WEST
LAFAYETTE, Ind., Jan. 2, 2024
/PRNewswire/ -- The latest report from the Purdue University/CME Group Ag Economy Barometer
indicates that U.S. farmers' inflation expectations have subsided
while overall producer sentiment changed little.
The December barometer recorded a reading of 114, just one point
lower than in November. Both subindices of the barometer, the Index
of Current Conditions and the Index of Future Expectations,
mirrored this slight decline, settling one point below their
respective November figures at 112 and 115. Notably, farmers'
inflation expectations for the upcoming year were markedly lower
than those reported a year ago for 2023. This month's Ag Economy
Barometer survey was conducted from Dec.
4-8.
Farmers reported another improvement in their farms' financial
performance during the month of December. The Farm Financial
Performance Index saw a 2-point increase compared to the previous
month, marking a continued positive trend. Since late summer, the
index has climbed 11 points, and at year-end, it was 21 points
above the low point for 2023, which occurred in May.
"The shift in farmers' perception of financial performance
during the fall quarter corresponds with USDA's (U.S. Department of
Agriculture's) more optimistic 2023 farm income outlook released in
late November, which was $10 billion
higher than their previous forecast," said James Mintert, the barometer's principal
investigator and director of Purdue
University's Center for Commercial Agriculture.
The Farm Capital Investment Index reading of 43 was only one
point above November's, but it marked a 13-point increase compared
to the same period last year. Respondents endorsing the notion that
now is a favorable time for substantial investments in their farm
operation cited "higher dealer inventories" and "strong cash flows"
as key factors supporting this perspective. While the percentage of
respondents selecting "strong cash flows" as a rationale for
investment rebounded from the previous month, it remained less
popular than in July and August. Conversely, in December, the
percentage of producers citing "higher dealer inventories" as a
primary motivation for investment was more than double the
proportion who expressed a similar sentiment in July.
"High input costs continue to be concerning for U.S. farmers,
although a notable shift in concerns took place as 2023 unfolded,"
Mintert said.
Farmers concerned about the risk of lower prices for crops and
livestock increased from 16% of respondents in January to over
one-fourth (26%) by December. Number three on the list of concerns
for the upcoming year was "rising interest rates," chosen by 24% of
farmers in December's survey.
Producers' inflation expectations moderated, with 70% expecting
inflation in 2024 to be less than 4%. By comparison, 50% of the
producers anticipated an inflation rate of 6% or higher a year ago.
When asked about interest rates, about one-third (34%) of
respondents said they anticipate rates declining in 2024 while 22%
expect no change in interest rates in the upcoming year.
Perspectives on farmland values weakened slightly in December
compared to November. The Short-Term Farmland Value Index fell 4
points to a reading of 121, while the long-term index decreased by
2 points to 149. Compared to a year ago, the short-term index was
down 3 points, while the long-term index was 9 points higher.
"The improvement in farmers' interest rate expectations since
late 2022 could help explain the year-to-year rise in farmers'
long-term farmland value expectations," Mintert stated.
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
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Writer: Erin Robinson,
erobin@purdue.edu
Source: James Mintert, 765-494-7004,
jmintert@purdue.edu
HERO IMAGE:
U.S. farmer sentiment stable as
inflation expectations subside (Purdue/CME Group Ag Economy Barometer/James
Mintert)
https://www.purdue.edu/uns/images/2023/agbarometer-2312LO.jpg
https://www.purdue.edu/uns/images/2023/agbarometer-2312HI.jpg
CME-G
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SOURCE CME Group