WEST LAFAYETTE, Ind. and
CHICAGO, Aug. 1, 2023
/PRNewswire/ -- Agricultural producer sentiment improved slightly
in July as the Purdue University/CME
Group Ag Economy Barometer index rose two points to a reading of
123. Farmers were also more optimistic about their perception of
current conditions and future expectations on their farms. The
Index of Current Conditions rose 5 points to a reading of
121, while the Index of Future Expectations was up one point
to 124. 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 July 10-14.
"Producers were slightly more confident about the farming
economy in July, despite recent crop price volatility and continued
concerns about rising interest rates," said James Mintert, the barometer's principal
investigator and director of Purdue
University's Center for Commercial Agriculture.
The improvement in farmers' perspective on current conditions
spilled over into a modest rise in July's Farm Capital
Investment Index, up 3 points to a reading of 45. However, the
index has greatly improved, up 14 points, since bottoming out in
November 2022. Comparing July's
responses to last fall's low point, the percentage of producers
saying now is a good time for large investments has improved from
10% who felt that way in November to 17% in July. Additionally, the
percentage of farmers who feel it's a bad time to invest was down
from 79% who felt that way in November to 72% in July.
Surprisingly, the improvement in this month's investment index
occurred despite a rise in the percentage of producers who expect
interest rates to rise over the next year. Nearly two-thirds (65%)
of producers in July said they expect interest rates to increase,
up from 57% in June. Among those who indicated that now is a bad
time to make large investments, their top reason was concern about
rising interest rates.
Given the volatility in commodity prices, especially crop
prices, this spring and early summer, it's notable that more
producers expressed concern about rising interest rates than
declining output prices. Producers' top concern for their farming
operations in the upcoming year is still higher input costs (37% of
respondents), followed by rising interest rates (24% of
respondents) and lower output prices (19% of respondents).
Confidence among farmers regarding the future direction of
farmland values continues, even as nearly two-thirds of survey
respondents expect interest rates to rise over the next year. The
Long-Term Farmland Value Expectations Index remained
unchanged in July at a reading of 151 while the Short-Term
Farmland Value Expectations Index declined just one point to
125. This month, corn and soybean producers were once again asked
about their farmland cash rental rate expectations for 2024.
Similar to last month, nearly one-quarter (24%) of respondents
expect rental rates to rise, compared to 2023, while just over 7
out of 10 (71%) of producers look for no change in rental
rates.
Farmers' rating of financial conditions on their farms was
virtually unchanged in July, as the Farm Financial Conditions
Index rose just one point to a reading of 87. When asked to
look ahead one year, there was a one percentage point increase in
farmers expecting farm financial conditions to improve over the
previous month and a one-point decline in the percentage of farmers
expecting conditions to worsen. Farmers' longer-term perspective on
the U.S. agricultural economy did improve somewhat in July. The
percentage of respondents expecting bad times in the upcoming 5
years fell two-percentage points to 39% in July.
This month's survey included several questions about crop
farmers' perspectives on cover crop usage. Nearly-half (45%) of
corn/soybean farmers in this month's survey indicated they
currently use cover crops. This compares with responses from 2021
and 2022 barometer surveys, where a range between 41 to 57% of
respondents reported planting cover crops. Among cover crop users,
the two most commonly cited reasons for using cover crops were to
improve soil health and erosion control (65% of July respondents),
which is in line with prior barometer surveys in 2021 and 2022 when
58 to 70% of respondents choose soil health and erosion control as
their motivation for using cover crops.
Those who indicated using cover crops were also asked to
describe their experience. Four out of five (80%) farmers said it
improved soil health and yields, while 15% of respondents said
cover crops improved soil health, but did not improve yields. In
prior barometer surveys, a range of 74 to 84% of respondents said
cover crops improved soil health and yields, while 9 to 18% of
respondents said it improved soil health, but did not improve
yields.
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,
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. The S&P 500 Index is a product of S&P
Dow Jones Indices LLC ("S&P DJI"). "S&P®", "S&P 500®",
"SPY®", "SPX®", US 500 and The 500 are trademarks of Standard &
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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: Farmers remain cautiously optimistic about
the agricultural economy (Purdue/CME
Group Ag Economy Barometer/James
Mintert).
https://www.purdue.edu/uns/images/2023/july-barometerLO.jpg
CME-G
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SOURCE CME Group