The August 5th release of the Agricultural Economy Barometer Index for July, compiled by Purdue University and the CME Group. The Index that is heavily weighted by row-crop production showed a continued fall in July by a noteworthy 11 points to 135. The Index of Current Conditions was down 17 points from June to 127. The Future Expectations Index was down 7 points to 139 suggesting anxiety over profits from the 2025 crop. The Index is derived from the responses of 400 U.S. farmers and was conducted from July 7^th to 11^th.

Evident conclusions from the survey are that farmers were less optimistic than in June and also compared to May that represented a high point for the year at 147. There are evident concerns over the prices for U.S. agricultural commodities due to the fluid tariff situation and mutual disaffection involving the People’s Republic of China. Current sentiment is impacted by prospects for weaker income from corn and soybeans. There is now uncertainty over the direction and trajectory of inflation with the prospect of higher interest rates and hence production costs. The outstanding concerns are:-

• A decline in prices for corn and soybeans reflecting disparity between supply and demand as denoted by the August WASDE
• Declining prospects for exports with competition from South American producers and lower demand by China
• High prices for seed, fertilizer and other inputs
• Uncertainty arising from failure of Congress to pass a Farm Bill
• Decreased demand for biofuels

Many respondents indicated that they would carry higher debt burdens through 2025 and into 2026 mainly due to anticipated lower corn and soybean prices and increased costs for inputs including seed, fuel and fertilizer for the current season. More than half of the participants will reduce or cancel equipment purchases*. Results from the June survey confirmed that almost a third of respondents considered that farm exports will decline in 2025. The same proportion strongly favor free trade compared to half of the respondents in 2020. Farmers in the survey considered that the financial condition of their farms is deteriorating with the Farm Financial Performance Index down from 104 in June to 90 in July.

*This sentiment is supported by the Q3 FY 2025 results of John Deere (DE) released on August 14^th. The Company posted net income of $1,289 million ($1,734 million, Q3 FY 2024) on revenue of $12,018 million ($13,152 million) with a diluted EPS of $4.75 ($6.29). The Production and Precision Farming Segment posted a 16 percent decrease in sales and a 50 percent lower operating profit compared to the corresponding Q3 in FY 2024.