Ag Economy Barometer Takes Hit in May

For the second month in a row, agricultural producer sentiment as measured by the Ag Economy Barometer experienced a significant decline.

The barometer released Tuesday fell 14 points in May to a reading of 101. The sentiment decline was driven by producers’ weakening perceptions of both current economic conditions and expectations for the future. Producer sentiment was the poorest the barometer has assessed since October 2016.

Farmers’ sentiment regarding the advisability of making large investments in their farming operations, measured by the Large Farm Investment Index, fell to a reading of 37 in May, 11 points lower than in April and 23 points lower than a year earlier. The Large Farm Investment Index’s May reading was its lowest value since data collection began in fall 2015.

Farmers’ expectations for both short-run (12 months ahead) and longer-run (5 years ahead) changes in farmland values also weakened, especially when compared to their perspectives in early 2019.

Finally, producers’ confidence that the trade dispute with China will be resolved quickly is waning and they were also less confident that the trade dispute would ultimately be resolved in a way that favors U.S. agriculture than they were earlier in the year.

The barometer is the work of Purdue University and the CME Group. The monthly index is based on a survey of 400 agricultural producers.