Farmer confidence is improving, but farmers remain concerned about rising costs and inflation

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September 6, 2022

Farmer confidence is improving, but farmers remain concerned about rising costs and inflation

Farmer confidence is improving, but farmers remain concerned about rising costs and inflation. (Purdue/CME Group Ag Economy Barometer/James Mintert).
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WEST LAFAYETTE, Indiana and CHICAGO — The Purdue University/CME Group Agricultural Economics Barometer the Farmer Sentiment Index rose 14 points in August to 117. The increase in the overall measure of Farmer Sentiment was driven by increases in both the Current Conditions Index, which rose 9 points to 118, and the Future Expectations Index, which climbed 16 points to 116. The Ag Economy Barometer is calculated each month from the responses of 400 US agricultural producers to a telephone survey. This month’s survey was conducted from August 15-19, after the US Department of Agriculture released the August crop production reports and global agricultural supply and demand estimates. .

“Producers in the August survey were less worried about the financial situation of their operation than in July, although they remain concerned about possible cost/price compression,” said James MinertPrincipal Investigator of the Barometer and Director of the Center for Commercial Agriculture at Purdue University.

This month, more producers indicated they expect better financial performance for their farms in 2022 and the year ahead, as the Farm Financial Performance Index improved by 11 points to reach 99. Corn and soybean prices rose from their lows in July to mid-August which, along with expectations of good returns, helped explain some of the improvement in financial performance expectations .

At the same time, there continues to be enormous uncertainty among producers regarding the future cost of items they purchase for both their farms and for family use. Asked about their main concerns for the next year, more than half (53%) of respondents chose higher input costs, followed by higher interest rates (14%), availability of inputs (12%) and lower output prices (11%). At the farm level, there is a wide disparity of opinion among farmers on whether input prices will fall or rise in 2023. About four in 10 producers expect agricultural input prices in 2023 stay the same or drop perhaps as much as 10%. , compared to 2022. On the other hand, just over half of all producers expect input prices to increase by 1% to 20%. On the consumer side, almost half (48%) of respondents said they expect the inflation rate for consumer goods over the next 12 months to be between 0% and 6%. Compared to previous barometric surveys, more producers this month said they expected inflation to be at the upper end of this range than those who had felt it earlier this year.

Producers continue to view the timing as a bad time to make big investments in farm machinery and construction. In a follow-up question, almost half (49%) of those who said it was a bad time to invest cited rising prices as the main reason. The farm capital investment index remains near its record low, but rose 3 points to 39 in August.

Upward pressure on cash rental rates for Corn Belt farmland in 2023 seems likely. Four in 10 corn and soybean producers expect farmland cash rental rates to increase in 2023 compared to 2022. This month, 27% of respondents said they expect rates will increase by up to 5%, compared to 39% of respondents who expect rates to increase between 5% and 10% in 2023.

Expectations for short-term and long-term farmland values ​​remained almost unchanged from the previous month. Of survey respondents who say they expect farmland values ​​to increase over the next five years, well over half (57%) chose demand from non-farm investors as their main reason for s expect the value to increase.

To understand growers’ exposure and experiences with companies offering carbon capture payments, this month’s survey asked respondents if they engaged in such discussions and the payments offered. In August, 9% of respondents said they had engaged in discussions with companies offering carbon capture payments, the highest percentage of respondents since the question was first included in the survey. Of those who engaged in discussions, 75% said the payment rate per metric ton of carbon offered was less than $20, and only 1% said they had signed a carbon contract. Respondents who entered into discussions and chose not to sign a contract were asked to indicate the minimum payment per acre they would accept to enroll their farm in a carbon capture program. Two-thirds of these respondents said the payment rate should be at least $30 per acre, suggesting that payment rates need to increase to encourage greater participation in carbon capture programs.

Read all Report of the Barometer of the agricultural economy. The site also offers additional resources – such as past reports, charts and survey methodology – and a form to sign up for monthly email updates and Barometer webinars.

Each month, the Purdue Center for Commercial Agriculture offers a short video analysis of barometer results. For even more information, see the Purdue Commercial AgCast Podcast. It includes a detailed breakdown of each month’s barometer, plus a discussion of recent agricultural news that affects farmers.

The Agricultural Economics Barometer, Current Conditions Index and Future Expectations Index are available on the Bloomberg Terminal under the following trading symbols: AGECBARO, AGECCURC and AGECFTEX.

About Purdue University Center for Commercial Agriculture

The Commercial Agriculture Center 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 teaching programs that meet the diverse needs of management in today’s business environment.

About CME Group

As the world’s leading and most diverse derivatives market, CME Group (www.cmegroup.com) enables clients to trade futures, options, spot and over-the-counter markets, optimize portfolios and analyze data, enabling market participants around the world to efficiently manage risks and seize opportunities. CME Group exchanges offer the broadest range of global benchmark products across all major asset classes based on interest rate, stock indices, exchange, energy, agricultural production and metals. The Company offers futures contracts and options on futures contracts through the CME Globex®, fixed income trading via BrokerTec and currency trading on the EBS platform. In addition, it operates one of the world’s leading central counterparty clearing providers, CME Clearing. With a range of pre- and post-trade products and services that underpin the entire lifecycle of a trade, CME Group also offers optimization and reconciliation services through TriOptima, and transactions through Traiana.

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 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, EBS, TriOptima and Traiana are trademarks 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 services and/or trademarks of Dow Jones Trademark Holdings LLC, Standard & Poor’s Financial Services LLC and S&P/Dow Jones Indices LLC, as applicable, and have made the licensed for use by Chicago Mercantile Exchange Inc. All other marks are the property of their respective owners.

Writer: Kami Goodwin, 765-494-6999, [email protected]

Source: James Mintert, 765-494-7004, [email protected]

Media contacts:

Aissa Good, Purdue University, 765-496-3884, [email protected]

Dana Schmidt, CME Group, 312-872-5443, [email protected]

Related websites:

Purdue University Center for Commercial Agriculture: http://purdue.edu/commercialag

CME Group: http://www.cmegroup.com/

Agricultural communications: (765) 494-8415;

Maureen Manier, Head of Department, [email protected]

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