April 2, 2024
Farmer sentiment improves as rate of interest expectations shift
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Farmer sentiment improves as rate of interest expectations shift. (Purdue/CME Group Ag Economic system Barometer/James Mintert) |
WEST LAFAYETTE, Ind. — U.S. farmers’ outlook improved in March because the Purdue University/CME Group Ag Economy Barometer index elevated to 114, marking a 3-point rise from February. Whereas the Index of Present Situations fell by 2 factors to 101, the Index of Future Expectations climbed to 120, up by 5 factors from February. The disparity between present and future indexes was primarily influenced by farmers’ perceptions of a monetary downturn happening previously 12 months, coupled with some expectations for enchancment over the following 12 months. The March survey was performed from March 11-15, 2024.
“Producers’ expectations for rate of interest modifications have shifted, which may assist clarify why producers search for monetary situations to enhance,” mentioned James Mintert, the barometer’s principal investigator and director of Purdue College’s Center for Commercial Agriculture.
This month 48% of respondents mentioned they anticipate a decline within the U.S. prime rate of interest over the following 12 months, up from 35% in December. Only one-third (32%) foresee a rise, in comparison with 43% final month. Solely 20% of respondents this month recognized the chance of rising rates of interest as a major concern, a lower from the 24% recorded December 2023. Excessive enter prices proceed to be producers’ No. 1 concern, with 36% of respondents expressing fear.
The Farm Capital Funding Index elevated by 7 factors this month, indicating rising optimism amongst producers about making massive investments. Producers who mentioned it’s a good time for a big funding rose to fifteen%, up 11% from the beginning of the 12 months. This optimism is fueled by producers who pointed to sturdy money flows on their farms, coupled with increased supplier inventories for farm equipment. Nonetheless, some producers nonetheless really feel hesitant to speculate on account of considerations about excessive prices for equipment and development and excessive rates of interest.
Producers displayed a extra optimistic short-term outlook on farmland values in March, with the Quick-Time period Farmland Values Index rising to 124, a 9-point improve from the earlier month. This month, 38% of producers anticipate farmland values to extend within the coming 12 months, in comparison with 31% in January and February.
“Elements contributing to this optimism included non-farm investor demand, inflation expectations and powerful money flows. An improved rate of interest outlook may need been an element as effectively, though producers didn’t level to that explicitly on this month’s survey,” Mintert mentioned.
Extra farmers this month (24%) mentioned they imagine farmland costs will go up due to inflation expectations in comparison with final month (18%). There was additionally a slight improve in producers citing sturdy money flows (8% in March versus 6% in February) as a purpose, and a modest decline within the variety of producers who talked about non-farm investor demand as a significant factor influencing the farmland market. Nonetheless, regardless of this decline, 57% of producers nonetheless contemplate non-farm investor demand the first purpose for his or her bullish outlook on farmland values.
Curiosity in utilizing farmland for carbon sequestration or photo voltaic power manufacturing seems to be growing. On this month’s survey, practically 1 out of 5 respondents (18%) mentioned they or their landowners had been approached about carbon seize utilization and storage on their farmland. Moreover, 12% of this month’s respondents mentioned that they had discussions with corporations taken with leasing farmland for a photo voltaic power venture within the final six months, in comparison with 10% in February. With regards to long-term farmland lease charges provided by photo voltaic power corporations, 54% of respondents this month mentioned they had been provided $1,000 or extra per acre, whereas simply over one-fourth (27%) had been provided $1,250 or extra per acre.
The March barometer additionally revealed that many farmers are involved about potential authorities coverage modifications affecting their farms following this 12 months’s elections. Forty-three p.c of respondents anticipate extra restrictive laws for agriculture. Moreover, 4 out of 10 (39%) producers anticipate taxes impacting agriculture to rise.
In regards to the Purdue College Heart for Industrial Agriculture
The Center for Commercial Agriculture was based in 2011 to supply skilled improvement and academic applications for farmers. Housed inside Purdue College’s Division of Agricultural Economics, the middle’s school and employees develop and execute analysis and academic applications that handle the totally different wants of managing in right now’s enterprise setting.
About Purdue College
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Author: Erin Robinson, erobin@purdue.edu
Supply: James Mintert, 765-494-7004, jmintert@purdue.edu
Media Contacts:
Aissa Good, Purdue College, 765-496-3884, aissa@purdue.edu
Dana Schmidt, CME Group, 312-872-5443, dana.schmidt@cmegroup.com
Associated web sites:
Purdue College Heart for Industrial Agriculture: http://purdue.edu/commercialag
CME Group: http://www.cmegroup.com/
Agricultural Communications: (765) 494-8415;
Maureen Manier, Division Head, mmanier@purdue.edu
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