WEST
LAFAYETTE, Ind., June 4, 2024
/PRNewswire/ -- U.S. farmers' outlook improved in May as the
Purdue University/CME Group Ag Economy
Barometer index rose to 108, marking a 9-point increase from April.
Both of the barometer's subindices saw increases, with the Index of
Future Expectations climbing 11 points to 117 and the Current
Conditions Index rising 6 points. The rise in crop prices played a
role in boosting farmer sentiment this month. By mid-May, Eastern
Corn Belt cash corn prices had increased by 6% to 7%, and soybean
prices had risen by 2% to 3% since the April survey was conducted.
The improvement in prices aligned with good corn and soybean
planting progress, which likely contributed to the sentiment
improvement. This month's Ag Economy Barometer survey was conducted
from May 13-17, 2024.
"The boost in the Index of Future Expectations reflects farmers'
expectation that conditions will improve, although it's clear
2024's financial challenges are still a concern," said James Mintert, the barometer's principal
investigator and director of Purdue
University's Center for Commercial Agriculture.
The Farm Financial Performance Index rose to 82 in May, a
6-point increase from April. This index, which asks producers to
compare their farm's expected financial performance to last year,
shows some improvement. However, despite the gain, the index
remains 15 points lower than at the end of last year. This
indicates that producers still anticipate 2024 to be a more
financially challenging year compared to 2023.
Producers' outlook on capital investments improved modestly in
May, with the Farm Capital Investment Index rising to 35, up 4
points from its all-time low reading of 31 in April. Despite this
increase, the survey revealed that 77% of respondents believe it is
a bad time to make large investments, while only 12% felt it was a
good time. Interest rates and elevated prices for farm machinery
and new construction were the main reasons cited for this cautious
approach. Among those who considered it a good time to invest,
nearly half (45%) cited high inventories at machinery dealers as
the key factor.
Producers' views on farmland values in May remained steady, with
a small 3-point increase in the Short-Term Farmland Value
Expectations Index. Compared to last fall, producers' sentiment in
2024 has weakened, as indicated by an average index of 116 from
January to May, down 6% from the average of 124 in
October-December 2023. Those
expecting higher farmland values in the coming year point to
nonfarm investor demand and inflation as key drivers for their
optimism. Notably, the survey expanded its response categories in
April and May to include energy production from wind and solar
installations as a reason to expect values to rise. In May, 12% of
optimistic respondents cited energy production as a factor for
their positive outlook, up from 8% in April.
"While the overall outlook on farmland values showed little
change in May, the evolving landscape of energy production is
beginning to play a role in producers' views," Mintert said. "We
are seeing a shift in how alternative revenue sources are impacting
farmland value expectations."
Interest in developing Carbon Capture and Storage (CCS) projects
is rising among ethanol plants, partly driven by tax credits in the
Inflation Reduction Act. This month's survey inquired about
farmers' experiences with potential CCS projects from ethanol
plants. Seven percent reported being approached about such
projects. Payment rates per acre ranged from under $26 to over $50,
showcasing considerable variation. Future surveys will delve deeper
into CCS project specifics.
Interest in leasing farmland for solar energy production is on
the rise, according to recent survey findings. In both April and
May, approximately 20% of respondents — up from just 12% in March —
have discussed leasing farmland for solar energy production within
the last six months. Notably, over half (55%) of respondents were
offered long-term lease rates of $1,000 per acre or more, with 27% receiving
offers exceeding $1,250 per acre.
Combining data from both April and May surveys reveals that
approximately 30% of respondents who explored leasing options have
now signed solar energy leases for farmland they control.
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,
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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
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product of S&P Dow Jones Indices LLC ("S&P DJI").
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About Purdue
University
Purdue University is a public research
institution demonstrating excellence at scale. Ranked among the 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: Morgan French,
mmfrench@purdue.edu
Source: James Mintert, 765-494-7004,
jmintert@purdue.edu
Image URL:
https://www.purdue.edu/uns/images/2024/ageconomy-barometer2405LO.jpg
Image Caption:
Farmer sentiment recovers in May; interest in solar leasing
rising. (Purdue/CME Group Ag
Economy Barometer/James Mintert)
CME-G
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SOURCE CME Group