WEST LAFAYETTE, Ind. and
CHICAGO, Feb. 1, 2022 /PRNewswire/ -- Farmer
sentiment weakened in January as the Purdue
University/CME Group Ag Economy Barometer declined 6 points
to a reading of 119, its second-lowest reading since July 2020. The Index of Current Conditions
fell 13 points to a reading of 133, while the Index of Future
Expectations changed little in January, down 2 points to a
reading of 112. The Ag Economy Barometer is calculated each
month from 400 U.S. agricultural producers' responses to a
telephone survey. This month's survey was conducted between
January 17-21, 2022.
"Rising farm input costs and ongoing supply chain disruptions
appear to be contributing to producers' weaker perception of
current conditions and expectations of their farm's financial
performance in 2022 when compared to last year," said James Mintert, the barometer's principal
investigator and director of Purdue
University's Center for Commercial Agriculture.
The Farm Financial Performance Index fell sharply in
January to a reading of 83, a 30% decline compared to a year
earlier and 27% lower than in December
2021. The financial index is generated based upon producers'
responses to whether they expect their farm's current financial
performance to be better than, worse than or about the same as the
previous year.
"The sharp drop in the financial performance index this month
indicates producers expect a sharp decline in income in 2022
compared to 2021. In the December survey, producers were focused on
comparing a very positive income year, 2021, to 2020, which really
supported the index at year end," said Mintert.
The Farm Capital Investment Index also weakened this
month, falling 4 points to a reading of 45. In January, 52% of
respondents said they plan to reduce their farm machinery purchases
in the upcoming year. Supply chain issues continue to hamper
farmers' investment plans as, for the third month in a row, over
40% of producers reported that low farm machinery inventories were
holding back their purchase plans. Farm construction plans were
also weaker this month as 66% of respondents reported reducing
their construction plans in the year ahead versus last year.
Supply chain concerns extend beyond farm machinery and farm
building/grain bin construction plans. Disruptions in the supply
chain for many farm inputs, coupled with strong demand, are pushing
production costs higher. Fifty-seven percent of survey respondents
in January said they expect farm input prices to rise by 20% or
more in 2022 and 34% of producers said they expect prices to rise
by 30% or more.
The disruptions extend not just to input pricing, but also input
availability. In January, 28% of producers responding to the survey
said they have had difficulty purchasing crop inputs from suppliers
for the 2022 crop season. In a follow-up question posed to
producers experiencing difficulty in procuring crop inputs,
respondents reported difficulty in purchasing a broad spectrum of
crop inputs including herbicides, insecticides, fertilizer, and
farm machinery parts.
Prices for nitrogen fertilizer have skyrocketed over the last
year. According to USDA, anhydrous ammonia (NH3) prices
in Illinois during January 2022 were nearly triple what they were in
January 2021. While a majority (57%)
of corn producers said they intend to use the same nitrogen
application rate in 2022 as in 2021; nearly four out of ten (37%)
said they intend to reduce their nitrogen application rate compared
to last year.
The rise in farm input costs was also the primary reason why
many producers are expecting to have a larger operating loan in
2022. This month, 27% of respondents said they expect to have a
larger operating loan in 2022 than a year earlier, 10 points higher
than on last year's survey and 12 points higher than two years
ago.
For the second month in a row, both the short-term and long-term
farmland value indices declined. The Short-Term Farmland Value
Index declined 11 points to an index value of 142, while the
Long-Term Farmland Value Index declined 7 points to a
reading of 145 in January. Both indices have fallen about 10%
compared to their fall 2021 peak values.
"Recent weakness in both indices could reflect recognition of
how much farmland values have increased over the last year or more,
tempering expectations for further price increases," said
Mintert.
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
Related websites:
Purdue University Center for Commercial
Agriculture: http://purdue.edu/commercialag
CME Group: http://www.cmegroup.com/
Photo Caption: Ag Economy Barometer declines, producers
concerned about rising costs and supply chain disruptions.
(Purdue/CME Group Ag
Economy Barometer/James
Mintert).
https://www.purdue.edu/uns/images/2022/ag-barometer122LO.jpg
CME-G
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SOURCE CME Group