April 6, 2021
Strong commodity prices and improving financial conditions boost the Agricultural Economy Barometer
High commodity prices and improving financial conditions are boosting the barometer of the agricultural economy. (Purdue / CME Group Ag Economy Barometer / James Mintert)
WEST LAFAYETTE, Ind., And CHICAGO – The Purdue University / CME Group Agricultural Economy Barometer rose 12 points in March to 177, marking the highest barometer reading since October. This increase has been attributed to producers’ more optimistic view of the future. The future expectations index fell four months, rising 16 points to 164 in March. The current conditions index tied its previous all-time high, rising 2 points to a reading of 202. The Farm Economy Barometer is calculated monthly from responses from 400 US farm producers to a telephone survey. This month’s survey was conducted from March 22-26.
“Even with a rebound in agricultural production in 2021, it appears that carryover stocks of corn and soybeans will remain tight, giving producers confidence that crop prices will remain high this year,” said James mintert, Principal Investigator of the Barometer and Director of the Center for Commercial Agriculture at Purdue University. “A rebound in the US economy this summer, combined with expectations of a smaller pork supply, also gives some optimism in the livestock sector. “
In March, producers continued to be relatively optimistic about the purchase of farm machinery and capital investment on their farms. The agricultural capital investment index held steady at 88, just 5 points lower than its all-time high of 93. Since March 2020, when farmers’ confidence in the agricultural economy collapsed, the investment index rose 63%.
The optimistic views of farmers about the value of farmland, both in the coming year and the next five years, continued into March. The short-term farmland value expectation index rose for the fourth consecutive month, up 3 points to a reading of 148, and the long-term farmland value index tied its previous record of December, up 4 points to a reading of 157. From the May 2020 low, producer optimism for the long-term value of farmland is up 22%.
Producers’ perspective on the financial condition of their farms continues to improve, which seems to fuel some of the near-term optimism about farmland values and capital investments. The Farm Financial Performance Index is based on responses to a question that asks producers, “To date, do you expect your farm’s financial performance to be better, worse, or about the same as it is? ‘last year ? In April 2020, the index hit an all-time low of 55; since then the index has seen a remarkable improvement, rising 127% to a record high of 125 in March.
The subject on which producers are not optimistic concerns the ongoing trade negotiations with China. The percentage of producers who expect the US-China trade dispute to be resolved in a way that benefits US agriculture peaked at 81% in early 2020. Since then, the percentage who felt that is in free fall, down just over 50 points to a 31% reading in March. This attitude reflects their thoughts on whether China will complete its Phase 1 trade agreement with the United States. In October, 59% of producers said they expected China to meet its Phase 1 obligations; which fell to 40% in January and 35% in March.
Building on questions from previous Barometer surveys regarding carbon sequestration, around 30-40% of farmers surveyed in our surveys, over the past three months, say they are aware of opportunities to receive payments to capture carbon in their operations. Among the relatively small percentage of respondents who reported carbon sequestration payment rates offered, about 80% of those respondents said the payment rates were $ 20 or less per acre.
Read the whole Agricultural economy barometer report. 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 brief video analysis barometer results, and for even more information, check out the Purdue Commercial AgCast podcast. It includes a detailed breakdown of each month’s barometer, in addition to a discussion of the latest farm news that is impacting farmers. Available now.
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 the Purdue University Center for Commercial Agriculture
the Commercial Agriculture Center was founded in 2011 to provide professional development and education programs to farmers. Based within the Department of Agricultural Economics at Purdue University, the centre’s faculty and staff develop and execute research and educational programs that meet the various 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 exchanges offer the widest range of global benchmark products in all major asset classes based on interest rate, stock market indices, exchange, energy, agricultural production and metals. The company offers futures and options on futures contracts through the CME Globex®, rate trading via 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.
CME Group, the Globe logo, CME, Chicago Mercantile Exchange, Globex, and E-mini are trademarks of Chicago Mercantile Exchange Inc. CBOT and Chicago Board of Trade are trademarks of Board of Trade of the City of Chicago, Inc. NYMEX, New York Mercantile Exchange, and ClearPort are trademarks of New York Mercantile Exchange, Inc. COMEX is a trademark of Commodity Exchange, Inc. BrokerTec, EBS, TriOptima and Traiana are trademarks of BrokerTec Europe LTD, EBS Group LTD , TriOptima AB and Traiana, Inc., respectively. Dow Jones, Dow Jones Industrial Average, S&P 500 and S&P are services and / or trademarks of Dow Jones Trademark Holdings LLC, Standard & Poor’s Financial Services LLC and S & P / Dow Jones Indices LLC, as applicable, and have made licensed for use by Chicago Mercantile Exchange Inc. All other trademarks are the property of their respective owners.
Writer: We are Goodwin, 765-494-6999, [email protected]
Source: James Mintert, 765-494-7004, [email protected]
Aissa Good, Purdue University, 765-496-3884, [email protected]
Dana Schmidt, CME Group, 312-872-5443, [email protected]
Agricultural communications: (765) 494-8415
Maureen Manier, Head of Department, [email protected]