Purdue’s Center for Commercial Agriculture released their monthly Ag Economy Barometer on Wednesday. The Barometer is calculated each month from 400 U.S. ag producers’ responses to a telephone survey.
The June survey included a question for corn and soybean producers about their expectations for farmland cash rental rates in 2024. 68% of those producers expect rates to stay the same.
“That would be a big change from what we saw in ‘21 and ‘22 where we saw some relatively high increases,” says Dr. Michael Langemeier, associate director of the Center for Commercial Ag.
While that surprised him, he was even more surprised by the 25% of farmers who said they expect cash rental rates to go up.
“If you think about a budget and the costs that you can possibly decrease, negotiating cash rents would rank way up there as a cost that you perhaps can try to reduce in the next year. That doesn’t bear out in this chart.”
Langemeier adds that cash rental rates are “very sticky”. They don’t tend to move as much as net returns. There’s also typically a year lag.
“If margins are tight in ’23, you’d expect that to enter into the negotiations for ’24. That’s why I’m saying that 25% who think the cash rents are going to be higher, they’re thinking that net returns are going to be a little bit different than we’re thinking. Perhaps we’re thinking that net returns aren’t going to be that bad in ’23.”
Hear more from Langemeier and director of the Center for Commercial Ag, Dr. Jim Mintert, as they discuss results from the survey in their Purdue AgCast below.
