Farmer Sentiment Improves as Interest Rate Expectations Shift

U.S. farmers’ outlook improved in March as the Purdue University/CME Group Ag Economy Barometer index increased to 114, 3-points higher than in February. While the Index of Current Conditions fell by 2 points to 101, the Index of Future Expectations climbed to 120, up by 5 points compared to February. The disparity between current and future indexes was primarily attributable to farmers’ perceptions that a financial downturn took place over the past year, coupled with expectations for some improvement over the next 12 months. The March survey was conducted from March 11-15, 2024.

Producers’ expectations for interest rate changes have shifted which could help explain why producers look for financial conditions to improve. This month 48% of respondents said they expect a decline in the U.S. prime interest rate over the next year, up from 35% in December. Just one-third (32%) of producers foresee an interest rate increase compared to 43% last month. Only 20% of respondents this month identified the risk of rising interest rates as a primary concern, a decrease from the 24% recorded in December 2023. High input costs continue to be producers’ No. 1 concern, with 36% of respondents expressing worry.