Agricultural producers’ sentiment improved barely in August in comparison with July because the Ag Economic system Barometer rose 4 factors to a studying of 138 vs. 134 a month earlier. The modest rise within the barometer was primarily attributable to an enchancment within the Index of Present Circumstances, which climbed 9 factors to 152 whereas the Index of Future Expectations rose simply 2 factors to 132. Though the barometer and its two key sub-indices improved in August in contrast to July, all three indices stay properly beneath the very constructive sentiment readings posted this previous spring. The Purdue College-CME Group Ag Economic system Barometer sentiment index is calculated every month from 400 U.S. agricultural producers’ responses to a phone survey. This month’s survey was performed from August 23-27, 2021.
The advance within the Present Situation Index was tied to producers’ extra constructive view of their farms’ monetary scenario. The Farm Monetary Efficiency Index rose 11 factors to 110, its highest studying since Might, as farmers indicated they count on profitability this yr to be higher than a yr earlier. Though corn and soybean costs have declined in latest weeks, they have been nonetheless properly above year-ago ranges as have been wheat costs. Uncertainty about closing yields for fall
harvested crops continues, however yield prospects stabilized or improved for a lot of producers in August as some precipitation fell in abnormally dry and drought-stricken areas. Livestock worth energy additionally supplied a lift to some farms’ earnings prospects as fed cattle and slaughter hog costs continued to commerce properly above ranges noticed 12 months earlier.
The Farm Capital Funding Index improved modestly in August, rising to a studying of 53, up 3 factors in comparison with July. The small enchancment within the index may very well be traced to fewer producers in August saying they deliberate to scale back their farm building exercise in comparison with a yr in the past. On the similar time, farmers stated their equipment buy plans have been unchanged from these reported in July. Business experiences proceed to recommend that offer chain challenges are hampering farmers’ equipment buy plans.
Producers have gotten more and more involved about rising enter prices. For the third month in a row, the barometer survey requested respondents for his or her expectations about farm enter worth modifications within the upcoming 12 months. On the August survey, 39% of respondents stated they count on enter costs to rise by 8% or extra, up from 30% who felt that approach in each June and July whereas one in 5 producers (21%) count on farm enter worth inflation to exceed 12%. Simply 13% of
producers surveyed stated they count on enter worth stress within the upcoming yr to fall in a variety of 0 to 2%, which might be just like the rise in farm enter costs during the last decade.
Optimism about farmland values amongst producers continues. Each the Quick-Time period and Lengthy-Time period Farmland Values Expectations Indices rose by 4 factors in August in comparison with July. Though each indices are beneath their springtime peaks, they continue to be close to their all-time highs since knowledge assortment started in 2015. In step with the optimism about farmland values, about one-half of corn/soybean growers count on farmland money rental charges to rise above 2021 ranges in 2022. Amongst growers who count on money rents to extend, 44% stated that they count on rental charges to rise from 5 to lower than 10% with one-third of respondents indicating they count on charges to rise by 10% or extra.
The August barometer survey included a sequence of questions designed to study extra about producers’ use of canopy crops of their farm operation. Practically two-thirds (65%) of producers stated they’d both used cowl crops up to now or have been at the moment utilizing cowl crops with 41% of respondents indicating they at the moment use cowl crops. Amongst producers at the moment utilizing cowl crops, almost half (47%) started planting cowl crops inside the final 5 years whereas 29% of
respondents have been planting cowl crops for greater than 10 years. Most producers report that they solely plant cowl crops on a portion of their farms’ acreage. Fifty-nine p.c of canopy crop customers stated they plant cowl crops on 25% or much less of their complete acreage whereas 10% of canopy crop customers reported planting cowl crops on greater than 75% of their acreage. When requested why
they select to plant cowl crops the most typical responses (so as) have been to enhance soil well being, enhance erosion management, and enhance water high quality. Though the existence of carbon sequestration contracts requiring using cowl crops is a comparatively new phenomenon, 10% of canopy crop customers stated that was one of many causes they select to plant cowl crops.
Farmer sentiment improved reasonably in August vs. July primarily as a result of producers reported that present situations on their farm operations have been higher than a month earlier. The sentiment enchancment seemed to be pushed partially by stronger monetary situations because the Farm Monetary Efficiency Index in August rose simply over 10% when in comparison with July. Fewer producers this month stated they plan to scale back farm building exercise when in comparison with a
yr earlier which helped push the Farm Capital Funding Index up barely in comparison with July. Agricultural producers stay bullish about farmland values over the subsequent 12 months and the subsequent 5 years, however on the similar time farmers indicated they’re involved about rising enter prices. A majority of corn/soybean producers count on a major rise in farmland money rental
charges for 2022 vs. 2021 whereas almost 40% of all producers count on farm enter costs to rise by 8%or extra within the subsequent 12 months.