WEST
LAFAYETTE, Ind. and CHICAGO, July 5, 2022
/PRNewswire/ -- The Purdue
University/CME Group Ag Economy Barometer continued to slide
in June, down 2 points to a reading of 97. Producers' expectations
for the future also weakened. The Index of Future
Expectations fell 5 points to a reading of 96, marking the
lowest level for the index since October
2016. Meanwhile, producers were slightly more optimistic
regarding current conditions; the Index of Current
Conditions improved 5 points to a reading of 99. 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 June
13-17.
"Rising input costs and uncertainty about the future continue to
weigh on farmer sentiment," said James
Mintert, the barometer's principal investigator and director
of Purdue University's Center for
Commercial Agriculture. "Many producers remain concerned about the
ongoing escalation in production costs as well as commodity price
volatility, which could lead to a production cost/income squeeze in
2023."
The Farm Financial Performance Index which is primarily
reflective of income expectations for the current year, improved 2
points to a reading of 83 in June, yet remains at one of the
index's lowest readings over the past 2 years. When asked about
expectations for their farm's financial condition in June 2023 compared to June
2022, 51% of survey respondents said they expect their farms
to be worse off financially a year from now. This is the most
negative response received to this question since data collection
began in 2015.
For the second month in a row, the Farm Capital Investment
Index held at a record low of 35, as producers continue to say
now is not a good time to make large investments in their farm
operation. Supply chain issues continue to frustrate farmers. In
May and June, 50% of producers said that tight machinery
inventories were impacting their farm machinery purchase plans.
The top concerns for producers in the upcoming year continue to
be input prices (43%), followed by input availability (21%),
government policies (18%), and lower output prices (17%). Looking
ahead to 2023, a majority of farmers expect to see another round of
large input cost increases with 63% of producers expecting higher
costs in 2023, on top of the large increases experienced in 2022.
Nearly four out of ten farmers expect input prices to rise by 10%
or more next year when compared to 2022; only one out of ten
producers expect input prices in 2023 to fall below 2022's prices.
Producers also expect inflation to push up the cost of living for
farm families in the year ahead. Seven out of ten survey
respondents said they expect the rate of inflation for consumer
items to be 6% or higher over the next year, and 35% of respondents
said they expect the inflation rate to exceed 10%.
When asked about their cropping plans for the upcoming year, one
out of five (19%) of crop producers said they intend to change
their crop mix in the upcoming year in response to rising input
costs. Among those who plan to shift their crop mix, almost half of
respondents (46%) said the biggest change will be to devote a
higher percentage of their acreage to soybeans. Twenty-six percent
of those planning a crop mix change said the biggest change would
be to devote more of their farm to wheat production, while 21% of
respondents said they would shift to planting more corn.
Although both farmland value indices remain at strong levels,
producers were noticeably less confident that farmland values will
continue to rise than they were last fall. The Short-Term
Farmland Value Expectations Index dropped 9 points to a reading
of 136 in June, while the Long-Term Farmland Value Expectations
Index dropped 8 points to a reading of 141. The short and
long-term farmland indices are down 13% and 12%, respectively from
the highs posted in fall of 2021.
This month's survey also asked farmers who planted corn or
soybeans in 2022 about their expectations for farmland cash rental
rates in 2023. Over half (52%) of respondents said they expect cash
rental rates to rise next year. Of those who expect rates to rise,
eight out of ten respondents said they expect rates to rise 5% or
more, while four out of ten said they expect rental rates to rise
by 10% or more in 2023.
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
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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: Farmer sentiment remains weak, crop producers
contemplating acreage shifts in 2023 (Purdue/CME Group Ag Economy Barometer/James Mintert).
https://www.purdue.edu/uns/images/2022/ag-barometer622-2LO.jpg
CME-G
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SOURCE CME Group