WEST
LAFAYETTE, Ind. and CHICAGO, July 5, 2023
/PRNewswire/ -- The Purdue
University/CME Group Ag Economy Barometer index improved in
June, rising 17 points to a reading of 121. The upswing in
sentiment was driven by producers' more optimistic view of the
future; however, their perception of current conditions remained
unchanged from May. The Index of Future Expectations rose 25
points to a reading of 123, while the Index of Current
Conditions held flat at a reading of 116 in June. 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 June
12-16.
"Optimism about U.S. agriculture's future and a more sanguine
interest rate outlook help explain producers' more positive view of
the future expressed in June's survey; however current conditions
in the farming economy continue to present a challenge for some
producers," said James Mintert, the
barometer's principal investigator and director of Purdue University's Center for Commercial
Agriculture. "This month four out of ten producers stated that
their financial situation has deteriorated compared to a year
ago."
To better understand the large month-to-month swing in
producers' expectations for the future, responses between the May
and June surveys were compared. In June, 20% of respondents said
they expected their financial condition to improve over the next
year, compared to just 13% who said that in May. Meanwhile, only
32% expect their farm's financial situation to decline over the
upcoming year, compared to 44% who responded that way in May.
Producers improved perspective on the future was not focused solely
on their own farms, but extended to all of U.S. agriculture. The
percentage of producers expecting good times for U.S. agriculture
in the next 5 years rose 8 points to 33%, while the percentage of
producers expecting bad times fell 3 points to 41%.
The Farm Financial Performance Index also rose this
month, up 10-points from May and was likely a result of a late-May
to early-June rally in harvest time prices for corn and soybeans,
as well as optimism towards positive returns for cattle producers.
In June, 50% of respondents said they expect "good times" for
livestock producers in the next 5 years, up from 37% in May.
Optimism about positive returns for cattle producers, especially
cow-calf operations, was likely a key factor behind the positive
livestock outlook.
The Farm Capital Investment Index rose 5 points in June
to a reading of 42; however, nearly 75% of respondents still feel
now is a bad time to make large investments in their farming
operation. Respondents in June cited rising interest rates (35% of
respondents) and increasing prices for equipment and new
construction (37% of respondents) as key reasons for viewing now as
a bad time for investments.
Producers were more optimistic about farmland values in June as
both the short and long-run farmland value indices rose. The
short-term index, which asks producers about their outlook over the
next 12 months, jumped 16 points to a reading of 126, its highest
reading since last November. Meanwhile, the long-term index, which
asks producers to look ahead 5 years, rose a more modest 6 points
to a reading of 151, pushing that index up to its highest level
since February 2022. Additionally,
43% of producers in the June survey think interest rates have
peaked and nearly a quarter of survey respondents expect to see
lower interest rates within the next year.
This month's survey also included a question targeted toward
corn and soybean producers regarding their expectations for
farmland cash rental rates in 2024. Twenty-five percent of the
corn/soybean producers in this month's survey said they expect 2024
cash rental rates in their area to rise above 2023's rates. Of
those respondents who said they expect rental rates to rise, nearly
one-third (32%) said they expect 2024 rental rates to increase up
to 5%, while nearly half (49%) look for rates to rise from 5 up to
10%, when compared to 2023.
This month's survey included questions to learn more about
producers' thoughts on the passage of a new farm bill. Among corn
and soybean producers, the Crop Insurance title and the Commodity
title remain the two most important farm bill components. When
asked about expectations for PLC reference prices for corn and
soybeans, half of corn and soybean producers said they expect
Congress to raise prices for both. In response to the recent
Supreme Court ruling, which upheld California's Proposition 12 mandating housing
standards for hogs processed into pork that will be sold in
California, all survey respondents
were asked about the likelihood Congress would overturn the
proposition as part of a new farm bill. Producers were split in
their response to this question, with 36% of respondents stating
it's either somewhat or very unlikely that Congress will try to
overturn the proposition and 25% stating it is at least somewhat
likely Congress will take on Proposition 12 in new farm bill
legislation.
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 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,
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Inc. NYMEX, New York Mercantile Exchange and ClearPort are
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trademarks of BrokerTec Europe LTD and EBS Group LTD,
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Dow Jones Indices LLC ("S&P DJI"). "S&P®", "S&P 500®",
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Writer: Kami Goodwin,
765-494-6999, kami@purdue.edu
Source: James Mintert,
765-494-7004, jmintert@purdue.edu
CME-G
Related websites:
Purdue University Center for
Commercial Agriculture: http://purdue.edu/commercialag
CME Group: http://www.cmegroup.com/
Photo Caption: Farmer sentiment rebounds on more optimistic
view of future (Purdue/CME Group Ag
Economy Barometer/James Mintert).
https://www.purdue.edu/uns/images/2023/ageconomy-barometer2306LO.jpg
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SOURCE CME Group