High input costs continue growing as a top concern for U.S. producers. The Purdue University/CME Group Ag Economy Barometer dropped from May to June. Michael Langemeier, the director of the Center for Commercial Agriculture at Purdue University, talked about the most recent numbers.
“The Purdue University/CME Group Ag Economy Barometer Index fell from 119 in May to 113 in June. Both measures of producer sentiment declined, with the Current Conditions Index falling by five points, and the Future Expectations Index declining by seven points. The decline in the Current Conditions Index is especially important because it reflects how producers view their farm’s financial situation today. The index is now at its lowest level since December 2024, suggesting that many producers continue to feel pressure from tighter margins and a more challenging cost environment.”
Only 12 percent of producers said their operations are better off today than they were last year.
“When producers were asked what is limiting improvement in their farm’s financial position this year, no surprise that it was high input cost. This was the overwhelming response. 42 percent of farmers identified input costs as their biggest constraint, followed by low output prices at 17 percent, and weather at 14 percent. We’ve had some pretty unpredictable weather this year, and so the fact that weather is one-third of input costs tells you how important input costs really are. Farmers are always concerned about commodity prices, but the current challenge appears to be focusing on the cost side of the business.”
There isn’t a lot of optimism for the immediate future.
“Looking ahead, producers remain cautious about the next year. Only 22 percent of respondents expect their farms to be financially better off a year from now. And when asked about the longer-term outlook, expectations for good times ahead have declined compared with last year. However, the outlook is not negative across every area of agriculture.”
Optimism continues when it comes to farmland prices.
“One area where producers remain optimistic is farmland. This is true both in terms of the short-term outlook and long-term outlook. The short-term farmland value expectations index declined from 130 in May to 124 in June, but it’s still relatively high. The long-term farmland value expectations index increased to 166, tying the highest level recorded in the survey. I think that’s quite remarkable. That was higher than even during that 2021, ‘22, and ‘23 period where land prices were climbing very rapidly. This suggests that while producers remain concerned about near-term margins, many continue to view farmland as a strong long-term asset.”