US farmer sentiment declined to its lowest in almost a year in May following a steep fall in crop prices.
Released Tuesday, the Purdue University-CME Group Ag Economy Barometer Index - which is based on a monthly survey of 400 producers across the country - came in at a reading of 104 points in May, down 19 points from April.
Crop price weakness helped trigger the sentiment decline, the barometer commentary said. Eastern Corn Belt fall delivery bids for corn fell over 50 cents/bu (10%) and soybean bids declined over $1/bu (8%) while new-crop June/July delivery wheat bids declined nearly 50 cents/bu (8%) in mid-May, all compared to bids available in mid-April when the April survey was conducted. The survey for the May barometer was conducted from May 15-19, 2023.
Amid the fall in crop prices, 38% of survey respondents said they expect weaker financial performance for their farm this year, way up from just 23% who felt that way in April. Although the top concern among producers in the upcoming year remains higher input costs, the risk of lower crop and/or livestock prices is creating further worry for producers. Indeed, more than one quarter (26%) of respondents chose lower output prices as their top concern compared with just 8% of respondents who made that choice last September.
Putting additional pressure on farmers’ profit prospects are expectations for higher interest rates in the upcoming year. Although producers’ interest rate projections have moderated somewhat in the last several months, nearly three-fifths (59%) of producers still said they expect interest rates to rise during the upcoming year and 22% of respondents chose it as a top concern for their farm in the next 12 months. Additionally, 40% of farmers in the May poll said they expect this spring’s US bank failures to lead to some changes in farm loan terms in the upcoming year, possibly putting more financial pressure on their operations.
Meanwhile, producers are also becoming more wary of making big investments in their farms. Among the three-fourths (76%) of producers who said it’s a bad time for large investments, two-thirds (67%) said the key reasons are price increases for machinery and new construction and rising interest rates.
