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Source: Purdue University

Farmer sentiment weakened again in October as the Purdue University-CME Group Ag Economy Barometer fell to a reading of 102, down 10 points compared to a month earlier.

Both of the barometer's sub-indices, the Index of Current Conditions and the Index of Future Expectations, declined this month. The Current Conditions Index dipped 8 points to a reading of 101 while the Future Expectations Index dropped 11 points to a reading of 102.

When the barometer survey was launched in October 2015 estimates from the fourth quarter of 2015 and first quarter of 2016 served as the barometer's base period and the average Ag Economy Barometer index value over those two quarters was 100.

This month's survey results suggest that farmer sentiment is on par with that of late 2015 and early 2016. The comparison is interesting because this year's weakness in farmer sentiment is taking place despite very strong net farm income compared to the earlier period. USDA estimates indicate that U.S. inflation adjusted net farm income averaged across 2021 and 2022 is more than 40% above the 2015-2016 average.

The Purdue University-CME Group Ag Economy Barometer sentiment index is calculated each month from 400 U.S. agricultural producers' responses to a telephone survey. This month's survey was conducted from October 10-14, 2022.

Concerns about their farm's financial performance was one of the drivers of weakening sentiment among producers. The Farm Financial Performance Index fell 13 points this month to 86. This month's weaker financial performance reading is a distillation of producers' concerns about high input costs combined with weaker commodity prices.

Challenging shipping conditions throughout the Mississippi river valley have hampered exports recently and the corresponding widespread weakening of corn and soybean basis levels might be contributing to heightened concerns about financial performance.

Looking ahead to next year, over 40% of producers in the October survey view high input costs as their top concern followed by rising interest rates which was chosen by 21% of respondents. This month the percentage of producers choosing lower output prices as a top concern rose to 13%, matching the percentage of producers who chose input availability as a major concern.

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