Farmer sentiment dropped sharply in May over concerns about weak crop prices, rising interest rates, high input prices and recent U.S. bank failures.
According to the Ag Economy Barometer, a monthly telephone survey that gathers information from 400 U.S. agricultural producers, declining crop prices were the largest factor hurting farmer sentiments. Delivery bids for corn fell 10 percent, while wheat and soybean bids fell 8 percent.
Shellye Suttles, assistant professor at the O’Neill School of Public and Environmental Affairs at IU, said that more acres planted have caused the decrease.
“I would say domestically first and foremost, more farmers planted more acres, and that's expected that these acres will have increasing yields,” she said. “So, when we have this kind of increase in supply of agricultural commodities, if nothing changes about demand for the product, we will see this kind of change in equilibrium where the new equilibrium will actually lead to a lower price.”
Read more: Despite cooling inflation, farmers still wrestle with increased costs
In the background, corn and wheat prices have stabilized overseas, though that may change due to recent events.
“I would say until yesterday, I don't know if you saw the dam breaking in Ukraine yesterday, but there was more conversation, more sentiment around having more security in global wheat and corn prices,” she said.”
The Black Sea Grain Initiative, an agreement between Russia and Ukraine and brokered by Turkey and the UN, created procedures to export grain from certain ports to address a food crisis borne of the conflict between the two countries.
Russia had previously suspended participation in the agreement following a drone attack on Russian naval ships, and recently agreed to a 60-day extension, expiring July 18.
While that agreement shored up wheat and corn prices worldwide, the recent dam break could affect the deal, and in turn the U.S. ag economy.
