WEST LAFAYETTE, Ind.,
July 2,
2024 /PRNewswire/ -- Farmer sentiment drifted
downward in June as the Purdue
University/CME Group Ag Economy Barometer reading of 105 was
3 points lower than a month earlier. The overall decline in
sentiment was due to a five-point drop in the Index of Future
Expectations, which fell to 112, while the June Current Conditions
Index increased to 90, 1 point higher than the May index. High
input costs, the risk of lower prices for their products, and
rising interest rates continue to weigh on farmer sentiment. This
month's Ag Economy Barometer survey was conducted from June 17-21.
"The impact of rising interest rates on their farm operations
has become a bigger concern for producers in recent months," said
James Mintert, the barometer's
principal investigator and director of Purdue
University's Center for Commercial Agriculture. "Interest
rate risk and high breakeven levels combined with concerns that
crop and livestock prices could weaken are holding back producer
sentiment and making producers cautious about making large
investments."
This month's Farm Capital Investment Index declined by 3 points
to a reading of 32, just one point above its historical low. More
producers indicated this month that it is not a favorable time for
large investments compared to May, while the percentage of
producers who viewed it as a good time remained the same.
The Short-Term Farmland Value Expectations Index remained steady
at 115 for June. However, there was a notable shift in producers'
longer-term outlook on farmland values, with the Long-Term Farmland
Values Index dropping to 152, down 7 points from May. Fewer
producers expect that farmland values will increase over the next
five years, coinciding with a rise in those anticipating values
holding steady. Among those expecting a long-term increase in
farmland values, 57% attributed their confidence to nonfarm
investor demand, while 16% cited inflation as a driving factor.
June marked the third consecutive month to include "Energy
Production" as a potential driver of farmland values, with 10% of
optimistic respondents pointing to energy production as a key
driver of farmland values.
This month's survey also explored respondents' interest in
carbon capture and storage projects introduced by ethanol plants.
Eight percent of respondents reported being approached about such
projects, with the majority (93%) noting they received payment
offers for less than $25 per acre and
only 8% receiving offers exceeding $50 per acre. Additionally, 16% of respondents
reported discussions taking place within the last six months about
leasing farmland for solar energy production, a slight decline from
April and May survey responses. However, lease rates continued an
upward trend, with 69% of respondents being offered long-term rates
of $1,000 per acre or higher,
compared to 27% in June 2021.
Notably, 27% of respondents received offers of $1,500 per acre or more, with 58% of leases
including an annual escalator clause, typically between 2% and 3%
per year.
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
derivatives marketplace, CME Group 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.
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
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product of S&P Dow Jones Indices LLC ("S&P DJI").
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"SPY®", "SPX®", US 500 and The 500 are
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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 comprehensive urban
campus in Indianapolis, the
Mitchell E.
Daniels, Jr. School of Business,
Purdue Computes and the One
Health initiative — at
https://www.purdue.edu/president/strategic-initiatives.
Writer: Morgan French,
mmfrench@purdue.edu
Source: James Mintert, 765-494-7004,
jmintert@purdue.edu
Image URL:
https://www.purdue.edu/uns/images/2024/agecon-barometer2406LO.jpg
Image Caption:
Farmer sentiment drifts lower on weaker future
expectations. (Purdue/CME Group Ag Economy
Barometer/James Mintert)
CME-G
Purdue University
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SOURCE CME Group