Farmer sentiment stabilizes as inflation expectations subside
The Purdue University/CME Group Ag Economy Barometer recorded a reading of 114 in December, down one point (0.9%) from the previous month and 12 points (9.5%) under year-ago. The Current Conditions Index for December was 112, while the Future Expectations Index was 115, both down one point from the previous month.
Farmers perceived continued improvement in their farms’ financial performance as the Farm Financial Performance Index rose by two points compared to a month earlier. Since late summer, the index has climbed 11 points and was 21 points higher than in May when it reached the low for the year.
At year-end, farmers still pointed to input costs as their top concern for the year ahead, but the percentage of them choosing the risk of lower crop and/or livestock prices rose from just 16% in January to 26% in December. Inflation expectations among farmers moderated during 2023. Compared to a year earlier, far fewer producers expect inflation to exceed 6% in the new year, and a large majority look for inflation to average less than 4% in 2024. Farmers expressed a somewhat more sanguine view of interest rates than they did in late 2022 with just over one-third of survey respondents indicating they expect prime interest rates to decline in 2024.
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