Farmer sentiment dips, but policy outlook stays positive

Farmer sentiment continues to weaken, as the Purdue University/CME Group Ag Economy Barometer declined again in July. The barometer fell 11 points to 135 from June, a reading that resulted from U.S. farmers’ weaker perceptions of both current conditions and future expectations.

The July Current Conditions Index dropped 17 points to 127 from last month, while the Future Expectations Index posted a smaller decline of 7 points to 139. Driving the weaker income prospects for 2025 were farmers’ assessment of current conditions.

Despite lower scores on the three principal farmer sentiment indices, sentiment remains notably higher than at the same time a year ago. Almost three-fourths of July’s survey respondents reported that U.S. policy is headed “in the right direction.” This month’s barometer survey took place from July 7-11.

The Farm Financial Performance Index reflected concerns about weak income prospects for 2025, falling 14 points from June to 90. This decline indicates that more farmers expect less income in 2025 compared to 2024. Weakening crop prices are eroding prospective income. The eastern Corn Belt, for example, has seen July bids for the fall harvest delivery of corn and soybeans fall 7 percent and 3 percent, respectively, compared to a month earlier. The decline in farmers’ income prospects contributed to a 7-point drop in July’s Farm Capital Investment Index to a reading of 53.

The Short-Term Farmland Value Expectations Index also softened in the wake of the weaker income outlook for next year, dropping 5 points from June. The latest reading of 115 also leaves the index 3 points lower than last year and 10 points below two years ago. The weakness in the farmland index stemmed from a small shift among respondents expecting rising instead of weakening values during the coming year. The percentage who expected values to hold steady, meanwhile, rose 1 point to 57 percent.

The July survey coincided with next year’s farmland leasing discussions between farms and landowners. A question regarding crop producers’ expectations for farmland cash rental rates revealed crop producers’ expectations for 2026 rates. Even with weakening crop income prospects, 73 percent of respondents said they expect cash rental rates to remain mostly unchanged. Only 11 percent of crop producers indicated that they foresee a rental-rate decline.

Producers’ expectations of the farm income safety net provided by U.S. farm programs may have helped support both farmland values and farmland cash rental rates. In the July survey, 31 percent of respondents said they expected a stronger safety net in the 2025 farm bill than the one in 2024.

More optimism prevailed among U.S. farmers about future agricultural trade prospects than in June. In July, 43 percent of respondents reported expectations for an increase in agricultural exports in the next five years, 2 points higher than the previous month. Similarly, fewer producers said they look for declining exports, dropping to 13 percent from 16 percent. Of those responding to a related question in July, 64 percent said they considered it likely that the next five years would open new foreign export markets to American agricultural goods.

Another question that gauged U.S. farmers’ outlook regarding trade and policy asked, “Would you say things in the U.S. today are generally headed in the right direction or on the wrong track?” The U.S. is “headed in the right direction,” according to 74 percent of respondents.

Producers held dim views of current conditions and future expectations, which weakened the sentiment of U.S. farmers in July. Still, producers showed somewhat more optimism about U.S. agricultural trade prospects in July, with the majority assessing that the U.S. policy is heading in the right direction.