The Purdue University-CME Group Ag Economy Barometer Index rose again in January, to a reading of 130, 4 points above its 2022 year-end index value. The January survey results also pushed the index 34% above its 2022 low point which occurred last June. The barometer’s modest rise in January was primarily attributable to better expectations for the future as the Future Expectations Index rose 5 points to 127 while the Index of Current Conditions, with a value of 136, changed little compared to December.
The Index of Current Conditions rose only 1 point to a reading of 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.
The Farm Capital Investment Index was up 2 points this month to 42; however, that still left it 7% lower than a year earlier. Just over 7 out of 10 survey respondents said they think now is a bad time to make large investments in their farm operation. Among respondents who felt now is a bad time, 39% said high prices for machinery and new construction, 25% said rising interest rates, and 12% said uncertainty about farm profitability was the primary reason.
Interest rates are becoming a bigger concern for farmers. As recently as November, just 19% percent of farmers in the monthly barometer survey chose rising interest rates as a key factor impacting their perspective on investments.
The Ag Economy Barometer is calculated each month from 400 U.S. agricultural producers’ responses to a telephone survey. This month’s survey was conducted from January 16-20.
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