July 5, 2022
Farmer Sentiment Remains Weak, Crop Producers Contemplating Acreage Shifts in 2023
Farmer sentiment remained weak in June as the Purdue University-CME Group Ag Economy Barometer fell to a reading of 97, 2 points below its May reading. During June farmers were a bit more optimistic about current conditions as the Current Conditions Index of 99 was 5 points higher than in May. This month’s survey was conducted from June 13-17, 2022. 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. Purdue ag economist Michael Langemeier breaks down the results of the June 2022 Ag Economy Barometer survey. Slides and audio transcript are available and can be found below.
The full report is available at https://purdue.ag/agbarometer.
Brady Brewer: Hello and welcome to the Purdue Commercial AgCast, the Purdue University Center for Commercial Agriculture’s podcast featuring farm management news and information. Today I’m your host, Brady Brewer, and I’m an associate professor of agricultural economics. And joining me today is Michael Langemeier, professor of agricultural economics and associate director of the Center for Commercial Agriculture here at Purdue.
On today’s episode, we’re going to review the results from the June Purdue University CME Group Ag Economy Barometer Survey that goes out to farmers all across the nation. Each month, we survey 400 farmers from across the U.S. to learn more about their perspective on the U.S. ag economy. This month’s Ag Barometer Survey was conducted from the 13th through the 17th of June.
I do want to take a quick moment here just to remind listeners, you can find the Purdue Center for Commercial Ag on Twitter. The username is @PUCommercialAg. And for all your farm management needs, you can go to purdue.edu/commercialag for the center’s website.
So, jumping right into the results from the June barometer. Michael, what were some of the things on the farmers minds this month?
Michael Langemeier: Yeah, every month we have an open-ended question at the end of the survey, just having farmers share their thoughts. And a lot of farmers do take advantage of that. And any given month, two thirds to three fourths provide some comments. And we take those comments and we put them into a word cloud, And I think this is very useful to see what’s on their mind and really is closely associated with the sentiment.
The big words this month, no surprise, inputs, that’s been a big, big word on that word cloud for a long time, energy and inflation. There are a lot of other words related to prices and costs, but one of them surprised me a little bit Brady this month, it’s regulation. I don’t know exactly what was on their mind, but that was also a concern this particular month.
Brady Brewer: So, Michael, do you see that as concern for new regulations that may impact agriculture?
Michael Langemeier: I think so. There’s a lot a lot of changes being made, and a lot of discussion being made. Not only in production agriculture, but also in agribusinesses. And I think the farm audience is picking up on some of those things.
Brady Brewer: Yeah. So, we’re looking at the word cloud, Michael. You know, the words that stick out to me, obviously, you mentioned inputs, but two of the other large words, energy and inflation. Really, all three of those are getting at the same thing there.
Michael Langemeier: Yes. I mean, obviously, the energy policy that we that we currently have in this country is creating a situation where diesel prices are very high. And it also impacts a lot of other inputs because most inputs have to be trucked in, you know, to get to the agribusiness that sells it to the farm or directly to the farm.
And of course, when you have high diesel costs, that’s going to increase the costs of those items. And so that’s a big concern for farmers and the energy in particular, but just inflation in general. And we’re going to we’re going to talk about several questions that get at this inflation in input costs here in a little bit.
Brady Brewer: So, with that, let’s get right into what happened to the barometer index here in June of 2022.
Michael Langemeier: Well, the index only dropped two points in June. But we have to look back in time and see where the barometer is currently at. Currently at 97. It hasn’t been this low since April and May of 2020 which is right at the heart of COVID, right when COVID started. And so that says a lot if you think back when COVID started, crop prices were not very high.
What was the difference Brady there? Well input costs were also not very high in 2020 and so one of the themes that’s coming out in the Ag Economy Barometer the last two months in particular but for the last several months is the fact that input costs are relatively high and there’s inflation because there’s such a wide band in terms of inflation expectations and where input costs may go and anytime you have uncertainty the sentiment indices like this show more pessimism, you know, because they know it’s harder to plan for the future. They don’t know what’s going to what’s going to happen in the next month yet alone, the next year. And farmers are buying a lot of assets. They buy machinery. They build grain bins. They buy land. All of those assets are long term. And you need to make plans, you need to have some forecast where net returns are heading when you buy those assets.
And it’s just harder in this environment. And I think that really helps explain why the index indices is quite low compared to where it’s been recently. If you look back earlier this year, it was over a hundred. So, sitting at 97 today it was close to 120, you know, just a few months ago.
Brady Brewer: Yeah. So historically, looking at the data, this is the lowest it’s been in about a five-year time frame. I do want to remind listeners, so this is a sentiment index. So, you know, a score 97 isn’t awful. Which shows, you know, I don’t think it’s all doom and gloom out there, but this is the lowest it’s been on a five-year period.
Michael Langemeier: Essentially what that means is you’ve got some people that are really pessimistic, but you got some people that are more neutral. You know, a score of 97 is more of a neutral index rather than a necessarily extremely optimistic or extremely pessimistic, and certainly not as pessimistic as the Consumer Survey out of the University of Michigan. I’ve looked at that last couple of months, that is very doom and gloom if you look at that one. This one is not like that. It’s more of a neutral reading.
Brady Brewer: Yeah, that index I’ve seen that as well. It’s well below a hundred. Yes. It does not paint a good picture of the overall economy here moving forward. So, Michael, what is driving this index? On the barometer, you asked the farmer, you know, their future expectations, but also current expectations. What’s driving this current index?
Michael Langemeier: Yeah, there’s five questions that go in to the Ag Economy Barometer Index. And some of those questions are more current related to current conditions. And some of those questions are related to future expectations. And usually, one of those is relatively higher or relatively and relatively lower than the other. Right now, they’re about the same. And that and that’s important to talk a little bit more about because for a long time here, you know, really for the last most of the last two years, the Index of Current Conditions has been higher than the Index of Future Expectations.
I think that’s reflecting the fact that we had strong net crop returns certainly in 21 and 22 is not in the bin yet but if we can get some rain here, I think we’re going to look at some fairly decent net returns this fall for crops. And so it always made sense to me that the Index of Current Conditions was higher than the Index of Future Expectations until recently.
Now they’re worried about the current situation. And so that’s a big change we’ve seen in the last two or three months the fact that those indices are almost identical.
Brady Brewer: Yeah, there’s more worry about getting the fertilizer for this year’s crop than maybe for a for next year’s crop.
Michael Langemeier: Yeah. There’s more worried about the input costs and then ask, you know, June/July is a typical period where you have a lot of weather uncertainty and the markets kind of fluctuate accordingly. And there are some dry, dry conditions in Great Plains and parts of the Corn Belt. And so, I think that also impacts the index of current conditions.
Brady Brewer: So that’s current and future but you also asked, you know, do you feel better or worse off than where you were last year at this time? So, what did farmers say on that?
Michael Langemeier: This is actually the first question in the survey, and it says would you say that your farm operation today is financially better off, worse off or about the same compared to a year ago? And I’m not real surprised at this one because, you know, now we’re looking at 21, which was a very good year particularly for crops.
The net farm income, if you look at U.S. net farm income was relatively high in 21 so I’m not real surprised to say that people think they’re worse off this year compared to a year ago. But it’s rather striking if you compare the index this month compared to the index in June ’21, in June 2021, 28% said they would be worse off and now it’s 49% or close to half.
And so there they’re starting to realize that 22 is not going to be as good as 21. And that’s essentially what this is telling us.
Brady Brewer: Yeah, but 14% did say they are better off last year. So, there is some optimism there.
Michael Langemeier: That was a little surprising. That was a little surprising when I, when I look at the net returns again, assuming that we get decent yields, for example, in the Eastern Corn Belt here, I think 22 is going to be not quite as good, but it’s going be a good year.
Brady Brewer: Now you mentioned cash flow. A big part of cash flow, you know, or cash flow is a big part when you’re thinking about making purchases. You know, you guys look at, you know, this farm financial performance index. Tell me what this is telling us.
Michael Langemeier: This is a very similar question. The one we just discussed. It’s comparing this year to last year in terms of financial performance. So, it’s worded slightly different, but it should give us similar information. And it does you know, currently the index is at 83, meaning that there’s more people think that 22 is not going to be as good as 21.
But again, I think that’s very logical that they would say that because 21 was so good and it would be interesting, we don’t do this, but it’d be interesting to see what they think 22 is compared to 19 or 20. And I think if you did that, they actually would think that 22 is going to be better.
And so, I think that’s important to keep that in mind. You know, one of the questions that’s really interesting and gets a lot of press every month is the question related to farm investments.
Brady Brewer: Yes. So, you guys ask is now a good time to make a capital investment on your farm? And not surprisingly, historically this has been under 100. It’s never a good time to make a large purchase. Right, Michael? But this has seen a decline.
Michael Langemeier: Yeah. This index is at all-time low. We started the survey back in late 2015. And so, we didn’t get to go back into the 2007-2013 period where there was a lot of machinery purchased, and grain bins were built, and tile drainage put in and all of that stuff. But nevertheless, I mean, this is a really low index.
And, and there’s two things going on here. One, we have a follow up question in the last few months asking did low machinery inventory levels affect your purchasing plans? And 50% said yes. And so that’s a very large number. Secondly, there’s good cash flow out there for the most part on farms, but machinery prices are high, it’s difficult to find new machinery. When you look at used machinery, they’re really high. And so, at that’s part of what’s going on with this question is yes, the cash flow is there, but the machinery is expensive. And so, they’re saying maybe if I can wait, I will wait.
Brady Brewer: Yeah. So, it’s, if it’s not a necessity right now, there is some waiting. And this could mean a lot of equipment purchases here over the next couple of years because farmers have really put off some maybe needed or almost needed investments into the farm over the past two to three years.
Michael Langemeier: That’s definitely the case. And I always point out when I when I talk to people about this, this question specifically from 2014 to 2019 farms didn’t make as large a farm machinery investment in particular. And so, there’s a lot of farms that are really ripe, if you will, to replace some of that machinery that was bought from 2007 to 2013 and so when the supply chain situation improves you know we can get this inflation under control, these are big ifs of course, but if that happens, I think the demand for machinery would be very strong.
Brady Brewer: So, machinery is one capital investment. You guys also asked about expectations for probably one of the largest things that a farmer balance sheet. Well, it is one of the largest things on a farmer’s balance sheet and that is farmland. Now you guys ask about farmland price expectations. Is it going to be higher five years from now or is it going to be lower? What did farmers say?
Michael Langemeier: Yeah, higher, lower and then remain the same. And so higher right now is 57%. So, 57% think farmland prices are going to be higher five years from now. 16% think they’re going to be lower. That’s 16% may not sound very big, but that’s about the highest we’ve seen in the life of this survey. And so, there’s still optimism regarding farmland.
That’s how I summarize this question. But the optimism is not as strong as what it was last fall. Last fall close to 70% thought that farmland prices were going to increase five years from now. And I think part of what’s going on with this question is again it’s not that cash flow is not there, interest rates are going up, but they’re still relatively low.
We’ve got non-farm investment. We’ve got inflation going on. And so, there’s a lot of factors that are positive for farmland values, but they’ve went up so much in the last year. And so, people are starting to think, can they continue to do that? I really do think that’s the question they’re asking in their mind and why there’s fewer people thinking that they’re going to continue to increase.
Brady Brewer: Yeah, there’s a lot of question marks out there when it comes to what asset prices will do. You mentioned interest rates. Obviously, that’s one of the big drivers of asset prices. The higher interest rates go that’s going to put downward pressure on asset prices. But you also mentioned inflation, right? Just general price level. That’s a kind of a countervailing pressure to the current interest rate. Demand and supply of farmland is also, you know, how much is going to be sold, who are the buyers in the market. So, along with the cash flow issue, big question marks out there. So, I will say from an economist standpoint, I, I agree with the division in the results in that I’m a little undecided as well, of which I think you could make an argument for going up or down over the next five years, giving these countervailing pressures.
Well, so you ask, will it rise? But one of the things that, you know, we’re interested in and we’ve kind of just been discussing this is what are the reasons that farmers think that the farmland value will rise over the next five years?
Michael Langemeier: When we first started asking this a few months ago, I was really quite surprised because when I when I talked to the farmers, when you’re looking at farmland, I emphasize cash flows and interest rates. Those are the fundamentals. And when you’re looking at farmland, that’s not what people are saying is driving the farmland value increases. 47% say non-farm investor demand is important, 33% say inflation. I don’t disagree with either one of those. I just wonder if those really are that overwhelming in terms of the factors that are driving farmland. But that’s what the farmers are telling us. And obviously, when the farmers do go to auctions or bid on land, they are seeing non-farm investors at those auctions.
And so that’s certainly the case. And then I think most people know that land is a good hedge against inflation. Typically, any physical asset, gold, silver, precious metals of various sorts and land, you know, are good hedges against inflation. And I think that’s where we’re picking that up. But also, when you think about the interest rates, Brady, and I’d like you to comment a little bit about this because you follow this closely, more closely than I do.
When you talk about low interest rates. We’ve got a nominal interest rate and a real interest rate. And right now, the real interest rate is negative. So, can you comment on that a little bit?
Brady Brewer: So, what Michael’s talking about is, the real interest rate is taking the interest rate you get in the marketplace, and you subtract out inflation. So essentially when inflation goes above the nominal interest rate, the real interest rate goes negative. And obviously, our Federal Reserve or any central bank across the world does not like that to happen, and that’s going to trigger an increase in interest rates.
We just saw that here in June. The Federal Reserve just did a historic 75 basis points or three quarters of a point interest rate increase to the Federal Funds Rate. That’s going to trigger interest rate increases for all of our loan products that farmers use and going to further increase it. And the signs, if you follow Federal Reserve policy, you know what the FOMC board is expecting. We’re probably going to have four more increases of a minimum of 50 basis points for the rest of 2022. So that’s probably going to increase interest rates at least another 2% here through the end of 2022. Any time you increase interest rates, that’s going to put downward pressure on asset prices because it pushes up mortgage payments so people can afford less. But then you have that inflation argument on the other side.
Michael Langemeier: It’s also going to complicate what we said earlier in terms of demand for machinery and grain bins, even though the cash flow is there. If interest rates are higher, that obviously has an impact, and so it’s going to play out in all asset purchases.
Brady Brewer: Absolutely. So, it’ll be interesting to see how that that plays out. So, I definitely agree with the farmers here that the inflation is you know, a big driver of this. You know, the one thing I’ll say on the non-farm investor, Michael, is that all it takes at an auction, one person to show up and bid against the person that really wants that land to really drive that that price higher.
Michael Langemeier: Yes, good point.
Brady Brewer: So, yes, we may not see a whole lot or in the data, we may not see a whole lot of non-farm investors. And you know, certainly the data that comes out of Iowa State and some of the other Land Grants is that most the land goes to other farmers, but all it takes is one other bidder.
So, you know, my guess is we have some farmers in here that have been bid against by some of these non-farm investors.
Michael Langemeier: Precisely.
Brady Brewer: All right. So that’s what farmers think on land values. But the other part of land values is cash rent. And really, I view cash rent as the income dividend from a piece of land. But it’s also a large part of their expenses for farmers that do rent land.
So, the barometer asked, compared to a year ago, what are your expectations for cash rent in your area in 2023 and they had the option of lower, about the same, so a neutral selection, or higher. So, Michael what did farmers say for cash rents?
Michael Langemeier: There was only 3% that said lower. That was not surprising. I was a little surprised that 45% said about the same but we don’t qualify that, so about the same could mean different things to different people. The most the most important result here I think from this question is 52% thought that cash rent was going to be higher.
That would certainly be very consistent with what we’re seeing in the Eastern Corn Belt. You know, a lot of pressure on cash rents in Illinois and in Indiana and Ohio.
Brady Brewer: So, one thing I’ll mention here is that rental rates tend to lag increases in land values. So, it’s not surprising we’re seeing this because you mentioned it earlier, we’ve seen a pretty large increases in land values across the US. So, you know, this lag of interest rates and this is for various reasons, sometimes, you know, rental contracts can be on three-year terms.
Sometimes landlord’s rental prices can be what we call sticky. They’re just slower to change than the actual auction prices for the land. You know, I completely agree with the farmer sentiment here that we’re going to continue to see increases in rental rates.
Michael Langemeier: And various researchers have done statistical analysis looking at cash rents and net returns, and I’ve also done some of that. And there’s a very high correlation just like you’re saying Brady between the cash rent in 23 for example and what the returns look like in 22, and 21 for that matter. And so, the recent history of net returns has a big impact on where cash rents might be moving in the next year.
And so that’s why we’re seeing that. We also have a follow up question compared to this year by how much you expect 2023 cash rents in your area to increase? We asked the same question last year and there was not quite as much pressure for rates to increase as there is this year. 2021 had pretty strong net returns and it looks pretty good for 22 like I’ve been saying.
And so, I was not that surprised to see that we had 42% of the people that thought cash rent is going to increase, that’s who we asked this question of, who said it was going be 10% or more.
Brady Brewer: That that actually is a little bit surprising to me Michael. I mean 10% is a pretty large increase in cash rental rates.
Michael Langemeier: Yes, it is.
Brady Brewer: And you have almost not quite half 42% of the farmers that think that it’s going to be 10% or more.
Michael Langemeier: Yeah, it’s 42% of the 52%. So, it’d be 20% of the total sample. But yeah, that’s a pretty significant percentage of people. But most of these people, we didn’t ask this question this month, cash rent ground. And so I think they kind of expect some big changes this year.
Brady Brewer: So, let’s switch to more of the immediate future here and get away from some of the asset questions. And one of the questions we ask on the barometer is just looking ahead to next year, what are your biggest concerns for your farming operation over the next year? So, Michael, what farmers say here.
Michael Langemeier: This is one of my favorite questions because I think it really gives us insight into why the barometer index is where it’s at. And so, if we want to look at that 97 barometer reading, looking at this question is very, very helpful. And overwhelmingly this month and the last few months, their biggest concern is higher input costs.
43% said higher input cost was their biggest concern. That’s followed by availability of inputs. You know, Jim and I’ve been talking about this in the last several podcasts for the barometer and we’re saying if we would ask availability of inputs two years ago, particularly in 2018, three years ago that wouldn’t have even been on people’s radar but given what’s happened in the last few months it was difficult to find some key inputs for the farm, that’s on people’s mind.
In fact, more people said that was an issue than lower crop and livestock prices, which is saying a lot because usually a typical period, more normal period if you will if there is such a thing, and in any industry you lower crop and livestock prices would be overwhelmingly the choice as the biggest concern.
But it’s third it’s in third place right now. And so and so this this whole idea of input costs, availability of inputs, going back to the word cloud is very important. In terms of driving the current sentiment.
Brady Brewer: Yeah, there’s a lot of worry about not just the price of inputs, but now we’re bringing in just are they going to be available? So, looking ahead, one of the questions you ask is, you know, to the crops that will be planted in the 2023 year. So, thinking about this fall and into next spring of next year, we ask what change do you expect for 2023 crop input prices compared to prices paid for 2022 crop input prices?
So now we’re getting into what’s the actual change that you expect in these input prices and what did farmers say here Michael.
Michael Langemeier: This is rather amazing to stop to think about it. And so, I want to spend some time on this chart. Only 12% think that the input prices are going to decline. That’s after very large increases in 22. And so, there’s not much optimism here in terms of where input prices are going. Now cash rents a big item and so if cash rent goes up, even if the other inputs don’t go up, you’re still looking at an increase.
So, you’ve got to keep that in mind, but 0% was only 25%. And then we’ll go to the far right of the of the chart of the chart that we’re going to have on the internet related to this is 20% or more. 16% thought that the input prices would increase 20% or more. Just to put that in perspective, when we do a corn budget here at Purdue and most Land Grants do this and just this is just one example, it would be similar across other states.
Corn break even prices increased 30% in 22, unprecedented. That means on top of that we’re going to have another 20%. I can see why there’s some pessimism out there with a few folks.
Brady Brewer: Yeah. So, this is actually a little surprising to me because you know you hear about the fertilizer, the quadrupling of fertilizer prices you know I expected some farmers to say yeah, we’re going to have some easing just because we’ve had such historical, and not all of this of inflation, right? Some of the increase in input prices is due to the supply chain and supply side issue. So you would figure once the supply chain gets that figured out, there would be some easing. Farmers are not optimistic that even if we do figure out some of these supply chain issues, that it will result in a decrease in their budgets for the 2023 crop year.
So, one of the questions we asked in June of 2022 is did you plant winter wheat in the fall of 2021, and Michael what did how many farmers said that they planted wheat last fall?
Michael Langemeier: What we’re trying to get at here is, this is just to get some idea whether farmers plan to plant more wheat. I mean the Biden administration for example is looking at different incentives that they could provide to plant more wheat. You know this is given the Ukraine-Russia situation and difficulty of getting crops out of that area.
They’re very important for winter wheat both of those countries. And so that’s why we’re asking those questions. And so, we posed a question to those that grew corn, soybeans, wheat and cotton. So, we eliminated livestock producers,for example, and 31% said they planted winter wheat in the fall of 21. And so, we use that number to see what their intentions were for the fall of 22.
And this is winter wheat. So, this is very important to keep in mind. There’s lot of spring wheat in the northern plains, for example. So, of that group, 24% said they were going to increase winter wheat – I thought that was rather large. So, the people that planted winter wheat in 21, you know, a quarter of those thought they were going to increase winter wheat acres.
Brady Brewer: Yeah. And you know, part of this you mentioned the Eastern European Ukraine-Russia conflict. This is driving a lot of that here. Obviously that region is a pretty large wheat producing region. There’s a lot of uncertainties now though. I’ve seen estimates that crops in the ground over there that farmers were able to get 70-75% of the crops in the ground.
But now you have the issue of can they get them out of the country. So, there’s a lot of question marks surrounding the crops being grown over in that part of the world right now. And this is what’s driven, you know what price. All commodity prices are up. You know, this is, and I know we’ve made mention on the podcast here before that I’m one of the younger faculty in our department, but this is going to show my age.
I remember as a child, you know, my dad was just wanting $3 wheat, right? And now it’s up, you know, way higher, triple, quadruple of that so, that’s what’s driving a lot of these increase of wheat planting intentions, that higher price.
So, 24% of farmers who grew wheat last year said they would increase it. But you also asked if you didn’t plant wheat, are you planning on planting it next year?
Michael Langemeier: This is probably one of the more important results on these acreage questions. 14% said yes. Now, it’s still early. I mean, I think wheat prices dropped following the latest acreage report here. And then there’s going to be a lot of bouncing around. And so, this may change between now and when they actually plant the wheat this fall.
But the fact that 14% of the people that didn’t grow wheat and it didn’t plant winter wheat in ‘21 are thinking about planting winter wheat. I thought that was a surprising result, and really would, in the end, result in quite a few more wheat acres.
Brady Brewer: Yes, you have wheat farmers who are saying a quarter of them are planning on planting more and then 14% that didn’t grow are planning to plant it here in the in the fall of 2022.
Michael Langemeier: We also asked farmers in general what types of crops were they thinking about expanding and wheat was one of those, but also soybeans. And so, we will continue to ask questions like this to get a feel for what people are going to do in terms of acreage decisions both this fall and next spring. And so, this will be a theme that we’ll be following up on in future surveys.
Brady Brewer: Sounds good. Well, that’s the conclusion of all the specific questions we are going to talk about. But I want to ask you, Michael, a real quick question. If there’s a word of the day, would you agree with me that the word is uncertainty?
Michael Langemeier: Definitely. And as I’ve said many times on the on these podcasts, production agriculture has always faced a lot of risk and uncertainty. But it’s particularly high right now. And I think a big part of that, it really is inflation. You got to remember that farmers are consumers, too. They have some of the same worries that consumers have.
And, you know, particularly when they’re buying their inputs, they’re consumers of those inputs. And so, it’s just more difficult to plan when you have when you have a lot of price volatility on the input side. They’re kind of used to the price volatility and the output side. But when you start getting price volatility in the output side and the inputs side, just think how difficult it is to make decisions like, should I install tile drainage? How much should I bid on this piece of land? It just magnifies it, multiples when you have this much uncertainty.
Brady Brewer: It also makes it harder to do calculations like breakeven analysis, if you’re wanting to know what the yield that you need to get from a particular field to break even on a piece of land, it makes it extremely hard with these volatile prices.
Michael Langemeier: And one of the things that we’ve been encouraging farmers to do is something that’s used quite a bit in other industries, and some farmers do this, is to run scenarios. You know, look at three different price scenarios rather than one when you’re doing your budgeting. Once you get that first budget done, it’s not that much more difficult to just put in some other scenarios.
And so put it in kind of your best guess using futures prices, and then put in a guess where the prices are lower. Because it could be! The supply and demand are there’s a lot of factors impacting supply and demand of agriculture commodities around the world. And those change very rapidly. And so put in a price is lower.
But also put in a set of prices that’s higher because that would be a scenario where if prices are higher, you know, maybe this would be a good year to buy machinery or construct some bins or something like that.
Brady Brewer: Yeah. So, I definitely will agree with you there. I think this year of all years is one to do a sensitivity analysis or, you know, a worst-case scenario analysis, right? So do your budget, but then take everything that could go wrong, increase interest rates by 2-3%. Decrease your land values by 5-10%, increase input costs and see what that would do to, you know, in that particular scenario, and really say, okay, worst case, what would happen to do that? And I think that would really help for planning.
So, this wraps up our discussion today for more details about the Purdue / CME Group Ag Economy Barometer, please go to our website which is purdue.edu/agbarometer. And for all of your farm management news and information, please go to the Center for Commercial Agriculture’s website at purdue.edu/commercialag.
The next Ag Economy Barometer will be released on Tuesday, August 2nd with the July survey results.
I encourage you to share the podcast with your friends and colleagues, and on behalf of Michael Langemeier and the Purdue University Center for Commercial Agriculture, I’m Brady Brewer, and I thank you for listening to today’s podcast.