WEST
LAFAYETTE, Ind., Dec. 5, 2023
/PRNewswire/ -- Agricultural producers' sentiment increased for the
second consecutive month, as the Purdue
University/CME Group Ag Economy Barometer index rose 5
points to a reading of 115, a 12% increase compared to the previous
year. The sentiment growth is largely attributed to farmers'
improved perceptions of their farms' financial conditions and
prospects. This month's Ag Economy Barometer survey was
conducted from November 13-17,
2023.
The Index of Current Conditions rose 12 points to 113
while the Index of Future Expectations improved by 2 points
to 116. The Farm Financial Performance Index also rose in
November to a reading of 95, which is up 3 points from October. The
financial index reached its low point back in the spring. The
November reading was 25% higher than in May and 10% higher than at
the start of fall harvest in September.
"Farmers' expectations regarding financial performance have
improved, with fewer producers' expecting worse performance than a
year ago," said James Mintert, the
barometer's principal investigator and director of Purdue University's Center for Commercial
Agriculture.
The Farm Capital Investment Index has fluctuated
throughout 2023 but rebounded this month to a reading of 42, up 7
points from October. Over the last several months, producers who
view the investment climate as favorable were asked why they feel
that way. The percentage of respondents choosing "strong cash
flows" has been drifting lower since summer when approximately 40%
of respondents chose that as their primary reason. This month just
22% of respondents chose "strong cash flows" with "higher dealer
inventories," chosen by 29% of respondents, claiming the top spot
as to why now is a good time to make large investments, implying a
potential change in market conditions.
"This shift suggests that farmers might be seeing a moderation
in farm equipment price rises, making it a more favorable time for
large investments," said Mintert.
In November, perspectives on farmland values changed little
compared to October. The Short-Term Farmland Values Expectations
Index maintained its position at 125, while the long-term index
fell 5 points. Among respondents who expect farmland values to rise
over the next five years, they overwhelmingly attribute their
optimism to non-farm investor demand, followed by inflation.
Top concerns for the upcoming year include higher input costs
(32%), rising interest rates (26%) and lower crop and/or livestock
prices (20%). Notably, there has been a shift in concern throughout
the year, with fewer producers expressing worry over higher input
costs compared to the beginning of the year. Instead, more
producers are now concerned about rising interest rates and lower
crop and livestock prices.
This month's survey was conducted the same week that Congress
voted to extend the 2018 Farm Bill's provisions to September 30, 2024. Anticipating the extension by
Congress, the November survey gauged the preferences of corn and
soybean producers regarding farm safety net programs for 2024. Over
two-thirds of respondents expressed a preference for the ARC farm
program, while nearly one-third leaned towards enrolling in the PLC
program, assuming the extension of the current Farm Bill's
provisions. Despite preferences emerging, uncertainty prevails,
particularly for soybean (52% declining to choose) and corn (43%
declining to choose) producers when deciding to choose between
programs.
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 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.
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Writer: Erin Robinson,
erobin@purdue.edu
Source: James Mintert, 765-494-7004,
jmintert@purdue.edu
Related websites:
Purdue University Center for Commercial
Agriculture: http://purdue.edu/commercialag
CME Group: http://www.cmegroup.com/
Image links:
https://www.purdue.edu/uns/images/2023/ageconomy-barometer2311LO.jpg
https://www.purdue.edu/uns/images/2023/ageconomy-barometer2311OG.jpg
Photo Caption: Farmer sentiment improves as producers credit
stronger financial conditions (Purdue/CME Group Ag Economy Barometer/James Mintert).
CME-G
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SOURCE CME Group