Farmer sentiment improved in August as the Purdue-CME Group Ag Economy Barometer rose 14 points above its July reading to 117. Both the Index of Current Conditions and the Index of Future Expectations increased last month.
Producers were less worried about their farm’s financial situation than in July, although they remain concerned about a possible cost-price squeeze. When asked about their biggest concerns for the next year, more than half of respondents chose higher input costs. Other concerns include rising interest rates, input availability, and lower output prices.
Despite this month’s improvement in sentiment, all three indices remain well below year-ago levels. Finally, this month’s survey revealed an uptick in the percentage of farmers engaged with companies offering payments to sequester carbon. However, just one percent of respondents said they’ve signed a carbon contract, with the majority of those choosing not to sign, suggesting that payment rates offered remain too low.
(From the National Association of Farm Broadcasters)
September 6, 2022
James Mintert and Michael Langemeier, Purdue Center for Commercial Agriculture
Farmer sentiment improved in August as the Purdue-CME Group Ag Economy Barometer index rose 14 points above its July reading to 117. The rise in the overall measure of agricultural producer sentiment was driven by increases in both the Index of Current Conditions, which rose 9 points in August to 118 and the Index of Future Expectations, which climbed 16 points in August to 116. Producers this month were less worried about their farm’s financial situation than in July, although they remain concerned about a possible cost/price squeeze. When asked about their biggest concerns for the next year, over half (53%) of respondents chose higher input costs. Other concerns included rising interest rates, input availability, and lower output prices chosen by 14, 12 and 11 percent of respondents, respectively. Despite this month’s improvement in sentiment, all three indices remain well below year ago levels. The Purdue University-CME Group Ag Economy Barometer sentiment index is calculated each month from 400 U.S. agricultural producers’ responses to a telephone survey. This month’s survey was conducted from August 15-19, 2022, which was after USDA released both the August Crop Production and World Agricultural Supply & Demand Estimates reports.
The Farm Financial Performance Index rose in August to 99, 11 points higher than a month earlier and 18 points higher than in May when the index was at its low point. Among respondents, there was a noticeable shift this month from producers expecting worse to better financial performance for their farms in 2022. Both corn and soybean prices rallied from their July lows into mid-August which, along with expectations for good yields, helped explain some of the improvement in financial performance expectations. Comparing the August survey’s end date to that of the July survey, prices for fall delivery of soybeans rose by about $1.50 per bushel while prices for fall delivery of corn rose by about $0.25 per bushel. Unlike last month, the improvement in expected financial performance this year carried over into expectations for next year as well. The percentage of producers expecting their farm to be better off financially a year from now rose while those expecting their farm to be worse off declined. Respondents were also a bit more optimistic about the U.S. agricultural economy as a whole in the upcoming year as the percentage expecting bad times for U.S. agriculture declined while those expecting good times rose.
There continues to be a tremendous amount of uncertainty among producers regarding the future cost of items they purchase both for their farms and family usage. Approximately four out of ten producers expect crop input prices in 2023 to be either unchanged or possibly decline by as much as 10%, compared to 2022, while just over half of all producers expect input prices to rise from 1 to 20%. Uncertainty among farmers about rising prices extends beyond crop input prices to consumer items as well. Nearly half (48%) of respondents this month said they expect the rate of inflation for consumer items during the next 12 months to be in the 0 to 6% range. Examining responses to this question over the last five months reveals …..
Read the full Purdue-CME Group Ag Economy Barometer Report.