Producer sentiment fell to its weakest reading since July 2022, as the Purdue University-CME Group Ag Economy Barometer Index declined 19 points in May to 104.
The month’s weak sentiment reading was fueled by declines in both of the barometer’s sub-indices. The Index of Future Expectations declined 22 points to 98, while the Index of Current Conditions fell 13 points below a month earlier to 116.
Crop price weakness helped trigger the sentiment decline. Eastern Corn Belt fall delivery bids for corn fell over $0.50 per bushel, down ten percent, and soybean bids declined over $1.00 per bushel, down eight percent.
Nearly half of producers feel that the most important aspect of new Farm Bill legislation will be the Crop Insurance Title, while a fourth of producers say the Commodity Title will be the most important. Almost half of corn and soybean producers expect Congress to raise PLC reference prices for both crops when a new Farm Bill becomes law.
(From the National Association of Farm Broadcasters)
Farmer Sentiment Sours as Crop Prices Decline
James Mintert and Michael Langemeier, Purdue Center for Commercial Agriculture
Producer sentiment fell to its weakest reading since July 2022, as the Purdue University-CME Group Ag Economy Barometer Index declined 19 points to a reading of 104 in May. This month’s weak sentiment reading was fueled by declines in both of the barometer’s sub-indices. The Index of Future Expectations declined 22 points to 98, while the Index of Current Conditions fell 13 points below a month earlier to 116. Crop price weakness helped trigger the sentiment decline. Eastern Corn Belt fall delivery bids for corn fell over $0.50/bushel (10%) and soybean bids declined over $1.00/bushel (8%) while new crop June/July delivery wheat bids declined nearly $0.50/bushel (8%) in mid-May, all compared to bids available in mid-April when the April survey was conducted. This month’s survey was conducted from May 15-19, 2023.
The Farm Financial Performance Index fell from 93 in April to 76 in May, a 17-point decline. Crop price weakness was likely a key factor behind the decline as 38% of this month’s respondents said they expect weaker financial performance for their farm this year compared to just 23% who felt that way in April. Although the top concern among producers in the upcoming year remains higher input costs, the risk of lower crop and/or livestock prices has become top of mind for more producers. This month 26% of respondents chose lower output prices as their top concern compared with just 8% of respondents who made that choice last September. Putting additional pressure on farmers’ profit prospects are expectations for higher interest rates in the upcoming year. Although producer’ interest rate projections have moderated somewhat in the last several months, nearly three-fifths (59%) of producers still said they expect interest rates to rise during the upcoming year and 22% of respondents chose it as a top concern for their farm in the next 12 months. Additionally, 40% of farmers in this month’s poll said they expect this spring’s U.S. bank failures to lead to some changes in farm loan terms in the upcoming year, possibly putting more financial pressure on their operations.
Unsurprisingly, given the weakness in the other sentiment indices, the Farm Capital Investment Index also declined in May. The investment index fell 6 points compared to a month earlier, pushing it down to 37, its lowest reading since …..
Read the full Purdue University-CME Group report: Farmer Sentiment Sours as Crop Prices Decline.