Producer sentiment improved sharply in December on sturdy year-end earnings estimates. The Purdue College-CME Group Ag Economic system Barometer Index ended the yr at 126, the best studying of the yr and 24 factors larger than November.
Farmers have been extra optimistic about each their present scenario and expectations for the long run. The Present Circumstances Index jumped 37 factors to a studying of 135, whereas the Future Expectations Index elevated 18 factors to a studying of 122.
James Mintert, the barometer’s principal investigator and director of Purdue College’s Heart for Industrial Agriculture, says the stronger Present Circumstances Index could possibly be attributed to producers estimating their 2022 farm earnings following harvest.
USDA estimates sturdy 2022 earnings
The Ag Economic system Barometer studying aligns properly with USDA’s numbers. In line with the division’s Farm Monetary Forecast launched in December, 2022 web farm earnings goes to achieve its highest stage since 1973 amid hovering commodity costs.
Associated: USDA: Farm earnings soars to new heights in 2022
Dairy, corn, soybean, and wheat costs are anticipated to supply the most important enhance to bigger money receipts.
Farmland worth shift
Regardless of the advance in farm funds, the short-term and long-term farmland worth indices continued decrease in December. The short-term index fell 5 factors to 124 whereas the long-term index declined from 144 to 140.
Though each farmland indices stay constructive, it’s clear that sentiment amongst producers about farmland values has shifted.
In comparison with a yr in the past, the share of respondents who count on to see farmland values decline within the upcoming yr elevated barely from 6% to fifteen% whereas the share anticipating to see values rise declined from 59% to 39%.
2023 outlook
Farmers stay optimistic concerning the yr forward, however most agree 2023 is not going to convey as a lot monetary success as 2022.
When requested to match expectations for his or her farm’s funds for 2022 and 2023, farmer’s count on decrease incomes in 2023 on account of rising prices and narrowing margins.
Almost half (47%) of crop producers say they count on farmland money rental charges in 2023 to rise. In a associated query, 45% of producers cited larger enter prices as their high concern in 2023 adopted by rising rates of interest (22% of respondents) and decrease crop or livestock costs (13% of respondents).
The Purdue College-CME Group Ag Economic system Barometer sentiment index is calculated every month from 400 U.S. agricultural producers’ responses to a phone survey. This month’s survey was performed from December 5-9, 2022.
