Producer sentiment fell to its weakest reading since July 2022, as the Purdue University/CME Group Ag Economy Barometer declined 19 points to a reading of 104 in May, said Purdue University Agricultural Economist James Mintert, in a release of the survey results.
The Ag Economy Barometer is calculated each month from 400 US agricultural producers’ responses to a telephone survey, Mintert said. This month’s survey was conducted from May 15 to 19.
DECLINES IN MAJOR INDICES
The Index of Future Expectations was down 22 points to a reading of 98 in May, while the Index of Current Conditions was down 13 points to a reading of 116, Mintert reported. This month’s lower sentiment was fueled by drops in both of the barometer’s sub-indices and likely triggered by weakened crop prices.
In mid-May, Eastern Corn Belt fall delivery bids for corn fell more than $0.50 a bushel, or 10%, and soybean bids declined more than $1.00 a bushel, or 8%, while new crop June/July delivery wheat bids declined nearly $0.50 a bushel, or 8%, all compared with bids available in mid-April when last month’s barometer survey was conducted.
Producers were feeling the squeeze from weakened crop prices, which had reduced their expectations for strong financial performance in the coming year.
FINANCIAL PERFORMANCE DOWN
The Farm Financial Performance Index reflected this month’s weak sentiment reading, dropping 17 points to a reading of 76 in May, Mintert said. Crop price weakness, uncertainty related to US bank failures, and rising interest rates likely were key factors behind the decline.
This month, 38% of respondents said they expected weaker financial performance for their farm this year, compared with just 23% who felt that way in April, the release said. Higher input cost remains the top concern for the year ahead; however, concern over the risk of lower crop and/or livestock prices was growing.
This month 26% of respondents chose lower output prices as their top concern compared with just 8% who felt this way in September, he said. Meanwhile, 59% of producers said they expected 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 said they expected US bank failures to lead to some changes in farm loan terms in the upcoming year, possibly putting more financial pressure on their operations.
NO TIME FOR INVESTMENT
The Farm Capital Investment Index also was lower, down six points to a reading of 37 in May, Mintert said. About 76% of respondents said now was a bad time for large investments. About 67% cited rising interest rates and increased machinery prices.
CATTLE, BEEF RECAP
The USDA reported formula and contract base prices for live FOB steers and heifers this week ranged from $179.66 per cwt to $188.00, compared with last week’s range of $171.68 to $183.03 per cwt. FOB dressed steers, and heifers went for $269.90 per cwt to $286.90, compared with $267.34 to $280.26.
The USDA choice cutout Tuesday was up $7.21 per cwt at $321.40 while select was up $2.71 at $299.44. The choice/select spread widened to $21.96 from $17.46 with 98 loads of fabricated product and 28 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 $1.65 to $1.75 a bushel over the Jul corn contract, which settled at $6.08 a bushel, up $0.10 1/2.
No deliveries were tendered against Jun live cattle Tuesday.
The CME Feeder Cattle Index for the seven days ended Monday was $218.65 per cwt, up $2.53. This compares with Tuesday’s Aug contract settlement of $243.25 per cwt, up $0.65.