Modest improvement in farmer sentiment, yet financial concerns loom

The Purdue University/CME Group Ag Economy Barometer rose modestly in February, posting a reading of 111, up five points (4.7%) from January but down 14 points (11.2%) from last year. The modest rise in the barometer was attributable to producers expressing somewhat more optimism about the future, as the Future Expectations Index rose 7 points to a reading of 115, while the Current Conditions Index was unchanged. Although farmers’ expectations for the future improved in February, their financial performance expectations did not. February’s Farm Financial Performance Index reading of 85 was 1 point lower than January and 13 points below its most recent peak in December.

Weak crop prices continue to weigh on financial expectations as mid-February eastern Corn Belt cash prices for corn and soybeans were 7% and 8% lower, respectively, than two months earlier when the December survey was conducted.

Although farmers’ short-run expectations for farmland values were unchanged compared to a month earlier, it’s clear that producers are not as confident that farmland values will continue to rise as they were two years ago when the short-run farmland index was 30 points higher than it was this month.