Farmer sentiment improved markedly in August as the Purdue University-CME Group Ag Economy Barometer rose to a reading of 144, 26 points higher than a month earlier. The improvement in producer sentiment was the result of improved perceptions regarding current conditions and, especially, better expectations for the future. The Index of Current Conditions rose 13 points in August to a reading of 124 while the Index of Future Expectations rose 33 points to a reading of 154.

The nature of dairy farming in the U.S. is undergoing a radical transformation and nowhere close to being over. It’s part of a pattern being seen in other parts of the agriculture, including grain farming and ag equipment dealerships where today’s economics dictate that bigger means better net returns.

In its August 2020 Ag Letter, the Chicago Federal Reserve Bank of Chicago reported that repayment rates for non-real estate loans in the second quarter were down vs. the same period of 2019.

The effects of the COVID-19 pandemic continued to pressure the agricultural economy and weighed on farm finances in the Tenth District. Farm income declined in the second quarter at the quickest pace since 2016, and weaknesses in both income and borrower liquidity were expected to carry into the coming months.

A continued lower price environment, uncooperative weather events over the past year, trade uncertainty and COVID-19 have all contributed to depressed net cash farm income levels and placed upward pressure on farm bankruptcies.

Farmer sentiment in July was virtually unchanged from a month earlier as the Purdue University-CME Group Ag Economy Barometer rose just one point to a reading of 118. The small change in the barometer left it 30% below its February 2020 peak and 23% below its level a year ago.