WEST LAFAYETTE, Ind. and
CHICAGO, March 2, 2021 /PRNewswire/ -- Farmers
continue to report strong current economic conditions on their
farms, according to the February Purdue
University/CME Group Ag Economy Barometer. While the overall
reading for the Ag Economy Barometer changed very little
compared to January, down 2 points to a reading of 165 in February;
the Index of Current Conditions remained near its all-time
high at a reading of 200. Meanwhile, the Index of Future
Expectations continued a four-month decline, down 20% from its
October peak, to a reading of 148.
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 February 15-19, 2021.
"The ongoing strength in ag commodity prices and farm income
continue to support producers' perspective on current conditions,"
said James Mintert, the barometer's
principal investigator and director of Purdue
University's Center for Commercial Agriculture. "At the same
time, concerns about possible policy changes affecting agriculture,
and eroding confidence in future growth in ag trade, continue to
weigh on producers' future expectations."
Producers are very bullish about farmland values. Fifty-one
percent of respondents in February said they expect farmland values
to rise during the next year, up 8 points from the January survey.
U.S. farmers were also optimistic about the long-run trend in
farmland values, as 62 percent of respondents indicated farmland
values are likely to rise over the next five years.
That same bullishness spilled over into expectations for rising
farmland cash rental rates in 2021. In February, more producers
(36%) now say they expect cash rental rates to increase, compared
to just 18% who felt that way in December. Those expecting rates to
remain unchanged fell from 75% to 61%, the decrease primarily due
to more producers' expecting rental rates to increase.
The percentage of farms expecting to see a better financial
performance in 2021 compared to the prior year has been rising
since last summer and on the February survey reached 37 percent, up
4 points from January and 25 points higher than last July. When
asked about their perception of the most critical risk facing their
operation, 29% ranked production, up 8 percent from February 2020, and 18% ranked financial risk,
down 8 percent from one year ago.
Each winter the barometer survey asks respondents about plans
for growth on their farms. This winter: 50% of commercial-scale
farms reported that they either have no plans to grow or plan to
exit/retire in the next five years; 17% expect their farm operation
to grow at a rate of less than 5 percent annually; 25% expect their
operation to grow 5 to 10 percent annually; and 9 percent expect
their farm to grow more than 10 percent per year. Overall, Mintert
said, these results point towards continued consolidation in the
farm sector.
Although producers are optimistic about the current situation on
their farms, confidence in the future continues to erode. Reasons
behind the 20% decline in the Index of Future Expectations
that has taken place since October appear centered on concerns
about the long-term future for agricultural trade and uncertainty
about a variety of policies affecting agriculture. In February,
only 45% of farmers expected ag exports to increase over the next 5
years, down from 65% in October. The percentage expecting a
favorable outcome to the U.S. trade dispute with China is also down, 37% in February compared
to 65% in October.
"Even though we have seen a recent 'ramp-up' in ag exports to
China, producers remain worried
about the future of ag trade," said Michael
Langemeier, associate director of the Center for Commercial
Agriculture. "They are also concerned about the possibility of more
restrictive environmental regulations as well as higher estate and
income taxes, all expressed on previous barometer surveys.
Uncertainty about all these factors appears to be the motivation
for the divergence between farmers' perspective on the current
versus the future situation."
Interest in alternative protein sources has increased markedly
over the last year. Respondents on the February survey were asked
several questions to learn about their perspectives on the possible
impact of alternative proteins on U.S. agriculture. More than half
of producers indicated they expect to see alternative protein
sources increase market share in the years ahead (55% expect a
total protein market share of up to 10 percent; 15% expect total
market share to exceed 10 percent) and, indicated that if the
market share becomes significant, they think it's likely to reduce
aggregate farm income.
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: Producers bullish about farmland values amid
strong current conditions. (Purdue/CME
Group Ag Economy Barometer/James
Mintert).
https://www.purdue.edu/uns/images/2021/AgEconomyBarometer_Feb2021LO.jpg
CME-G
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SOURCE CME Group