LAFAYETTE OUEST, Ind. and CHICAGO, August 3, 2021 / PRNewswire / – The Purdue University/ CME Group Ag Economy Barometer stabilized after two months of sharp declines, down just 3 points to a reading of 134 in July. The sentiment of both producers regarding current and future conditions has also plummeted. the Index of current conditions was down 6 points to 143, mainly due to weakening prices for major crops. the Future expectations index was down 2 points to a reading of 130. The Agricultural economy barometer is calculated monthly from the responses of 400 American agricultural producers to a telephone survey. This month’s survey was conducted between July 19-23, 2021.
This month’s Sentiment Index marks the lowest barometer reading since July 2020 and actually marks a return to sentiment readings seen for much of 2017 through 2019, when annual average barometer readings ranged from 131 to 133 “, said James mintert, principal researcher of the barometer and director of Purdue University Commercial agriculture center. “Producers’ sentiment about the financial condition of their farms was more optimistic when prices for corn, soybeans and wheat soared last fall, winter and early spring. Nonetheless, recent sentiment readings suggest that farmers remain cautiously optimistic about the financial conditions of their farms. “
There has been a slight improvement in the Agricultural financial performance index, which asks producers about expectations for their farm’s financial performance this year compared to last year. The index improved 3 points from last month to a reading of 99 and remains 43% higher than july 2020 when the index was 69.
the Agricultural capital investment index fell for the fourth month in a row, down 4 points to 50. The weakness in the investment index is mainly due to more producers indicating that they plan to reduce their purchases of farm buildings and grain elevators in the coming year. Two-thirds of those polled in July said their construction plans were lower than a year earlier, compared to 61% who said this in June. Farm machinery purchase plans were also a bit weaker, with a shift in more respondents planning to reduce their machinery purchases from last year instead of keeping them constant.
Producers were also asked about their expectations regarding the prices of agricultural inputs. Just over half (51%) of producers in the July survey expect input prices to increase by 4% or more in the next year, 30% expect input prices to increase by 4% or more in the next year. costs increase by 8% or more, and nearly one in five (18%) expects input prices to increase by 12% or more.
“It’s important to stress that these expectations are significantly higher than the 1.8% per year rate at which input prices have increased over the past decade,” Mintert said.
Farmers remain optimistic about the value of farmland, although recent increases in value may make some producers more cautious about the direction of land values over the next five years. the Short-term farmland value expectations index weakened this month to a reading of 142, down 6 points from June and the long-term index weakened to a reading of 151, down 4 points from the previous month . Although both indexes remain close to historic highs, Mintert suggests that recent declines in farmland indexes may reflect more of the rapid increase in farmland values over the past year, leading producers to be cautious. as to the likelihood of further price increases. For example, Purdue University annual Survey of farmland values and cash rents, carried out in June 2021 and published in late July, reported that Indiana the value of cultivated land increased by 12 to 14%, depending on the quality of the land, compared to the june 2020 survey results.
Finally, the June and July barometer surveys included questions on the leasing of farmland for solar energy production. The percentage of all respondents who engaged in discussions about leasing solar power ranged from 6% (July survey) to 9% (June survey). New to the July survey, growers were also asked whether they or one of their owners had signed a solar leasing contract, with 4% indicating that an agreement had been signed. In a follow-up question on the two surveys, producers were asked about rental rates offered by solar rental companies. In July, more respondents said they were offering rental rates above $ 1,000 per acre as compared to the June survey. However, Mintert noted that more information is needed as the number of respondents reporting rental rates remains quite low and the rates are variable.
Read the whole Agricultural economy barometer report at https://purdue.ag/agbarometer. This month’s report includes additional information on producer thoughts on farmland cash rental rates and the Executive Order on Promoting Competition in the United States Economy signed in early July by President Biden. 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 offers a short video analysis of the barometer results, available at https://purdue.ag/barometervideo. For even more information, see the Purdue Commercial AgCast Podcast. It includes a detailed breakdown of each month’s barometer, in addition to a discussion of recent agricultural news affecting farmers. Available now at https://purdue.ag/agcast.
The Agricultural Economy Barometer, Current Conditions Index and Future Expectations Index are available on the Bloomberg Terminal under the following ticker symbols: AGECBARO, AGECCURC and AGECFTEX.
About Purdue University Commercial Agriculture Center
The Center for Commercial Agriculture was founded in 2011 to provide professional development and education programs to farmers. Installed inside Purdue University Department of Agricultural Economics, the faculty and staff of the center develop and execute research and educational programs that meet the different management needs in today’s business environment.
About the CME Group
As the world’s leading and most diverse derivatives market, CME Group (www.cmegroup.com) enables clients to trade futures, options, liquidity and over-the-counter markets, optimize portfolios and analyze data, enabling market participants around the world to effectively manage risks and seize opportunities. CME Group stock exchanges offer the widest range of global benchmarks across all major asset classes based on interest rates, stock indices, currencies, energy, agricultural commodities and metals. . The company offers futures and options on futures trading through the CME Globex® platform, fixed income trading through BrokerTec and currency trading on the EBS platform. In addition, it operates one of the world’s leading providers of central counterparty clearing, CME Clearing. With a range of pre- and post-trade products and services that underpin the entire lifecycle of a transaction, CME Group also offers optimization and reconciliation services through TriOptima, and transaction processing services. transactions through Traiana.
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Writer: Kami goodwin, 765-494-6999, [email protected]
Source: James mintert, 765-494-7004, [email protected]
Purdue University Commercial Agriculture Center: http://purdue.edu/commercialag
CME Group: http://www.cmegroup.com/
Photo caption: As producer sentiment holds, farmers weigh on rising input prices and the value of farmland (Purdue/ CME Group Ag Economy Barometer /James mintert). https://www.purdue.edu/uns/images/2021/ag-barometer721LO.jpg
SOURCE CME Group