A rise in producer sentiment during the March Purdue University/CME Group Ag Economy Barometer may have caught a few industry experts by surprise. Michael Langemeier, the director of the Center for Commercial Agriculture at Purdue University, talked about the rising March sentiment.
“Well, certainly the impact of higher energy prices and higher fertilizer prices had a negative impact on sentiment. But there were other factors going on here, and one of them that we didn’t talk about in the report that obviously was going on is that the bridge payments were going out. And the bridge payments, if you average those for a corn and soybean farm, were about $35 per acre, and so they were rather sizable, and so that probably boosted sentiment.”
Corn and soybean prices also helped increase optimism.
“You look at corn and soybean prices, particularly corn prices, and corn prices were up if you look at the time we surveyed in March compared to the time we surveyed in February. One of the interesting things about corn prices is that they are not perfectly correlated with energy prices, but they are positively correlated with energy prices, and so, because the energy prices went up, corn prices went up a little bit. I think that’ll offset some of the negativity regarding the higher energy and fertilizer prices.”
He also said many producers had already purchased fertilizer for this year when the survey was taking place.
“So, this isn’t going to have quite as much impact for those people. There are people who haven’t. And then also, I would think that people who are going to put some of the fertilizer on in-season probably haven’t bought all of that. And so, I’m not saying the impact of the fertilizer prices is neutral, but it’s not as big as you might think.”