Farmer sentiment weakened again in March as the Purdue University/CME Group Ag Economy Barometer fell 8 points to a reading of 117. However, that was still up from a reading of 117 in March 2022. Both the Index of Current Conditions and Index of Future Expectations declined 8 points in March. 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.
Farmers are becoming less confident that farmland values will continue to rise in the short run with one out of five producers saying they expect values to weaken in the next 12 months. Producers’ longer-term farmland outlook remains more positive than in the short-run, although the percentage of farmers who expect farmland values to weaken over the next five years is up compared to this time last year and two years ago.
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