A better outlook on current conditions provided a boost to how producers view the state of the agriculture sector.
Researchers said the rise in overall measure of agricultural producer sentiment was driven by increases in both the Index of Current Conditions, which rose 9 points to 118 and the Index of Future Expectations, which climbed 16 points to 116.
Producers in the August survey were less worried about their farm's financial situation than in July, although they remain concerned about a possible cost/price squeeze.
The Ag Economy Barometer is calculated each month from 400 U.S. agricultural producers' responses to a telephone survey. This month's survey was conducted between Aug. 15 and Aug. 19, after the USDA released both the August Crop Production and World Agricultural Supply & Demand Estimates reports.
In August, more producers indicated they're expecting better financial performance for their farms in 2022 and the upcoming year, as the Farm Financial Performance Index improved 11 points to a reading of 99, researchers said. Both corn and soybean prices rallied from their July lows into mid-August which, along with expectations for good yields, explains some of the improvement in financial performance expectations.
Researchers said there continues to be much uncertainty among producers regarding the future cost of items they purchase both for their farms and family usage. When asked about their biggest concerns for the next year, more than half or 53% of respondents chose higher input costs, followed by rising interest rates (14%), input availability (12%), and lower output prices (11%).
On the farm level, there is a big disparity in opinions among farmers regarding whether or not input prices will retreat or escalate in 2023. About four out of 10 producers expect crop input prices in 2023 to be either unchanged or possibly decline by as much as 10%, compared to 2022 but roughly half of all producers expect input prices to rise between 1% and 20%.
At the consumer level, 48% of respondents said they expect the rate of inflation for consumer items during the next 12 months to be in the 0 to 6% range.
Producers still believe now as a bad time to make large farm machinery and building investments. In a follow-up question, nearly half or 49% of those who said it is a bad time for investing cited increasing prices as the primary reason.