WEST
LAFAYETTE, Ind. and CHICAGO, Oct. 4, 2022
/PRNewswire/ -- The Purdue
University/CME Group Ag Economy Barometer farmer sentiment
index declined 5 points to a reading of 112 in September. The
decline in farmer sentiment was primarily the result of producers'
weakened perception of current conditions, as the Current
Conditions Index declined 9 points to 109. The Index of
Future Expectations also weakened slightly, declining 3 points
from a month earlier to a reading of 113. 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 September
19-23.
"Concerns about input costs and, in some cases, availability are
key factors behind the relative weakness in this month's farmer
sentiment," said James Mintert, the
barometer's principal investigator and director of Purdue University's Center for Commercial
Agriculture. "However, a growing number of producers are also
concerned about the impact of rising interest rates on their farm
operations."
Higher input costs remain the number one concern among survey
respondents. In September, 44% of respondents chose "higher input
costs" as their number one concern, while 23% chose "rising
interest rates," and 14% chose "availability of inputs." When asked
to look ahead to 2023, the largest share (38%) of producers expect
input prices to rise from 1% to 9%, compared to 2022 prices.
Meanwhile, nearly a fourth (24%) of producers expect input prices
to rise from 10% to 19%, and 9% of survey respondents said they
expect an input price rise of 20% or more.
The Farm Capital Investment Index declined to a record
low of 31 in September, as producers continue to indicate now is
not a "good time" to make large investments in their farming
operations. To understand why they felt that way, a follow-up
question was posed to farmers who reported now being a "bad time"
to make large investments. For the third month in a row, producers
overwhelmingly (46%) said it was due to increasing prices for farm
machinery and new construction; however, 21% indicated that "rising
interest rates" were a primary reason, up from 14% who cited
interest rates back in August.
Despite that negative perspective, fewer producers plan to
reduce their farm machinery purchases. Since peaking in
March 2022 at 62%, the share of
producers who plan to reduce their machinery purchases compared to
a year earlier has been declining, dipping to 47% in September.
Their plans for farm building purchases tell a similar story. Since
the March 2022 high of 68%, producers
who planned to reduce their building and grain bin purchases has
fallen to 56% in September.
Producers' perspective on farmland values continues to soften.
This month the Short-Term Farmland Value Expectations Index
fell 5 points to 123 and the Long-Term Farmland Value
Expectations Index fell 7 points to 139. Compared to a year
ago, the short-term index is down 21%, while the long-term index
has fallen 12% over the same time frame. In a follow-up question
posed to respondents who expect farmland values to rise over the
next 5 years, non-farm investor demand (60%) remains their primary
reason for the rise.
This month's survey included a series of questions to understand
producers' cover crop usage. Nearly six out of 10 (57%) respondents
said they currently plant cover crops on a portion of their
farmland, while approximately one out of four producers said they
have never planted a cover crop. Most producers who report planting
cover crops say they only plant them on a portion of their farmland
with half indicating they plant on 25% or less of their acreage.
However, some farms report more intensive use of cover crops as
nearly a fourth of respondents said they plant cover crops on over
50% of their farms' acreage. A large share (40%) of producers who
reported planting cover crops this month said they have been
planting cover crops for 5 years or less, while 28% of respondents
said they have been planting cover crops for more than 10 years.
The reasons for planting cover crops vary, with 37% citing "improve
soil health" and 33% citing "improve erosion control" as the
primary motivators. Just 5% of cover crop users indicated "carbon
sequestration" as a motivation for planting cover crops.
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 more information,
check out the Purdue Commercial AgCast podcast
available at https://purdue.ag/agcast, which includes a detailed
breakdown of each month's barometer, in addition to a discussion of
recent agricultural news that affects farmers.
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: Farmer sentiment drifts lower, rising
interest rates contribute to uneasiness. (Purdue/CME Group Ag Economy Barometer/James Mintert).
https://www.purdue.edu/uns/images/2022/sept-barometerLO.jpg
CME-G
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SOURCE CME Group