AgCast 210: Producer Sentiment Stabilizes, But Future Expectations Slip

Audio Transcript:

Joana Colussi: Welcome to Purdue Commercial AgCast. I am Joanna Colussi, a Research Assistant Professor in Agricultural Economics at Purdue. I joined the University last fall and I’m super excited to step into this role this month. I will be joining my colleague, someone you know very well, Michael Langemeier, Director of the Center for Commercial Agriculture.

Today we will discuss the results from the February 2026, Purdue University -CME Group Ag Economy Barometer survey. Each month we interview 400 farmers across the United States to learn more about their perspectives on the ag economy. This month’s ag barometer survey was conducted from the second through the 6th of February.

Joana Colussi: Before we get started, be sure to follow the page, like this video, and subscribe so you don’t miss future updates.

So let’s take a look at the this month’s Ag Economy Barometer. The overall index increased a bit from 113 points in January, to 116 points in February. It’s not a huge jump, but one improvement. Even so we were still well below where we were a year ago – 36 points lower than last February – and about 20 points below December.

When you break it apart, it gets interesting. The Index of Current Conditions actually improved quite a bit, up 11 points this month. So, producers are feeling somewhat better about where things stand right now. But the Index of Future Expectations is slipped by one point.

So even though current conditions have improved, there is still a lot of caution about what’s ahead. Michael, what do you think is driving that mix of better current sentiment, but continue concern about the future?

Michael Langemeier: Well, the current sentiment is really driven on what’s going on in the ground right now. And so if you look at net returns for crops, they’re relatively low. Livestock net returns are better. And so if you put those two together that’s keeping the current condition index lower than what it would be otherwise and lower than what it was for most of 2025. One of the things that’s really disconcerting to me is how low the Index of Future Expectations has really gotten. The current index is the lowest index since September 2024.

Joana Colussi: Before election.

Michael Langemeier: Before the election. And so I think what’s going on is, is that the relatively tough environment we’re facing, today, is expected to continue, into the future. A couple of the questions that, that go into the Index of Future Expectations are worded as, Do you expect to have good times or bad times, financially fi in in the next five years? And so, and so, that’s why I say that’s disconcerting. ‘Cause it really, it really tells me that the crop producers are expecting at least two or three more tough years. And, and that’s, that’s being reflected in that relatively low Index of Future Expectations.

Joana Colussi: Two related questions ask respondents whether they expect crop producers or livestock producers to have good or bad time. And we continue to see more optimism on the livestock side compared to the crop production.

Michael, as you look ahead, what kind of trend should we expect this year, given the current situation related to the cattle prices, for example?

Michael Langemeier: I think the disparity between, the sentiment between the crop producers and, and the livestock producers or crop production and livestock production is gonna continue for at least the next year, possibly the next two years.

And, and what we’re seeing here is, is, like I said, we’re seeing some low net returns in, in the crop sector, really across the board. Corn, soybean, wheat, and cotton. That’s the primary commodities that producers have, that, that we survey, whereas the, the, the cattle, the cattle group is about 20% of all respondents. And so it’s a very important part of the livestock group that we survey, but also a very important part of the survey itself. And, and cattle prices are expected to remain relatively high for the foreseeable future.

Just to put this in perspective, you know, this month in February here, 63% expected crop producers to have bad times in the next five years. Only 17 percent expected livestock producers to have bad times. And so just a very large difference. And and I think this is gonna continue.

Joana Colussi: And you can see in the consumer perspective, you see the price of the meat on the grocery store.

Michael Langemeier: Yeah.

Joana Colussi: It’s continue high.

Michael Langemeier: Meat prices are high and, and demand is high.

Joana Colussi: Yeah.

Michael Langemeier: And so that just, that’s just a perfect storm for, for them to, to remain having solid net returns, particularly in the cow sector.

Joana Colussi: That’s true.

So let’s turn to the Farm Capital Investment Index. That measure moved up three points this month, reaching 50 points.

Even so, producers remain cautions about large investments. Around 70% of the respondents said that they, they believed now it’s a bad time to buy machinery or buildings.

The results from another question help explain discussions, mood. We ask at producers. Looking ahead to the next year, what’s your biggest concern for your farming operation? The two biggest concerns were high input costs and low output, prices. These concerns contribute to the stress, the financial stress that you just mentioned regarding the current net returns and the agriculture economy as a whole. Michael, do you see any change of improvement of these concerns in the short term?

Michael Langemeier: If you look at the current conditions chart each month, it looks about the same, after COVID till today. It really does look the same. About 45% are very concerned about input costs and anywhere from 25 to 30% are concerned about low prices. And again, this is primarily coming from, from the crop producers, which represent about 70% of those that, that we survey.

And so I don’t think this is gonna change, anytime soon. I think those are gonna continue, to be the largest concerns. And as long as we have relatively tight net returns. That, that capital investment index is, is not going to skyrocket. In fact, it’s been in a very tight band for the last 12 to 18 months.

It’s been ranging from approximately 50 to 60 for the last 12 to 18 months. Obviously well below a hundred. If the index is above a hundred, that means that people are, are, think, think this is a good time to invest in machinery rather than a bad time.

So obviously there’s a lot of people that think this is a bad time, to invest in machinery. In fact, one of the questions we ask. Is is you expect to increase or decrease or remain the same. The amount of purchases of machinery, only 7% said they were going to increase the purchase of machinery in 2026.

Extremely low number.

Joana Colussi: Yeah. And given the situation’s totally understandable.

Michael Langemeier: Yes it is.

Joana Colussi: Yeah. Yeah. So, turning to the exports, we also ask at farmers if over the next five years they expect agriculture exports to increase, decrease or remain about the same. Compared to the last month, there was a small change.

So even after last year’s declining exports, particularly in soybeans to China, producers still appear optimist about the long-term outlook for international markets. What could explain this optimist, Michael, in your opinion?

Michael Langemeier: I think it goes, it goes to what I call the long run policy environment, and ever since the 2024 election there’s been more positivity, towards the, the long run policy environment and that that, that also is impacting how they’re answering this export question. I think. There’s been a little slippage recently, in their confidence in the long run policy environment. And we’ll get to, another question that, that clearly shows that, but there’s still, they’re still more confident that they were prior to the ’24 election, about, about, about the future of, of agriculture production. And I, I think that’s what’s being reflected, in this, in this export question.

Joana Colussi: Every February since 2016, we have asked producers about their farm growth plans. This year, nearly 50%, of the respondents, they said either have no plans to grow, or expect to reduce their farm size over the next five years.

Michael, should we be concern about these numbers? Especially when you think about the long term future of agriculture in U.S.

Michael Langemeier: I think these percentages have been very consistent since 2016.

This is one of the ways I’d answer this question and, and consistently about 50% really have no growth plans and another 50% have growth plans. And of that 50% that has no growth plans, 34% of the 50% that have no growth plans, I expect to stay the same size.

And we don’t ask people this, but my hunch, those are sole proprietors that don’t have someone coming back to the farm. And so there’s really not as much pressure for them to, to expand. It’s, we’re only seeing 15% exit. By itself, that might sound, sound really alarming, but I wanna go to some of the people that have very aggressive growth plans and I think they can easily pick up the acres, of the people that are, that are leaving the industry.

There’s approximately 15% that expect to grow 10% or more per year. If that materializes, they will double in size in five years or less. And so you’ve got a group that’s not growing at all. In fact some of ’em are retiring, but you also have a group that really wants to expand.

Some of those are probably bringing another family member into the business and really need to expand.

Joana Colussi: And that should increase the concentration of the sector.

Michael Langemeier: Yes, obviously, the results are showing that we’re gonna see consolidation, in, in production agriculture.

Joana Colussi: In February, we also asked producers about their farm goals, and the results are interesting. More than 90% told us their farms have established goals, objectives, and core values. When you ask at about their top, priority, nearly 40% said their most important goal is transitioning the farm to the next generation. And 36% said that they plan to bring another family member full time into the business within the next five years.

So, Michael, should we understand this as a signal that a generation transition is underway in the U.S. in a, is speed more faster than in the past?

Michael Langemeier: What it really shows me is there’s a lot of people wanting to come back to the farm. You know, that 36%, that’s a lot of people, that are trying to bring another person back into the business. And I think we need to relate this back to the growth.

The reason why, some of the growth expectations are so aggressive is there’s such a large group here that’s really prioritizing tr transition Planning is being their most important goal. And by the way, some of the other goals listed are very important. Profit maximization, reducing debt, soil health. And so transition planning was by far and away the most important goal.

And so yes, I, I do think there’s a, there’s a, there’s a, a young group of producers that want to join these operations and, and that’s exciting, to see these new people, you know, wanting to, wanting to take the realms and or help take the realms, and, and, and manage these farms.

Joana Colussi: Yeah. New blood.

Michael Langemeier: Yes.

Joana Colussi: New energy in the farms. So moving on, we also ask producers how they plan to use the Farmer Bridge Assistance Payments is scheduled for late February. And 47%, they said they will use the money to pay the debt. Michael, I’m guessing that does not surprise you, given the narrow margins have been over the past year, right?

Michael Langemeier: Yes. Last month we asked this question, but we asked it only of corn and soybean producers. And last month, 50% of the corn and soybean producers were gonna use the money to pay down debt. And when we broaden this to all, the people in the survey, which is really moving from about 80% of the respondents to a hundred percent of the respondents. We got very similar answer. Almost half said they’re gonna pay down debt.

And, and given the, given the relatively tight, cash flows this year, particularly again for crop producers, it’s no surprise that they’re gonna use this money to, to help pay operating debt that they might be carrying over from the year before, but also help make those term debt payments.

If you go back to ’21 and ’22, quite a few of the farms either bought land or bought machinery, and they’re still paying for those things. And so certainly this is, this is, this is very helpful. These payments are gonna be very helpful, in making sure that they can make those term debt payments.

I thought it was really interesting that about 25% said they were gonna improve working capital, and, hopefully they’re reading some of our articles on working capital on our website because that’s a topic that we’ve covered a lot. Uh, so if you want more information, go to our website for that. Uh, but that was, that was also not surprising because, because in, in these relatively tough, financial times, we’ve really drawn down the working capital and, and, and, and program payments like this, help build that up again. So that wasvery interesting to see,those out there that may be in the machinery industry or maybe lenders that are thinking about borrowing money, uh, they’re looking at buying machinery. Only 15%, slightly less than that, expected to use these payments to buy machinery.

When we asked that question of corn soybean producers in January, it was only 10%. So a fairly small percent, are gonna buy machinery and that’s certainly reflective of the times we’re in. If we were in better financial times, first of all, we probably wouldn’t have the bridge payments, but, but if we were in better financial times, more people would be using the money to buy machines.

Joana Colussi: So at different times in terms of financial stress. And so when, after a few months of relative stability, the Short -Term Farmland Value Expectation Index rose to 123 points in February. The highest reading since May 2025. So, Michael, what does this tell us about expectations in the farmland market right now?

Michael Langemeier: It tells me that the land values are steady, to increasing slightly. You know, and this, again, this is a U.S. survey, so it’s not necessarily just in the corn belt or just in the Eastern Corn Belt, where we sit today, where we’re seeing, the strength in land values.

And that’s certainly really good news, in terms of strength of the balance sheet. You know, land values are critical piece of the balance sheet. And, that’s really helping, you know, kind of us weather the financial storm.

Joana Colussi: And then we also ask at producers, which policies or programs they expect to be most important to their farms over the next five years. And 55% pointed to the trade policy. Up from 45% in February last year. So given everything that happened with tariffs last year, that’s probably not surprising. Trade policy now is in the top of mind for farmers what we could expect. I know that it was a hot topic in 2025.

Michael Langemeier: Yes, cer certainly since the 2024 November election, trade policy has risen up to being the most important policy.

The charts we have this month don’t show data before 25 because we reworded the question and we don’t have the same choices. That we used to have, but I can talk a little bit about that. If you go back for before the ’24 election, climate policy, environmental policy, was, was more important and trade policy was less important.

So certainly, you know, since the ’24 election, trade policy overwhelmingly, is the po is the policy, that producers, are looking at, and maybe the most worried about

Joana Colussi: Yeah, especially if you’re given all the situation related to tariffs and Chinese markets.

Michael Langemeier: Yes, soybean producers, for example.

Joana Colussi: And we saw a lot of, impacts in the international market.

Michael Langemeier: Yes.

Joana Colussi: In South America, Brazil, and Argentina given all this situation.

So finally we ask producers whether they think things in the US today are generally headed in the right direction or in the wrong track. For the first time since July 2025, the share shoes in right directions fell below 60%. And for the first time more than 40% select wrong track. That’s, I would say a clear shift.

Michael, does this suggest that producer sentiment start to turn more negative in 2026 compared to 2025?

Michael Langemeier: I’m using these results to, to, talk about why the Index of Future Expectations is dropped. I, I think this question is really reflecting what I call that, that, view of the long run policy environment and, and they’re starting to lose a little bit of faith, if you will. That the current policies that that we’re using are actually going to, are actually gonna be beneficial to production agriculture. Having said that, it’s still, it’s still, about 58, 59% think we’re moving the right, right track. But just to put that in perspective, for most of 2025, that was 75%. And so that’s definitely a shift, in, in, in long term sentiment.

Joana Colussi: Yeah. And you are in February, so there are many things going on.

Michael Langemeier: Yes.

Joana Colussi: Long of this year. Yeah. In terms of trade policy.

So that covers the key highlights for this month survey. You can find the full report on our website, the links in the description below. Thanks so much for watching and don’t forget to like, follow, and subscribe to receive our reports and insights. We hope to see you again next month.