Farmer sentiment improves in January
The Purdue University/CME Group Ag Economy Barometer posted a modest increase in January, up 4 points to a reading of 130. The rise in sentiment was primarily attributable to better expectations for the future, as the Future Expectations Index improved by 5 points to 127. The Index of Current Conditions rose only 1 point to 136.
“Although producers were a bit more optimistic about the future this month, they again reported expectations for tighter margins in 2023 than in 2022,” said James Mintert, the barometer’s principal investigator and director of Purdue University’s Center for Commercial Agriculture.
The Farm Capital Investment Index rose 2 points to 42; however, it remained lower than a year earlier. Just over seven out of 10 survey respondents said they think now is a bad time to make large investments in their farming operation, with 39% noting high prices for machinery and new construction, 25% saying rising interest rates and 12% attributing uncertainty about farm profitability as the primary reason. Interest rates are becoming a bigger concern for farmers.
Producers’ expectations for short-term and long-term farmland values were mixed in January. The Short-Term Farmland Index fell 4 points to 120, down 22 points when compared to one year earlier, as more producers said they expect values to hold steady over the coming year instead of increasing. The Long-Term Farmland Values Index rose slightly to 142 from 140 in December. Over the last year, the long-term index has declined three points as producers continue to retain a more optimistic long-term than short-term view of farmland values.
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