WEST
LAFAYETTE, Ind., March 5,
2024 /PRNewswire/ -- The latest Purdue University/CME Group Ag Economy Barometer
reveals a modest increase in farmer sentiment compared to the
previous month, though concerns remain regarding farm financial
performance in the year ahead.
The February barometer reading reached 111, marking a 5-point
rise from last month. The small uptick is attributed to producers
expressing increased optimism about the future, with the Future
Expectations Index climbing 7 points to 115. However, the Current
Conditions Index remained unchanged. Despite their improved outlook
for the future, farmers' financial performance expectations did not
keep pace. February's Farm Financial Performance Index registered
at 85, a slight dip from January and notably lower than its recent
peak in December. The February survey was conducted from
Feb. 12-16.
"Weak crop prices continue to weigh heavily on financial
expectations, with mid-February Eastern Corn Belt cash prices for
corn and soybeans declining by 7% and 8%, respectively, compared to
two months earlier," said James
Mintert, the barometer's principal investigator and director
of Purdue University's Center for
Commercial Agriculture.
When producers were asked about their primary concerns for farm
operations in the upcoming year, the top concern cited by 34% of
respondents was "high input costs," closely followed by "lower
crop/livestock prices," chosen by 28% of respondents. Worries about
rising interest rates among producers seem to have diminished
somewhat, with only 18% of February respondents citing it as a top
concern, down from 26% who did so in November.
The Farm Capital Investment Index remains weak at 34 points, 9
points lower than last year. Producers expressing reluctance toward
making large investments highlighted concerns over high production
costs and weak output prices. The percentage of farmers worried
about farm profitability has tripled since last October. This
month, 22 out of every 100 farmers pointed to farm profitability
concerns, while last fall only 7 out of every 100 farmers felt the
same way.
The Short-Term Farmland Values Expectations Index held steady in
comparison to January but declined by 4 points from a year ago and
by 30 points from two years ago. Although the farmland index
remains positive, it is clear that overall sentiment regarding
future increases in farmland values is weaker than it was a couple
of years ago. Among producers who expect values to increase in the
next year, the top reason cited for their optimism was demand from
non-farm investors.
Each February, the barometer survey asks producers about growth
plans for their farm operation in the upcoming five years. This
year, 4 out of 10 respondents expressed no plans for growth, with
14% saying they plan to exit or retire. Alternatively, just over 3
out of 10 respondents anticipate their farm's annual growth rate to
exceed 5%. Responses to this question, which have been consistent
in recent years, point to further consolidation among farm
operations.
"To put growth rates into perspective, consider that a farm
operation growing at a 5% annual rate will double in size in about
14 years, whereas a farm growing at an annual rate of 10% will need
just seven years to double," Mintert said.
Interest in leasing farmland for solar energy development
remains strong, with 10% of respondents having discussed such
projects in the last six months. Rates varied widely, but over half
of the respondents reported being offered lease rates of
$1,000 per acre or more. The top end
for solar lease rates appears to be rising over time. When this
question was posed in June 2021, just
27% of respondents reported a lease rate offer of $1,000 or more per acre, compared to 56% of
respondents this year.
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 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 is a trademark of BrokerTec Americas LLC
and EBS is a trademark of EBS Group LTD. 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 & Poor's Financial Services LLC; Dow
Jones®, DJIA® and Dow Jones Industrial Average are service and/or
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have been licensed for use by Chicago Mercantile Exchange Inc.
Futures contracts based on the S&P 500 Index are not sponsored,
endorsed, marketed, or promoted by S&P DJI, and S&P DJI
makes no representation regarding the advisability of investing in
such products. All other trademarks are the property of their
respective owners.
About Purdue University
Purdue University is a public research
institution demonstrating excellence at scale. Ranked among top 10
public universities and with two colleges in the top four in
the United States, Purdue discovers and disseminates knowledge with a
quality and at a scale second to none. More than 105,000 students
study at Purdue across modalities and
locations, including nearly 50,000 in person on the West Lafayette campus. Committed to
affordability and accessibility, Purdue's main campus has frozen tuition 13 years in
a row. See how Purdue never stops in
the persistent pursuit of the next giant leap — including its first
comprehensive urban campus in Indianapolis, the new Mitchell E. Daniels, Jr.
School of Business, and Purdue Computes —
at https://www.purdue.edu/president/strategic-initiatives.
Writer: Erin Robinson,
erobin@purdue.edu
Source: James Mintert, 765-494-7004,
jmintert@purdue.edu
Image URL:
https://www.purdue.edu/uns/images/2024/agbarometer-2402LO.jpg
https://www.purdue.edu/uns/images/2024/agbarometer-2402OG.jpg
Image Caption:
Modest improvement in farmer sentiment, yet financial concerns
loom. (Purdue/CME Group Ag Economy
Barometer/James Mintert)
CME-G
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SOURCE CME Group