Farmer sentiment stays weak, crop producers considering acreage shifts in 2023

July 5, 2022

Farmer sentiment stays weak, crop producers considering acreage shifts in 2023

June Barometer

Farmer sentiment stays weak as crop producers ponder acreage shifts in 2023 (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 continued to slip in June, down 2 factors to a studying of 97. Producers’ expectations for the long run additionally weakened. The Index of Future Expectations fell 5 factors to a studying of 96, marking the bottom stage for the index since October 2016. Meanwhile, producers had been barely extra optimistic relating to present circumstances; the Index of Current Conditions improved 5 factors to a studying of 99. 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 June 13-17.

“Rising enter prices and uncertainty concerning the future proceed to weigh on farmer sentiment,” mentioned James Mintert, the barometer’s principal investigator and director of Purdue University’s Center for Commercial Agriculture. “Many producers stay involved concerning the ongoing escalation in manufacturing prices in addition to commodity worth volatility, which may result in a manufacturing price/earnings squeeze in 2023.”

The Farm Financial Performance Index, which is primarily reflective of earnings expectations for the present 12 months, improved 2 factors to a studying of 83 in June, but stays at one of many index’s lowest readings over the previous two years. When requested about expectations for his or her farm’s monetary situation in June 2023 in comparison with June 2022, 51% of survey respondents mentioned they anticipate their farms to be worse off financially a 12 months from now. This is probably the most unfavorable response obtained to this query since information assortment started in 2015.

For the second month in a row, the Farm Capital Investment Index held at a document low of 35, as producers proceed to say now shouldn’t be a superb time to make giant investments of their farm operation. Supply chain points proceed to frustrate farmers. In May and June, 50% of producers mentioned that tight equipment inventories had been impacting their farm equipment buy plans.

The high considerations for producers within the upcoming 12 months proceed to be enter costs (43%), adopted by enter availability (21%), authorities insurance policies (18%), and decrease output costs (17%). Looking forward to 2023, a majority of farmers anticipate to see one other spherical of enormous enter price will increase, with 63% of producers anticipating larger prices in 2023, on high of the big will increase skilled in 2022. Nearly 4 out of 10 farmers anticipate enter costs to rise by 10% or extra subsequent 12 months when in comparison with 2022; just one out of 10 producers anticipate enter costs in 2023 to fall under 2022’s costs. Producers additionally anticipate inflation to push up the price of residing for farm households within the 12 months forward. Seven out of 10 survey respondents mentioned they anticipate the speed of inflation for shopper gadgets to be 6% or larger over the subsequent 12 months, and 35% of respondents mentioned they anticipate the inflation price to exceed 10%.

When requested about their cropping plans for the upcoming 12 months, one out of 5 (19%) of crop producers mentioned they intend to alter their crop combine within the upcoming 12 months in response to rising enter prices. Among those that plan to shift their crop combine, nearly half of the respondents (46%) mentioned the largest change shall be to dedicate a better proportion of their acreage to soybeans. Twenty-six p.c of these planning a crop combine change mentioned the largest change can be to dedicate extra of their farm to wheat manufacturing, whereas 21% of respondents mentioned they’d shift to planting extra corn.

Although each farmland worth indices stay at sturdy ranges, producers had been noticeably much less assured that farmland values will proceed to rise than they had been final fall. The Short-Term Farmland Value Expectations Index dropped 9 factors to a studying of 136 in June, whereas the Long-Term Farmland Value Expectations Index dropped 8 factors to a studying of 141. The short- and long-term farmland indices are down 13% and 12%, respectively, from the highs posted in fall of 2021.

This month’s survey additionally requested farmers who planted corn or soybeans in 2022 about their expectations for farmland money rental charges in 2023. Over half (52%) of respondents mentioned they anticipate money rental charges to rise subsequent 12 months. Of those that anticipate charges to rise, eight out of 10 respondents mentioned they anticipate charges to rise 5% or extra, whereas 4 out of 10 mentioned they anticipate rental charges to rise by 10% or extra in 2023.

Read the complete Ag Economy Barometer report. The web site additionally gives extra sources – reminiscent of previous reviews, charts and survey methodology – and a type to join month-to-month barometer e-mail updates and webinars.

Each month, the Purdue Center for Commercial Agriculture supplies 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 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 supply skilled improvement 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 deal with the completely different wants of managing in right this moment’s enterprise atmosphere.

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 information – 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 lessons primarily based on rates of interest, fairness indexes, international alternate, 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 alternate 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 underpinning your entire lifecycle of a commerce, CME Group additionally gives optimization and reconciliation providers by TriOptima, and commerce processing providers by Traiana.

CME Group, the Globe brand, 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 homeowners.  

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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