Farmer sentiment drifts decrease, rising rates of interest contribute to uneasiness

October 4, 2022

Farmer sentiment drifts decrease, rising rates of interest contribute to uneasiness

September Barometer

Farmer sentiment drifts decrease, rising rates of interest contribute to uneasiness. (Purdue/CME Group Ag Economy Barometer/James Mintert).
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WEST LAFAYETTE, Ind. and CHICAGO — The Purdue University/CME Group Ag Economy Barometer farmer sentiment index declined 5 factors to a studying of 112 in September. The decline in farmer sentiment was primarily the results of producers’ weakened notion of present circumstances, because the Current Conditions Index declined 9 factors to 109. The Index of Future Expectations additionally weakened barely, declining 3 factors from a month earlier to a studying of 113. 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 Sept. 19-23.

“Concerns about enter prices and, in some circumstances, availability are key components behind the relative weak spot on this month’s farmer sentiment,” mentioned James Mintert, the barometer’s principal investigator and director of Purdue University’s Center for Commercial Agriculture. “However, a rising variety of producers are additionally involved concerning the influence of rising rates of interest on their farm operations.”

Higher enter prices stay the primary concern amongst survey respondents. In September, 44% of respondents selected “greater enter prices” as their primary concern, whereas 23% selected “rising rates of interest,” and 14% selected “availability of inputs.” When requested to sit up for 2023, the most important share (38%) of producers anticipate enter costs to rise from 1% to 9% in comparison with 2022 costs. Meanwhile, almost a fourth (24%) of producers anticipate enter costs to rise from 10% to 19%, and 9% of survey respondents mentioned they anticipate an enter value rise of 20% or extra.

The Farm Capital Investment Index declined to a report low of 31 in September, as producers proceed to point now shouldn’t be a “good time” to make giant investments of their farming operations. To perceive why they felt that means, a follow-up query was posed to farmers who reported now being a “dangerous time” to make giant investments. For the third month in a row, producers overwhelmingly (46%) mentioned it was as a result of rising costs for farm equipment and new building; nevertheless, 21% indicated that “rising rates of interest” have been a major purpose, up from 14% who cited rates of interest in August.

Despite that damaging perspective, fewer producers plan to scale back their farm equipment purchases. Since peaking in March 2022 at 62%, the share of producers who plan to scale back their equipment purchases in comparison with a 12 months earlier has been declining, dipping to 47% in September. Their plans for farm constructing purchases inform the same story. Since the March 2022 excessive of 68%, producers who deliberate to scale back their constructing and grain bin purchases has fallen to 56% in September.

Producers’ perspective on farmland values continues to melt. This month, the Short-Term Farmland Value Expectations Index fell 5 factors to 123, and the Long-Term Farmland Value Expectations Index fell 7 factors to 139. Compared to a 12 months in the past, the short-term index is down 21%, whereas the long-term index has fallen 12% over the identical time-frame. In a follow-up query posed to respondents who anticipate farmland values to rise over the subsequent 5 years, nonfarm investor demand (60%) stays their major purpose for the rise.

This month’s survey included a sequence of questions to know producers’ cowl crop utilization. Nearly six out of 10 (57%) respondents mentioned they presently plant cowl crops on a portion of their farmland, whereas roughly one in 4 producers mentioned they’ve by no means planted a canopy crop. Most producers who report planting cowl crops say they solely plant them on a portion of their farmland, with half indicating they plant on 25% or much less of their acreage. However, some farms report extra intensive use of canopy crops as almost a fourth of respondents mentioned they plant cowl crops on over 50% of their farms’ acreage. A big share (40%) of producers who reported planting cowl crops this month mentioned they’ve been planting cowl crops for 5 years or much less, whereas 28% of respondents mentioned they’ve been planting cowl crops for greater than 10 years. The causes for planting cowl crops range, with 37% citing “enhance soil well being” and 33% citing “enhance erosion management” as the first motivators. Just 5% of canopy crop customers indicated “carbon sequestration” as a motivation for planting cowl crops.

Read the total Ag Economy Barometer report. The website additionally presents further assets – reminiscent of previous reviews, charts and survey methodology – and a type to join month-to-month barometer electronic mail updates and webinars.

Each month, the Purdue Center for Commercial Agriculture gives a brief video evaluation of the barometer outcomes. For much more info, take a look at the Purdue Commercial AgForged 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 underneath 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 applications for farmers. Housed inside Purdue University’s Department of Agricultural Economics, the middle’s college and employees develop and execute analysis and academic applications that deal with the totally different wants of managing in right now’s enterprise atmosphere.

About CME Group

As the world’s main and most numerous derivatives market, CME Group (www.cmegroup.com) allows purchasers to commerce futures, choices, money and OTC markets, optimize portfolios, and analyze information – empowering market contributors worldwide to effectively handle threat and seize alternatives. CME Group exchanges provide the widest vary of world benchmark merchandise throughout all main asset lessons primarily based on rates of interest, fairness indexes, overseas trade, vitality, agricultural merchandise and metals. The firm presents futures and choices on futures buying and selling via the CME Globex® platform, mounted earnings buying and selling by way of BrokerTec and overseas 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 and products underpinning the complete lifecycle of a commerce, CME Group additionally presents optimization and reconciliation companies via TriOptima, and commerce processing companies via 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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