Producer Sentiment Weakens With Decline in Future Expectations

(WEST LAFAYETTE, IN) The Purdue University/CME Group Ag Economy Barometer weakened in February as producers became less optimistic about current economic conditions and the commodity price outlook. The barometer, which is based on a survey of 400 U.S. agricultural producers, declined seven points. Weaker expectations for the future and, especially, a decline in the perception of current conditions combined to drive the overall barometer lower. The Index of Current Conditions saw the biggest drop (down 13 points), whereas the Index of Future Expectations weakened only slightly (off three points). Last month the survey reflected a significant boost in optimism among producers after the announcement of the second round of Market Facilitation Program (MFP) payments; however, it appears that their positive impact eroded quickly. Compared to responses from a year ago, fewer farms said they expect their operation to grow in the future, which could be a sign of increasing financial stress. The survey showed more farms are concerned about marketing risk, ranking it as the biggest risk facing their farming operations.