Farmer sentiment remains weak as crop growers consider acreage changes in 2023

July 5, 2022

Farmer sentiment remains weak as crop growers consider acreage changes in 2023

Farmer sentiment remains weak as crop growers consider acreage changes in 2023 (Purdue/CME Group Ag Economy Barometer/James Mintert).
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WEST LAFAYETTE, Ind. and CHICAGO – The Purdue University/CME Group Agricultural Economics Barometer continued to decline in June, down 2 points to 97. Producer expectations for the future also weakened. The Future Expectations Index fell 5 points to 96, marking the index’s lowest level since October 2016. Meanwhile, producers were slightly more optimistic about current conditions; the current conditions index improved by 5 points to 99. The Farm Economics Barometer is calculated each month from the responses of 400 US agricultural producers to a telephone survey. This month’s survey was conducted June 13-17.

“Rising input costs and uncertainty about the future continue to weigh on farmer sentiment,” said James Mintert, principal researcher of the barometer and director of Purdue University’s Center for Commercial Agriculture. “Many growers remain concerned about the continued escalation of production costs as well as commodity price volatility, which could lead to production cost/revenue compression in 2023.”

The agricultural financial performance index, which mainly reflects income expectations for the current year, improved 2 points to 83 in June, but remains at one of the lowest levels in the index over the past two years. Asked about expectations for their farm’s financial situation in June 2023 compared to June 2022, 51% of survey respondents said they expected their farm’s financial situation to deteriorate in a year. This is the most negative response received to this question since data collection began in 2015.

For the second month in a row, the farm capital investment index held at a record low of 35, as producers continue to say now is not the right time to make big investments in their farm business . Supply chain issues continue to frustrate farmers. In May and June, 50% of producers said tight machinery inventories were impacting their farm machinery purchase plans.

The top concerns for producers in the coming year remain input prices (43%), followed by input availability (21%), government policies (18%) and declining output prices ( 17%). Looking ahead to 2023, a majority of farmers expect another round of significant increases in input costs, with 63% of producers expecting higher costs in 2023, on top of the steep increases seen in 2022 Nearly four in 10 farmers expect input prices to rise by 10% or more next year compared to 2022; only one in 10 producers expect input prices in 2023 to fall below 2022 prices. Producers also expect inflation to drive up the cost of living for farm families over the next the year to come. Seven in 10 respondents said they expected the consumer goods inflation rate to be 6% or more over the next year, and 35% of respondents said they expected the inflation rate to be 6% or higher over the next year. inflation exceeds 10%.

Asked about their cropping plans for the coming year, one in five crop growers (19%) said they intended to change their crop mix in the coming year in response to the rising input costs. Of those considering changing their crop mix, nearly half of respondents (46%) said the biggest change would be to devote a higher percentage of their acreage to soybeans. Twenty-six percent of those planning a change in crop mix said the biggest change would be devoting more of their farm to wheat production, while 21% of respondents said they would switch planting more maize.

Although both farmland value indexes remain at high levels, producers were significantly less confident that farmland values ​​will continue to rise than they were last fall. The short-term farmland value expectations index fell 9 points to 136 in June, while the long-term farmland value expectations index fell 8 points to 141. The short-term and long-term farmland indices are down 13% and 12%, respectively, from the highs recorded in the fall of 2021.

This month’s survey also asked farmers who planted corn or soybeans in 2022 about their expectations for cash rental rates for farmland in 2023. More than half (52%) of respondents said said to expect cash rental rates to increase next year. Of those who expect rates to rise, eight in 10 respondents said they expect rates to rise by 5% or more, while four in 10 said they expect rental rates to rise 10% or more in 2023.

Read the full Agricultural Economics Barometer report. The site also offers additional resources – such as past reports, charts and survey methodology – and a form to sign up for monthly email updates and Barometer webinars.

Each month, the Purdue Center for Commercial Agriculture offers a short video analysis of the barometer results. For even more information, check out the Purdue Commercial AgCast podcast. It includes a detailed breakdown of each month’s barometer, plus a discussion of recent agricultural news that affects farmers.

The Agricultural Economics Barometer, Current Conditions Index and Future Expectations Index are available on the Bloomberg Terminal under the following trading symbols: AGECBARO, AGECCURC and AGECFTEX.

About Purdue University Center for Commercial Agriculture

The Commercial Agriculture Center 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 teaching programs that meet the diverse needs of management in today’s business environment.

About CME Group

As the world’s leading and most diversified derivatives marketplace, CME Group (www.cmegroup.com) enables clients to trade futures, options, cash and over-the-counter markets, optimize portfolios and analyze data, enabling market participants around the world to effectively manage risk and seize opportunities. . CME Group exchanges offer the broadest range of global benchmark products across all major asset classes based on interest rates, equity indices, currencies, energy, agricultural commodities and metals. The Company offers futures contracts and options on futures contracts through the CME Globex® platform, fixed income trading via BrokerTec and currency trading on the EBS platform. In addition, it operates one of the world’s leading central counterparty clearing providers, CME Clearing. With a range of pre- and post-trade products and services that underpin the entire life cycle of a trade, CME Group also offers optimization and reconciliation services through TriOptima, and transactions through Traiana.

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Writer: Kami Goodwin, 765-494-6999, [email protected]

Source: James Mintert, 765-494-7004, [email protected]

Media contacts:

Aissa Good, Purdue University, 765-496-3884, [email protected]

Dana Schmidt, CME Group, 312-872-5443, [email protected]

Related websites:

Purdue University Center for Commercial Agriculture: http://purdue.edu/commercialag

CME Group: http://www.cmegroup.com/

Agricultural communications: (765) 494-8415;

Maureen Manier, Head of Department, [email protected]

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