Farmer sentiment weakened once more in March because the Purdue College/CME Group Ag Economic system Barometer fell 8 factors to a studying of 117. Each of the barometer’s sub-indices declined 8 factors in March, leaving the Present Situations Index at 126 and the Future Expectations Index at 113. This month’s Ag Economic system Barometer, which is calculated every month from 400 U.S. agricultural producers’ responses to a phone survey, was performed between March 13-17.
“Rising rates of interest and weaker costs for key commodities together with wheat, corn, and soybeans from mid-February by mid-March have been key components behind this month’s decrease sentiment studying,” mentioned James Mintert, the barometer’s principal investigator and director of Purdue College’s Heart for Industrial Agriculture. “Though the March survey didn’t embody any questions immediately associated to the financial institution closures, throughout an open-ended remark query posed on the finish of every survey, a number of respondents voiced considerations in regards to the banking sector’s issues and its potential to harm the financial system. These issues additionally possible -weighed on producer sentiment.”
The Farm Monetary Efficiency Index remained unchanged from February at a studying of 86. Producers level to greater enter prices (34% of respondents) and rising rates of interest (25% of respondents) as their primary concern for the 12 months forward. Notably concern about greater enter value has been falling since final summer time’s peak when 53% of respondents cited it as their primary concern for the 12 months forward. On the similar time, the share of producers pointing to rates of interest as a prime concern has been rising, up 11 factors from final summer time.
Whereas there was little change within the Farm Capital Funding Index, down one level to a studying of 42 in March, there was a change in how respondents perceived whether or not now was or dangerous time for big investments. Since final July, respondents who felt now could be a foul time to make massive investments have persistently chosen “elevated costs for farm equipment and new development” as the important thing cause. That modified in March as extra felt that rising rates of interest (34% of respondents, up from 27% in February) over excessive costs (32% of respondents, down from 45% in February) was the important thing cause that now could be a foul time for such investments.
Producers’ outlook for farmland values within the short-term and long-term have been blended in March. The Quick-Time period Farmland Worth Index declined 6 factors to 113 whereas the Lengthy-Time period Farmland Worth Index rose 5 factors to 142. This month’s short-term index worth supplied the weakest studying since September 2020 and left the index 32 factors decrease than a 12 months earlier. One out of 5 producers on this month’s survey mentioned they count on farmland values to weaken within the subsequent 12 months. Lengthy-term, 17% of respondents mentioned they count on weaker values within the subsequent 5 years, up from 13% a 12 months in the past and seven% two years in the past.
This month’s survey included a number of renewable power questions centered on the ethanol and renewable diesel sectors. When requested to look forward 5 years, almost half (46%) of respondents mentioned they anticipated the renewable diesel business to be bigger than it’s right now, whereas only a quarter (25%) count on the ethanol business to develop over the identical time interval. In a follow-up query, respondents have been requested what impression they count on the renewable diesel business to have on soybean costs over the upcoming 5 years with 39% anticipating a value enhance of as much as $0.50 per bushel, 28% anticipating a lift in value between 50 cents as much as $1.00 per bushel, and 21% anticipating soybean costs to rise by $1.00 or extra per bushel.
The total Ag Economic system Barometer report could be accessed right here.
