Producer sentiment toward the agricultural economy dropped to 124 in March, marking the second consecutive month of decline, according to the Purdue University/CME Group Ag Economy Barometer.

The decrease is a 10-point drop from February's reading of 134. The barometer is based on a monthly survey of 400 agricultural producers from across the U.S.

"The barometer has been moderating in recent months after a large jump in sentiment that began in November 2016," said Jim Mintert, director of Purdue's Center for Commercial Agriculture and principal investigator for the barometer. "While sentiment has settled lower, it's important to note that it is still higher than during all but the last two months of 2016."

The March 2016 reading was 85.

The barometer's sub-indices — the Index of Current Conditions and the Index of Future Expectations — offer insights into why producer sentiment settled at 124. The Index of Future Expectations, which measures producer sentiment 12 months out and beyond, fell to 126 in March, down from the February reading of 148. The Index of Current Conditions, however, increased from 105 in February to 120 in March.

"At 120 in March, the Index of Current Conditions exceeded recent highs and is at a level that we haven't seen since late 2015," Mintert said. "Producers' reduced optimism about future economic conditions in agriculture is what drove this month's barometer lower."

The results noted that producers responding to the March survey were somewhat less optimistic about the long-term outlook for the agricultural economy than they were earlier in the winter. Producers then were expecting major changes in the regulatory and tax environment following the November election. However, the most recent reading of the barometer could signify the growing realization that changes, if they are to occur, could take a long time to implement.

On a quarterly basis, the survey also asks producers about their expectations for livestock commodity prices 12 months out — specifically, if they believe prices in 12 months will be higher, lower or about the same. In March, a slightly larger share of producers expected beef prices to be higher (26%) than lower (20%), with the largest share of respondents (53%) expecting prices to be “about the same.” Current producer expectations for beef prices improved from March 2016, when 19% expected higher prices and 33% expected lower prices.

In terms of the overall U.S. economy, producer sentiment continued to be strong in the March report — a trend that started in November 2016. In October, just 35% of respondents said they expected widespread good times in the U.S. economy over the next five years. By December, this number had jumped to 71%. It improved again in the March survey, increasing to 77%.

"These results are consistent with producer responses to other questions about the U.S. economy," said David Widmar, senior research associate for the Center for Commercial Agriculture and leader of the barometer's research activities. "Two examples are that 59% of producers said that they expect the U.S. economy to expand, and 78% expect the U.S. stock market to be higher or about the same over the next 12 months."