Declining crop prices leads to lower farmer sentiment
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A drop in crop prices has led to the lowest reading of farmer sentiment since last July, according to the most recent Purdue University/CME Group Ag Economy Barometer.
The barometer is calculated monthly from a telephone survey of 400 agricultural producers across the country. The newest survey was conducted May 15-19, and saw the barometer drop 19 points to 104.
May’s barometer is five points higher than a year ago, but 54 points lower than it was two years ago.
Economists with the Purdue Center for Commercial Agriculture said fall delivery bids for corn in the Eastern Corn Belt fell 10%, while soybean and wheat bids each declined 8%.
“Producers are feeling the squeeze from weakened crop prices, which has reduced their expectations for strong financial performance in the coming year,” said James Mintert, the barometer’s principal investigator and director of the Center for Commercial Agriculture.
The Farm Financial Performance Index, one of the two sub-indices, also dropped 17 points, likely due to crop price weakness, uncertainty related to U.S. bank failures and rising interest rates.
Purdue said 38% of respondents said they expect weaker financial performance for their farm this year, up from 23% in April. They cited higher input cost among their top concerns, along with a growing concern over the risk of lower crop and/or livestock prices.
Additionally, 59% said they expect interest rates to rise in the upcoming year.
Purdue said the Farm Capital Investment Index also fell six points, with 76% of respondents saying now is a bad time for large investments in their farm. Rising interest rates also played a factor in the results, as well as increased costs for machinery and new construction.
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