WEST LAFAYETTE, Ind. and
CHICAGO, Nov. 2, 2021 /PRNewswire/ -- The Purdue University/CME Group Ag Economy Barometer
recorded a drop in producer sentiment in October, down 3 points to
a reading of 121. The modest drop was part of a three-month slide
for the index primarily due to producers' weakened perceptions for
both current and future conditions in the production agriculture
sector. The Index of Current Conditions was down 5 points to
a reading of 140, while the Index of Future Expectations
fell 2 points to a reading of 114. 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 October 18-22, 2021.
"Recent weakness in farmer sentiment appears to be driven by a
wide variety of issues, with concerns about input price rises
topping the list," said James
Mintert, the barometer's principal investigator and director
of Purdue University's Center for
Commercial Agriculture. "Rapid run-ups in input prices, especially
fertilizer for crop production, are giving rise to concerns among
producers' about their operating margins weakening. Livestock
producers are also concerned about a cost-price squeeze, especially
in the pork and dairy sectors."
Producer's view of their farms' financial situation was less
optimistic in October compared to September. The Farm Financial
Performance Index declined 6 points to 104 in October. Over
half (51%) of producers in the survey said they expect input prices
to rise 8% or more in the upcoming year and one-third of producers
said they expect those prices to rise by 12% or more. While the
dramatic rise in fertilizer prices that's taken place in recent
months is a key factor; rising input costs also extend to other
inputs such as seed, pesticides, and machinery repairs and
ownership costs leading farmers to become increasingly concerned
about a cost-price squeeze on their operating margins, said
Mintert.
Rising input costs are starting to have a dampening effect on
expectations for farmland cash rental rates. In October, the
percentage of corn and soybean producers expecting higher farmland
rental rates in 2022 compared to 2021, dipped to 43%, down 7 points
from September, with more respondents expecting rates to remain
unchanged in the coming year. Despite these concerns, producers
remain bullish on farmland values. The Long-Term Farmland Value
Expectations Index set a new record high this month with a
reading of 161, 2 points higher than a month earlier while the
short-term index rose 1 point to 156.
Tight machinery inventories continue to hold back producers'
machinery investment plans, nearly four out of ten respondents said
their purchase intentions were impacted by low farm machinery
inventory levels. Even so, the Farm Capital Investment Index
improved modestly in October, up 3 points to a reading of 46. Even
with that rise, however, the index was still 50% lower than it was
at the beginning of the year. Weaker construction plans among
producers this month also weighed on the investment index as the
percentage of producers planning to increase building and grain bin
construction on their farms fell to 10% in October compared to 13%
in September.
Over the past year, there's been little change in producers'
awareness of carbon capture opportunities on their farms. Just 29%
of respondents in the October survey said they were aware of
opportunities to receive payments to capture carbon on their farms,
on par with survey results from last winter and spring. Of those
aware of the opportunities, just over 2% said they had discussed
carbon capture payments with any companies, compared to 5% last
winter and spring.
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
Related websites:
Purdue University Center for Commercial
Agriculture: http://purdue.edu/commercialag
CME Group: http://www.cmegroup.com/
Photo Caption: Farmer sentiment weakens amid rising concerns of
a cost-price squeeze. (Purdue/CME Group
Ag Economy Barometer/James
Mintert).
https://www.purdue.edu/uns/images/2021/ag-baromter1021OG.jpg
CME-G
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SOURCE CME Group