WEST
LAFAYETTE, Ind. and CHICAGO, Jan. 3, 2023
/PRNewswire/ -- Following a two-month decline and a year of weak
sentiment, the Purdue University/CME
Group Ag Economy Barometer closed out the year on a more positive
note, rallying 24 points in December to a reading of 126. U.S.
farmers were more optimistic about both their current situation and
expectations for the future. The Current Conditions Index
jumped 37 points to a reading of 135, while the Future
Expectations Index increased 18 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 from December
5-9.
"The improvement in current sentiment was motivated by
producers' stronger perception of current financial conditions on
their farms and could be attributed to producers taking time to
estimate their farms' 2022 income following the completion of the
fall harvest," said James Mintert,
the barometer's principal investigator and director of Purdue University's Center for Commercial
Agriculture.
The Farm Financial Performance Index climbed 18 points to
a reading of 109 in December. Notably, this was the only time in
2022 that the index was above 100. The turnaround was driven by a
sharp increase in the percentage of producers who expect better
performance than last year, which jumped from 23% to 35% of
respondents, and is consistent with USDA's forecast for strong net
farm income in 2022.
The Farm Capital Investment Index climbed 9 points this
month to 40, the highest reading for the index since February; yet,
it remains 9 points lower than a year earlier. Among the nearly
three-quarters of respondents who said it was a bad time for large
investments, the most commonly cited reason was high prices for
farm machinery and new construction (41%) followed by rising
interest rates (28%).
Despite the improvement in farmers' perception of their
financial situation, both the short-term and long-term farmland
value indices continued to drift lower in December. The short-term
index fell 5 points to 124 while the long-term index declined 4
points to 140. When examined over the course of the last year it's
clear that sentiment among producers about farmland values has
shifted. For example, compared to a year ago, the percentage of
respondents who expect to see farmland values decline in the
upcoming year increased from 6% to 15%, while the percentage
expecting to see values rise declined from 59% to 39%. Among
producers who expect farmland values to rise over the next 5 years,
just over three-fourths of them said that a combination of non-farm
investor demand and inflation are the main reasons they expect to
see values rise.
Looking to the year ahead, the December survey asked producers
to compare their expectations for their farm's financial
performance in 2023 to 2022. Producers indicated they expect lower
financial performance in 2023 and cited rising costs and narrowing
margins as key reasons. Concerns about costs continue to be top of
mind for producers. Nearly half (47%) of crop producers said they
expect farmland cash rental rates in 2023 to rise above the
previous year. Other top concerns for 2023 include higher input
costs (45% of respondents), rising interest rates (22% of
respondents) and lower crop or livestock prices (13% of
respondents).
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 and 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 rebounds at year end on
stronger 2022 income. (Purdue/CME Group
Ag Economy Barometer/James Mintert).
https://www.purdue.edu/uns/images/2022/dec-barometerLO.jpg
CME-G
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SOURCE CME Group