Farmer Sentiment Weakened Again in March
Farmer sentiment weakened again in March as the Purdue University/CME Group Ag Economy Barometer fell 8 points to a reading of 117. Both the Index of Current Conditions and Index of Future Expectations declined 8 points in March leaving the Current Conditions Index at 126 and the Future Expectations Index at 113. Weaker prices for key commodities including wheat, corn, and soybeans from mid-February through mid-March were a key factor behind this month’s weaker sentiment reading
The Farm Financial Performance Index reading of 86 was unchanged from February and nearly identical to last year. Although the index was unchanged, farmers continue to express more concern about rising interest rates with 25% of respondents choosing that as one of their top concerns for the upcoming year. The percentage of farmers choosing rising rates as a top concern has been increasing steadily since last summer when just 14% of respondents identified it as a top concern. Higher input costs remain the number one concern, chosen by 34% of producers this month, but concern about input costs has been falling since last summer’s peak when it was chosen by 53% of producers.
For the third month in a row, there was little change in the Farm Capital Investment Index which came in at 42 in March, one point lower than a month earlier but 6 points higher than a year ago. However, among respondents who said it was a bad time for large investments, there was a change in perspective. In previous surveys going back to last July, the increase in prices for farm machinery and new construction was the top choice among respondents as the key reason now is a bad time to make such investments. That changed this month with the increase in prices eclipsed by rising interest rates as the primary reason. High prices for machinery and new construction was chosen by 32% of respondents this month, down from 45% last month, while rising interest rates was chosen by 34% of those who think now is a bad time for investments, up from 27% in February. Rising interest rates was chosen by only 14% of the respondents last summer.