Ag Economy Barometer declines once more, producers categorical concern about rate of interest coverage

 

November 1, 2022

Ag Economy Barometer declines once more, producers categorical concern about rate of interest coverage

October Barometer
Ag Economy Barometer declines once more, producers categorical concern about rate of interest coverage (Purdue/CME Group Ag Economy Barometer/James Mintert).
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WEST LAFAYETTE, Ind. and CHICAGO — Farmer sentiment weakened once more in October because the Purdue University/CME Group Ag Economy Barometer dropped 10 factors to a studying of 102. Both barometer’s sub-indices additionally declined this month. The Current Conditions Index dipped 8 factors to a studying of 101, whereas the Future Expectations Index dropped 11 factors to a studying of 102. The “Ag Economy Barometer” is calculated every month from 400 U.S. agricultural producers’ responses to a phone survey. This month’s survey was performed Oct. 10-14.

“Concern over rising rates of interest grew as soon as once more in October and is including to the unease amongst producers who’re nervous about its impression on their farm operations,” stated James Mintert, the barometer’s principal investigator and director of Purdue University’s Center for Commercial Agriculture. “Additionally, difficult transport circumstances all through the Mississippi River valley have hampered exports just lately, and the corresponding widespread weakening of corn and soybean foundation ranges might be contributing to heightened unease about monetary efficiency.”

Producer concern in regards to the monetary efficiency of their farms was one of many major drivers of weakening sentiment in October. The Farm Financial Performance Index fell 13 factors this month to 86 and was a distillation of producers’ issues about excessive enter prices mixed with weaker commodity costs. Looking forward to subsequent 12 months, over 40% of producers considered excessive enter prices as their high concern, adopted by 21% who selected rising rates of interest, 13% who selected decrease output costs and 13% who selected enter availability.

After dipping to a brand new report low final month, the Farm Capital Investment Index improved 7 factors this month to a studying of 38. Producers who considered this as a foul time for giant investments revealed that growing costs for farm equipment and new development (40% of respondents) was the first purpose for his or her adverse outlook, adopted by rising rates of interest (20%) and uncertainty about farm profitability (17%).

Producers’ expectations for short- and long-term farmland values rose this month. The Short-Term Farmland Value Expectation Index rose 10 factors to a studying of 133, whereas the Long-Term Farmland Value Index rose 5 factors to 144. Strength in each indices comes on the heels of stories from farmland auctions across the Corn Belt that land values are setting new report highs once more this fall. Even with this month’s rise, each indices stay weaker than a 12 months earlier. The short-term index this month was 15% decrease and the long-term index was 11% decrease than in October 2021.

Farm coverage discussions are underway as Congress prepares for debate on a brand new Farm Bill in 2023. As a outcome, a number of farm coverage associated questions had been included on this month’s barometer survey. Crop producers had been requested which two insurance policies or packages could be most necessary to their farm within the upcoming 5 years. More than one-third (36%) of crop producers selected rate of interest coverage as crucial coverage subject for his or her farming operation, adopted by the crop insurance coverage program (27%), environmental coverage (16%), conservation coverage (11%) and local weather coverage (10%). When requested how efficient the present ARC-County and Price Loss Coverage (PLC) packages are at offering a monetary security web, 72% of respondents rated the 2 packages as both “considerably efficient” (61%) or “very efficient” (11%). When the identical query was posed relative to crop insurance coverage, 84% of respondents rated it as both “considerably efficient” (56%) or “very efficient” (28%).

Read the complete Ag Economy Barometer report. The website additionally gives extra sources – comparable to previous stories, charts and survey methodology – and a kind to enroll in month-to-month barometer e-mail updates and webinars.

Each month, the Purdue Center for Commercial Agriculture gives a brief video evaluation of the barometer outcomes. For much more data, try the Purdue Commercial AgSolid podcast. It features a detailed breakdown of every month’s barometer, along with a dialogue of latest agricultural information that impacts farmers.

The Ag Economy Barometer, Index of Current Conditions and Index of Future Expectations can be found on the Bloomberg Terminal beneath the next ticker symbols: AGECBARO, AGECCURC and AGECFTEX.

About the Purdue University Center for Commercial Agriculture

The Center for Commercial Agriculture was based in 2011 to offer skilled growth and academic packages for farmers. Housed inside Purdue University’s Department of Agricultural Economics, the middle’s school and workers develop and execute analysis and academic packages that deal with the totally different wants of managing in at this time’s enterprise surroundings.

About CME Group

As the world’s main and most various derivatives market, CME Group (www.cmegroup.com) permits shoppers to commerce futures, choices, money and OTC markets, optimize portfolios, and analyze knowledge – empowering market contributors worldwide to effectively handle threat and seize alternatives. CME Group exchanges supply the widest vary of worldwide benchmark merchandise throughout all main asset courses primarily based on rates of interest, fairness indexes, international trade, vitality, agricultural merchandise and metals. The firm gives futures and choices on futures buying and selling by the CME Globex® platform, mounted earnings buying and selling by way of BrokerTec and international trade buying and selling on the EBS platform. In addition, it operates one of many world’s main central counterparty clearing suppliers, CME Clearing. With a variety of pre- and post-trade services underpinning the complete lifecycle of a commerce, CME Group additionally gives optimization and reconciliation companies by TriOptima, and commerce processing companies by Traiana.

CME Group, the Globe emblem, CME, Chicago Mercantile Exchange, Globex, and E-mini are logos of Chicago Mercantile Exchange Inc. CBOT and Chicago Board of Trade are logos of Board of Trade of the City of Chicago, Inc. NYMEX, New York Mercantile Exchange and ClearPort are logos of New York Mercantile Exchange, Inc. COMEX is a trademark of Commodity Exchange, Inc. BrokerTec, EBS, TriOptima, and Traiana are logos of BrokerTec Europe LTD, EBS Group LTD, TriOptima AB, and Traiana, Inc., respectively. Dow Jones, Dow Jones Industrial Average, S&P 500, and S&P are service and/or logos of Dow Jones Trademark Holdings LLC, Standard & Poor’s Financial Services LLC and S&P/Dow Jones Indices LLC, because the case could also be, and have been licensed to be used by Chicago Mercantile Exchange Inc. All different logos are the property of their respective house owners.

Writer:  Kami Goodwin, 765-494-6999, kami@purdue.edu

Source: James Mintert, 765-494-7004, jmintert@purdue.edu

Media Contacts:

Aissa Good, Purdue University, 765-496-3884, aissa@purdue.edu

Dana Schmidt, CME Group, 312-872-5443, dana.schmidt@cmegroup.com

Related web sites:

Purdue University Center for Commercial Agriculture: http://purdue.edu/commercialag

CME Group: http://www.cmegroup.com/

Agricultural Communications: (765) 494-8415;

Maureen Manier, Department Head, mmanier@purdue.edu

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