Agricultural producer sentiment fell in February after three straight months of gains, according to the latest reading of the Purdue/CME Group Ag Economy Barometer.

The barometer dropped to 134 in February, a 19-point decrease from January's record high of 153. Even with the drop, the February reading is still the second-highest since data collection began in October 2015.

Both of the barometer's component indices — the Index of Current Conditions and the Index of Future Expectations — dropped from their January levels.

"The concern producers expressed about current economic conditions is consistent with other measures of conditions in the farm economy," said James Mintert, barometer principal investigator and director of Purdue's Center for Commercial Agriculture. "For example, during the recent annual Agricultural Outlook Forum, USDA projected net farm income in 2017 will fall to $62 billion, a 9% decrease from 2016 and a 50% drop from the peak net farm income set in 2013."

With uncertainty surrounding U.S. trade policy since the November election, the Purdue/CME Group survey asked producers to rate the importance of agricultural exports to the U.S. economy. Ninety-three percent reported that agricultural exports were important or very important. Nearly 80% also said that agricultural exports were important or very important for their individual farms.

The rapidly approaching spring planting season is another factor with the potential to influence producer sentiment. Two-thirds of February survey respondents said they expect soybeans to be more profitable than corn this year.

"Corn and soybean growers are finalizing their planting decisions as we speak," Mintert said. "The expected profitability of corn versus soybeans in 2017 will be one of the key factors that determines the crop mix. The indications that more producers think soybeans will be more profitable means that there will be extra interest in USDA's annual Planting Intentions Report."

USDA will release the “Prospective Plantings” report on March 31.

Expectations for farmland values

An important component of the farm economy is the farmland market, as it a major asset and store of wealth for most farmers. Periodically, producers are surveyed regarding both their expectations for farmland values in their local market and their overall perceptions about farmland as an investment.

February’s survey responses indicated a small improvement in sentiment since last fall. Compared to when producers were last surveyed about farmland values in October 2016, fewer producers expect farmland values to decline and more producers expect values to increase.

In a separate question, producers were asked to rate farmland as an investment. In February 2017, 64% of respondents rated farmland favorably as an investment, up from 52% in November 2016 and 55% a year earlier.