Farmer sentiment improves, however farmers nonetheless involved about rising prices and inflation

September 6, 2022

Farmer sentiment improves, however farmers nonetheless involved about rising prices and inflation

August Barometer

Farmer sentiment improves, however farmers nonetheless involved about rising prices and inflation. (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 rose 14 factors in August to a studying of 117. The rise within the total measure of agricultural producer sentiment was pushed by will increase in each the Index of Current Conditions, which rose 9 factors to 118, and the Index of Future Expectations, which climbed 16 factors to 116. 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 Aug. 15-19, after The U.S. Department of Agriculture launched each the August Crop Production and World Agricultural Supply and Demand Estimates studies.

“Producers within the August survey had been much less frightened about their farm’s monetary state of affairs than in July, though they continue to be involved a couple of potential price/value squeeze,” stated James Mintert, the barometer’s principal investigator and director of Purdue University’s Center for Commercial Agriculture.

This month, extra producers indicated they’re anticipating higher monetary efficiency for his or her farms in 2022 and the upcoming yr, because the Farm Financial Performance Index improved 11 factors to a studying of 99. Both corn and soybean costs rallied from their July lows into mid-August which, together with expectations for good yields, helped clarify among the enchancment in monetary efficiency expectations.

At the identical time, there continues to be an incredible quantity of uncertainty amongst producers concerning the long run price of things they buy each for his or her farms and household utilization. When requested about their greatest issues for the subsequent yr, over half (53%) of respondents selected greater enter prices, adopted by rising rates of interest (14%), enter availability (12%), and decrease output costs (11%). On the farm stage, there’s a massive disparity in opinions amongst farmers concerning whether or not enter costs will retreat or escalate in 2023. Approximately 4 out of 10 producers anticipate crop enter costs in 2023 to be both unchanged or probably decline by as a lot as 10%, in comparison with 2022. On the opposite hand, simply over half of all producers anticipate enter costs to rise from 1% to twenty%. At the patron stage, almost half (48%) of respondents stated they anticipate the speed of inflation for client objects throughout the subsequent 12 months to be within the 0% to six% vary. Compared to earlier barometer surveys, extra producers this month stated they anticipate inflation to be within the higher finish of that vary than those that felt that method earlier this yr.

Producers proceed to view now as a foul time to make massive farm equipment and constructing investments. In a follow-up query, almost half (49%) of those that stated it’s a unhealthy time for investing cited rising costs as the first motive. The Farm Capital Investment Index stays close to its document low, however was up 3 factors to a studying of 39 in August.

Upward stress on money rental charges for Corn Belt farmland in 2023 appears probably. Four out of 10 corn and soybean producers anticipate farmland money rental charges to rise in 2023 in comparison with 2022. This month, 27% of respondents stated they anticipate charges to rise as much as 5% in comparison with 39% of respondents who anticipate charges to rise between 5% and 10% in 2023.

Expectations for each short- and long-term farmland values had been almost unchanged over the earlier month. Among survey respondents who say they anticipate farmland values to rise over the subsequent 5 years, effectively over half (57%) selected nonfarm investor demand as the primary motive they anticipate values to rise.

To perceive producers’ publicity to and experiences with firms providing funds for capturing carbon, this month’s survey requested respondents in the event that they’ve engaged in a majority of these discussions and the funds being supplied. In August, 9% of respondents stated they’ve engaged in discussions with firms providing funds for carbon seize, the best share of respondents because the query was first included within the survey. Of those that engaged in discussions, 75% stated the fee fee per metric ton of carbon supplied was lower than $20, and simply 1% stated they’ve signed a carbon contract. Respondents who engaged in discussions and selected to not signal a contract had been requested the minimal fee per acre they might settle for to enroll their farm in a carbon seize program. Two-thirds of these respondents stated the fee fee wanted to be not less than $30 per acre, suggesting that fee charges have to rise to encourage extra participation in carbon seize applications.

Read the total Ag Economy Barometer report. The website additionally gives extra sources – reminiscent of previous studies, charts and survey methodology – and a type to enroll in month-to-month barometer e mail updates and webinars.

Each month, the Purdue Center for Commercial Agriculture offers a brief video evaluation of the barometer outcomes. For much more info, try the Purdue Commercial AgSolid podcast. It features a detailed breakdown of every month’s barometer, along with a dialogue of current 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 supply skilled improvement 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 handle the totally different wants of managing in in the present day’s enterprise surroundings.

About CME Group

As the world’s main and most numerous derivatives market, CME Group (www.cmegroup.com) allows shoppers to commerce futures, choices, money and OTC markets, optimize portfolios, and analyze knowledge – empowering market members worldwide to effectively handle danger and seize alternatives. CME Group exchanges provide the widest vary of world benchmark merchandise throughout all main asset courses primarily based on rates of interest, fairness indexes, international trade, power, agricultural merchandise and metals. The firm gives futures and choices on futures buying and selling by the CME Globex® platform, fastened 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 spread of pre- and post-trade services and products underpinning all the lifecycle of a commerce, CME Group additionally gives optimization and reconciliation providers by TriOptima, and commerce processing providers 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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