Farmer sentiment dipped for the third straight month in August, with the Purdue University/CME Group Ag Economy Barometer Index falling 10 points to 125. Producers expressed markedly less optimism about the future, as reflected in the Index of Future Expectations, which fell 16 points to 123. This marks the lowest reading for the future index since last September.

Producers’ perspective on current conditions changed little this month, as the Current Conditions Index rose 2 points from July to 129. Sentiment differed widely among producers according to whether their operations focused mainly on crops or livestock. Crop producers responded with much less optimism than their livestock counterparts, reflecting the profitability disparity between the two enterprises. Beef cattle operations are experiencing record profitability as the smallest cattle inventory since 1951 has pushed cattle prices to record levels. This stands in sharp contrast to returns for crop production, which have weakened in 2025. The August barometer survey took place from Aug. 11-15, 2025.

Farmers again reported weak financial expectations for their farms in the coming year. As in July, the Farm Financial Performance Index remained below 100. The reading of 91 barely changed from July’s index value. Crop prices that stand below the cost of production for many farms help explain why more farmers expect weaker incomes for the coming year. The USDA released its August Crop Production and World Agricultural Supply and Demand Estimates reports during the week the August survey was conducted. The USDA forecasted a 2025-26 season average corn price of $3.90 per bushel and a soybean price of $10.10 per bushel. Both estimates fall well below estimated break-even levels for U.S. farmers. Despite the weak income outlook, the Farm Capital Investment Index improved 8 points from July to 61. Livestock producers had a notably more optimistic outlook in August than crop producers, which helped push the index higher.

The Short-Term Farmland Value Expectations Index reading of 112 dropped 3 points from July, continuing a three-month trend. Even so, the index remains above 100. This indicates that more farmers still expect rising values in the coming year than those who consider declining values as more likely. This perspective is similarly held by three-fourths of crop producers, who said in the August survey that they expect farmland cash rental rates in 2026 to remain unchanged from 2025. Only 12 percent of respondents said they expect lower rates next year.

Every January, the Ag Economy Barometer survey includes two questions about farmers’ expectations about the size of their farm’s operating loan for the coming year and the reasons for a change in operating loan size. Given the concerns about weak farm income in 2025, the two questions about operating loans were added to the August barometer survey. Twenty-two percent of August’s respondents said they expect their 2026 operating loan to be larger than in 2025. This was up from January, when 18 percent of respondents said they expected their 2025 loan size to increase compared to 2024.

A follow-up question to farmers who said they expected their operating loan size to increase asked for the reason behind the larger loan. Twenty-three percent of those farmers in the August survey said it was because they expected to carry over the unpaid operating debt from 2025 to 2026. The responses to these questions suggest that farmers’ financial stress increased from January to August. Financial stress appears to be noticeably higher than it was in January 2023, when only 5 percent of farmers with larger operating loans attributed that to the need to carry over unpaid operating debt. That number rose to 17 percent in January 2024 – still lower than this year.

In sum, the August Ag Economy Barometer survey results show that U.S. farmers generally expect their financial performance for the coming year to drop from the previous year. Despite a weakening Short-Term Farmland Value Expectations Index in August, more farmers still expect farmland values to rise rather than to weaken. Lastly, the percentage of farmers citing expectations for rising operating debt because of unpaid operating debt carrying over from the previous year could signal increasing farm financial stress in production agriculture.