WEST
LAFAYETTE, Ind., April 2,
2024 /PRNewswire/ -- U.S. farmers' outlook improved
in March as the Purdue University/CME
Group Ag Economy Barometer index increased to 114, marking a
3-point rise from February. While the Index of Current Conditions
fell by 2 points to 101, the Index of Future Expectations climbed
to 120, up by 5 points from February. The disparity between current
and future indexes was primarily influenced by farmers' perceptions
of a financial downturn taking place in the past year, coupled with
some expectations for improvement over the next 12 months. The
March survey was conducted from March 11-15,
2024.
"Producers' expectations for interest rate changes have shifted,
which could help explain why producers look for financial
conditions to improve," said James
Mintert, the barometer's principal investigator and director
of Purdue University's Center for
Commercial Agriculture.
This month 48% of respondents said they expect a decline in the
U.S. prime interest rate over the next year, up from 35% in
December. Just one-third (32%) foresee an increase, compared to 43%
last month. Only 20% of respondents this month identified the risk
of rising interest rates as a primary concern, a decrease from the
24% recorded December 2023. High
input costs continue to be producers' No. 1 concern, with 36% of
respondents expressing worry.
The Farm Capital Investment Index increased by 7 points this
month, indicating growing optimism among producers about making
large investments. Producers who said it is a good time for a large
investment rose to 15%, up 11% from the start of the year. This
optimism is fueled by producers who pointed to strong cash flows on
their farms, coupled with higher dealer inventories for farm
machinery. However, some producers still feel hesitant to invest
due to concerns about high costs for machinery and construction and
high interest rates.
Producers displayed a more optimistic short-term outlook on
farmland values in March, with the Short-Term Farmland Values Index
rising to 124, a 9-point increase from the previous month. This
month, 38% of producers expect farmland values to increase in the
coming year, compared to 31% in January and February.
"Factors contributing to this optimism included non-farm
investor demand, inflation expectations and strong cash flows. An
improved interest rate outlook might have been a factor as well,
although producers didn't point to that explicitly in this month's
survey," Mintert said.
More farmers this month (24%) said they believe farmland prices
will go up because of inflation expectations compared to last month
(18%). There was also a slight increase in producers citing strong
cash flows (8% in March versus 6% in February) as a reason, and a
modest decline in the number of producers who mentioned non-farm
investor demand as a major factor influencing the farmland market.
However, despite this decline, 57% of producers still consider
non-farm investor demand the primary reason for their bullish
outlook on farmland values.
Interest in using farmland for carbon sequestration or solar
energy production appears to be increasing. In this month's survey,
nearly 1 out of 5 respondents (18%) said they or their landowners
had been approached about carbon capture utilization and storage on
their farmland. Additionally, 12% of this month's respondents said
they had discussions with companies interested in leasing farmland
for a solar energy project in the last six months, compared to 10%
in February. When it comes to long-term farmland lease rates
offered by solar energy companies, 54% of respondents this month
said they were offered $1,000 or more
per acre, while just over one-fourth (27%) were offered
$1,250 or more per acre.
The March barometer also revealed that many farmers are
concerned about potential government policy changes affecting their
farms following this year's elections. Forty-three percent of
respondents anticipate more restrictive regulations for
agriculture. Additionally, 4 out of 10 (39%) producers expect taxes
impacting agriculture to rise.
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
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marketplace, CME Group enables clients to trade futures, options,
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empowering market participants worldwide to efficiently manage risk
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agricultural products and metals. The company offers futures and
options on futures trading through the CME Globex platform, fixed
income trading via BrokerTec and foreign exchange trading on the
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About Purdue University
Purdue University is a public research
institution demonstrating excellence at scale. Ranked among top 10
public universities and with two colleges in the top four in
the United States, Purdue discovers and disseminates knowledge with a
quality and at a scale second to none. More than 105,000 students
study at Purdue across modalities and
locations, including nearly 50,000 in person on the West Lafayette campus. Committed to
affordability and accessibility, Purdue's main campus has frozen tuition 13 years in
a row. See how Purdue never stops in
the persistent pursuit of the next giant leap — including its first
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School of Business, and Purdue Computes —
at https://www.purdue.edu/president/strategic-initiatives.
Writer: Erin Robinson,
erobin@purdue.edu
Source: James Mintert, 765-494-7004,
jmintert@purdue.edu
Image URL:
https://www.purdue.edu/uns/images/2024/agbarometer-2403LO.jpg
Image Caption:
Farmer sentiment improves as interest rate expectations
shift. (Purdue/CME Group Ag
Economy Barometer/James Mintert)
CME-G
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SOURCE CME Group