WEST
LAFAYETTE, Ind. and CHICAGO, June 7, 2022
/PRNewswire/ -- The Purdue
University/CME Group Ag Economy Barometer dropped to its
lowest level since April 2020, down
22 points in May to a reading of 99. Agricultural producers'
perceptions regarding current conditions on their farms, as well as
their future expectations, both weakened this month. The Index
of Current Conditions dipped 26 points to a reading of 94 and
the Index of Future Expectations fell 21 points to a reading
of 101. 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 May 16-20.
"Despite strong commodity prices, this month's weakness in
producers' sentiment appears to be driven by the rapid rise in
production costs and uncertainty about where input prices are
headed," said James Mintert, the
barometer's principal investigator and director of Purdue University's Center for Commercial
Agriculture. "That combination is leaving producers very concerned
about their farms' financial performance."
The Farm Financial Performance Index declined 14 points
to a reading of 81 in May. The percentage of producers who
expect their farm's financial performance to worsen in 2022
compared to last year rose from 29% in April to 38% in May. Over
the course of the last 13 months, the Farm Financial Performance
Index has fallen 41% below its life of survey high of 138 set
in April 2021.
The Farm Capital Investment Index drifted to an all-time
low in May and is down 30 points from this same time last year. In
the May survey, only 13% of respondents said this is a good time to
make large investments in their operation, while 78% said they
viewed it as a bad time to invest in things like machinery and
buildings. Half of the producers in this month's survey said their
machinery purchase plans were impacted by low farm machinery
inventory levels, up from 41% in the April survey, suggesting that
supply chain issues are at least partly responsible for the ongoing
weakness in the capital investment index.
Higher input costs remain a top concern for producers with 44%
of those surveyed choosing it as the biggest concern facing their
farming operation in the coming year. Additionally, 57% of
producers said they expect a 30% or more rise in prices paid for
farm inputs in 2022 compared to prices paid last year. The May
survey also asked producers about their expectations for input
costs in 2023 compared to 2022 with nearly 39% of producers
indicating they expect an additional cost increase of 10% or more
in the coming year.
In response to a Biden administration policy proposal for a
$10/acre wheat/double-crop soybean
crop insurance subsidy, this month's survey asked respondents if
the subsidy would encourage them to plant more wheat in fall 2022
than would otherwise be the case. Among producers who have employed
a wheat/double-crop soybean rotation in the past, just over one in
five (22%) said it would encourage them to plant more wheat. Among
producers who have not followed a wheat/double-crop soybean
rotation in the past, just one out of ten producers said the
insurance subsidy would encourage them to plant more wheat this
fall.
Lastly, farmers remain optimistic toward farmland values. The
Short-Term Farmland Value Expectations Index, based upon
producers' 12-month outlook, rose 1 point to a reading of 145.
Meanwhile, the Long-Term Farmland Value Expectations Index,
based upon producers' farmland outlook over the upcoming 5 years,
rose 8 points in May to a reading of 149. In a follow-up question,
respondents who expect farmland values to rise over the next 5
years were asked the main reason they expect values to rise. Over
the past few months that this question has been posed, respondents
have consistently chosen non-farm investor demand as the top
reason, followed closely by inflation.
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
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Writer: Kami Goodwin,
765-494-6999, kami@purdue.edu
Source: James Mintert, 765-494-7004,
jmintert@purdue.edu
CME-G
Related websites:
Purdue University Center for Commercial Agriculture:
http://purdue.edu/commercialag
CME Group: http://www.cmegroup.com/
Photo Caption: Farmer sentiment plummets as production costs
skyrocket. (Purdue/CME Group Ag Economy
Barometer/James Mintert).
https://www.purdue.edu/uns/images/2022/ag-barometer522LO.jpg
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SOURCE CME Group