WEST
LAFAYETTE, Ind. and CHICAGO, May 3, 2022
/PRNewswire/ -- The Purdue
University/CME Group Ag Economy Barometer improved in April
up 8 points to a reading of 121; however, it remains 32% below its
reading from the same time last year. Producers' perspective on
current conditions and future expectations saw an uptick over the
past month. The Index of Current Conditions improved 7
points to a reading of 120 and the Index of Future
Expectations improved 9 points to a reading of 122. The Ag
Economy Barometer is calculated each month from 400 U.S.
agricultural producers' responses to a telephone survey. This
month's survey was conducted between April
18-22.
"Rising prices for major commodities, especially corn and
soybeans, appear to be leading the change in producers' improved
financial outlook," said James
Mintert, the barometer's principal investigator and director
of Purdue University's Center for
Commercial Agriculture. "However, it's hard to overstate the
magnitude of the cost increases producers say they are facing."
The Farm Financial Performance Index improved to a
reading of 95, up 8 points from March and 12 points higher than in
January and February. As Mintert suggests, much of this could be
attributed to the strengthened commodity prices. For example,
Eastern Corn Belt cash prices for corn in mid-April rose more than
10% above their mid-March level while bids for fall delivery of
2022 crop corn climbed 20% over the same period. Soybean prices
rose as well. Near-term delivery prices for soybeans rose about 7%
from mid-March to mid-April while elevator bids for fall delivery
of new crop soybeans climbed 5% over the one-month span.
Even as commodity prices have strengthened, producers continue
to say higher input costs are the top concern for their farming
operation. In April, 42% of producers chose higher input
costs as their biggest concern, which was more than twice as
many who chose government policies (21%) or lower output
prices (19%). In April, 60% of survey respondents said they
expect input prices to rise by 30% over the next 12 months. This
compares to an average of 37% of respondents who said they were
expecting a cost increase of this magnitude when the same question
was posed in the December 2021
through March 2022 surveys.
When asked specifically for their expectations for 2023 crop
input prices compared to prices paid for 2022 crop inputs, 36% of
respondents said they expect prices to rise 10% or more and 21% of
crop producers said input price rises of 20% or more are likely.
The war in Ukraine has also added
a new level of uncertainty for producers. Sixty percent of survey
respondents said the biggest impact of the war on U.S. agriculture
will be on input prices.
Crop input challenges extend beyond their inflated cost to their
availability. In April, 34% of producers said they experienced some
difficulty in purchasing inputs for the 2022 crop season, up from
27% in March. In a follow-up question, producers who said they had
some difficulty obtaining inputs said that herbicides (30%
of respondents) were most problematic followed closely by farm
machinery parts (27%), fertilizer (26%), and
insecticides (17%). In a related question, 11% of crop
producers said they received notice an input supplier would not be
able to deliver one or more crop inputs they had already
purchased for use in 2022. Of those, herbicide availability was
the top problem reported.
Despite an overall improved financial performance outlook, the
Farm Capital Investment Index remains at its all-time low.
Supply chain problems remain a key reason many producers feel now
is not a good time for making large investments in their farming
operation. For example, just over 40% of producers said their farm
machinery purchase plans were impacted by low machinery
inventories. The rising cost of all inputs, including machinery,
buildings, and grain bins, is likely another factor causing
producers to say now is not a good time for large investments.
Read the full Ag Economy Barometer report at
https://purdue.ag/agbarometer. The site also offers additional
resources – such as past reports, charts and survey methodology –
and a form to sign up for monthly barometer email updates and
webinars.
Each month, the Purdue Center for Commercial Agriculture
provides a short video analysis of the barometer results, available
at https://purdue.ag/barometervideo. For even more
information, check out the Purdue Commercial
AgCast podcast. It includes a detailed breakdown of each
month's barometer, in addition to a discussion of recent
agricultural news that affects farmers. Available now
at https://purdue.ag/agcast.
The Ag Economy Barometer, Index of Current Conditions and Index
of Future Expectations are available on the Bloomberg Terminal
under the following ticker symbols: AGECBARO, AGECCURC and
AGECFTEX.
About the Purdue University
Center for Commercial Agriculture
The Center
for Commercial Agriculture was founded in 2011 to provide
professional development and educational programs for farmers.
Housed within Purdue University's Department of
Agricultural Economics, the center's faculty and staff develop and
execute research and educational programs that address the
different needs of managing in today's business
environment.
About CME Group
As the world's leading and most
diverse derivatives marketplace, CME Group
(www.cmegroup.com) enables clients to trade
futures, options, cash and OTC markets, optimize portfolios, and
analyze data – empowering market participants worldwide to
efficiently manage risk and capture opportunities. CME
Group exchanges offer the widest range of global benchmark
products across all major asset classes based
on interest rates, equity
indexes, foreign
exchange, energy, agricultural
products and metals. The company
offers futures and options on futures trading through
the CME Globex® platform, fixed income trading
via BrokerTec and foreign exchange trading on
the EBS platform. In addition, it operates one
of the world's leading central counterparty clearing
providers, CME Clearing.
CME Group, the Globe logo, CME, Chicago Mercantile Exchange,
Globex, and, E-mini are trademarks of Chicago Mercantile
Exchange Inc. CBOT and Chicago Board of Trade are trademarks of Board
of Trade of the City of Chicago,
Inc. NYMEX, New York Mercantile Exchange and ClearPort are
trademarks of New York Mercantile Exchange, Inc. COMEX is a
trademark of Commodity Exchange, Inc. BrokerTec and EBS are
trademarks of BrokerTec Europe LTD and EBS Group LTD,
respectively. Dow Jones, Dow Jones Industrial Average, S&P
500 and S&P are service and/or trademarks of Dow Jones
Trademark Holdings LLC, Standard & Poor's Financial Services
LLC and S&P/Dow Jones Indices LLC, as the case may be, and have
been licensed for use by Chicago Mercantile Exchange Inc. All
other trademarks are the property of their respective owners.
Writer: Kami Goodwin,
765-494-6999, kami@purdue.edu
Source: James Mintert, 765-494-7004,
jmintert@purdue.edu
Related websites:
Purdue University Center for Commercial Agriculture:
http://purdue.edu/commercialag
CME Group: http://www.cmegroup.com/
Photo Caption: Producer sentiment improves with
strengthened commodity prices; but high cost inflation worries
farmers. (Purdue/CME Group Ag
Economy Barometer/James
Mintert).
https://www.purdue.edu/uns/images/2022/ag-barometer422LO.jpg
CME-G
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SOURCE CME Group