WEST
LAFAYETTE, Ind., Oct. 3, 2023
/PRNewswire/ -- Agricultural producers' sentiment declined for the
second month in a row, as the Purdue
University/CME Group Ag Economy Barometer index fell 9
points to a reading of 106 in September. Producers expressed
concern about their current situation as well as future prospects
for their farms. The Current Conditions and Future
Expectations Indices both declined 10 points to a reading of 98
and 109, respectively. Notably, all three indices stand below their
readings from one year ago. This month's Ag Economy
Barometer survey was conducted from September 11-15, 2023.
"Weakening prices for major crops and ongoing concerns about
high production costs and interest rates weighed on producers'
minds this month," said James
Mintert, the barometer's principal investigator and director
of Purdue University's Center for
Commercial Agriculture.
Producers continue to point to high input costs as a top concern
for their farming operations in the year ahead. One-third of
respondents in this month's survey cite it as their number one
concern, followed by rising interest rates, chosen by 25% of
respondents, and lower crop and/or livestock prices, chosen by 22%
of farmers. The percentage of producers choosing lower crop and/or
livestock prices has increased since the beginning of the year,
when just 16% of producers cited it as a top concern.
There was a small uptick in the Farm Capital Investment
Index, up 2-points to a reading of 39 in September; however,
three-fourths of the producers still said now is a bad time for
large investments. The primary reasons among those who feel now is
a bad time for large investments are rising interest rates and the
high cost of machinery and new construction. Notably, 40% of
producers who feel it's a bad time to invest cited rising interest
rates as a key reason, up from 35% last month, and up from 14% when
this question was first posed in July
2022. This month there was a slight rise in the percentage
of producers who said now is a good time to make investments,
citing strong cash flows on their farm operations as their primary
reason.
The Farm Financial Performance Index was unchanged in
September compared to August, leaving the index at a reading of 86.
In a nod to how variable conditions have been around the country
during this growing season, there were small increases in the
percentages of producers who 1) expect better conditions and 2)
expect worse financial conditions compared to last year.
Producers remain relatively optimistic about farmland values,
which Mintert called surprising given the percentage of respondents
who expressed concerns about high input costs, rising interest
rates, and the risk of lower crop and livestock prices. The
Short-Term Farmland Value Expectations Index was unchanged
at a reading of 126, while the long-term index rose 2 points to
153. Respondents who expect farmland values to rise over the next
five years continue to point to non-farm investor demand for
farmland along with inflation as the top two reasons for farmland
values to continue rising.
The September survey included several questions posed to corn
and soybean growers to learn more about their perspective on cover
crops. Just over half (52%) of the corn/soybean growers said they
currently plant cover crops on a portion of their acreage and, from
this group, nearly half (47%) said they used cover crops on no more
than 25% of their acreage. Among those corn and soybean growers who
reported having used cover crops, 41% of respondents said they had
used cover crops for 5 years or less, while 14% said they've been
using cover crops for more than 20 years. Respondents who use cover
crops cited improvements to soil health and erosion control as
their primary reasons. Farmers who tried planting cover crops, but
ultimately chose to discontinue their use, cited low profitability,
lowered crop yields, insufficient soil benefits, and a lack of
resources to plant cover crops.
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
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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: 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: Weakening crop prices and high production costs
weigh on farmer sentiment (Purdue/CME Group Ag Economy Barometer/James Mintert). URL.
https://www.purdue.edu/uns/images/2023/agbarometer-23sepOG.jpg
CME-G
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SOURCE CME Group