Farmers were more optimistic about future conditions in July, despite declining crop prices as evidenced by the rise in the Farm Capital Investment Index to 38 in July from 32 in June.
The rise was puzzling given that corn and soybean prices fell 11% and 5% respectively in July, Michael Langemeier, associate director at the Center for Commercial Agriculture at Purdue University, which released the index Aug. 6, told Equipment Finance News.
“It surprised us a little bit that the sentiment improved,” Langemeier said.
Data for the report was collected on the same dates as the Republican National Convention, which may have affected the results, he said. Next month’s report will include policy questions to see if the upcoming election will affect the agriculture industry.
The Farm Capital Investment index was 7 points lower year over year, and three-quarters of the 400 surveyed farmers said it was a bad time to invest, according to the report.
Additionally, 70% of respondents said they mainly buy used equipment.
Farm financial performance falls
Farm financial performance dropped 4 points to 81 in July, a 6-point YoY decline.
Around 34% of farmers said high costs are the biggest concern for the year, and 29% said lower crop and livestock prices are the biggest concern.
“I think interest rates would actually make that list if those other two weren’t really problematic,” Langemeier said. “We’ve got some low margins in 2024, particularly for crop producers.”
Concerns over interest rates fell 2 percentage points to 23% in July, in part from Fed signals that it may reduce rates in September, according to the report.
Future expectations grow
Farmer sentiment for both future expectations and current conditions rose in July. Current conditions climbed 10 points to 100 and future expectations rose 7 points to 119.
If land values continue to hold, farmers may be more willing to purchase equipment in the long-term future, Langemeier said, noting that “they will have the wherewithal to purchase machinery.”
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