Ag Economy Barometer: Farmers worried about ag economy

WEST LAFAYETTE, Ind. — Farmer sentiment about the ag economy soured in May as crop prices declined, according to the latest reading of the Purdue University/CME Group Ag Economy Barometer.

The barometer declined 19 points to a reading of 104, the weakest reading since July 2022. The decline was likely triggered by weakened crop prices.

“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, director of Purdue University’s Center for Commercial Agriculture.

In mid-May, Eastern Corn Belt fall delivery bids for corn fell over 50 cents a bushel, or 10%, and soybean bids declined over $1 a bushel, or 8%.

New crop June and July delivery wheat bids declined nearly 50 cents a bushel, or 8%, all compared to bids available in mid-April, when last month’s barometer survey was conducted.

The Farm Financial Performance Index dropped 17 points to a reading of 76 — likely due to crop price weakness, uncertainty related to U.S. bank failures and rising interest rates.

In May, 38% of respondents said they expect weaker financial performance for their farm this year, compared to just 23% who felt that way in April.

Higher input cost remains the top concern among producers in the year ahead. However, concern over the risk of lower crop and livestock prices is growing.

Other report highlights:

• The Farm Capital Investment Index declined six points to a reading of 37 in May.

• More than three-fourths of respondents continue to feel now is a bad time for large investments.

• Two thirds of farmers cited rising interest rates and increased prices for machinery and new construction as key reasons why now is a bad time for large investments.

• Producers’ expectations for short-term farmland values fell 13 points to 110 and marked the weakest short-term index reading since August 2020.

• A quarter of respondents said they expect farmland values to rise over the next 12 months.

• Farmers remain more optimistic about the longer-term outlook for farmland values.

• When asked about farm bill priorities, nearly half said that crop insurance will be most important for their farm.

Read the full Ag Economy Barometer report at https://purdue.ag/agbarometer.