WEST LAFAYETTE, Indiana and CHICAGO, May 3, 2022
WEST LAFAYETTE, Ind. and CHICAGO, May 3, 2022 /PRNewswire/ — The Purdue University/CME Group Ag Economy Barometer improved in April by up to 8 points to a reading of 121; however, it remains 32% below its reading from the same period last year. Growers’ views on current conditions and future expectations have been on the rise over the past month. The current conditions index improved by 7 points at a reading of 120 and the Future Expectations Index improved 9 points to a reading of 122. The Agricultural economy barometer is calculated each month from the responses of 400 American agricultural producers to a telephone survey. This month’s survey was conducted between April 18-22.
“Higher prices for major commodities, particularly corn and soybeans, appear to be driving the change in the improved financial outlook for producers,” said James Minertprincipal researcher of the barometer and director of Purdue University Center for Commercial Agriculture. “However, it’s hard to overstate the magnitude of the cost increases producers say they’re facing.”
the Agricultural Financial Performance Index improved to a reading of 95, up 8 points from March and 12 points higher than in January and February. As Mintert suggests, much of this could be attributed to firming commodity prices. For example, Eastern Corn Belt corn spot prices in mid-April were up more than 10% from their mid-March level, while bids for delivery to the Fall 2022 corn harvest increased 20% over the same period. Soybean prices have also increased. Short-term delivery prices for soybeans rose about 7% from mid-March to mid-April, while elevator bids for fall delivery of new crop soybeans rose 5%. % over the period of one month.
Even though commodity prices have firmed, producers continue to say that rising input costs are the biggest concern for their farm operation. In April, 42% of producers chose higher entry costs as their biggest concern, which were more than twice as likely to choose government policies (21%) or drop in producer prices (19%). In April, 60% of respondents said they expected input prices to rise by 30% over the next 12 months. This compares to an average of 37% of respondents who said they expected a cost increase of this magnitude when the same question was asked in the December 2021 by March 2022 surveys.
When asked specifically what their expectations are for crop input prices in 2023 compared to prices paid for crop inputs in 2022, 36% of respondents said they expect prices to increase by 10 % or more and 21% of crop growers said input price increases of 20% or more were likely. The war in Ukraine also added a new level of uncertainty for growers. Sixty percent of respondents said the greatest impact of the war on US agriculture will be felt in input prices.
The challenges of agricultural inputs go beyond their inflated cost to their availability. In April, 34% of producers said they had difficulty buying inputs for the 2022 crop year, compared to 27% in March. In a follow-up question, producers who said they had difficulty obtaining inputs said that herbicides (30% of respondents) were the most problematic, followed closely by agricultural machinery parts (27%), fertilizer (26%) and insecticides (17%). In a related question, 11% of crop producers said they had been notified that an input supplier would not be able to deliver one or more crop inputs they had already bought for use in 2022. Among these, the availability of herbicides was the main issue reported.
Despite an overall improvement in the outlook for financial performance, the Farm Capital Investment Index remains at its historic low. Supply chain issues remain a key reason why many producers feel that now is not the right time to invest heavily in their farm operations. For example, just over 40% of producers said their farm machinery purchase plans had been affected by low machinery inventories. The rising cost of all inputs, including machinery, buildings and grain silos, is likely another factor leading producers to say now is not the right time for big investments.
Read all Agricultural economy barometer report to 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 email updates and Barometer 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, plus a discussion of recent agricultural news that affects farmers. Available now on https://purdue.ag/agcast.
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 Commercial Agriculture Center
the Commercial Agriculture Center was founded in 2011 to provide professional development and educational programs for farmers. Installed in Purdue The university’s Department of Agricultural Economics, faculty and staff at the center develop and execute research and teaching programs that meet the different management needs in today’s business environment.
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Writer: Kami Goodwin765-494-6999, [email protected]
Source: James Mint765-494-7004, [email protected]
Photo caption: Producer sentiment improving as commodity prices firm; but high cost inflation worries farmers. (Purdue/CME Group Ag Economy Barometer/James Minert). https://www.purdue.edu/uns/images/2022/ag-barometer422LO.jpg
SOURCE CME Group