WEST LAFAYETTE, Ind. and
CHICAGO, Jan. 5, 2021 /PRNewswire/ -- There was a
modest improvement in producer sentiment according to the December
Purdue University/CME Group Ag Economy
Barometer. The barometer increased 7 points from November to a
reading of 174. Both of the barometer's sub-indices, the Index
of Current Conditions and the Index of Future
Expectations, were also higher in December than in November.
The Index of Current Conditions climbed 15 points to 202 and
the Index of Future Expectations increased by 5 points to a
reading of 161. The Ag Economy Barometer is calculated each
month from 400 U.S. agricultural producers' responses to a
telephone survey. This month's survey was conducted from
December 7-11, 2020.
"The rise in the Ag Economy Barometer was primarily
driven by farmers' perception that the current situation on their
farms really improved. The sharp rise in the Index of Current
Conditions is correlated with the farm income boost provided by
the ongoing rally in crop prices. That appears to be the driving
force behind producers' optimism," said James Mintert, the barometer's principal
investigator and director of Purdue
University's Center for Commercial Agriculture.
Producers were noticeably more inclined to think now is a good
time to make large investments in their farming operations than in
November. The Farm Capital Investment Index increased 13
points in December to a record high of 93. The percentage of
farmers expecting to increase their machinery purchases in the
upcoming year rose 5 points to 15 percent in December, while the
percentage expecting to reduce their purchases declined by the same
amount.
They were also bullish about farmland values and cash rental
rates. In December, the percentage of farmers expecting farmland
values to rise over the next year increased 9 points from November
to a reading of 35. The percentage expecting farmland values to
rise over the next five years increased 11 points from November to
a life of survey high 65 percent.
Reflecting the improvement in crop production profitability,
more producers said they expect farmland cash rental rates to rise
in 2021 when compared to survey results from late summer. In
December, 18 percent of respondents said they expect cash rental
rates to rise in 2021, double the percentage who felt that way in
August and September. Moreover, it's clear that any downward
pressure on cash rental rates evident earlier in the year has
nearly disappeared, as just 5 percent of farmers said they expect
to see cash rental rates decline in 2021 compared to 17 percent who
felt that way in August.
Farmers were less optimistic when asked about the on-going trade
dispute between U.S. and China. In
the first quarter of 2020, an average of 76% of respondents thought
the trade dispute's ultimate resolution would favor U.S.
agriculture, by spring that average declined to 62 percent, and by
December it dropped to an all-time survey low of 47 percent. When
asked whether they expect U.S. ag exports to increase over the next
five years, only 51 percent of respondents in December said they
expect to see export growth.
To learn more about what factors might be motivating the shift
in producers' sentiment pre- and post-November election, a series
of questions focused on producers' future expectations for
environmental regulations, taxes and other key aspects of the
agricultural economy, were included on the October, November and
December surveys. In December, farmers continued to express
concerns following the November election about several key policy
issues affecting agriculture. Over 80 percent of farmers said they
expect environmental regulations to become more restrictive in
December, compared to 41 percent who felt that way in October. Over
70 percent of producers expect to see higher income and estate
taxes compared to 35 and 40 percent, respectively, in October.
One-third of farmers said they expect the farm income safety net to
weaken compared to 18 percent and just over one-fourth of producers
said they expect government support for the ethanol industry to
weaken compared to 17 percent who felt that way in October.
Read the full Ag Economy Barometer report at
https://purdue.ag/agbarometer. 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
provides a short video analysis of the barometer results, available
at https://purdue.ag/barometervideo, 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 recent
agricultural news that impacts farmers. Available now
at https://purdue.ag/agcast.
The Ag Economy Barometer, Index of Current Conditions and Index
of Future Expectations are available on the Bloomberg Terminal
under the following ticker symbols: AGECBARO, AGECCURC and
AGECFTEX.
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 and most
diverse derivatives marketplace, CME Group (www.cmegroup.com)
enables clients to trade futures, options, cash and OTC markets,
optimize portfolios, and analyze data – empowering market
participants worldwide to efficiently manage risk and capture
opportunities. CME Group exchanges offer the widest range of global
benchmark products across all major asset classes based
on interest rates, equity indexes, foreign
exchange, energy, 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
EBS platform. In addition, it operates one of the world's leading
central counterparty clearing providers, CME Clearing. With a range
of pre- and post-trade products and services underpinning the
entire lifecycle of a trade, CME Group also offers optimization and
reconciliation services through TriOptima, and trade processing
services 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 service and/or
trademarks of Dow Jones Trademark Holdings LLC, Standard &
Poor's Financial Services LLC and S&P/Dow Jones Indices LLC, as
the case may be, and have been licensed for use by Chicago
Mercantile Exchange Inc. All other trademarks are the property
of their respective owners.
Writer: Kami Goodwin,
765-494-6999, kami@purdue.edu
Source: James Mintert, 765-494-7004,
jmintert@purdue.edu
Related websites:
Purdue University Center for Commercial
Agriculture: http://purdue.edu/commercialag
CME Group: http://www.cmegroup.com/
Photo Caption: Farmer sentiment rises as income prospects
improve, concerns about key policy issues remain.
(Purdue/CME Group Ag
Economy Barometer/James
Mintert)
https://www.purdue.edu/uns/images/2020/dec-barometerLO.jpg
CME-G
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SOURCE CME Group