WEST
LAFAYETTE, Ind. and CHICAGO, Sept. 6,
2022 /PRNewswire/ -- The Purdue
University/CME Group Ag Economy Barometer farmer sentiment
index rose 14 points in August to a reading of 117. The rise in the
overall measure of agricultural producer sentiment was driven by
increases in both the Index of Current Conditions, which
rose 9 points to 118 and the Index of Future Expectations,
which climbed 16 points to 116. 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 August 15-19, after USDA
released both the August Crop Production and World
Agricultural Supply & Demand Estimates reports.
"Producers in the August survey were less worried about their
farm's financial situation than in July, although they remain
concerned about a possible cost/price squeeze," said James Mintert, the barometer's principal
investigator and director of Purdue
University's Center for Commercial Agriculture.
This month, more producers indicated they're expecting better
financial performance for their farms in 2022 and the upcoming
year, as the Farm Financial Performance Index improved 11
points to a reading of 99. Both corn and soybean prices rallied
from their July lows into mid-August which, along with expectations
for good yields, helped explain some of the improvement in
financial performance expectations.
At the same time, there continues to be a tremendous amount of
uncertainty among producers regarding the future cost of items they
purchase both for their farms and family usage. When asked about
their biggest concerns for the next year, over half (53%) of
respondents chose higher input costs, followed by rising interest
rates (14%), input availability (12%), and lower output prices
(11%). On the farm level, there is a big disparity in opinions
among farmers regarding whether or not input prices will retreat or
escalate in 2023. Approximately four out of ten producers expect
crop input prices in 2023 to be either unchanged or possibly
decline by as much as 10%, compared to 2022. On the other hand,
just over half of all producers expect input prices to rise from 1
to 20%. At the consumer level, nearly half (48%) of respondents
said they expect the rate of inflation for consumer items during
the next 12 months to be in the 0 to 6% range. Compared to previous
barometer surveys, more producers this month said they expect
inflation to be in the upper end of that range than those who felt
that way earlier this year.
Producers continue to view now as a bad time to make large farm
machinery and building investments. In a follow-up question, nearly
half (49%) of those who said it is a bad time for investing cited
increasing prices as the primary reason. The Farm Capital
Investment Index remains near its record low, but was up 3
points to a reading of 39 in August.
Upward pressure on cash rental rates for Corn Belt farmland in
2023 seems likely. Four out of ten corn and soybean producers
expect farmland cash rental rates to rise in 2023 compared to 2022.
This month, 27% of respondents said they expect rates to rise up to
5% compared to 39% of respondents who expect rates to rise between
5 to 10% in 2023.
Expectations for both short- and long-term farmland values were
nearly unchanged over the previous month. Among survey respondents
who say they expect farmland values to rise over the next five
years, well over half (57%) chose non-farm investor demand
as the main reason they expect values to rise.
To understand producers' exposure to and experiences with
companies offering payments for capturing carbon, this month's
survey asked respondents if they've engaged in these types of
discussions and the payments being offered. In August, 9 percent of
respondents said they have engaged in discussions with companies
offering payments for carbon capture, the highest percentage of
respondents since the question was first included in the survey. Of
those who engaged in discussions, 75% said the payment rate per
metric ton of carbon offered was less than $20 and just 1 percent said they have signed a
carbon contract. Respondents who engaged in discussions and chose
not to sign a contract were asked the minimum payment per acre they
would accept to enroll their farm in a carbon capture program.
Two-thirds of those respondents said the payment rate needed to be
at least $30 per acre, suggesting
that payment rates need to rise to encourage more participation in
carbon capture programs.
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 improves, but farmers still
concerned about rising costs and inflation. (Purdue/CME Group Ag Economy Barometer/James Mintert).
https://www.purdue.edu/uns/images/2022/ag-barometer822LO.jpg
CME-G
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SOURCE CME Group