WEST
LAFAYETTE, Ind. and CHICAGO, May 2, 2023
/PRNewswire/ -- Farmer sentiment improved modestly in April as the
Purdue University/CME Group Ag Economy
Barometer rose 6 points to a reading of 123. Both of the
barometer's sub-indices were also higher in April, the Current
Conditions Index was up 3 points to 129 and the Future
Expectations Index was up 7 points to 120. 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 April 10-14.
"Producers held a more optimistic view of the agricultural
economy in April," said James
Mintert, the barometer's principal investigator and director
of Purdue University's Center for
Commercial Agriculture. "A shift in farmers' expectations regarding
the Fed's future interest rate policy could be a key reason."
The Farm Financial Performance Index also improved this
month, up 7 points to a reading of 93. The prime interest rate
charged by U.S. commercial banks increased from 7.75% in January to
8% in late March, and since the February barometer survey, there
has been a noticeable shift in farmers' interest rate expectations.
In April, 34% of respondents said they expect the U.S. prime
interest rate to remain unchanged or decline over the next year,
compared to 25% of producers who felt that way in February. At the
same time, two-thirds (66%) of producers expect interest rates to
keep rising, compared to 75% of respondents who felt that way in
February. However, the biggest shift was a decline in the
percentage of respondents who expect rates to rise between 1 to 2
percent in the next year, down 6 points since February to 37%.
The Farm Capital Investment Index increased one point to
a reading of 43 in April; yet more than 70% of respondents continue
to feel now is a bad time for large investments. This month, 39% of
respondents cited "rising equipment and construction costs" while
33% cited "rising interest rates" as the top reason for now being a
bad time for such investments.
Producers' expectations for short-term farmland values increased
in April following five-straight months of decline. The
Short-Term Farmland Value Expectations Index rose 10 points
in April to a reading of 123, while the long-term farmland index
held steady at a reading of 142. Even with this month's rise, the
short-term index remains 21 points lower than a year earlier and 36
points lower than two years ago.
Farm bill discussions are heating up and this month's survey
included questions to learn more about producers' perspectives on
the legislation. When asked about the likelihood that a new farm
bill will be passed this year, 12% of respondents think it's very
likely, 28% said somewhat likely, 16% said somewhat unlikely, and
13% said very unlikely. The survey also questioned corn and soybean
producers on what they consider to be the most important aspect of
a new farm bill. Of those respondents, 40% chose crop insurance,
31% chose commodity programs, 13% chose conservation, 8% chose
agricultural research and extension, and 8% chose renewable energy
as a top priority to them.
Leasing farmland for solar energy production continues to be a
hot topic. In this month's survey, 15% of respondents said that
they had actively engaged in discussions with companies about
leasing farmland for solar energy production in the past 6 months.
Of those producers, nearly half indicated that lease rates of
$1,000 or more per acre were
discussed. Twenty-five percent of respondents said that, following
the development and construction period, they were offered a lease
rate of $1,250 or more per acre,
while 22% of respondents said they were offered between
$1,000 and $1,250 per acre. On the other end of the
spectrum, 32% of respondents said they were offered lease rates of
less than $500 per acre.
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 more information,
check out the Purdue Commercial AgCast podcast
available at https://purdue.ag/agcast, which includes a detailed
breakdown of each month's barometer and a discussion of recent
agricultural news that affects farmers.
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 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. The S&P 500 Index is a product of S&P
Dow Jones Indices LLC ("S&P DJI"). "S&P®", "S&P 500®",
"SPY®", "SPX®", US 500 and The 500 are trademarks of Standard &
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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: Farmer sentiment improves; less pessimism
over interest rates (Purdue/CME Group
Ag Economy Barometer/James Mintert).
https://www.purdue.edu/uns/images/2023/april-barometerLO.jpg
CME-G
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SOURCE CME Group