Farmer sentiment drops 3 points in June

Farmer sentiment declined in June, with the Purdue/CME Group Ag Economy Barometer index reading dropping to 105, three points lower than the previous month. The decline was attributed to a five-point drop in the Index of Future Expectations, which fell to 112, while the June Current Conditions Index increased slightly to 90. James Mintert, the barometer’s principal investigator and director of Purdue University’s Center for Commercial Agriculture, said, “Interest rate risk and high breakeven levels, combined with concerns that crop and livestock prices could weaken, are holding back producer sentiment and making them cautious about making large investments.” The Farm Capital Investment Index also fell, declining by three points to a reading of 32, just one point above its historical low. More producers indicated this month that now is not a favorable time for large investments compared to May, although the percentage of producers who viewed it as a good time remained unchanged. The Long-Term Farmland Values Index dropped to 152, down seven points from May. Fewer producers expect farmland values to increase over the next five years, with a rise in those anticipating values holding steady.

Farmer sentiment survey insights

Among those expecting long-term increases, 57% attributed their confidence to nonfarm investor demand and 16% to inflation. The survey also explored respondents’ interest in carbon capture and storage projects introduced by ethanol plants. Eight percent of respondents reported being approached about such projects, with the majority (93%) noting they received payment offers for less than $25 per acre and only 8% receiving offers exceeding $50 per acre. Discussions about leasing farmland for solar energy production were reported by 16% of respondents, a slight decline from April and May surveys. However, lease rates showed an upward trend, with 69% of respondents being offered long-term rates of $1,000 per acre or higher, compared to 27% in June 2021. Notably, 27% of respondents received offers of $1,500 per acre or more, and 58% of leases included an annual escalator clause, typically between 2% and 3% per year.