June 7, 2022
Farmer sentiment plummets as manufacturing prices skyrocket
Farmer sentiment plummets as manufacturing prices skyrocket. (Purdue/CME Group Ag Economy Barometer/James Mintert).
WEST LAFAYETTE, Ind. and CHICAGO — The Purdue University/CME Group Ag Economy Barometer dropped to its lowest degree since April 2020, down 22 factors in May to a studying of 99. Agricultural producers’ perceptions concerning present circumstances on their farms, in addition to their future expectations, each weakened this month. The Index of Current Conditions dipped 26 factors to a studying of 94, and the Index of Future Expectations fell 21 factors to a studying of 101. The Ag Economy Barometer is calculated every month from 400 U.S. agricultural producers’ responses to a phone survey. This month’s survey was carried out May 16-20.
“Despite sturdy commodity costs, this month’s weak point in producers’ sentiment seems to be pushed by the fast rise in manufacturing prices and uncertainty about the place enter costs are headed,” mentioned James Mintert, the barometer’s principal investigator and director of Purdue University’s Center for Commercial Agriculture. “That mixture is leaving producers very involved about their farms’ monetary efficiency.”
The Farm Financial Performance Index declined 14 factors to a studying of 81 in May. The share of producers who count on their farm’s monetary efficiency to worsen in 2022 in comparison with final yr rose from 29% in April to 38% in May. Over the course of the final 13 months, the Farm Financial Performance Index has fallen 41% under its life-of-survey excessive of 138 set in April 2021.
The Farm Capital Investment Index drifted to an all-time low in May and is down 30 factors from this identical time final yr. In the May survey, solely 13% of respondents mentioned this can be a good time to make massive investments of their operation, whereas 78% mentioned they considered it as a foul time to spend money on issues like equipment and buildings. Half of the producers on this month’s survey mentioned their equipment buy plans had been impacted by low farm equipment stock ranges, up from 41% within the April survey, suggesting that offer chain points are not less than partly accountable for the continuing weak point within the capital funding index.
Higher enter prices stay a high concern for producers with 44% of these surveyed selecting it as the most important concern dealing with their farming operation within the coming yr. Additionally, 57% of producers mentioned they count on a 30% or extra rise in costs paid for farm inputs in 2022 in contrast with costs paid final yr. The May survey additionally requested producers about their expectations for enter prices in 2023 in comparison with 2022 with practically 39% of producers indicating they count on a further value improve of 10% or extra within the coming yr.
In response to a Biden administration coverage proposal for a $10/acre wheat/double-crop soybean crop insurance coverage subsidy, this month’s survey requested respondents if the subsidy would encourage them to plant extra wheat in fall 2022 than would in any other case be the case. Among producers who’ve employed a wheat/double-crop soybean rotation up to now, simply over one in 5 (22%) mentioned it could encourage them to plant extra wheat. Among producers who’ve not adopted a wheat/double-crop soybean rotation up to now, only one out of 10 producers mentioned the insurance coverage subsidy would encourage them to plant extra wheat this fall.
Lastly, farmers stay optimistic towards farmland values. The Short-Term Farmland Value Expectations Index, primarily based upon producers’ 12-month outlook, rose 1 level to a studying of 145. Meanwhile, the Long-Term Farmland Value Expectations Index, primarily based upon producers’ farmland outlook over the upcoming 5 years, rose 8 factors in May to a studying of 149. In a follow-up query, respondents who count on farmland values to rise over the following 5 years had been requested the primary purpose they count on values to rise. Over the previous few months that this query has been posed, respondents have constantly chosen nonfarm investor demand as the highest purpose, adopted carefully by inflation.
Read the total Ag Economy Barometer report. The website additionally gives extra assets – resembling previous reviews, 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 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 below 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 school and workers develop and execute analysis and academic applications that tackle the completely different wants of managing in in the present day’s enterprise atmosphere.
About CME Group
As the world’s main and most various derivatives market, CME Group (www.cmegroup.com) allows shoppers to commerce futures, choices, money and OTC markets, optimize portfolios, and analyze information – empowering market contributors worldwide to effectively handle danger 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, overseas change, vitality, agricultural merchandise and metals. The firm gives futures and choices on futures buying and selling by way of the CME Globex® platform, mounted earnings buying and selling through BrokerTec and overseas change 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 whole lifecycle of a commerce, CME Group additionally gives optimization and reconciliation companies by way of TriOptima, and commerce processing companies by way of Traiana.
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Writer: Kami Goodwin, 765-494-6999, [email protected]
Source: James Mintert, 765-494-7004, [email protected]
Aissa Good, Purdue University, 765-496-3884, [email protected]
Dana Schmidt, CME Group, 312-872-5443, [email protected]
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, [email protected]
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