WEST LAFAYETTE, Ind. and
CHICAGO, Feb. 2, 2021 /PRNewswire/ -- The Purdue University/CME Group Ag Economy Barometer
dropped 7 points in January to a reading of 167. While the Index
of Current Conditions remained relatively flat, down 3 points
to a reading of 199; the Index of Future Expectations fell
10 points to a reading of 151. Since its peak in October of 2020,
the Ag Economy Barometer has fallen 9 percent, all
attributable to weaker expectations for the future. The Index of
Future Expectations has fallen 19 percent since October, while
the Index of Current Conditions rose 12 percent over the
same time period. 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
January 18-22, 2021.
"The ongoing strength in the Current Conditions Index
appears to be driven by the ongoing rally in crop prices, while the
deterioration in the Futures Expectations Index seems to be
motivated by longer-run concerns about policies that could impact
U.S. agriculture in the future," said James
Mintert, the barometer's principal investigator and director
of Purdue University's Center for
Commercial Agriculture.
Producers are becoming more optimistic about short-term
expectations for their farms' financial performance, with nearly
one-third expecting better financial performance in the coming year
compared to 2020. When asked about the size of their operating
loan, 17% of respondents expect their loan to increase this year
and, of those, 20% said the increased loan is due to carrying over
unpaid operating debt from the previous year. This implies that 3
to 4% of those surveyed are suffering financial stress; however,
that is down from 5-6% of farms identified as suffering financial
stress one year ago.
Producers continue to think now is a relatively good time
to make large investments in their farming operations. The Farm
Capital Investment Index held strong at its record high
of 93 for the past two months. The percentage of farmers expecting
to increase their machinery purchases also held at its highest
level over the last year of 15 percent in January.
Farmers also remained bullish about short-term farmland values
and cash rental rates. In January, 43% of respondents said they
expect farmland values to rise over the next year (up 8 points from
December) and 27 percent of respondents said they expect cash
rental rates to rise in 2021 (up 9 points from last month).
Farmers' weakening expectations for the future appear to be
motivated by concerns about several policy issues. Confidence that
the on-going trade dispute with China will ultimately be resolved in a way
that favors U.S. agriculture has waned, falling 12 points in
January to 38 percent. There is also concern about possible changes
in environmental policies with 83% of respondents expecting more
restrictive regulations under the new administration (up 42 points
since October). Lastly, approximately 73% and 75%, respectively,
expect higher estate and income taxes over the next five years,
compared to 35% and 40% who felt that way in October.
Interest in capturing carbon on farms that agree to follow
specified production practices has increased as several firms have
begun offering contracts to farmers. To learn more about this, the
January barometer survey included questions related to carbon
capture. Thirty percent of respondents to the January survey said
they are aware of opportunities to receive a payment for capturing
carbon. Interestingly, among the 30 percent aware of these
opportunities, 22 percent said they have actively engaged in
discussions about receiving a carbon capture payment. This implies
that 6 to 7 percent of the farmers in the January survey have given
consideration to contractually sequestering carbon.
Finally, to better understand the farming community's
perspective on receiving the COVID-19 vaccine, the barometer survey
has been asking respondents since October, whether they plan to get
the vaccine. Possible responses included, "Yes, as soon as
possible;" "Yes, but not right away;" and "No." Interest in being
vaccinated quickly has been trending up since October. In January,
58% said they plan to get vaccinated as soon as possible, up from
39% in December, 36% in November, and 24% 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 &
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the case may be, and have been licensed for use by Chicago
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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: Ag Barometer drifts lower, farmers remain
concerned about the future despite strong economic conditions.
(Purdue/CME Group Ag
Economy Barometer/James
Mintert)
https://www.purdue.edu/uns/images/2021/jan-barometerLO.jpg
CME-G
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SOURCE CME Group