Farmer Sentiment Drifts Lower As Trade Uncertainty Hangs Over Agriculture

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Audio Transcript

James Mintert: Welcome to Purdue Commercial AgCast, the Purdue University Center for Commercial Agriculture’s podcast featuring farm management news and information. I’m your host, James Mintert, Emeritus Professor of Ag 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 at Purdue.

We’re gonna review the results from the December 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 first through the 5th of December.

And you know, Michael, as you look at it.

[00:00:46] Overview of Ag Barometer Results
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James Mintert: The barometer fell three points this month to 136. That’s about the same as this time last year, but it does leave the index 22 points lower than it was back in May, which was the index as high point in 2025.

And you know, if you look at what was going on in terms of what drove the change, Current Condition Index at 128 was unchanged from a month ago. That left the Current Condition Index, at year end, about 18 points below its 2025 peak, which was also back in May. Future expectations did drop, and that’s what drove the change in the barometer. It was down four points to a reading of 140, that leaves that index down 24 points from its 2025 peak, which was also in May.

So I guess two questions, Michael, were you surprised at the drop in the barometer? And more importantly, maybe were you surprised at the fact that the motivator was the future expectations change?

Michael Langemeier: It, it, it’s always hard to tell exactly what, what’s gonna happen here and, and in a kind of a short month, if you will. I mean, there wasn’t as much time between the surveys as there typically is. I think there was only three weeks, uh, rather than four weeks. And I don’t know if that factored in or not. But, but there really, there really hasn’t been a lot of news or a lot of changes, uh, you know, changes in policy. You know, that, that have came about. And so it wasn’t real surprising that it, that it was relatively stable.

Uh, you know, I thought maybe there’d be a little bit of strengthening in the current rather than the future. And so that’s kind of the way I, I looked at that. I, I don’t think the long run policy environments necessarily changed, uh, in the last month, but, uh, that’s just kinda my viewpoint on that.

James Mintert: Yeah, I was a little surprised at the drop in the future expectations. Uh, I was kind of looking for a change in the Current Condition Index. Yes. But I, you know, I don’t wanna overplay that ’cause of the, the changes were small.

Michael Langemeier: They’re small.

James Mintert: Yeah. So one of the things that was kind of interesting is the fact that if you look at the report and, and look at the survey itself, when we ask people about over the next five years are widespread good times of expected in crops or livestock. The drop was in livestock, right? I mean that was, that was, uh, I dunno if it’s not unexpected, but it was an eight point drop. It went from 49% saying good, uh, good times to 41%, almost no change in the crop side. Two points.

Michael Langemeier: And it’s remarkable that that drop is like 30 points, uh, in the last two months. And so that, that’s a big different, that’s a big change in the last two months.

James Mintert: And most of that I think is coming outta cattle.

Michael Langemeier: Yes.

James Mintert: Right. And, uh, people all of a sudden are less confident about what’s going on in, in the cattle sector. They were really, really positive for a long time there, but all of a sudden, and, and you know, we’re still looking at high cattle prices.

Michael Langemeier: Yes.

James Mintert: And, and they’re gonna stay high for a while because expansion hasn’t hit yet, so. That was, that was kind of an interesting, uh, point I think.

Um, the other interesting point that showed up this month, which we didn’t really highlight in the report itself, but it’s worth maybe talking about it, and that is when we look ahead to next year, what are your biggest concerns for your farming operation?

And there was no change in the ranking of what people chose. High input cost has been the top concern ever since we started asking this question now for the last, what couple of years. But there was a jump in terms of more people were worried about high input cost. 45% of the respondents, I think, said that that was their top concern.

Michael Langemeier: There’s been a lot of press it, and I don’t know if this impacts people or not, but there’s been a lot of press that that’s been talking about the tariffs and inflation and affordability. Maybe some of that, uh, you know, maybe they’re factoring in some of that. Uh, one of the, one of the, uh, we told, we were talking before the, the podcast, one of the inputs that has increased, uh, you know, compared, you know, recently is, is fertilizer. Uh, you, you were, you were talking specifically phosphorus, and so, you know, maybe that, maybe that’s it. And so I, it’s probably a combination of, of, of those two things, you know, may maybe some more concerns about inflation, uh, general inflation, which certainly would, uh, increase some of the, uh, production costs in agriculture and maybe some of these, uh, relatively higher fertilizer, uh, prices are entering into their thinking.

James Mintert: Yeah. The other thing that took place, especially since our last survey is there’s been some press reports kind of highlighting the high input cost.

Michael Langemeier: Yeah.

James Mintert: And basically trying to call out some suppliers for raising prices.

Michael Langemeier: Yeah.

James Mintert: And so maybe it’s kind of highlighted the issue in producer’s minds maybe a little more than otherwise. And of course, the other thing takes place this time of year is. People are purchasing inputs for the upcoming year, and so it’s kind of the reminder of just how much,

Michael Langemeier: Yes.

James Mintert: things like fertilizer, seed, uh, and other inputs cost.

[00:05:22] Farm Financial Performance & Investments
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James Mintert: So the Farm Financial Performance Index rose two points in December to a rating of 94. That index is up substantially since October. You know, if you look at it compared to October, we’re up 16 points. That’s still lower than it was back in May. I think that leaves us 15 points lower than in May, but it’s been a pretty significant jump since October.

Michael Langemeier: And soybean prices has been a little, little softer recently, but they’re, they’re still up compared to what they were mid-October. And, and I, I point to that, uh, as, as being a very positive force, uh, when you look at this financial performance index. Of course, when, uh, when, when soybean prices increase, it also tended to raise, uh, corn prices a little bit too. And so I, I really point to those that, that, that, that news, uh, uh, with respect to China, uh, you trade with China, uh, in late October is, is really being responsible for this.

James Mintert: That’s an interesting point and I, I tend to agree with it, although by the time we did the December survey, we’d lost some of that.

Michael Langemeier: Yeah. We lost some, we lost some headways.

James Mintert: You know, looking at, uh, for example, here in the Eastern Corn Belt, cash prices for soybeans dropping back below $11, right?

Michael Langemeier: Yeah. Yeah.

James Mintert: So, uh, good, good point though.

Farm Capital Investment Index, like the performance index, up two points this time to a reading of 58. And although that index is up, we still had 60% of the response to the survey saying it’s a bad time to make a large investments.

Michael Langemeier: Yes.

James Mintert: Um, what’s your take?

Michael Langemeier: It’s, it’s been sideways for a long time. I, I, I’ve been talking about the last couple months and so, and so I, I, I don’t really think it’s really moving one direction or the other. Uh, it is just kind of, it is just kind of stable.

James Mintert: Yeah. And if you look at the next one, which is plans for, um, farm machinery purchases. The, there’s no evidence, no of any confidence rise there. In fact, uh, the percentages said they were gonna, uh, reduce their machine repurchases compared to a year ago actually went up a little bit. This, this month it went from 51% to 55%. No change virtually in the percentage of people who said that it’s a good time. I think it went from seven to 6%.

Michael Langemeier: Yeah.

James Mintert: So we’re not, if even though the index went up a little, I don’t think we’re gonna see any rush to the, to the doors of the machine dealers.

Michael Langemeier: And I, I wanna circle back to, to a question we had last month. And we asked question, we asked a question about what would you do with your MFP trade payment. I mean, it looks like those are gonna materialize now. Uh, what would you do with that? I think 10% said they would invest in machinery. So very small percent. It’s not zero. Uh, as I was talking to someone in the machinery industry, uh, noted, you know, it’s not zero, uh, but it’s still a really small percentage.

James Mintert: Yeah.

Michael Langemeier: And I think that that just reflects how tight margins still are, uh, even with the potential of these payments margins are, are, are tight enough that, that some people are gonna have a little bit of trouble repaying debt, uh, yet alone buying new buying machinery.

James Mintert: Yeah, and you’re right, we asked that question a couple of times and the, the responses range between I think 10 and 12%.

Michael Langemeier: Yeah. They were very small.

James Mintert: Yeah.

[00:08:11] Farmland Value Expectations
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James Mintert: So, uh, you know, if you look at the next one, which is the Short-Term Farmland Index, um, 117, up just one points compared to a month earlier. But maybe the bigger news is if you go back to September we were at 106, so we’re now 11 points higher than we were early in the fall. Basically the beginning of harvest time. Are you surprised at the strength in that short-term farmland index?

Michael Langemeier: Yes, I’m surprised in both the short-term index, uh, being relatively strong as well as the long-term index, uh, being relatively strong. I think the long run index was either close or at, uh, it’s, it’s all time high. Uh, and, and so, and so, it’s a little surprising to me.

Uh, uh, that’s really good news from a balance sheet standpoint. Uh, ’cause obviously if land values hold that, that means the balance sheet’s gonna be much stronger. And we did ask a question this month, uh, related to the, uh, the strength of the balance sheet. And, uh, 68%, uh, said that their balance, uh, agreed or, or strongly agreed that their balance sheet was strong. Uh, and, and so certainly this is good news for farmers. But it, uh, it, it is a little surprising to me that it’s as strong as it is ’cause you look at the fundamentals, uh, you know, net income is, is not that strong. Uh, and also the interest rate I would think is more neutral. Uh, but one of the, I I was looking at some of the, some of the factors, uh, that they said were impacting land values and, uh, and inflation has, has gotten a little bit, uh, more common as a response, uh, is, is, uh, related to land values. And so maybe that’s part of it.

I mean the, the stock market’s pretty high. Uh, I think that’s also could be related a little bit to inflation, and maybe that’s holding up these land values a little higher than they would be otherwise.

James Mintert: You know, we, we talked, I think last month about the fact that you’ve done a lot of research on farmland values and factors that influence it and what kind of a hedge it is against inflation. And one of the things I think you like to point out is that when there’s a lot of uncertainty, people like to move money into hard assets and gold, silver’s at an all time high, uh,

Michael Langemeier: And land would be consistent.

James Mintert: and farmland would be right in there. So I, that’s probably a factor as well. Yeah. If you look underneath the, uh, index and look at the raw responses to that farmland, uh, question, it’s kind of interesting. The change in the index this month was not driven by more people saying they think farmland better is gonna go up. It was driven by fewer people saying farmland values were gonna decline. And so. That’s kind of a muted form of optimism, I guess is how I’d characterize that, as opposed to being very bullish about, uh, what’s taken place.

Michael Langemeier: But that percentage that said decline is, is about the lowest it’s been since ’23.

James Mintert: Yeah.

Michael Langemeier: So that was interesting.

James Mintert: Yeah. And then as you mentioned, uh, the long term index record high.

Michael Langemeier: Yeah.

James Mintert: Uh, 166, only one point change from last month, but you know, prior to that it was at 161. And a little bit like some of the other indices, you go back to early fall, now it’s up substantially compared to early fall. It’s, I think back in, uh, late, late summer, early fall, we were down about 146. So we’re up 20 points compared to that. That’s the five year outlook. Um, again, you just think it’s the, the inflation aspect and the, and the hedge against inflation.

Michael Langemeier: It, it has to, that has to be a major factor.

James Mintert: Um, all right, so,

[00:11:18] Ag Exports & Trade Expectations
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James Mintert: Next one was, uh, over the next five years, do you think ag exports are more likely to increase, decrease, or remain about the same? And you know, if there’s any news on this one, it’s the fact that we’ve got fewer and fewer people telling us they think exports are gonna decline. At least when we ask the question in a generic framework, right? We just say ag exports.

Two months ago, 14% of the people in the survey said it was gonna, they thought it was gonna decline over the next five years. Last month that was cut in half to 7%. This month it went down slightly to 5%. Um, that’s the big picture. Right?

And then when we asked a little more specifically about, you know, soybeans, which was the hot news with respect to the trade agreement with China, we got a different response. 13% of the people in the survey said that they think soybean exports over the next five years could decline. Interesting contrast there in terms of how we phrase the questions. What do you make of that?

Michael Langemeier: Yeah. Very interesting. And we phrase this question over five years because, uh, uh, just just to remind the, the listener that the first year is supposed to be lower. Uh, the, the, the purchases from China are supposed to be lower, and then they’re supposed to be bumped up in the, in the second and third year. And the levels in the second and third year are similar. They’re down a little bit, uh, from the historical average, but they’re similar to the long run average.

And so I found this really interesting that, you know, even with those, even with the, I’m not gonna say agreement, but even with that discussion that we had, uh, with China, there’s still, there’s still 13%, think, they’re think we’re gonna, the exports are gonna decline.

James Mintert: Well, maybe the next question helps explain that because the next question we asked was, how concerned are you about the competitiveness of U.S. soybean exports with Brazil’s exports? And when you add ’em together, I think 84% of the people in the survey said they were concerned about our competitiveness with Brazil. And maybe more importantly. 45% said they were very concerned.

Michael Langemeier: Yeah. I’m so glad we asked this question because we didn’t really know, and we talked about this, we talked about this issue when we were drafting the survey. Uh, we didn’t really know what this was gonna look like and, and, you know, anecdotal evidence, you know, talking to the farm press, you know, reading, reading articles in the farm press. And then I, I’ve done a, I’ve done a couple, uh, meetings recently. There’s some angst out there, uh, about, about, uh, our competitiveness, uh, vis-a-vis, uh, Brazil. Uh, and, and so, and, and so this, these results are showing that.

James Mintert: And I think with good reason, right?

Michael Langemeier: Yes.

James Mintert: You know, when, uh, you and I make presentations around the country, you know, one of the charts I use anyway is I show how Brazil, South America in general, but Brazil in particularly, has gained market share, not just over a couple of years, over decades. Right. And so it’s clear that they’ve been a long run competitor for a long time. And of course it eclipsed us in terms of both production and, and world exports. So, yeah. Um, it’s, it’s a serious concern.

Michael Langemeier: And one of the things I point out is, is they become, they, they, they, they, they increase competitiveness every single year. But if you go back to the la la, the, the, uh, last time we had a trade dispute with China back in 2008, they’re certainly more competitive, uh, you know, compared to 2018. Uh, they’ve increased production and they have the capacity to, to export a lot more soybeans than they did back in 2018. And so it makes, it makes me more concerned, uh, when we have these disputes with China because, uh, you know, China doesn’t need us. As much as they, as they did in the past.

James Mintert: Yeah, that’s a good point. Yeah. When you look at those charts, and I always put a long run chart up when I make a presentation. There was a time when anywhere in the world if you wanted to import soybeans, there was really only one supplier.

Michael Langemeier: Yes.

James Mintert: And that was the us. That’s not been the case for a long time and it’s been eroding for decades.

So, um, as we look at. The next one, which is a question we’ve been asking since, uh, springtime, I think we started doing 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? And in the beginning, strength, strengthen the economy was clear that the dominant response. First couple times we asked this in April and May, 70% said strengthen. That support for the tariff policy has been eroding. It’s still a majority, 54% said strengthen this month. Um, that’s the second lowest percentage we’ve gotten on strengthen since we’ve been asking the question.

And maybe more importantly, and we showed up, we talked about this last month as well. We’re picking up more people saying they’re just uncertain. This month it was 19% of the people in the survey said they were uncertain. Last month it was 17%. The month before that it was 16. You go back to last spring and it was only 8%.

Michael Langemeier: Yeah. That’s a huge signal, uh, that they’re, people are just getting, becoming more concerned.

James Mintert: Yeah. So, clearly a shift. Not to the point where we have a majority saying they think it’s gonna hurt us, but we’re getting closer.

Uh, and then the question we started asking this summer, which was, would you say that things in the U.S. today are generally headed in the right direction or on the wrong track? We got one of the most positive responses we’ve gotten since we started asking this in July. 75%, three fourths of the people in the survey said we’re headed in the right direction. 25% said wrong track. Um, last month it was 67% saying right direction and 33% saying wrong track.

Michael Langemeier: I, I’m glad we included both of these questions. The, you know, the first question, uh, focuses more on, on tariff policy. This is a more general question and, and there has been some very positive things from a policy standpoint that that have happened, uh, in the last year. The one big, beautiful bill, uh, certainly when you look at, uh, you know, look at, uh, the ability to, to to use Section 179, bonus depreciation and some other tax issues we’re very positive. Uh, you know, for agriculture it looks like we’re can get these trade payments and that’s also very positive.

And so, and so, I’m not particularly surprised that they, they answer this or, uh, stronger. They’re, they’re, they’re stronger, uh, in terms of ask, asking this question, the in affirmative compared to the tariff question.

James Mintert: Yeah, that’s a good point. The other thing is, I always tell people, I think this question encompasses more than what’s going on in agriculture.

Michael Langemeier: Oh, yeah.

James Mintert: Um, so, you know, it’s, it’s, you can interpret it, it’s an open-ended question. You can interpret this the way you want to, uh, but I strongly suspect it embodies much more than just agriculture.

[00:17:46] Conclusion & Resources
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James Mintert: Uh, so that wraps up the highlights for this month’s survey. You can get the full report on our website, which is purdue.edu/agbarometer. And if you’re listening to this on the web, you, I’d encourage you to think about. Um, subscribing to our podcast, which is Purdue Commercial AgCast, which is available at all the major podcast providers. And of course you can listen to it on the web itself without subscribing. And that website is purdue.edu/commercialag.

So on behalf of my colleague, Dr. Michael Langemeier and the Center for Commercial Agriculture, I wanna thank you for joining us. And I’m James Mintert.