Farmer sentiment recovered somewhat in May following a sharp drop-off in April. The May reading of the Purdue University-CME Group Ag Economy Barometer came in at 108, up 9 points compared to April. Both of the barometer’s sub-indices rose as well, with the biggest improvement coming from the Index of Future Expectations, which climbed 11 points to 117, while the Current Conditions Index rose 6 points. Strengthening crop prices was a factor in this month’s sentiment improvement. For example, Eastern Corn Belt cash corn prices in mid-May were 6 to 7% higher than when the April survey was conducted, while cash soybean prices improved by 2 to 3% over the same period. The improvement in prices coincided with good corn and soybean planting progress as USDA reported the planting pace in mid-May matched the 5-year average. This month’s Ag Economy Barometer survey was conducted from May 13-17, 2024.
The Farm Financial Performance Index climbed to 82, up 6 points compared to April. The index is based on a question that asks producers to compare their farm’s expected financial performance to last year. Despite this month’s improvement in the index, it remained 15 points lower than at the end of last year indicating that producers still expect 2024 to be a more challenging year financially than 2023.
Producers’ outlook on capital investments improved in May, but producers maintained a cautious attitude towards investments as the Farm Capital Investment Index came in at a reading of 35. Although the 4-point rise pulled the index off its all-time low reading of 31, this month’s survey still indicated that 77% of respondents feel it’s a bad time to make large investments, while just 12% of respondents said it was a good time to invest. Interest rates and relatively high prices for farm machinery and new construction were the two primary reasons cited for this being a bad time to make large investments. Among those producers who think it’s a good time to invest, nearly half (45%) said they felt that way because of high inventories at machinery dealers.
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