WEST LAFAYETTE, Ind. and CHICAGO, Feb. 2, 2021 /PRNewswire/ — The Purdue University/CME Group Ag Economy Barometer dropped 7 factors in January to a studying of 167. Whereas the Index of Present Circumstances remained comparatively flat, down 3 factors to a studying of 199; the Index of Future Expectations fell 10 factors to a studying of 151. Since its peak in October of 2020, the Ag Financial system Barometer has fallen 9 %, all attributable to weaker expectations for the longer term. The Index of Future Expectations has fallen 19 % since October, whereas the Index of Present Circumstances rose 12 % over the identical time interval. The Ag Financial system Barometer is calculated every month from 400 U.S. agricultural producers’ responses to a phone survey. This month’s survey was carried out from January 18-22, 2021.
“The continued energy within the Present Circumstances Index seems to be pushed by the continued rally in crop costs, whereas the deterioration within the Futures Expectations Index appears to be motivated by longer-run considerations about insurance policies that might impression U.S. agriculture sooner or later,” mentioned James Mintert, the barometer’s principal investigator and director of Purdue College’s Middle for Industrial Agriculture.
Producers have gotten extra optimistic about short-term expectations for his or her farms’ monetary efficiency, with practically one-third anticipating higher monetary efficiency within the coming 12 months in comparison with 2020. When requested in regards to the dimension of their working mortgage, 17% of respondents anticipate their mortgage to extend this 12 months and, of these, 20% mentioned the elevated mortgage is because of carrying over unpaid working debt from the earlier 12 months. This means that 3 to 4% of these surveyed are struggling monetary stress; nevertheless, that’s down from 5-6% of farms recognized as struggling monetary stress one 12 months in the past.
Producers proceed to assume now’s a comparatively good time to make giant investments of their farming operations. The Farm Capital Funding Index held robust at its report excessive of 93 for the previous two months. The share of farmers anticipating to extend their equipment purchases additionally held at its highest degree during the last 12 months of 15 % in January.
Farmers additionally remained bullish about short-term farmland values and money rental charges. In January, 43% of respondents mentioned they anticipate farmland values to rise over the subsequent 12 months (up 8 factors from December) and 27 % of respondents mentioned they anticipate money rental charges to rise in 2021 (up 9 factors from final month).
Farmers’ weakening expectations for the longer term seem like motivated by considerations about a number of coverage points. Confidence that the on-going commerce dispute with China will in the end be resolved in a manner that favors U.S. agriculture has waned, falling 12 factors in January to 38 %. There’s additionally concern about potential adjustments in environmental insurance policies with 83% of respondents anticipating extra restrictive laws underneath the brand new administration (up 42 factors since October). Lastly, roughly 73% and 75%, respectively, anticipate increased property and earnings taxes over the subsequent 5 years, in comparison with 35% and 40% who felt that manner in October.
Curiosity in capturing carbon on farms that conform to observe specified manufacturing practices has elevated as a number of companies have begun providing contracts to farmers. To be taught extra about this, the January barometer survey included questions associated to carbon seize. Thirty % of respondents to the January survey mentioned they’re conscious of alternatives to obtain a cost for capturing carbon. Apparently, among the many 30 % conscious of those alternatives, 22 % mentioned they’ve actively engaged in discussions about receiving a carbon seize cost. This means that 6 to 7 % of the farmers within the January survey have given consideration to contractually sequestering carbon.
Lastly, to raised perceive the farming group’s perspective on receiving the COVID-19 vaccine, the barometer survey has been asking respondents since October, whether or not they plan to get the vaccine. Attainable responses included, “Sure, as quickly as potential;” “Sure, however not instantly;” and “No.” Curiosity in being vaccinated shortly has been trending up since October. In January, 58% mentioned they plan to get vaccinated as quickly as potential, up from 39% in December, 36% in November, and 24% in October.
Learn the total Ag Financial system Barometer report at https://purdue.ag/agbarometer. The positioning additionally affords further assets – similar to previous experiences, charts and survey methodology – and a type to join month-to-month barometer electronic mail updates and webinars.
Every month, the Purdue Middle for Industrial Agriculture gives a brief video evaluation of the barometer outcomes, obtainable at https://purdue.ag/barometervideo, and for much more data, take a look at the Purdue Industrial AgCast podcast. It features a detailed breakdown of every month’s barometer, along with a dialogue of current agricultural information that impacts farmers. Out there now at https://purdue.ag/agcast.
The Ag Financial system Barometer, Index of Present Circumstances and Index of Future Expectations can be found on the Bloomberg Terminal underneath the next ticker symbols: AGECBARO, AGECCURC and AGECFTEX.
Concerning the Purdue College Middle for Industrial Agriculture
The Center for Commercial Agriculture was based in 2011 to offer skilled growth and academic applications for farmers. Housed inside Purdue College’s Division of Agricultural Economics, the middle’s school and workers develop and execute analysis and academic applications that deal with the totally different wants of managing in right now’s enterprise setting.
About CME Group
Because the world’s main and most numerous derivatives market, CME Group (www.cmegroup.com) allows shoppers to commerce futures, choices, money and OTC markets, optimize portfolios, and analyze information – empowering market contributors worldwide to effectively handle threat and seize alternatives. CME Group exchanges supply the widest vary of world benchmark merchandise throughout all main asset lessons primarily based on interest rates, equity indexes, foreign exchange, energy, agricultural products and metals. The corporate affords futures and choices on futures buying and selling via the CME Globex® platform, mounted earnings buying and selling by way of BrokerTec and overseas trade buying and selling on the EBS platform. As well as, it operates one of many world’s main central counterparty clearing suppliers, CME Clearing. With a variety of pre- and post-trade services underpinning the complete lifecycle of a commerce, CME Group additionally affords optimization and reconciliation providers via TriOptima, and commerce processing providers via Traiana.
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Picture Caption: Ag Barometer drifts decrease, farmers stay involved in regards to the future regardless of robust financial situations. (Purdue/CME Group Ag Financial system Barometer/James Mintert) https://www.purdue.edu/uns/images/2021/jan-barometerLO.jpg
SOURCE CME Group