked departure from a year earlier when just 20% of survey respondents pointed to weak commodity prices as a top concern for their farm operation.
At the same time, fewer respondents identified rising interest rates as a top concern. Seventeen percent of respondents pointed to interest rates as a top issue in August, down from 24% a year ago. In a related question, two-thirds (68%) of respondents said they expect interest rates to fall during the upcoming year, while only 19% said they look for rates to rise.
