By Michele F. Mihaljevich

Indiana Correspondent

WEST LAFAYETTE, Ind. – Farmer sentiment as measured by the Purdue University-CME Group Ag Economy Barometer rose in May to its highest level in four years, signaling more optimism about the future, according to two university agricultural economists.

The barometer reading of 158 – up 10 points from April – was the highest since May 2021, said James Mintert, emeritus professor of agricultural economics.

“The biggest reason the barometer went up was because people became more optimistic about the future, but they also became a little more optimistic about the current situation on their farms and in the U.S. ag economy.

“I wasn’t surprised the barometer went up, but maybe the magnitude of the jump was a little bit surprising,” Mintert noted.

Michael Langemeier, director of Purdue’s Center for Commercial Agriculture and a professor of agricultural economics, agreed.

“I’m in the same camp,” he said. “I wasn’t surprised it went up. During the week we were asking this, there was some good news regarding tariffs with respect to China. I think that played into the optimism we saw in this month’s reading.”

Mintert said the Trump administration continues to have some short-term delays in the implementation of tariffs, which “seems to give us this bounce in terms of expectations, not just in our index, but also in other indexes. You see it in the stock market, elsewhere.”

The ag barometer gauges the health of the U.S. agricultural economy. A value greater than 100 shows positive sentiment toward the economy. Values lower than 100 indicate negative sentiment. The survey of 400 U.S. producers was conducted May 12-16. The results were released June 3.

Mintert and Langemeier spoke during the Purdue Commercial AgCast on June 3.

The Current Conditions Index rose five points to 146, while the Farm Financial Performance Index was up eight points to 109. The financial performance number was the highest index reading since December 2022, Mintert said.

“Going back to last fall, you go back to September, that index was at 68 and now we’re at 109,” he explained. “So we’ve really seen this dramatic improvement in that Farm Financial Performance Index. Some of that relates to 2025 expectations versus 2024. Last fall, people were comparing 2024 to 2023, I think. But I don’t know, (it’s) a little optimistic, isn’t it?”

Langemeier said he thought so. “But I do think 2025 is going to be as good as 2024. And so, when I look at budget projections, I think it’s fairly consistent with the budget projections. (This) doesn’t necessary mean this is going to be a good year, but what that tells me is they think it’s going to be similar to 2024.”

The barometer’s Farm Capital Investment Index fell six points in May to 55. Mintert said despite the drop, the index is still pretty strong relative to the last three years. In May 2024, the index was 35, two years ago it was 37, and three years ago it was 35.

The percentage of producers who said it was a good time to make large investments fell from 25 to 19 percent, Mintert said, while the percentage who said it was a bad time was unchanged at 64 percent.

“That’s what caused the index to move,” he said. “You did see a little loss of optimism about this being a good time (to make large investments).”

The survey found 52 percent of producers expect exports to increase over the next five years, a jump from 33 percent in April. Mintert said that’s the highest percentage expecting exports to increase since November 2020.

“This was a truly amazing result,” Langemeier said. “I did not expect this. I expected (it) to be a little bit more positive, but not this much.”

Respondents were asked if they thought the increased use of tariffs by the U.S. would strengthen or weaken the U.S. economy in the long run. In May, 69 percent said they expect the use of tariffs to strengthen the U.S. economy; in April, the number was 70 percent.

“So a large majority of people think this will have a positive impact on the U.S. ag economy,” Mintert said. “I don’t know anybody in the ag economics profession that agrees with that. But that’s what producers are telling us.”

Langemeier said, “I personally don’t agree with this, but I think that explains why we have the highest Index of Future Expectations since April 2021. If you really believe this, you’re pretty optimistic about the long run.”