WEST
LAFAYETTE, Ind. and CHICAGO, April 5,
2022 /PRNewswire/ -- The Purdue
University/CME Group Ag Economy Barometer dipped to a
reading of 113 in March, down 12 points from February and 36% lower
than March 2021, marking the weakest
farmer sentiment reading since May
2020, the early days of the pandemic. The decline was driven
by producers' weaker perceptions of both current conditions in the
agricultural economy and expectations for the future. The Index
of Current Conditions declined 19 points to 113, down 44% from
March 2021, and the Index of
Future Expectations declined 9 points to 113, down 31% from the
same time last year. 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
March 14-18, 2022.
"Concern about the war's impact on input prices and input
availability on their farming operations was paramount in the minds
of producers responding to the March survey and was a major factor
in this month's decline in sentiment," said James Mintert, the barometer's principal
investigator and director of Purdue
University's Center for Commercial Agriculture.
The March survey provided the first opportunity to ask producers
how they expect the war in Ukraine
to affect U.S. agriculture. Producers overwhelmingly said they
expect input prices to be most affected (63% of respondents),
followed by crop prices (33% of respondents), and livestock prices
(3% of respondents). Responding to a related question, 19% of
respondents chose "availability of inputs" as their biggest concern
in their farming operation this year, which was equal to the
percentage of producers who chose "lower crop and/or livestock
prices" as their biggest concern.
Diving deeper into producers' expectations for farm input prices
in the upcoming year, 57% expect farm input prices to rise by 20%
or more and 36% think input prices will rise by 30% or more. And,
just over one-fourth (27% of producers) say they've had difficulty
purchasing crop inputs for the 2022 crop season. Producers report
that supply chain problems persist across a wide-range of inputs
with herbicides, fertilizer, and farm machinery parts posing the
most problems.
Producers continue to say that they expect their farm's
financial performance to decline in 2022 compared to 2021. The
March Farm Financial Performance Index, which asks producers
whether they expect their farm's financial performance in 2022 to
be better than, worse than or about the same as in 2021, was up
slightly (4 points) at a reading of 87, but remains 30% lower than
a year earlier.
"When producers think about how their farm will fare financially
in 2022, it's clear they do not expect commodity price strength to
offset the dramatic rise in farm production costs they are
experiencing," said Mintert.
Producers do not view this as a good time to make large
investments in their farming operations as the Farm Capital
Investment Index fell again in March. The index was 6 points
lower than a month earlier and 59% lower than in March 2021 when it was near its all-time peak. In
a pair of follow-up questions, 62% of respondents said their plans
for farm machinery purchases in the upcoming year are lower than a
year earlier, which is the most negative response to that question
since May 2020. When asked a similar
question about their plans for farm building and grain bin
construction, 68% of respondents chose "lower" which was the most
negative response received to that question since its first
inclusion in a barometer survey in May
2021.
Supply chain problems continue to haunt both the farm machinery
and construction sectors and are one of the reasons producers don't
view this as a good time for large investments. For example, 42% of
producers this month said their machinery purchase plans were
impacted by low farm machinery inventories, consistent with
industry reports that major machinery manufacturers are
experiencing order backlogs.
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: Ag Economy Barometer slides lower, producers
concerned about war's impact on input prices. (Purdue/CME Group Ag
Economy Barometer/James
Mintert).
https://www.purdue.edu/uns/images/2022/ag-barometer322LO.jpg
CME-G
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SOURCE CME Group