Interest rate expectations fuel improved farmer sentiment
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More farmers around the country are expecting financial conditions to improve this year, according to the latest Purdue University/CME Group Ag Economy Barometer.
Purdue says expectations for lower interest rates have led to an increase in farmer sentiment, though higher input costs continue to be a top concern.
The barometer is calculated monthly from a telephone survey of 400 agricultural producers across the country. The newest survey was conducted March 11-15, and saw the barometer rise three points to 114.
The barometer’s Index of Future Expectations also rose five points to 120 in March. Purdue said 48% of respondents expect a decline in the U.S. prime interest rate over the next year, up from 35% in December. Conversely, 32% of producers are expecting an interest rate increase, compared to 43% in February.
Additionally, farmers expressed a rise in optimism about making large investments as the barometer’s Farm Capital Investment Index rose seven points in March. Purdue said 15% of producers said it was a good time to make a large investment, up from 11% at the start of the year.
“Producers who said it’s a good time to invest pointed to strong cash flows on their farms coupled with higher dealer inventories for farm machinery as key reasons,” the university said. “However, a majority of producers still feel hesitant to invest due to concerns about high costs for machinery and construction as well as high interest rates.”
Nearly a quarter of respondents said they believe farmland prices will go up because of inflation expectations.
You can connect the full Ag Economy Barometer results for March by clicking here.