James Mintert and Michael Langemeier, Purdue Center for Commercial Agriculture
Producer sentiment improved sharply in December as the Purdue University-CME Group Ag Economy Barometer Index reading of 126 was 24 points higher than a month earlier. Although U.S. farmers were more positive regarding both the current situation as well as their expectations for the future, by far the biggest improvement was in their assessment of current conditions. The Current Conditions Index reached 135, 37 points higher than in November while the Future Expectations Index hit 122, 18 points above a month earlier. The Purdue University-CME Group Ag Economy Barometer sentiment index is calculated each month from 400 U.S. agricultural producers’ responses to a telephone survey. This month’s survey was conducted from December 5-9, 2022.
The improvement in current sentiment was motivated by producers’ stronger perception of current financial conditions on their farms as the Farm Financial Performance Index climbed 18 points above the prior month’s reading to reach 109 which was the only time in 2022 that the index was above 100. The turnaround in the Financial Performance Index this month was driven by a sharp increase in the percentage of producers who expect better performance than last year which jumped from 23 to 35% of respondents. Meanwhile, the percentage expecting weaker performance fell from 32 to 26%. The change in perception among producers regarding their farms’ financial situation could be attributable to producers taking time to estimate their farms’ 2022 income following the completion of the fall harvest. This month’s improved assessment of farm financial conditions is consistent with USDA’s forecast for strong net farm income in 2022.