Producer Sentiment Improves with Strengthened Commodity Prices; But High Cost Inflation Worries Farmers

The Purdue University/CME Group Ag Economy Barometer improved in April up 8 points to a reading of 121; however, it remains 32% below its reading from the same time last year. 

Producers’ perspective on current conditions and future expectations saw an uptick over the past month. 

The Index of Current Conditions improved 7 points to a reading of 120 and the Index of Future Expectations improved 9 points to a reading of 122. Rising prices for major commodities, especially corn and soybeans, appear to be leading the change in producers’ improved financial outlook. 

The Farm Financial Performance Index improved to a reading of 95, up 8 points from March and 12 points higher than in January and February. Much of this could be attributed to the strengthened commodity prices.

In April, 42% of producers chose higher input costs as their biggest concern, which was more than twice as many who chose government policies (21%) or lower output prices (19%). Also in April, 60% of survey respondents said they expect input prices to rise by 30% over the next 12 months.

When asked specifically for their expectations for 2023 crop input prices compared to prices paid for 2022 crop inputs, 36% of respondents said they expect prices to rise 10% or more and 21% of crop producers said input price rises of 20% or more are likely. The war in Ukraine has also added a new level of uncertainty for producers. Sixty percent of survey respondents said the biggest impact of the war on U.S. agriculture will be on input prices.

The Ag Economy Barometer is calculated each month from 400 U.S. agricultural producers’ responses to a telephone survey. This month’s survey was conducted between April 18-22.