WEST LAFAYETTE, INDIANA, US — Three broad-based measures of US farmer sentiment improved in July as the Purdue University/CME Group Ag Economy Barometer index rose 8 points to 113, the Index of Current Conditions increased by 10 points to 100, and the Index of Future Expectations at 119 was 7 points higher than a month earlier.

Despite declines in corn and soybean prices from mid-June to mid-July — Eastern Corn Belt cash prices fell 11% and 5%, respectively — farmer sentiment improved in July. Responses to the individual questions attribute this positive shift to fewer respondents reporting worsened conditions compared to a year ago and a decrease in those expecting negative future outcomes.

The July survey, which was conducted July 15-19, showed that high input costs remained the biggest concern for 34% of farmers. Additionally, the risk of lower crop and livestock prices continues to worry producers, with 29% citing it as a top concern, up from 25% in June. Reflecting the signals from the Federal Reserve that interest rates have peaked, only 17% of respondents cited rising interest rates as a top concern, down from 23% last month.

The Farm Financial Performance Index dropped 4 points in July to 81, 6 points lower than in July 2023. The decline in financial performance expectations reflected farmers’ worries about weakening commodity prices and high input costs following improvements in the May and June indices. Although production costs for principal crops, including corn and soybeans, have decreased year over year, output prices also have fallen, raising the possibility of a cost-price squeeze for US crop producers.

“Declines in crop prices point to lower producer incomes this year, so the increase in optimism was somewhat puzzling,” said James Mintert, the barometer’s principal investigator and director of Purdue University’s Center for Commercial Agriculture. “Fewer producers citing rising interest rates as a primary concern for the upcoming year corresponds with the modest improvement in their perspectives on capital investments, but respondents continue to express hesitancy to make large investments.”