Farmer Sentiment Dips Amid Weaker View of Current Conditions

U.S. farmers’ sentiment weakened in August compared to July as the Purdue University-CME Group Ag Economy Barometer dipped 8 points to a reading of 115.  This month’s decline was fueled by producers’ weaker perception of current conditions both on their farms and in U.S. agriculture as the Current Conditions Index fell 13 points to a reading of 108. The Future Expectations Index also declined in August to a reading of 119, 5 points below a month earlier. This month’s Ag Economy Barometer survey was conducted from August 14-18, 2023.

Although producer sentiment weakened in August, producers’ rating of farm financial conditions changed little this month, as the Farm Financial Performance Index declined just one point to a reading of 86. However, producers’ perspectives on farm financial conditions were noticeably weaker than a year earlier when the index stood at 99. Weaker producer sentiment this month did translate into a decline in the Farm Capital Investment Index. The investment index fell to 37, eight points lower than in July and two points lower than a year earlier. Among producers with a negative view of the investment climate, the increase in prices for farm machinery and new construction along with rising interest rates were the two most commonly cited reasons for their negative view. In a related question, over half (60%) of producers in this month’s survey said they expect interest rates to rise in the upcoming year.

When asked about top concerns for their farming operations in the next 12 months, producers continue to point to higher input prices and rising interest rates as their top two concerns. Higher input prices was chosen by one out of three (34%) and rising interest rates was chosen by one out of four (24%) survey respondents as a top concern. Even though crop prices weakened significantly this summer, producers ranked declining commodity prices as their number three concern, chosen by one out of five (20%) producers.

Despite increasing concerns about rising interest rates, producers remain cautiously optimistic about farmland values. This Short-Term Farmland Values Expectation Index rose one point to 126 while the long-term index was unchanged at a reading of 151. In this month’s survey, four out of ten respondents (39%) said they expect farmland values to rise over the next year while 13% said they look for values to decline in the next year. The percentage of respondents expecting values to rise in the near term has increased since May when just 29% of farmers in the survey said they expected values to rise during the upcoming year. When asked about their longer-term view of farmland values, six out of ten (63%) respondents said they expect values to rise over the next five years while 12% said they expect values to fall. The percentage of producers who held a negative five-year outlook on farmland values peaked back in February at 19%. 

Interest about usage of carbon contracts in row-crop agriculture remains high. This month’s survey posed questions about carbon contracts to corn and soybean growers. In the August survey, 6% of corn and soybean growers said they have engaged in discussions with companies about receiving payments to capture carbon on their farms, while just 2% said they had signed a carbon contract. Nearly half (47%) of the farms who discussed contract terms with a company said they were offered a payment rate of $10 to $20 per metric ton of carbon captured. Among the farms who engaged in discussions but chose not to sign a carbon contract, half of them said it was because the payment level was too low.

Wrapping Up

Farmer sentiment dipped in August with farmers weakening perception of current conditions on their farms providing the impetus for weaker sentiment. Although farmers reported little change in their farms’ financial condition compared to a month earlier, conditions were reported to be weaker than a year earlier. Six out of ten farmers in this month’s survey said they expect interest rates to rise over the next year which, along with rising prices for farm machinery and new construction, was cited as a reason for a weaker investment climate. Despite concerns about rising interest rates, producers remain cautiously optimistic about farmland values in both the short-run and longer-term.

USDA Crop Progress Report - Corn, Soy Conditions Fall in Week Ended Sept. 3

OMAHA (DTN) -- Bouts of extreme heat in much of the Corn Belt are starting to have a bigger influence on crop condition ratings, USDA-NASS stated in its weekly Crop Progress report. The percentage of corn and soybean crops rated good to excellent dropped 2 to 3 percentage points on Tuesday's report, which covered blistering hot days before the Labor Day holiday.

CORN

-- Crop progress: USDA said 93% of the corn was in the dough stage and 67% was dented, both slightly above the five-year average pace; 18% of the crop is mature.

-- Crop condition: USDA said 53% of the corn crop was rated good to excellent as of Sept. 3, down from 56% last week and one point lower than a year ago. Illinois fell 10 points to 57% good to excellent, while Iowa fell 5 points to 49%. Kansas and Missouri were the worst-rated at 33% and 32% good to excellent, respectively, said DTN Senior Analyst Dana Mantini.

SOYBEANS

-- Crop progress: USDA said 95% of soybeans were setting pods, up from the five-year average of 94% for this time of year, and 16% of the crop was dropping leaves.

-- Crop condition: USDA said 53% of the soybean crop was rated good to excellent as of Sept. 3, down from 58% last week and compared to 57% last year. Illinois dropped 10 points to 58%, while Iowa fell 4 points to just 49% good to excellent. Kansas is also the worst-rated, at 25% and down 12 points from last week, Mantini added. That portion of the national crop rated as poor to very poor rose 3 points to 17%

SPRING WHEAT

-- Harvest progress: USDA said spring wheat harvest is 74% complete as of Sept. 3, just slightly behind the 77% average. Minnesota is ahead of the average pace at 85%, while North Dakota is still lagging at 64% done compared to the average of 73%, according to Mantini.

-- Crop condition: USDA no longer reports spring wheat condition as too much of the crop has been harvested.

WEATHER OUTLOOK FOR THE WEEK AHEAD

A lot of the country will get a reprieve from the heat and will see widespread light showers this week, according to DTN Ag Meteorologist John Baranick.

"It got hot over the holiday weekend, but we'll see a system squash that over the next couple of days," said Baranick. "The system moved into the Northern Plains on Labor Day and will probably take through Thursday to get through the Eastern Corn Belt. The system may not bring widespread areas of heavy rain like it did over the Northern Plains, but showers should be fairly widespread for a lot of the country with light amounts expected. Temperatures behind the system are seasonably mild to cool and will wash out the heat, reducing stress on immature crops.

"The front to the system will get hung up in the Central Plains, where some isolated areas of showers remain possible for the week. Another system is forecast to move into the Plains this weekend and should move through the Corn Belt early next week with another round of widespread light showers. The system will bring another round of milder air into the country yet again."

Idaho And Western United States SNOTEL Water Year (Oct 1) to Date Precipitation % of Normal (9/5)

 

Bureau of Reclamation, Pacific Northwest Region - Storage Reservoirs in the Upper Snake River (9/4)

Average daily streamflows indicated in cubic feet per second.
Reservoir levels current as of midnight on date indicated.

Upper Snake River system is at 50 % of capacity.
(Jackson Lake,Palisades, Grassy Lake,Island Park,Ririe,American Falls,LakeWalcott)
Total space available:	2005225 AF
Total storage capacity:	4045695 AF