Slight increase in producer sentiment despite rising costs and lower crop prices
The Purdue University/CME Group Ag Economy Barometer rose by 6 points in July to a reading of 103, indicating increased optimism among producers regarding current and future farm economic conditions. The Index of Current Conditions rose to 109, while the Index of Future Expectations reached 100. However, these indices remain 23-24% lower than last year. Producers expressed concerns about rising input prices (42%), lower crop prices (19%), and interest rates (17%). Despite some optimism, 49% expect their farms to be financially worse off next year.
- Ag Economy Barometer rose 6 points to 103 in July.
- Index of Current Conditions increased to 109.
- Improvement in Farm Financial Performance Index by 5 points to 88.
- 49% of producers expect worse financial conditions in a year.
- 42% of respondents cite higher input prices as a key concern.
- Short-Term Farmland Value Index declined 9 points to 127.
WEST LAFAYETTE, Ind. and CHICAGO, Aug. 2, 2022 /PRNewswire/ -- The Purdue University/CME Group Ag Economy Barometer farmer sentiment index rose 6 points in July to a reading of 103. Producers were somewhat more optimistic about both current and future economic conditions on their farms when compared to June. The Index of Current Conditions rose 10 points to a reading of 109 and the Index of Future Expectations rose 4 points to a reading of 100. Although all three indices rose this month, they were still 23
"Even though we saw a slight uptick in sentiment this month, there is still a tremendous amount of uncertainty in the agricultural economy," said James Mintert, the barometer's principal investigator and director of Purdue University's Center for Commercial Agriculture. "Key commodity prices, including wheat, corn and soybeans, all weakened during the month and producers remain concerned over rising input prices and input availability."
Farm operators in this month's survey voiced concerns about several key issues affecting their operation, including: higher input prices (
The Farm Financial Performance Index, which is primarily reflective of income expectations for the current year, improved 5 points to a reading of 88 in June. However, this month,
Producers remain uncertain over their expectations for crop input prices over the next 12 months. In July,
The rise in input costs is leading some producers to reassess their cropping plans for the upcoming year. In this month's survey, nearly one out of four (
The Farm Capital Investment Index remains near its record low, up one point to a reading of 36 in July. To shed light on why, respondents who said now is a bad time for large investments were asked for the primary reason they felt that way. Of those respondents,
Producers' views on farmland values diverged this month as the Short-Term Farmland Value Index declined 9 points to 127, while the long-term index rose 9 points to 150. The short-term index is down
"The short-run and long-term farmland indices don't always move in tandem, but the magnitude of this month's divergence between the short and long-term indices is unusual," said Mintert. "Producers who expect values to rise over the upcoming 5 years continue to say that non-farm investor demand and inflation are the two primary reasons they expect values to rise."
Read the full Ag Economy Barometer report at https://purdue.ag/agbarometer. The site also offers additional resources – such as past reports, charts and survey methodology – and a form to sign up for monthly barometer email updates and webinars.
Each month, the Purdue Center for Commercial Agriculture provides a short video analysis of the barometer results, available at https://purdue.ag/barometervideo. For even more information, check out the Purdue Commercial AgCast podcast. It includes a detailed breakdown of each month's barometer, in addition to a discussion of recent agricultural news that affects farmers. Available now at https://purdue.ag/agcast.
The Ag Economy Barometer, Index of Current Conditions and Index of Future Expectations are available on the Bloomberg Terminal under the following ticker symbols: AGECBARO, AGECCURC and AGECFTEX.
About the Purdue University Center for Commercial Agriculture
The Center for Commercial Agriculture was founded in 2011 to provide professional development and educational programs for farmers. Housed within Purdue University's Department of Agricultural Economics, the center's faculty and staff develop and execute research and educational programs that address the different needs of managing in today's business environment.
About CME Group
As the world's leading and most diverse derivatives marketplace, CME Group (www.cmegroup.com) enables clients to trade futures, options, cash and OTC markets, optimize portfolios, and analyze data – empowering market participants worldwide to efficiently manage risk and capture opportunities. CME Group exchanges offer the widest range of global benchmark products across all major asset classes based on interest rates, equity indexes, foreign exchange, energy, agricultural products and metals. The company offers futures and options on futures trading through the CME Globex® platform, fixed income trading via BrokerTec and foreign exchange trading on the EBS platform. In addition, it operates one of the world's leading central counterparty clearing providers, CME Clearing.
CME Group, the Globe logo, CME, Chicago Mercantile Exchange, Globex, and, E-mini are trademarks of Chicago Mercantile Exchange Inc. CBOT and Chicago Board of Trade are trademarks of Board of Trade of the City of Chicago, Inc. NYMEX, New York Mercantile Exchange and ClearPort are trademarks of New York Mercantile Exchange, Inc. COMEX is a trademark of Commodity Exchange, Inc. BrokerTec and EBS are trademarks of BrokerTec Europe LTD and EBS Group LTD, respectively. Dow Jones, Dow Jones Industrial Average, S&P 500 and S&P are service and/or trademarks of Dow Jones Trademark Holdings LLC, Standard & Poor's Financial Services LLC and S&P/Dow Jones Indices LLC, as the case may be, and have been licensed for use by Chicago Mercantile Exchange Inc. All other trademarks are the property of their respective owners.
Writer: Kami Goodwin, 765-494-6999, kami@purdue.edu
Source: James Mintert, 765-494-7004, jmintert@purdue.edu
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Related websites:
Purdue University Center for Commercial Agriculture: http://purdue.edu/commercialag
CME Group: http://www.cmegroup.com/
Photo Caption: Slight increase in producer sentiment despite rising costs and lower crop prices. (Purdue/CME Group Ag Economy Barometer/James Mintert). https://www.purdue.edu/uns/images/2022/ag-barometer722LO.jpg
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SOURCE CME Group
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