WEST
LAFAYETTE, Ind. and CHICAGO, March 7,
2023 /PRNewswire/ -- The Purdue University/CME Group Ag Economy Barometer
dipped 5 points to a reading of 125 in February. Farmers'
perspectives regarding both current conditions on their farms and
their expectations for the future also weakened. The Index of
Current Conditions fell 2 points to 134 and the Index of
Future Expectations declined 6 points to 121. 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 February 13-17.
"Increased concern over the risk of falling output prices,
rising interest rates, and uncertainty over the future growth of
U.S. agricultural exports is weighing on producers' minds," said
James Mintert, the barometer's
principal investigator and director of Purdue
University's Center for Commercial Agriculture.
Producers' expectations for their farms' financial performance
in 2023 compared to 2022 weakened in February. The Farm
Financial Performance Index declined 7 points to a reading of
86. Farmers continue to point to concerns about higher input costs
(38% of respondents), rising interest rates (24% of respondents),
and lower output prices (18% of respondents), as their biggest
concern for the year ahead.
Agricultural exports have been a key source of growth for U.S.
agriculture for decades. Beginning in 2019, the Ag Economy
Barometer survey routinely included a question asking producers
about their expectations for agricultural exports in the upcoming 5
years. Since peaking in 2020, when just over 70% of respondents
said they expected exports to increase in the upcoming 5 years, the
percentage of farmers looking for exports to grow over time has
drifted lower. In February, just 33% of survey respondents said
they expect exports to increase, which leads Mintert to suggest
that a lack of confidence in future agricultural export growth is
contributing to weakened sentiment among producers.
Despite strong farm income, the February reading of the Farm
Capital Investment Index changed little, rising one point to a
reading of 43. This month, 72% of producers said it is a "bad time"
to make large investments in their farming operation, while just
15% reported it is a "good time" to make such investments. The
disparity between producers' responses to the question and actual
farm equipment sales continues to be focused on costs. Of those who
said now is a "bad time" to make large investments, 45% of
respondents said it was because of an increase in prices for farm
machinery and new construction, while 27% of respondents said it
was because of "rising interest rates."
Producers' expectations for short-term and long-term farmland
values fell in February but remain positive. The Short-Term
Farmland Value Index declined one point to 119 while the
Long-Term Farmland Value Index dropped 5 points to 137.
Although both indices remain above 100, indicating a positive
outlook on farmland values, the percentage of producers who said
they expect values to decline over the next 5 years reached 19%
this month, the highest percentage since this question was first
routinely included in barometer surveys in 2019. Still, over half
(56%) of respondents expect values 5 years from now to be higher
than today. This month, just 33% of respondents said they expect
values to rise in the next 12 months, while 14% said they expect
values to weaken.
Each February, the barometer survey includes a question focused
on farm growth, asking respondents about the annual growth rate
they expect for their farm over the next 5 years. This year 49% of
respondents said their farm either had "No plans to grow" (33%) or
"Plan to exit or retire" (16%). Of those respondents who expect
their farms to grow, 19% expect it to grow by "Less than 5%
annually" and 22% said they expect it to grow by "5 to 10%
annually."
Leasing of farmland for solar energy production is a hot topic
in many parts of the U.S. Since the Spring of 2021, the barometer
survey has periodically included questions about the discussions
that farmers are having with solar companies. In both the January
and February 2023 surveys, just over
10% of respondents said they had discussed a solar lease with a
company. Of those who indicated they had been in discussions,
nearly half (48%) of respondents said they were offered a lease
rate above $1,000 per acre, up from a
low of 27% and a high of 35% in previous surveys. This month's
survey findings suggest companies have started to increase the
lease rates they are willing to pay.
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
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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 dips in February
(Purdue/CME Group Ag Economy
Barometer/James Mintert).
https://www.purdue.edu/uns/images/2023/feb-barometerLO.jpg
CME-G
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SOURCE CME Group