4-5-23 – Farmer sentiment weakened again in March as the Purdue University/CME Group Ag Economy Barometer fell eight points to a reading of 117, said Purdue Agricultural Economist James Mintert, in a release.
The Ag Economy Barometer is calculated each month from 400 US agricultural producers’ responses to a telephone survey, the release said. This month’s survey was conducted from March 13 through 17, which coincided with the demise of Silicon Valley Bank and Signature Bank.
SUB-INDICES DECLINE
Both of the barometer’s sub-indices declined eight points in March, leaving the Current Conditions Index at 126 and the Future Expectations Index at 113, Mintert said.
Issues surrounding weakness in the banking sector likely weighed on producer sentiment this month.
Rising interest rates and weaker prices for key commodities including wheat, corn and soybeans from mid-February through mid-March were key factors behind this month’s lower sentiment reading, Mintert reported. Although the March survey did not include any questions directly related to the bank closures, responding to an open-ended comment question posed at the end of each survey, multiple respondents voiced concerns about the banking sector’s problems and its potential to hurt the economy.
FINANCIAL PERFORMANCE ABOUT STEADY
The Farm Financial Performance Index remained unchanged from February at a reading of 86, the release said. Producers pointed to higher input costs (34% of respondents) and rising interest rates (25% of respondents) as their top concerns for the year ahead.
Notably, concern about higher input cost has been falling since last summer’s peak when 53% of respondents cited it as their number one concern for the year ahead, Mintert said. At the same time, the percentage of producers pointing to interest rates as a top concern has been increasing, up 11 points from last summer.
CAPITAL INVESTMENT DIPS SLIGHTLY
While there was little change in the Farm Capital Investment Index, down one point to a reading of 42 in March, there was a change in how respondents perceived whether now was a good or bad time for large investments, he said.
Since July, respondents who felt now was a bad time to make large investments have consistently chosen “increased prices for farm machinery and new construction” as the key reason, Mintert said. This changed in March as more felt that rising interest rates (34% of respondents, up from 27% in February) over high prices (32% of respondents, down from 45% in February) was the key reason that now was a bad time for such investments.
Producers’ outlook for farmland values in the short-term and long-term were mixed. The Short-Term Farmland Value Index declined six points to 113 while the Long-Term Farmland Value Index rose five points to 142.
CATTLE, BEEF RECAP
The USDA reported formula and contract base prices for live FOB steers and heifers this week ranged from $168.76 to $171.18 per cwt, compared with last week’s range of $163.20 to $166.06. FOB dressed steers, and heifers went for $256.76 to $264.03 per cwt, versus $255.92 to $262.06.
The USDA choice cutout Tuesday was up $2.85 per cwt at $287.94 while select was up $3.77 at $277.95. The choice/select spread narrowed to $9.99 from $10.91 with 90 loads of fabricated product and 16 loads of trimmings and grinds sold into the spot market.
The USDA said basis bids for corn from feeders in the Southern Plains were unchanged at $1.60 to $1.68 a bushel over the May corn contract. Bids in Kansas were not available. The May contract settled at $6.53 3/4 a bushel, down $0.04.
The CME Feeder Cattle Index for the seven days ended Monday was $193.02 per cwt, up $1.34. This compares with Tuesday’s Apr contract settlement of $197.95 per cwt, down $1.00.
IN OUR OPINION
–With more snow predicted for the upper Midwest and Plains this week, prevent plant could be a big issue this year. If it is, those expanded US corn acreage plans may be out the window. Also, it’s calving season for many, and baby calves could litter the kitchen floors of farm houses.