AgCast 215: Farm Sentiment Is Up… So Why Are Farmers Still Worried?

Audio Transcript:

[00:00:00] – Why Farmer Sentiment Is Rising (But Risks Are Growing)
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Joana Colussi: Welcome to Purdue Commercial AgCast. I am Joana Colussi, research assistant professor in Agriculture Economics, and I’m here with Michael Langemeier, professor and director of Purdue Center for Commercial Agriculture.

This is a special episode for us because we are recording the podcast for the first time from our office here at Purdue. We thought it would be a nice way to bring you a little closer to the place where we work every day.

Today we are breaking down the results of the March 2026, Purdue University- CME Group Ag Barometer. Every month we survey 400 farmers across the U.S. to learn more about how they are feeling about the farm economy. This month survey was conducted from March 16 to March 20.

But before you get start, be sure to like this video, subscribe to the channel, and turn on notifications so you don’t miss future episodes.

[00:01:09] March 2026 Ag Economy Barometer: Key Results Explained
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Joana Colussi: Let’s take a look at this month’s Ag Economy Barometer. The overall index rose 11 points from 116 in February to 127 in March.

Both the Index of Current Conditions and the Index of Future Expectations also moved higher. With the biggest jump coming in the Future Expectation Index up 14 points from the previous month. Even so, that index remains 12 points below, uh, last December’s reading and 16 points below its level in March of last year.

Overall though, we can say that U.S. farmer sentiment improved in March compared to the February. And that’s especially interesting because since then, uh, we have seen the outbreak of war with Iran. Which is affecting global markets, including fertilizer, uh, prices.

[00:02:10] What’s Driving Higher Farmer Sentiment Right Now?
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Joana Colussi: Michael, what do you think is behind that improvement now in March?

Michael Langemeier: Well, certainly the impact of higher energy prices and higher fertilizer prices had a negative impact on sentiment, but there was other factors going on here. And one of ’em that we didn’t talk about in the report, uh, that that’s obviously was going on is the bridge payments were going out.

Uh, and the bridge payments, uh, if you average those for corn, soybean par farm were about $35 per acre. And so they were rather sizable. And so that probably boosted sentiment.

But also if you look at, uh, uh, corn and soybean prices, particularly corn prices. Uh, corn prices were up. If you look at the time we surveyed in, in March compared to the time we surveyed in in February, and one of the interesting things about corn prices is it’s not perfectly correlated with energy prices, but it is positively correlated with energy prices and so and so because the energy prices went up.

Corn prices went up a little bit, and I think that off offset some of the negative, uh, the negativity, uh, regarding the higher energy and fertilizer prices. Another thing I think is important to point out is a lot of pro producers probably already had purchased their fertilizer. Uh, and so this isn’t gonna be quite as much impact for those people.

Uh, there is people that hadn’t. Uh, and then also I would think that, uh, uh, people that are going to do, uh, you know, do get put some of the fertilizer on in season. They probably hadn’t bought all of that.

And so I’m not saying the, the impact of the fertilizer prices is neutral, but it, it’s not as big as, as you might think, uh, because people had probably bought quite a bit of their fertilizer before the war started.

Joana Colussi: Do you have a idea how much percent of the farmers aready bought the fertilizers for in the coming season?

Michael Langemeier: I just read someplace it was about 80%. I don’t know how accurate that figure is.

Joana Colussi: Mm-hmm. That’s a good amount.

Michael Langemeier: Yeah, that’d be very high percentage.

Joana Colussi: Mm-hmm. And we continue to see more optimists, uh, on the livestock side.

Compared to crop production, only 31% of respondents expected good times for crop producers, while 63% expected good times for livestock producers.

[00:04:13] Why Farmers Are NOT Buying Equipment in 2026
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Joana Colussi: And now let’s turn to the Farm Capital Investment Index. That measure moved up three points this month reaching 53 points. However, only 4% of survey respondents indicated that they plan to increase farm machinery purchase in the upcoming year.

Michael, uh. Why are farmers still trying to avoid large investments, especially machinery?

Michael Langemeier: I, I think if you look at the net returns, particularly for crop producers, they’re, they’re very tight. Uh, and when you see relatively low net returns like this, uh, they have a tendency to cover owner withdrawals and principle payments before, uh, they purchase a machinery.

That’s just a natural. Way to, way to think about cash flow. Uh, and, and usually there’s not enough cash flow left over, uh, you know, to seriously consider, uh, buying, buying, uh, machinery in 2026. Uh, that was also the case in 2025. And so this index has been relatively low, uh, for the last 18 months. It’s, it’s been really, uh, it’s really been really, uh, arranging for about 50 to 60, uh, for the last 18 months.

Joana Colussi: And is there an expectation that the situation could change in a short term?

Michael Langemeier: It would take a substantially higher prices than what we’re seeing right now. Uh, it would probably, uh, if you look at something like the IFR and price distribution tool, which kind looks at the probability of prices, prices would probably have to be in that upper quartile.

Mm-hmm. There’s a probability, 25% chance of prices could be high enough that you’d see, uh, more interest in, in buying machinery.

Joana Colussi: Mm-hmm. And the cost production of the situation.

Michael Langemeier: Yeah. Obviously that that situation’s actually worse. Mm-hmm. Uh, you know, since the war and it wasn’t too good before that. And so break even prices increased a little bit.

[00:05:56] Input Costs Are Rising Again: Biggest Risk for Farmers
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Michael Langemeier: Uh, just to give you some example, some idea of the, of, of, of the magnitude, if somebody hadn’t bought their fertilizer, uh, and, and they were buying fertilizer. Buying quite a bit of their fertilizer, uh, under these new, new prices, uh, breakeven price for corn would be about 10 to 15, uh, cents per bushel higher.

Joana Colussi: Mm-hmm. Yeah. And that concern, uh, about cost production shows up very clearly in the response to the next question. Uh, looking ahead to the next year, what’s your biggest concern for your farming operation? The percentage of respondents who pointed to high input costs air their top concern increased from 40.

4% to 46% this month. Concern about input, availability also moved higher rising from 8% to 11%. Michael, we are red seeing fertilizer, uh, prices moving higher because of the war, which I, uh, which could direct. Production, production costs, we just talking about. Do you think these concerns are likely to grow in the months ahead?

We know that this question is tough because we don’t know what it will happen, but

Michael Langemeier: Yeah, if you look a year ago, the, the, the, uh, the biggest concern was input cost and it was about 40%. So it certainly has grown here. In the last, last few months, it was at 44% in February. So not exactly a small percentage, and then a further increase in March.

I think it’s gonna stay around that 40 to 45% for the foreseeable, foreseeable future. And this is true for even, even for livestock producers because, uh, if you know, for if you were a, a feeder producer or. Someone that finishes cattle, one of your big expenses, buying the, the cattle, buying the feeders, or buying the calves or buying the feeders.

And, and that’s included in, in aggregate input price indices. And so, uh, and so you’re, and so input costs are gonna, input, costs are gonna be concern for both crop and livestock producers moving forward.

Joana Colussi: Mm-hmm. So we can see some changes in this index. Yes. Mm-hmm.

[00:08:01] Inflation & Interest Rate Outlook: What Farmers Expect
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Joana Colussi: Uh, this month survey included questions about inflation and interest rate expectations.

Almost 40% of respondents expected inflation for consumers to be above 3%. When asked whether the US interest rate would be lower. About the same or higher 12 months from now. 34% of respondents indicated that the interest rates would be lower while 16% said interest rates would be higher.

Uh, Michael, it seems like farmers are still concerned about inflation, but at the same time expect interest rates to move lower. Uh, how do you read this results?

Michael Langemeier: I, I think we’re gonna continue to ask this question because this is kind of a moving target. I, I’ve heard, uh, I’ve heard information, um, uh, not necessarily coming outta the Fed, but those that watch the Fed.

Very carefully that they could reduce rates, but they could also increase rates because they’re looking at inflation very closely. That’s why we put both those questions in there this month. And so, uh, so we’re gonna continue to ask this because I, I do think you’re gonna, you’re gonna see, you’re gonna see some people on both ends of the spectrum.

You know, some people are gonna expect lower. That was kind of what we anticipated last year, uh, coming into 26. But there’s also gonna be that group, uh, that expect interest rates to be higher. And this is huge, not only because, uh, uh, it impacts operating costs, but it, it impacts asset prices. Uh, and so it’s, it’s, so it’s very important to, to ask this question and, and relate it to land values.

Joana Colussi: Mm-hmm. That’s another factor.

[00:09:36] Financial Risk Overtakes Marketing Risk (What It Means)
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Joana Colussi: So financial concerns were also clear in these questions. Uh, when we asked farmers which type of risk they see as the biggest treat to their operation, 33% pointed out financial risk followed by marketing risk and production risk. We have also other risks. Could you?

Michael Langemeier: Yeah. There’s also, uh. There’s also human resource or, or labor risk, legal risk and strategic risk. They tended to be 10% or below. And so the big three, which is typical, uh, financial marketing and production. Uh, but when we’ve asked this question in the past, marketing usually is the first. And so the fact that financials, uh, the first really, really is an indicator, again of, of how tight those margins are, particularly for the crop sector.

Joana Colussi: That’s true. Uh, and from time to time.

[00:10:25] Solar Leasing on Farmland: Growing Trend or Hype?
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Joana Colussi: The monthly survey includes questions about leasing, farm land for solar. Energy production. In this month survey, 12% of farmers said that they had talk about lease and farmland they own for solar development during the preview six months. Overall, 5% of respondents said that either they or one of their land landowners had signed a solar lease.

Michael, how should we analyze these numbers? Solar Lising becoming a more common part of the conversation in the farmland used in the us.

Michael Langemeier: Yeah, the one of the, we have a chart in the report that looks at the, looks at the percentage that, that, that talked to someone about solar leases going back all the way to early 24.

And, uh, a couple of those months it was close to 20%. Uh, close to 20% of the respondents had, had, had been approached by somebody, and that was before the 24 election. Uh, and so we are really trying to gauge here, at least that’s one of the things I was trying to gauge. Did that fall off the cliff? Uh, you know, in terms of the percentage that had been approached, uh, since the 20, since the 24 election and no, not really.

It, it’s still 12%, uh, it was 11% in, in January 25 and 12% this month. And so there’s still a lot of, a lot of people, uh, being approached by, by solar companies about the potential of, of leasing ground for solar. One of the things that was interesting. In the results this month, and, and we didn’t put this in the report, but uh, uh, we, we did ask the question about what was the rate, and we had a lot of different buckets.

It was all over the place. And so that’s one of the reasons I didn’t put in the report because it’s hard to figure out exactly what’s going on there. There was quite a few below 500. Uh, there was quite a few above 1250. There was about 30%. There were above 1,250, but, but, uh, it was a very, very wide, uh, wide, uh, difference between the, the high end and the low end in terms of those rates.

And I think way I interpret that. Is that probably these solar leases are, uh, people are being approached in these solar leases all over the corn belt and gray plains. And, and if you go into areas where the, where the cash rent’s not as high as what it is in Indiana, you don’t need to offer a thousand dollars because you compare it to the cash rent.

And so my guess, we didn’t ask this, but my guess is the lower rates are occurring in areas, uh, that have lower rent. Oh yes. Makes sense. The eastern, eastern corn belt here is, is where some of the higher rates mm-hmm. Are occurring. The rates over 1250, for example.

Joana Colussi: Mm-hmm. It’s kind of still a new market that’s developing.

So many things going on. Yes. They trying to adjust according to each situation. That’s different.

Michael Langemeier: But we, we, we’ll periodically ask that question at least once a year. We’ll try to get a gauge on what’s happening in the, uh, solar leasing.

Joana Colussi: To be able to compare.

Michael Langemeier: Yes.

Joana Colussi: Yeah.

[00:13:16] Farmland Values Outlook: Will Land Prices Keep Rising?
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Joana Colussi: So, and uh, turning to farmland values, the short term farmland value expectation index rose from 123 to 125 in March.

Marking its, uh, highest reading since May, 2025. The long-term index also moved higher this month, rising from 150 to 159. Respondents identify alternative investments, net farm income and interest rates as the three factors which the greatest influence on farmland values. I dunno if you have any additional comments in these results?

Michael Langemeier: Yes. We’re actually, we’re actually, I’m actually working on an article that’s comparing the characteristics and sediment for those that expect land values to go down in the next 12 months and those that expect land values to go up in the next 12 months. Uh, and there’s a couple things that are very interesting, uh, and, and we’ll put this out as an article on our, on our website after, after the, uh, the April 7th release.

Uh, and, uh, essentially. One of the things that’s happening is, is if the, uh, if you’re a livestock producer, you’re probably more optimistic about land values going up. That’s very, very clear. Mm-hmm. But not surprisingly, those that expect land values to go up are quite a bit more optimistic, particularly about the index of current conditions.

And that’s, and that’s leading them to think, well, you know, I’m. You know, the current conditions aren’t that bad. So, uh, and so land values are gonna go up in the next 12 months. If you look at the people that, that expect lower land values, they’re very concerned about input costs, more concerned about input costs than the, than than the other group.

Uh, but they’re also, but they’re also, uh, really worried about net farm income. Uh, they, they, they said NetForm income was the most important factor influencing, uh, land land. Land values in their area. And so there’s just a lot of difference among producers. Uh, but, uh, but because that index occurring conditions was a little stronger and that index of future expectations was a little stronger, I was not surprised to see, uh, an increase in the index, both the short term land value index and the long term value.

Uh, long-term land index, they tend to follow, uh, those two sub indices. Mm-hmm. Short term obviously following index of current conditions, long-term following that index of future expectations. Now it is, it is important to point out that the long-term, uh, index is down a little bit from what it was in December.

Uh, uh, but it, but it went up. It, it’s quite a bit higher than what it was both in January and February. And so, and so that leads me to believe, and we’re gonna get to this, that uh, people are a little bit more optimistic about the, uh, the current long-term policy environment.

Joana Colussi: Mm-hmm. That’s a good spoiler for this article, when to be, yeah.

Running. It’s in April. This article that you were writing? Yes, yes. Yeah. Nice.

[00:16:07] Are Farmers More Optimistic About the U.S. Economy?
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Joana Colussi: So, and, and as you have done in recent months, we ask at producers whether they believe the US is headed in the right direction or on the wrong. Track, uh, in March, 65% said that the country is headed in the right direction up from 59% in February.

Michael, would you say that this reinforced the improved sentiment we saw among producers in March?

Michael Langemeier: I when I saw the higher. Index of future expectations. I went right away to what happened to the long-term land values and what happened to this question. And they’re very consistent. You know, if you, if you, if you’re more confident about what’s going on five years from now, you’re gonna be more confident in where land values are heading and where the US is heading.

And so they’re all very consistent with one another. Uh, they, they all saw increases. They are.

Joana Colussi: Correlator connect in some

Michael Langemeier: way, and maybe that maybe those, you know, you have, we have to circle back to those bridge payments. Maybe those bridge payments, you know, really made a lot of difference. Not only short term, but long term, because it really did, it really did change how you, how they view land values when you, when you see a, when you see a, an influx of, of $35 per acre, uh, you know, you know, for, in terms of income for, for corn and soybean, uh, you know, uh, farm, that, that’s quite a bit.

Uh, and, and so maybe that’s also feeds into there somehow.

Joana Colussi: Yeah, we didn’t touch so much in the export Yes. Chart, but we also can see some impact from that. Yes. Because we know that in January and February happened some shipments to China.

Michael Langemeier: Yes. That’s certainly positive too. Yeah. And, and, and as I said at the beginning, I mean it.

It wasn’t just corn prices that were up, it was also soybean prices. Soybean prices weren’t up as much. But, uh, uh, just to give as a frame of reference here, uh, if you look at US cash prices for soybeans, they’re up 90 cents to a dollar per bushel since January. And, and, and you would think eventually that’s gonna have a positive impact on, on, on sediment and it has,

Joana Colussi: yeah, probably.

[00:18:10] Final Takeaways: What Farmers Should Watch Next
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Joana Colussi: Um, so those are the key highlights from this month’s survey. You can find the full report on our website and we, that we have included in the link and description below. Thanks for watching and be sure to like, follow and subscribe so you don’t miss future reports and videos from the Purdue Center for Commercial Agriculture.

We hope to see you again next month.