Farmer sentiment in October rebounded ahead of the U.S. election

Rhea-AI Summary

Farmer sentiment showed a significant improvement in October 2024, with the Purdue University/CME Group Ag Economy Barometer rising 27 points to 115. The Future Expectations Index jumped 30 points to 124, while the Current Conditions Index improved to 95. The Farm Financial Performance Index increased by 22 points to 90, nearly matching last year's level. Fewer farmers (53% vs. 73% in September) anticipate challenging times for U.S. agriculture in the coming year. However, over half of surveyed producers reported worse farm financial conditions compared to the previous year. The survey revealed reduced concerns about interest rates and improved expectations for farmland values, with the Short-Term Farmland Value Expectations Index rising 25 points to 120.

Positive

• Future Expectations Index increased significantly by 30 points to 124
• Farm Financial Performance Index surged by 22 points to 90
• Short-Term Farmland Value Expectations Index climbed 25 points to 120
• Percentage of producers expecting tough times decreased from 73% to 53%
• Interest rate concerns decreased from 26% to 15%

Negative

• Over 50% of producers reported worse financial conditions than previous year
• Current Conditions Index at 95 indicates weaker conditions than 2015-16 base period
• Farm Capital Investment Index remains low at 42 despite 7-point improvement

News Market Reaction

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WEST LAFAYETTE, Ind., Nov. 5, 2024 /PRNewswire/ -- Farmer sentiment saw an unexpected surge in October ahead of the upcoming U.S. election, according to the latest Purdue University/CME Group Ag Economy Barometer. The index rose to 115, marking a 27-point increase from September. This boost in sentiment was primarily driven by a rise in producers' confidence in the future, with the Future Expectations Index jumping 30 points to 124. While the Current Conditions Index also improved, reaching 95, it still reflected farmers' concerns that economic conditions this year are worse than last year and weaker than the barometer's base period of 2015-16 during the early days of a multiyear downturn in the U.S. farm economy. Despite current challenges, the October survey indicated some optimism among producers that economic conditions may strengthen, avoiding an extended downturn in the farm economy. This month's survey was conducted from Oct. 14-18, 2024.

"Examining responses to the barometer's individual questions helps us understand the producers' shift toward a less pessimistic view of the U.S. agricultural economy," said James Mintert, the barometer's principal investigator and director of Purdue University's Center for Commercial Agriculture.

In October, only 53% of producers anticipated challenging times for the U.S. agricultural economy in the year ahead, a decrease from 73% in September. Similarly, concerns about the next five years eased, with just 33% of producers expecting tough times ahead, down from 48% the previous month. Additionally, fewer producers expect worsening financial conditions on their farms over the next 12 months, dropping to 23% in October from 38% in September.

"While producer sentiment improved in October, many respondents indicated they are still feeling financial strain due to the deterioration of their financial situation throughout 2024," said Mintert. "Over half of the producers we surveyed reported that their farm's financial condition was worse than a year ago, which underscores the ongoing challenges producers face despite their more optimistic outlook for the year ahead."

Each month's survey ends with an open-ended question, allowing respondents to share their thoughts and concerns. For October, politics emerged as a frequent topic of discussion, likely influenced by the upcoming elections. Many producers expressed worries about potential policy changes impacting their farms and the agricultural economy, with regulation, environment and taxes featured prominently alongside price concerns. When specifically asked about their worries for the upcoming year, respondents continued to point to higher input costs and lower output prices as their primary concerns. The trend of producers' decreasing concern over interest rates continued this month, with only 15% citing it as a top worry in October, down from 26% in late 2023.

One of the most surprising findings from this month's survey was the increase in the Farm Financial Performance Index. This index measures producers' expectations regarding their farm's financial performance over the next 12 months compared to the past year. In October, the index surged to 90, reflecting a 22-point jump from September and falling just 2 points shy of last year's level. Though not solely accountable for the rise in the index, contributing factors likely include high fall crop yields and a stress-free harvest season in the Corn Belt and Plains states. The index's improvement also suggests a growing optimism among farmers about their financial outlook, with expectations for better performance in 2025 compared to 2024. Producers seem to view 2024's weak income prospects as transitory, as there was also a modest improvement in the Farm Capital Investment Index, which reached 42 — a 7-point increase from September.

Both Farmland Value Expectation indices rose this month, indicating that producers are maintaining a level of optimism about the agricultural economy's future strength, which could, in turn, support farmland values. The Short-Term Farmland Value Expectations Index, which often correlates with financial performance expectations and the Current Conditions Index, climbed to 120, 25 points higher than the September reading. The long-term index improved to 159, up from 147 the previous month.

About the Purdue University Center for Commercial Agriculture

The Center for Commercial Agriculture was founded in 2011 to provide professional development and educational programs for farmers. Housed within Purdue University's Department of Agricultural Economics, the center's faculty and staff develop and execute research and educational programs that address the different needs of managing in today's business environment.

About CME Group

As the world's leading derivatives marketplace, CME Group enables clients to trade futures, options, cash and OTC markets, optimize portfolios, and analyze data — empowering market participants worldwide to efficiently manage risk and capture opportunities. CME Group exchanges offer the widest range of global benchmark products across all major asset classes based on interest rates, equity indexes, foreign exchange, energy, agricultural products and metals. The company offers futures and options on futures trading through the CME Globex platform, fixed income trading via BrokerTec and foreign exchange trading on the EBS platform. In addition, it operates one of the world's leading central counterparty clearing providers, CME Clearing.

CME Group, the Globe logo, CME, Chicago Mercantile Exchange, Globex, and E-mini are trademarks of Chicago Mercantile Exchange Inc. CBOT and Chicago Board of Trade are trademarks of Board of Trade of the City of Chicago, Inc. NYMEX, New York Mercantile Exchange and ClearPort are trademarks of New York Mercantile Exchange, Inc. COMEX is a trademark of Commodity Exchange, Inc. BrokerTec is a trademark of BrokerTec Americas LLC and EBS is a trademark of EBS Group LTD. The S&P 500 Index is a product of S&P Dow Jones Indices LLC ("S&P DJI"). "S&P®", "S&P 500®", "SPY®", "SPX®", US 500 and The 500 are trademarks of Standard & Poor's Financial Services LLC; Dow Jones®, DJIA® and Dow Jones Industrial Average are service and/or trademarks of Dow Jones Trademark Holdings LLC. These trademarks have been licensed for use by Chicago Mercantile Exchange Inc. Futures contracts based on the S&P 500 Index are not sponsored, endorsed, marketed, or promoted by S&P DJI, and S&P DJI makes no representation regarding the advisability of investing in such products. All other trademarks are the property of their respective owners.

About Purdue University

Purdue University is a public research institution demonstrating excellence at scale. Ranked among top 10 public universities and with two colleges in the top four in the United States, Purdue discovers and disseminates knowledge with a quality and at a scale second to none. More than 105,000 students study at Purdue across modalities and locations, including nearly 50,000 in person on the West Lafayette campus. Committed to affordability and accessibility, Purdue's main campus has frozen tuition 13 years in a row. See how Purdue never stops in the persistent pursuit of the next giant leap — including its first comprehensive urban campus in Indianapolis, the Mitch Daniels School of Business, Purdue Computes and the One Health initiative — at https://www.purdue.edu/president/strategic-initiatives

Writer: Morgan French, mmfrench@purdue.edu
Source: James Mintert, 765-494-7004, jmintert@purdue.edu

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SOURCE CME Group

FAQ

What was the CME Group Ag Economy Barometer reading in October 2024?

The CME Group Ag Economy Barometer rose to 115 in October 2024, marking a 27-point increase from September.

How much did the Future Expectations Index increase in October 2024?

The Future Expectations Index increased by 30 points to 124 in October 2024.

What percentage of farmers reported worse financial conditions in October 2024?

Over 50% of farmers reported that their farm's financial condition was worse than a year ago in October 2024.

How did the CME Group Farm Financial Performance Index change in October 2024?

The Farm Financial Performance Index increased by 22 points to 90 in October 2024.