WEST
LAFAYETTE, Ind. and CHICAGO, April 4,
2023 /PRNewswire/ -- Farmer sentiment weakened again
in March as the Purdue University/CME
Group Ag Economy Barometer fell 8 points to a reading of 117.
Both of the barometer's sub-indices declined 8 points in March,
leaving the Current Conditions Index at 126 and the
Future Expectations Index at 113. 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 13-17, which
coincided with the demise of Silicon Valley Bank and Signature
Bank.
"Rising interest rates and weaker prices for key commodities
including wheat, corn, and soybeans from mid-February through
mid-March were key factors behind this month's lower sentiment
reading," said James Mintert, the
barometer's principal investigator and director of Purdue University's Center for Commercial
Agriculture. "Although the March survey did not include any
questions directly related to the bank closures, during an
open-ended comment question posed at the end of each survey,
multiple respondents voiced concerns about the banking sector's
problems and its potential to hurt the economy. These problems also
likely weighed on producer sentiment."
The Farm Financial Performance Index remained unchanged
from February at a reading of 86. Producers point to higher input
costs (34% of respondents) and rising interest rates (25% of
respondents) as their number one concern for the year ahead.
Notably concern about higher input cost has been falling since last
summer's peak when 53% of respondents cited it as their number one
concern for the year ahead. At the same time, the percentage of
producers pointing to interest rates as a top concern has been
increasing, up 11 points from last summer.
While there was little change in the Farm Capital Investment
Index, down one point to a reading of 42 in March, there was a
change in how respondents perceived whether now was a good or bad
time for large investments. Since last July, respondents who felt
now is a bad time to make large investments have consistently
chosen "increased prices for farm machinery and new construction"
as the key reason. That changed in March as more felt that rising
interest rates (34% of respondents, up from 27% in February) over
high prices (32% of respondents, down from 45% in February) was the
key reason that now is a bad time for such investments.
Producers' outlook for farmland values in the short-term and
long-term were mixed in March. The Short-Term Farmland Value
Index declined 6 points to 113 while the Long-Term Farmland
Value Index rose 5 points to 142. This month's short-term index
value provided the weakest reading since September 2020 and left the index 32 points lower
than a year earlier. One out of five producers in this month's
survey said they expect farmland values to weaken in the next 12
months. Long-term, 17% of respondents said they expect weaker
values in the next 5 years, up from 13% a year ago and 7% two years
ago.
This month's survey included several renewable energy questions
focused on the ethanol and renewable diesel sectors. When asked to
look ahead 5 years, nearly half (46%) of respondents said they
expected the renewable diesel industry to be larger than it is
today, while just a quarter (25%) expect the ethanol industry to
grow over the same time period. In a follow-up question,
respondents were asked what impact they expect the renewable diesel
industry to have on soybean prices over the upcoming 5 years with
39% expecting a price increase of up to $0.50 per bushel, 28% expecting a boost in price
between $0.50 up to $1.00 per bushel, and 21% expecting soybean
prices to rise by $1.00 or more per
bushel.
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: Commodity price outlook and interest rate
concerns cloud farmer sentiment (Purdue/CME Group Ag Economy Barometer/James Mintert).
https://www.purdue.edu/uns/images/2023/march-barometerLO.jpg
CME-G
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SOURCE CME Group