WEST
LAFAYETTE, Ind. and CHICAGO, Aug. 2, 2022
/PRNewswire/ -- The Purdue
University/CME Group Ag Economy Barometer farmer sentiment
index rose 6 points in July to a reading of 103. Producers were
somewhat more optimistic about both current and future economic
conditions on their farms when compared to June. The Index of
Current Conditions rose 10 points to a reading of 109 and the
Index of Future Expectations rose 4 points to a reading of
100. Although all three indices rose this month, they were still
23-24% lower than a year earlier. 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 July 11-15.
"Even though we saw a slight uptick in sentiment this month,
there is still a tremendous amount of uncertainty in the
agricultural economy," said James
Mintert, the barometer's principal investigator and director
of Purdue University's Center for
Commercial Agriculture. "Key commodity prices, including wheat,
corn and soybeans, all weakened during the month and producers
remain concerned over rising input prices and input
availability."
Farm operators in this month's survey voiced concerns about
several key issues affecting their operation, including: higher
input prices (42% of respondents), lower crop prices (19% of
respondents), rising interest rates (17% of respondents), and
availability of inputs (15% of respondents).
The Farm Financial Performance Index, which is primarily
reflective of income expectations for the current year, improved 5
points to a reading of 88 in June. However, this month, 49% of
respondents said they expect their farm to be worse off financially
a year from now, which compares to 51% who felt that way in June.
This is a markedly more pessimistic outlook than producers provided
a year ago when just 30% of respondents said they expect their
financial condition to worsen in the upcoming year.
Producers remain uncertain over their expectations for crop
input prices over the next 12 months. In July, 18% of crop
producers said they expect 2023's crop input prices to decline
between 1 and 10% when compared to 2022's prices, versus 12% who
felt that way in June. Meanwhile, 26% of respondents in July said
they expect 2023's prices to rise by 10% or more, compared to 38%
who expected a crop input price rise of that magnitude in June.
The rise in input costs is leading some producers to reassess
their cropping plans for the upcoming year. In this month's survey,
nearly one out of four (24%) of crop producers said that as a
result of the rise in input costs they plan to change their farm's
crop mix in 2023. In a follow-up question, over half (53%) of
respondents who said they plan to change their mix will increase
the percentage of their cropland devoted to soybeans. In a separate
set of questions, 26% of producers who told us they planted winter
wheat last year said they plan to increase their wheat acreage this
fall.
The Farm Capital Investment Index remains near its record
low, up one point to a reading of 36 in July. To shed light on why,
respondents who said now is a bad time for large investments were
asked for the primary reason they felt that way. Of those
respondents, 44% indicated an "increase in prices for farm
machinery and new construction," 15% said "uncertainty about farm
profitability," and 14% chose "rising interest rates" as the
primary reason they viewed now as a bad time for large investments.
Somewhat surprisingly, only 7% of respondents chose "tight farm
machinery inventories at dealers" as their primary reason for
responding negatively to the investment question.
Producers' views on farmland values diverged this month as the
Short-Term Farmland Value Index declined 9 points to 127,
while the long-term index rose 9 points to 150. The short-term
index is down 20% from its peak reading in 2021, while the
long-term index is only 6% lower than the peak reached last year.
Short-term there was a shift away from expectations that farmland
values will go higher, with more producers in July expecting values
to remain about the same. The long-term change was attributable to
more respondents this month expecting values to rise with fewer
expecting a decline over the next five years.
"The short-run and long-term farmland indices don't always move
in tandem, but the magnitude of this month's divergence between the
short and long-term indices is unusual," said Mintert. "Producers
who expect values to rise over the upcoming 5 years continue to say
that non-farm investor demand and inflation are the two primary
reasons they expect values to rise."
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
CME-G
Related websites:
Purdue University Center for Commercial
Agriculture: http://purdue.edu/commercialag
CME Group: http://www.cmegroup.com/
Photo Caption: Slight increase in producer sentiment despite
rising costs and lower crop prices. (Purdue/CME Group Ag Economy Barometer/James Mintert).
https://www.purdue.edu/uns/images/2022/ag-barometer722LO.jpg
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SOURCE CME Group