Farmer sentiment weakens as producer confidence in future wanes

Rhea-AI Summary

The Purdue University-CME Group Ag Economy Barometer Index declined 10 points to 125 in August 2025, marking the third consecutive monthly decrease. The Index of Future Expectations saw a significant drop of 16 points to 123, its lowest level since September 2024, while the Current Conditions Index slightly increased by 2 points to 129.

Key findings show a stark contrast between crop and livestock producers' sentiment. Livestock operations, particularly beef cattle, are experiencing record profitability due to the smallest cattle inventory since 1951. However, crop producers face challenging conditions with prices below production costs, with USDA forecasting corn at $3.90/bushel and soybeans at $10.10/bushel for 2025-26.

Financial indicators reveal growing concerns, with 22% of farmers expecting larger operating loans in 2026, up from 18% in January. Notably, 23% of these farmers attribute the increase to carrying over unpaid operating debt from 2025, indicating rising financial stress in the agricultural sector.

Positive

• None.

Negative

• Ag Economy Barometer Index fell 10 points to 125, marking third straight monthly decline
• Future Expectations Index dropped 16 points to lowest level since September 2024
• Crop prices are below break-even levels for many farms
• 23% of farmers expecting larger loans cite need to carry over unpaid operating debt, up from 5% in January 2023
• Farm Financial Performance Index remains weak at 91, indicating expected income decline

Insights

Agricultural Economist

Declining farmer sentiment and increasing financial stress signal challenges ahead for the agricultural sector despite strong livestock returns.

The latest Purdue University-CME Group Ag Economy Barometer reveals a 10-point drop to 125 in August, marking the third consecutive monthly decline in farmer sentiment. Most concerning is the 16-point plunge in the Future Expectations Index to 123, its lowest level since September 2024.

The data highlights a stark divergence between crop and livestock producers. While beef cattle operations enjoy record profitability due to the smallest cattle inventory since 1951, crop producers face significantly less optimistic conditions with prices below production costs. The USDA's August forecasts of $3.90 per bushel for corn and $10.10 per bushel for soybeans fall well below break-even levels for most farmers.

Despite weak income projections, the Farm Capital Investment Index improved by 8 points to 61, largely driven by livestock producers' optimism. However, the financial stress indicators are troubling. 22% of respondents expect larger operating loans in 2026 compared to 2025, up from 18% who expected increases in January. More concerning, 23% of those farmers attribute the increase to carrying over unpaid operating debt from 2025 to 2026.

This carryover debt indicator has risen significantly from 5% in January 2023 to 17% in January 2024, and now 23%, signaling escalating financial pressure in the agricultural sector. The disconnect between farmland value expectations (still positive with an index of 112) and deteriorating operational economics suggests farmers are navigating complex financial calculations that could impact agricultural markets in the coming year.

WEST LAFAYETTE, Ind., Sept. 2, 2025 /PRNewswire/ -- Farmer sentiment dipped for the third straight month in August, with the Purdue University-CME Group Ag Economy Barometer Index falling 10 points to 125. Producers expressed markedly less optimism about the future, as reflected in the Index of Future Expectations, which fell 16 points to 123. This marks the lowest reading for the future index since last September. Producers' perspective on current conditions changed little this month, as the Current Conditions Index rose 2 points from July to 129. Sentiment differed widely among producers according to whether their operations focused mainly on crops or livestock. Crop producers responded with much less optimism than their livestock counterparts, reflecting the profitability disparity between the two enterprises. Beef cattle operations in particular are experiencing record profitability as the smallest cattle inventory since 1951 has pushed cattle prices to record levels. This stands in sharp contrast to returns for crop production, which have weakened in 2025. The August barometer survey took place from Aug. 11-15, 2025.

Farmers again reported weak financial expectations for their farms in the coming year. As in July, the Farm Financial Performance Index remained below 100. The reading of 91 barely changed from July's index value. Crop prices that stand below the cost of production for many farms help explain why more farmers expect weaker incomes for the coming year. The U.S. Department of Agriculture released its August Crop Production and World Agricultural Supply and Demand Estimates reports during the week the August survey was conducted. The USDA forecasted a 2025-26 season average corn price of $3.90 per bushel and a soybean price of $10.10 per bushel. Both estimates fall well below estimated break-even levels for U.S. farmers. Despite the weak income outlook, the Farm Capital Investment Index improved 8 points from July to 61. Livestock producers had a notably more optimistic outlook in August than crop producers, which helped push the index higher.

The Short-Term Farmland Value Expectations Index reading of 112 dropped 3 points from July, continuing a three-month trend. Even so, the index remains above 100. This indicates that more farmers still expect rising values in the coming year than those who consider declining values as more likely. This perspective is similarly held by three-fourths of crop producers, who said in the August survey that they expect farmland cash rental rates in 2026 to remain unchanged from 2025. Only 12% of respondents said they expect lower rates next year.

Every January, the Ag Economy Barometer survey includes two questions about farmers' expectations about the size of their farm's operating loan for the coming year and the reasons for a change in operating loan size. Given the concerns about weak farm income in 2025, the two questions about operating loans were added to the August barometer survey. Twenty-two percent of August's respondents said they expect their 2026 operating loan to be larger than in 2025. This was up from January, when 18% of respondents said they expected their 2025 loan size to increase compared to 2024. 

A follow-up question to farmers who said they expected their operating loan size to increase asked for the reason behind the larger loan. Twenty-three percent of those farmers in the August survey said it was because they expected to carry over the unpaid operating debt from 2025 to 2026. The responses to these questions suggest that farmers' financial stress increased from January to August. Financial stress appears to be noticeably higher than it was in January 2023, when only 5% of farmers with larger operating loans attributed that to the need to carry over unpaid operating debt. That number rose to 17% in January 2024 — still lower than this year.

"In sum, the August Ag Economy Barometer survey results show that U.S. farmers generally expect their financial performance for the coming year to drop from the previous year," said Michael Langemeier, the barometer's principal investigator and director of Purdue University's Center for Commercial Agriculture. "Despite a weakening Short-Term Farmland Value Expectations Index in August, more farmers still expect farmland values to rise rather than to weaken. Lastly, the percentage of farmers citing expectations for rising operating debt because of unpaid operating debt carrying over from the previous year could signal increasing farm financial stress in production agriculture."

About the Purdue University Center for Commercial Agriculture

The Center for Commercial Agriculture was founded in 2011 to provide professional development and educational programs for farmers. Housed within Purdue University's Department of Agricultural Economics, the center's faculty and staff develop and execute research and educational programs that address the different needs of managing in today's business environment.

About CME Group

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About Purdue University

Purdue University is a public research university leading with excellence at scale. Ranked among top 10 public universities in the United States, Purdue discovers, disseminates and deploys knowledge with a quality and at a scale second to none. More than 107,000 students study at Purdue across multiple campuses, locations and modalities, including more than 58,000 at our main campus locations in West Lafayette and Indianapolis. Committed to affordability and accessibility, Purdue's main campus has frozen tuition 14 years in a row. See how Purdue never stops in the persistent pursuit of the next giant leap — including its integrated, comprehensive Indianapolis urban expansion; the Mitch Daniels School of Business; Purdue Computes; and the One Health initiative — at https://www.purdue.edu/president/strategic-initiatives. 

Source: Michael Langemeier, mlangeme@purdue.edu, 765-494-9557

Author: Steve Koppes

Image caption: Farmer sentiment weakened in August as their confidence in future prospects wanes. (Purdue University/CME Group Ag Economy Barometer/James Mintert)

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SOURCE CME Group

FAQ

What caused the decline in the CME Group Ag Economy Barometer Index in August 2025?

The decline was primarily driven by weakening farmer sentiment, particularly among crop producers facing below-break-even prices, with the index falling 10 points to 125. The Future Expectations Index notably dropped 16 points to 123.

How are livestock producers performing compared to crop producers in 2025?

Livestock producers, especially beef cattle operations, are experiencing record profitability due to the smallest cattle inventory since 1951, while crop producers face weak returns with prices below production costs.

What are the USDA's price forecasts for corn and soybeans in 2025-26?

The USDA forecasts corn prices at $3.90 per bushel and soybean prices at $10.10 per bushel for the 2025-26 season, both below estimated break-even levels for U.S. farmers.

How has farm financial stress changed from 2023 to 2025?

Financial stress has significantly increased, with 23% of farmers expecting to carry over unpaid operating debt in 2025-26, compared to just 5% in January 2023 and 17% in January 2024.

What is the outlook for farmland values according to the August 2025 survey?

Despite a 3-point drop in the Short-Term Farmland Value Expectations Index to 112, it remains above 100, indicating more farmers expect rising values than declining values in the coming year.