The Purdue University/CME Group Ag Economy Barometer dropped to its lowest level since April 2020, down 22 points in May to a reading of 99, said James Mintert, Purdue University agricultural economist, in a release.
The Ag Economy Barometer is calculated each month from 400 US agricultural producers’ responses to a telephone survey. This month’s survey was conducted between May 16-20.
Despite strong commodity prices, this month’s weakness in producers’ sentiment appeared to be driven by the rapid rise in production costs and uncertainty about where input prices are headed. The combination left producers very concerned about their farms’ financial performance.
INDEX READINGS FALL
Agricultural producers’ perceptions regarding current conditions on their farms, as well as their future expectations, weakened in this month’s survey.
The Index of Current Conditions dipped 26 points to a reading of 94 and the Index of Future Expectations fell 21 points to a reading of 101, the release said.
The Farm Financial Performance Index declined 14 points to a reading of 81 in May, Mintert said. The percentage of producers who expected their farm’s financial performance to worsen in 2022 compared to last year rose from 29% in April to 38% in May.
Over the course of the last 13 months, the Farm Financial Performance Index has fallen 41% below its life-of-survey high of 138 set in April 2021.
The Farm Capital Investment Index drifted to an all-time low in May and was down 30 points from this same time last year, he said. In the May survey, only 13% of respondents said this is a good time to make large investments in their operation, while 78% said they viewed it as a bad time to invest in things like machinery and buildings.
Half of the producers in this month’s survey said their machinery purchase plans were affected by low farm machinery inventory levels, up from 41% in the April survey, suggesting supply chin issues were at least partly responsible for the ongoing weakness in the capital investment index, Mintert said.
INPUT COSTS WORRY
Higher input costs remained a top concern for producers with 44% of those surveyed choosing it as the biggest concern facing their farming operation in the coming year, the release said. Additionally, 57% of producers said they expected a 30% or more rise in prices paid for farm inputs in 2022 compared with last year.
The survey also asked producers about expectations for 2023 input costs compared with nearly 39% indicating they expected an additional cost increase of 10% or more.
CATTLE, BEEF RECAP
The USDA reported formula and contract base prices for live FOB steers and heifers this week ranged from $135.00 to $143.15 per cwt, compared with last week’s range of $138.47 to $147.00. FOB dressed steers, and heifers went for $214.46 to $216.89 per cwt, versus $216.01 to $219.32.
The USDA choice cutout Wednesday was up $0.32 per cwt at $271.74, while select was down $0.15 at $249.41. The choice/select spread widened to $22.33 from $21.86 with 99 loads of fabricated product and 22 loads of trimmings and grinds sold into the spot market.
The USDA reported that basis bids for corn from feeders in the Southern Plains were unchanged at $1.75 to $1.85 a bushel over the Jul futures and for southwest Kansas were steady at even the Jul, which settled at $7.64 1/2 a bushel, up $0.07 1/2.
No live cattle delivery intentions were posted Wednesday.
The CME Feeder Cattle Index for the seven days ended Monday was $158.68 per cwt up $0.19. This compares with Wednesday’s Aug contract settlement of $175.65, up $3.20.