Declining Farmer Sentiment Indicates Growing Financial Worries and Uneven Profitability

Farmer sentiment experienced a notable decline for the third successive month in August, as illustrated by the Purdue University-CME Group Ag Economy Barometer Index. The index saw a decrease of 10 points, landing at a score of 125. This decline indicates that producers are expressing significantly less optimism regarding future conditions, with the Index of Future Expectations suffering a sharper plunge of 16 points, settling at 123. This represents the lowest level of expectation observed since September of the previous year.

While the sentiment towards current conditions saw a slight improvement, with the Current Conditions Index rising by 2 points to reach 129, it did little to quell the growing concerns among farmers. The survey revealed a stark contrast in sentiment between crop producers and livestock businesses, with those primarily focused on crops showing a marked decrease in optimism. This disparity in outlook can largely be attributed to the recent profitability challenges faced by crop farmers compared to livestock producers, particularly in the beef sector, which has been flourishing with record profitability due to historically low cattle inventories resulting in soaring cattle prices.

The August barometer survey also highlighted producers' continued pessimism regarding their financial prospects for the upcoming year. Similar to trends noted in July, the Farm Financial Performance Index registered a figure below the critical threshold of 100, maintaining a score of 91—nearly unchanged from the previous month. Many farmers are struggling with crop prices that are presently below their production costs, prompting expectations of weaker incomes ahead. With forecasts from the U.S. Department of Agriculture (USDA) indicating a 2025-26 average corn price of $3.90 per bushel and soybean price at $10.10 per bushel, concerns are mounting as both figures fall below the break-even costs estimated for farmers nationwide.

Despite the overall bleak income outlook, the Farm Capital Investment Index saw a modest increase of 8 points from July, reaching a score of 61. This upward tick was primarily fueled by the significantly more favorable outlook from livestock producers, who are more optimistic compared to their crop-growing counterparts. Meanwhile, the Short-Term Farmland Value Expectations Index recorded a slight drop of 3 points to 112 this month, continuing a declining trend over the past three months. However, it remains above the 100 mark, showing that more farmers still anticipate rising farmland values rather than declines in the foreseeable future. Notably, about three-fourths of crop producers surveyed expect 2026 farmland cash rental rates to remain consistent with 2025 levels, while merely 12% foresee reductions.

A focus of the August survey was expanded to include farmers' expectations about their operating loans for the coming year, reflecting the heightened financial pressures on the farming community. 22% of respondents indicated they expect their operating loans for 2026 to be larger than those in 2025, marking a slight increase from the 18% predicting larger loans earlier this year. Of those who foresee a rise in loan size, 23% cited the necessity to carry over unpaid operating debt from the current year as the primary reason. This trend of escalating financial stress is particularly alarming; it shows a clear uptick from earlier surveys conducted in January of 2023, where only 5% attributed increased loan needs to unpaid debts. That figure had risen slightly to 17% by 2024, yet it's now much higher this August.

In conclusion, findings from the August Ag Economy Barometer survey paint a concerning picture for U.S. farmers, as many anticipate a drop in financial performance in the year ahead. While optimism exists regarding long-term farmland values, ongoing anxieties over profitability and financial strain continue to overshadow the agricultural landscape. Michael Langemeier, the principal investigator of the barometer and director of Purdue University’s Center for Commercial Agriculture, underscores the challenges ahead, emphasizing the increasing financial stress among producers in today’s volatile market.

Moreover, the Purdue University Center for Commercial Agriculture aims to provide educational resources to enhance farmers' competitiveness in such evolving conditions. Meanwhile, CME Group—the leading global derivatives marketplace—plays a vital role in helping market participants manage risk and navigate the complexities of financial opportunities within agriculture and beyond.