Modest Gains in U.S. Farmer Sentiment Driven by Livestock Sector Optimism

U.S. farmer sentiment experienced a slight uptick in October, reflecting a complex economic landscape within the agricultural sector. The Purdue University/CME Group Ag Economy Barometer rose by three points, reaching a reading of 129. This modest increase is attributed largely to improvements in the Index of Current Conditions, which surged eight points to a level of 130. In contrast, the Index of Future Expectations remained relatively unchanged, inching up just one point to 129, signaling a cautious outlook among farmers.

The survey, conducted between October 13 and 17, showcases a distinct division in sentiment between livestock and crop producers. Livestock producers, buoyed by exceptional profitability in the beef sector, expressed high levels of optimism regarding their operational conditions. Conversely, crop producers are less optimistic, with many reporting diminished profit margins in major crop enterprises. This divergence underscores the varying challenges faced across different agricultural sectors.

One of the concerning trends noted in the data is the decline in the Farm Financial Performance Index, which plummeted to 78 in October, a steep 10-point drop from September. This index reflects farmers' decreasing expectations for financial performance, which have been on a downward trajectory since a more favorable reading of 109 in May. The differences in financial outlook are particularly pronounced between crop and livestock producers, with crop farmers anticipating significantly lower performance compared to the previous year. In contrast, livestock farmers expect results to remain stable, with many predicting outcomes similar to 2023.

Interestingly, despite the overall pessimism surrounding financial expectations, the Farm Capital Investment Index saw a 9-point increase, climbing to 62. This rise is again primarily the result of optimism among livestock producers, who are likely capitalizing on their anticipated profitability to invest in their operations.

Respondents to the barometer indicated how they might utilize potential supplementary payments from the U.S. Department of Agriculture (USDA) in light of the significant economic pressures. A notable 53% expressed plans to allocate any potential payments towards paying down debts, while about a quarter (25%) indicated they would strengthen their farm's working capital. Less common was the inclination to invest in machinery or cover personal living expenses, with only 12% and 11% of producers respectively indicating such plans.

The Short-Term Farmland Value Expectations Index increased by 7 points to 113, signaling a growing anticipation among farmers that farmland values will rise rather than remain stable—a reversal from the decrease observed over the prior four months. A growing number, 30%, now expect farmland values to escalate in the coming year, up from 24% in September. Those anticipating declines remained largely unchanged at 17%.

Michael Langemeier, Principal Investigator of the barometer and director of Purdue's Center for Commercial Agriculture, highlighted the adjustment strategies employed by U.S. farmers as they adapt to ongoing economic pressures. He noted, “Livestock producers are witnessing strong returns and maintaining a positive outlook, while many crop producers are evaluating management adjustments for 2026 to navigate tighter profit margins.”

The October survey delved deeper into the crop producers' responses regarding low corn prices and their corresponding management strategies. Surprisingly, around 30% of the corn farmers surveyed indicated they would not alter their practices in 2026, while others projected different strategies: 29% indicated plans to reduce phosphorus applications, 27% were likely to adopt lower-cost seed varieties, and only 11% considered reducing corn seeding rates for the upcoming planting season.

Policy uncertainties surrounding tariffs continue to impact farmer sentiment as well. Notably, 58% of farmers expressed expectations regarding increased tariff use by the U.S. government to bolster the agricultural economy. However, this is a dip from the 70% confidence reported back in April and May. Additionally, 16% of participants remain uncertain about the implications of such tariff policies, a figure that has doubled compared to earlier in the year. Nonetheless, approximately 70% of producers still believe that the overall direction of U.S. agriculture is positive.

The insights provided by this month's survey shed light on the adaptive measures farmers are considering as they navigate complex economic realities, helping to guide discussions and decisions moving forward in the agricultural community.