Livestock Sector Optimism Fuels a Modest Rise in Farmer Sentiment in October

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Audio Transcript

James Mintert: Welcome to Purdue Commercial AgCast at Purdue University Center for Commercial Agriculture’s podcast featuring farm management news information. I’m your host, James Mintert Emeritus professor of Agricultural Economics here at Purdue University. And joining me today is my colleague, Dr. Michael Langemeier, who’s the director of the Center for Commercial Agriculture and also a professor of ag economics here at Purdue. We’re gonna review the results from the October 2025 Purdue University -CME Group Ag Economy Barometer survey of farmers from across the nation. Each month we survey 400 farmers across the U.S. to learn more about their perspectives on the ag economy. This month’s Ag Barometer survey was conducted from the 13th through the 17th of October.

[00:00:46] Overview of Ag Barometer Results
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James Mintert: And Michael, the Ag Economy Barometer Index actually rose a little bit this month. It rose three points to 129, but that still leaves the index 29 points lower than it was in May, which was the index’s high point so far in 2025. And a year ago the index was just 115, so it’s 14 points higher than it was in October 2024.

And when you look At the Index of Current Conditions and the Index of future Expectations, they were both up this month. The big mover was the Current Condition Index, which was up eight points to a reading of 130. Um, that’s 16 points, however, below its 2025 peak of, uh, 146, which was back in May. And the Future Expectation Index was uh, up, I think one point, so kind of a trivial move. And then October expectation index was down 35 points from its 2025 peak, which was also back in May.

So when you look at the change, a fairly small change in the barometer itself. A bigger change in the Current Condition Index. What’s your take?

Michael Langemeier: I, I spend quite a bit of time thinking about the relationship between those two and, and there’s obviously times like we, we saw, we saw in late ’24 and early ’25 where the Index are, the Index of Future Expectations is quite a bit higher than the Index of current Conditions. But, but the fact that they’re the same tells me that the tight net return, uh, scenario that we’re currently in, they expect that to persist. That’s what it’s telling me.

Uh, if you dig deeper, we’re gonna talk more about this, but you dig deeper and you look at livestock and crop, uh, the crop people think their situation’s probably gonna persist for a while. Uh, the livestock people, uh, similarly think their situation, which is much different. They, they’re facing a, a much brighter, uh, brighter, uh, scenario right now. They’re expecting that to persist.

James Mintert: Yeah. I, I, I agree with you, Michael. And the other thing though that I think is interesting is the fact that that Current Condition Index and the Future Expectation Index, they’re both substantially higher than they were this time last year.

Michael Langemeier: Yeah.

James Mintert: And given where we’re at with respect to especially, uh, crop prices. That’s a little surprising. And you know, you mentioned, as we’re gonna talk more about it, there is the impact of the livestock sector showing up here. But still it is kind of interesting.

Michael Langemeier: I, I think, I think again, we, we talked about this many times before. I think it’s that they’re still fairly confident in that long run policy environment. Uh, that the trade and tariff situation we’re in, uh, is, is, you know, a lot of people think that’s gonna turn out in our favor. Uh, and we’ll talk about that here a little bit later, but that makes a difference, uh, particularly when you’re looking at the Index of Future Expectations.

James Mintert: Yeah, good point.

[00:03:16] Farm Financial Performance & Investments
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James Mintert: So looking at some of the raw responses to questions, would you say that your farm operation today is better off, worse off, or about the same financially compared to a year ago? And you know, this really kind of illustrates what’s going on. The worse off category is really up sharply since May. That was up two points this month, but it’s 21 points higher than it was in May. And we’re at, you know, 49% of the people in the survey saying we’re off. So that kind of, I think, tells the tail a little bit.

And then you mentioned the difference between livestock and crop producers. The question says over the next five years, or widespread good times or bad times, more likely. And we differentiate that based on livestock and crops. On the livestock side, 70% are saying good times. And on the crop side, only 30%. And you know, that that really trickles through a lot of our results, this difference in the perspectives that people have on the crop side versus the livestock side.

Michael Langemeier: Yeah, it’s extremely important. And, and, and the, the, certainly the, all the indices would be down, both the, Ag Economy Barometer and, and both of the, both of the sub indices would be lower, uh, if, if the sediment wasn’t really positive for the livestock sector.

James Mintert: Yeah, and I think that’s underappreciated. I think it’s probably worth pointing out that when we do our survey every month, by design, this is based on the value of farm production from the US census of agriculture. By design, uh, 19% of the people in the survey have a beef enterprise. Um, and when you bring in, uh, dairy and, and hogs, we wind up at about 25% of the people have a livestock enterprise. And that has had a big impact because the livestock situation is so much different, especially on the beef side than it is in the crop side.

Michael Langemeier: Yes.

James Mintert: Farm Financial Performance Index dropped back 10 points in October to a reading of 78. Um, that puts the index 31 points lower than it was in May. And you know, it’s, it’s, uh, I, I’m not surprised by this, right.

Michael Langemeier: I’m not either. Uh, it looks like ’26 is gonna be another tough year.

James Mintert: One of the questions we added this month was previous surveys. Producers have told us overwhelmingly that they think USDA is gonna make a market facilitation program type payment. Uh, I think last month it was 83% said that was either likely or very likely, and I think 62% said very likely.

So this month we asked if USDA provides a market facilitation payment to compensate for weak commodity prices. What will be the principle use of this payment on your farm? And over half the people in the survey said they’d use it to pay down debt. That was 53%. Another 25% said improve their working capital position. So 78%, almost eight outta 10 are probably doing what a good farm management advisor would tell ’em to do, right?

Michael Langemeier: Yeah. Both of those strategies are very logical. We did not distinguish between paying down operating debt, uh, paying down, uh, you know, a non-operating debt. But my ex, my, my guess is probably both.

James Mintert: Yeah.

Michael Langemeier: They’ll probably pay down some operating debt if they have, if they have some operating debts that’s gonna be leftover, uh, leftover after harvest. Uh, and that’s that by itself it’s probably gonna improve working capital. Uh, but they’re probably also gonna pay some of that long term debt down.

James Mintert: And I know there’s a lot of interest in the farm machinery industry about what people might do if they get a significant MFP payment. 12% said that they would invest in or use that money to help update their farm machinery. So that’s a fairly small percentage, but it’s not zero. Uh, and then 11% said they would use it to co help cover family living expenses.

So we really we’re, we suspected, I think, from a managerial perspective that we would see a lot of people’s. Say they were gonna pay down debt, but that’s, that’s a good thing I think in terms of, of maybe, uh, improving the stability of the sector.

Um, the Farm Capital Investment Index was a little bit of a surprise this month. It rose nine points to a reading of 62 and that essentially offset last month’s decline. Um, the percent of respondents who chose good time to invest rose to 24%. That was up from 18% in September. The percentage that who chose bad time to invest fell three points of 62. And again, some of the rise in this index has to be attributable to the livestock sector.

Michael Langemeier: Yeah, we, I actually saw, I actually, uh, we didn’t put in the report, but I actually summarized it, summarized that in the spreadsheet and the Farm Capital Investment Index for livestock was 80. Uh, that compares to a much lower index for crop. And so I definitely think the livestock sector, uh, helped, uh, improve this number.

James Mintert: Yeah, and I, I think that’s widely, uh, misunderstood. And again, thinking about how many people in the survey have a significant portion of their farm income coming from the livestock sector helps explain these results quite a bit.

Um, little follow up question about farmer shooting purchases in the upcoming year compared to a year ago. That’s a question we ask every month, and the percentage of producers who say it’s a bad time to divest has declined three months in a row. Um, and they’ve been shifting over to the stay about the same category. So that’s actually sort of consistent with what we’re picking up. Um, uh, on the investment side a little bit in terms of the direction, maybe not the magnitude.

Michael Langemeier: Yes.

[00:08:16] Farmland Value Expectations
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James Mintert: So, um, the Short -Term Farmland Value Expectation Index at 113 was up seven points, uh, compared to September. And maybe more importantly, that broke a, a pattern of declining index values going back to June. So, you know, we’ve been coming down every month and been tied pretty closely to the margins that have been tightening in the crop sector. So how do you explain that bump bump this month?

Michael Langemeier: Every month there’s, there’s a couple surprises, and this was a bit of a surprise to me. Um, you know, particularly the short term, uh, you know, you, you look at, you look at the net return prospects for crop producers, they don’t look any better, uh, than they did, uh, in, uh, in September or August or even July for that matter.

And so and so that’s really not explaining it and. And so this, this was a bit of a, a head scratcher. Now, the long term, uh, we’re also gonna talk about here, that one to me makes some sense because, uh, one of the things that’s been going on, uh, is, is people have flocked to gold and silver. And so they flocked to physical assets and, well land’s in that category. Uh, if you think about inflation hedge, if people are really worried about inflation in the future, um, it’s gold, silver, and, and, and land. Farmland are the assets that people typically, typically invest in. So and so, the fact that the long-term farmland value, uh, index increased rather dramatically it’s not as surprising to me as the, as the short run increase.

James Mintert: Yeah. The long-term index at a reading of 1 61 actually jumped up 15 points. And that matched its highest value at 2025. So I’m gonna, I’m gonna disagree a little bit, Michael. I was surprised I would’ve not, the fact that it went up didn’t surprise me so much that, but the fact that it matches the high value of the year, that did surprise me.

Michael Langemeier: Yeah.

James Mintert: And it’s, it’s a little puzzling, but I guess both of us think that it is tied to somehow, to this I idea that we’re gonna see some inflation. And historically farmland has been a relatively good, uh. Uh, hedge against deflation.

Michael Langemeier: Yes.

James Mintert: Certainly viewed as a I was, yes. You’re, you’re actually more of an expert on that. It’s certainly viewed as a hedge against inflation from a really long term standpoint. It is a good hedge, but not necessarily in the short run.

Michael Langemeier: Yeah. Not necessarily in the short run, but, but, uh, Dr. Baker, Dr. Boehlje and myself, along with a graduate student a few years back, actually looked at whether gold and silver was a better, uh, uh, hedge against inflation or farmland in the long term. And farmland actually was better.

James Mintert: Yeah.

Michael Langemeier: Now short term, you know, it doesn’t do as well explain any short term movements. No.

James Mintert: And it also has the advantage of actually offering, uh, a dividend every year. Yes. Unlike gold.

Michael Langemeier: Yes.

James Mintert: Which just sits there. Right. So, all right.

[00:10:54] Ag Exports & Trade Expectations
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James Mintert: Um, we’ve been asking this question for a long time. Going back to 2019, over the next five years, do you think ag exports are likely to increase, decrease, or remain about the same? And there was a bit of optimism this month. Uh, it’s a small amount. Uh, the percentages said that they expect to see exports increase rose to 51%. That’s up from 47% last month. Um, the percentages said they, they think it’s gonna decline. Uh, changed a little. It went to 14% from 13%.

The interesting thing, Michael, is when I look at a chart. The line that plots the percentages, say they think exports are gonna increase, has been increasing now for about, what, six months or so? Uh, it’s got a strong uptrend

Michael Langemeier: And if you go back before the, before the, uh, uh, ’24 election, it was actually 10 points lower. That’s the bit surprising to me. Uh,

James Mintert: Given, given, given what’s going on with everything

Michael Langemeier: That’s going on, that they’re actually more optimistic regarding, uh, exports in the next five years than they were before the ’24 election.

James Mintert: I mean. Exports to China have fallen off a cliff.

Michael Langemeier: Yes.

James Mintert: I mean, that’s, that’s the big one.

Michael Langemeier: There’s zero for soybeans right now.

James Mintert: Yeah. So that’s, that’s, yeah. This is a surprising result, but it, it does speak to the attitude of

Michael Langemeier: Yes.

James Mintert: what people are thinking about out there.

Um, and the follow up question we’ve been asking just recently, I guess we started asking this in April. Do you expect the increased use of tariffs by the U.S. to strengthen or weaken the U.S. ag economy in the long run? Uh, this month, 58% said strengthen. That’s up from last month. Last month in September it was 51%. Um, in June it was 63%. In the spring it was 70%, so there maybe been a fall off in confidence since the spring.

And then what I’m gonna call the uncertainty factor is definitely up compared to the spring. And the spring only 8% said they were uncertain about the out come of the tariff policy. This month that’s doubled at 16%. It’s down slightly compared to last month. Last month was 19%, but when you go back to the spring versus now, the uncertainty factor has definitely risen.

Michael Langemeier: Yeah. You point out a very important point here is the last two months, that uncertainty index has double compared to what it was in April, May, and and June. And this is a question I definitely think we should have asked again in November and December, uh, to see if this changes.

James Mintert: Yeah.

[00:13:10] Farmers’ Biggest Concerns
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James Mintert: Um, we’ve been asking this question I think for a long time as well. Looking at it next year, what are your biggest concerns for your farming operation? Not a lot of change here. You know, higher input cost is still the number one choice at this month. 41% of the people in the survey said that was their top concern. 28% said lower crop and livestock prices. Those are both a little higher than they were at the beginning of the year, but not a big change.

Um, last month we did highlight the fact that we saw a bump in the people worried about the availability of inputs. Um, it was up around 15%, which was the highest we’d seen in a long time. This month that dropped back to 9%. And we wondered last month if that 15% was kind of a blip. Based on this month’s results, maybe it is a blip. Do you agree with that?

Michael Langemeier: Yes, it does look like it is. ’cause it’s no different than the January number, 8%, 9%. They’re not significantly different. One of the things that’s always interesting about when you, when you look at the, the answer to these questions, uh, when you read the farm press, for example, and, and, and you. And you listen to podcasts, uh, related to, related to the, related to the farm community. They, they tend to focus on policy.

And I just wanna note here, this hasn’t changed, uh, all year, but only about 11%. Uh, their biggest concern is policy. Uh, so that, that, that tells me that they’re pretty confident that the policy makers are probably gonna come through. You know, if, if, if, if they, if we need some additional, additional government payments or something like that.

They’re, they’re worried about the fundamentals. Uh, and the fundamentals to me are the, where, where are prices relatively low for the crop sector, relatively high for the livestock sector. And then those high input costs that, that are with us, uh, ever since COVID ended. So I, I find that fascinating that they, here they really focus on the fundamentals.

James Mintert: Yeah. And I, we’ve talked about this before. I think we’ve both been a little bit surprised at the fact that how few people focused on the policy side. We’ve got it broken up into two questions or two responses. One’s farm policy, and this month it was only 6% and that’s about where it’s been all year long.

Environmental policy was a 5%. That’s a little lower than it was at the beginning of the year. It was 8%. It’s been as high as nine. So that’s a small percentage, and yet. You know, in an era of low prices on the crop side, farm support coming out of farm policy is pretty doggone important. And so it is surprising that we don’t get more people focused on that.

Um, we added some extra questions this month basically to try and learn a little bit more about what people are thinking about. In response to lower prices for the crops, and more specifically in this case, corn.

So the first question we asked was, does your farm use advice from an agronomic consultant when making decisions? And 52% said yes, 48%. No. We were talking about this before the podcast. I was a little surprised at the 52% I would expect a somewhat higher number. I didn’t expect a hundred percent, obviously, but I thought a little higher than basically a coin flip.

Michael Langemeier: I think there’s a couple things going on here as, as we were talking about before. One of them is, uh, you know, who do they call an agronomic consultant? Is that a full-time person, uh, that comes to the farm and, and helps them, uh, you know, for, for consulting fee? Or, or, or is that a person from the co-op, uh, that’s maybe providing that service for very low cost or even free? Are they both considered agronomic consultants?

And so we’re, we’re a little vague with this question, but also we gotta remember we’ve got quite a few. Uh, mid-size sole proprietors in here that maybe probably don’t have a consultant from either source.

James Mintert: Yeah, that’s a good point. Um, yeah, we’ll, we’ll, we’ll probably ask this again at some point in the future. I, I, I’m looking, it may be phrasing the question differently would matter.

Michael Langemeier: And we also asked a question related to financial ratios and it was about half the people use financial ratios. Again, there we’re probably a little vague. My guess is as, as, uh, folks use the current ratio and debt to asset ratio a lot more than the profit margin. Um, but, but, uh, about 50% used, uh, uh, financial ratios in their business.

James Mintert: So then following up that agronomic question, we said, what changes, if any, will your farm make in 2026 to respond to low corn prices and. 30%. So roughly three outta 10, said they were gonna make no change.

Um, the next was reduce phosphorus rates. And, uh, we only asked about phosphorus, not, uh, not potash. My interpretation is that was probably like reduce dry fertilizer rates.

Michael Langemeier: Yeah.

James Mintert: Or, or reduce reduce rate rates on fertilizers that we don’t necessarily have to apply every single year. That was chosen by 29%. So almost the same as no change, adopt lower cost seed traits was chosen by 27%, so again, almost three outta 10. And then the two that really dropped back quite a bit, reduced nitrogen rates was only chosen by 16% and reduced seeding rates, uh, was only chosen by 11%. So what were your, what were your expectations coming in on this question?

Michael Langemeier: I, I thought the changes would be a little smaller, uh, than what we’re seeing here. But having said that, I think it’s very logical that people think about lowering their, their seed cost versus traits and choosing traits and varieties rather than the seeding rates. That makes a lot of sense to me. Uh, reducing sheet seating rates could, uh, the benefit there might, might, uh, may not be as big as the cost, uh, quite frankly.

And so that one’s always a little tricky. Uh, and, and it was very logical to me that, uh, the p rates, a lot more people thought, uh, thought about, uh, reducing p rates that, that end rates. And, uh, and, and perhaps one of the things that’s going on here when you look at the fertilizer results is fertilizer prices are relatively high right now, particularly for phosphorus, but also nitrogen compared to, uh, last year at this time, it’s higher. And so I think that is in people’s minds, is there anything I can do, uh, to try to reduce my fertilizer costs, uh, you know, this year? And, and, uh, uh, and they’re indicating that they’re gonna look at those rates carefully.

James Mintert: Yeah. And I guess my interpretation of this question is not that necessarily people are gonna follow through on all these things, but rather they’re thinking about ’em.

Michael Langemeier: You’re thinking about that.

James Mintert: They’re thinking about ways that I could do something to reduce my cost per bushels.

Michael Langemeier: You get that break, even, even a di dime or 20 cents would make a lot of difference.

James Mintert: Yeah. And so I, I suspect a lot of the folks that, that responded to this question, probably these are things we’re thinking about. They probably haven’t made a final decision on what they’re gonna do here.

So, um, the question we’ve been asking since July is, would you say that things in the US today are generally headed in the right direction or on the wrong track? And boy, if we’ve got a question that we got consistent responses to, it’s this one 72% said right direction. There’s been almost no change in this, right?

Last month it was 71%. In August it was 69%, and in July it was 74% saying right direction. So again, you thinking back to that, um, some of the things people are thinking about with respect to looking ahead, uh, Index of, of Future Expectations, for example.

People are on board with the policy direction that’s going on. Uh, we hear a lot in the farm press and recently the non-farm press about complaints. But fundamentally, people think this is gonna turn out okay in the long run. In the short run, it seems like the complaints that we’re picking up are revolving around the need for something like the MFP program. You agree?

Michael Langemeier: It has been consistent all, all year. We’ve asked questions about whether they expect MFP payments, uh, a few months ago they said yes. And so it’s been very consistent throughout the year. Uh, and, and this question we’ve been asking since July, like you said, is extremely consistent. I, I don’t think that’s necessarily the case with the non-ag community. I think the non, you know, this has been asked of the broader US and I think there’s more variability, uh, when you ask that. But, but for the ag community, very consistent response to this question.

James Mintert: It if probably the most consistent thing that we’ve done, right? Yeah. I mean, kind of a policy zone like this. So, you know, when we think about responses, we’ve got four months of data now that’s a little over six, well, roughly 1600 responses, and they just haven’t changed at all. So that’s, that’s kind of interesting.

[00:21:21] Conclusion & Resources
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James Mintert: Well, that wraps up the highlights of this month’s, uh, ag Barometer survey. You can get the full report on our website, which is purdue.edu/ag barometer. And of course, if you’re watching this on, on YouTube, you can also get more details on a regular basis from Purdue Commercial AgCast, which is available on major podcast providers and at purdue.edu/commercial ag. I wanna emphasize, you don’t have to subscribe to this on a podcast provider. You can simply, uh, listen to the podcast on the website itself.

So with that, I want to thank my colleague, Dr. Michael Langemeier for joining me today. And on behalf of the Center for Commercial Agriculture, I’m James Mintert.