Farmers' Financial Outlook Optimism Sees Dramatic Drop in June Ag Economy Barometer
U.S. farmers' optimism about current and future conditions are seeing a sharp decline to start the summer, as a monthly gauge of producer sentiments hit the lowest reading since July 2020.
The monthly Ag Economy Barometer, which is a survey of 400 agricultural producers' conducted by Purdue University and the CME Group, fell to a reading of 137 in June. The 21-point decline from just a month prior indicated farmers are concerned not just about current conditions, but what they may face in the future.
The biggest driver of the sharp drop came in the Index of Current Conditions, which fell 29 points to 149, and marked the lowest reading since September 2020.
"The decline of the barometer was driven mostly by a decline in the index of current conditions," says Jim Mintert, author of the Ag Economy Barometer and Purdue University economist. "Although the index of future expectations also declined, the sharpest decline, however, really was with the Current Condition Index, which fell to 149 from 178 a month earlier."
The Future Expectations also acted as a weight this month, falling 17 points from the month prior, as more farmers voiced concerns over the health of their farm finances.
"The farm financial performance index declined sharply to a rating of 96 versus 126 last month and 138 two months ago, as farmers became more concerned about the ability of their farms to have good financial performance compared to a year earlier," adds Mintert.
Mintert says since peaking in April, producers' perception of their farm's financial performance has seen a dramatic drop. That's as more farmers are concerned what the rising cost of inputs will mean for their bottom-line.
“Farmers expect their input costs to rise much more rapidly in the year ahead than they have over the last decade, contributing to their concerns about their farm finances and financial future," says Mintert.
This month’s survey was conducted from June 21-25, 2021.
