Farmers' Sentiment Dips as Weakened Crop Prices Add Pressure

In May, the Purdue University/CME Group Ag Economy Barometer registered its weakest reading since July 2022, plunging 19 points to 104. The Index of Future Expectations dropped 22 points to 98, while the Index of Current Conditions fell 13 points to 116. Weaker sentiment stemmed from declines in both sub-indices, primarily driven by reduced crop prices. Corn bids in the Eastern Corn Belt for fall delivery declined by over $0.50/bushel, soybean bids decreased by over $1.00/bushel, and new crop wheat bids were down nearly $0.50/bushel compared to mid-April.

Lower sentiment impacted the Farm Financial Performance Index, which decreased by 17 points to 76 in May. Crop price weakness, uncertainty surrounding U.S. bank failures, and rising interest rates were key factors contributing to the decline. Concerns over higher input costs and the risk of lower crop and/or livestock prices are growing among producers. Meanwhile, almost 60% of respondents anticipate rising interest rates in the next year.

The Farm Capital Investment Index dropped 6 points to 37, with over three-fourths of producers feeling that now is not a favorable time for large investments. Rising interest rates and increased machinery and construction prices were cited as significant reasons.

While short-term farmland value expectations declined, producers remained optimistic about the long-term outlook, as the Long-Term Farmland Value Expectations Index rose 3 points to 145 in May.

As discussions around the farm bill continue, crop insurance emerged as the most crucial aspect for nearly half of the surveyed producers, followed by the commodity title. Corn and soybean growers expressed expectations of higher reference prices in the new farm bill.

For more detailed insights, refer to the Ag Economy Barometer report on the Purdue University website. The Purdue Center for Commercial Agriculture offers video analysis of the barometer results at purdue.ag/barometervideo, and additional information can be found on the Purdue Commercial AgCast podcast at purdue.ag/agcast.

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