U.S. farmers retain optimistic outlook for 2025 despite ag trade uncertainty

Rhea-AI Summary

U.S. farmers' sentiment improved in January 2025, with the Purdue University/CME Group Ag Economy Barometer rising 5 points to 141. The increase was driven by a 9-point growth in Current Conditions Index and a 3-point rise in Future Expectations Index, supported by higher crop prices. The Farm Financial Performance Index climbed 13 points, indicating expectations for a stronger 2025.

The Farm Capital Investment Index remained stable at 48, significantly above last summer's low. Farmland value expectations showed mixed results, with the short-term index rising to 115 while the long-term index declined to 150. However, concerns persist about agricultural trade, with 42% of producers identifying trade policy as their most important concern. Additionally, 18% of farmers anticipate larger operating loans in 2025, with 23% attributing this to carried-over debt from the previous year.

Positive

• Ag Economy Barometer increased 5 points to 141
• Corn and soybean prices rose 9% and 5% respectively
• Farm Financial Performance Index up 13 points
• Short-Term Farmland Value Expectations Index rose to 115

Negative

• 23% of farmers carrying over unpaid operating debt from previous year, up from 17%
• 40% of producers believe a trade war is likely or very likely
• Long-Term Farmland Value Expectations Index declined 5 points to 150
• Increased percentage of farmers requiring larger operating loans (18% vs 15% in 2024)

WEST LAFAYETTE, Ind., Feb. 4, 2025 /PRNewswire/ -- U.S. farmers began 2025 with an optimistic outlook, as the January Purdue University/CME Group Ag Economy Barometer rose 5 points from the previous month to a reading of 141. This increase was driven by a 9-point growth in the Current Conditions Index and a 3-point rise in the Future Expectations Index. The improvement in sentiment was linked to higher crop prices between December and mid-January and fewer producers citing crop and livestock prices as a top concern. For instance, Eastern Corn Belt prices for near-term delivery of corn and soybeans rose by 9% and 5%, respectively, during that period. While farmers' views of current conditions improved, optimism about the future remained even stronger, with the Future Expectations Index exceeding the Current Conditions Index by 47 points. This month's survey was conducted between Jan. 13-17.

The Farm Financial Performance Index climbed 13 points in January, reflecting a similar rise in the Current Conditions Index and indicating that producers, on average, anticipate 2025 will be a more robust financial year than 2024. Meanwhile, the Farm Capital Investment Index remained steady at a reading of 48, unchanged from December. Despite no change, the investment index remains significantly higher than last summer's low of 31 and represents the second-highest reading of the past three years. Producers' optimism about the future appears to support the stronger investment index, though it remains uncertain whether this optimism will lead to more farm machinery or new construction investments.

"The January survey reflects a notable sense of optimism among U.S. farmers, particularly regarding their expected financial performance in 2025," said Michael Langemeier, the barometer's principal investigator and director of Purdue University's Center for Commercial Agriculture. "Recent improvements in crop and livestock prices have provided a boost to farmers' current sentiment. Although farmers are optimistic about the future, there are some clouds on the horizon. For example, more farmers this month reported challenges in paying off operating loans compared to the last couple of years, and many producers are worried about the future of agricultural trade, with 40% of this month's respondents saying they think a trade war is either likely or very likely."

The Short-Term Farmland Value Expectations Index rose 5 points in January to a reading of 115, returning to its November level. Farmers' confidence in rising farmland values, which dipped late last summer amid weaker crop prices, has stabilized since October, with the index fluctuating between 110 and 120 in recent months. January's modest improvement reflects a higher percentage of producers expecting values to increase, coupled with fewer expecting values to remain unchanged. Meanwhile, the Long-Term Farmland Value Expectations Index, which gauges expectations for the next five years, declined 5 points to 150. Despite the dip, the long-term index remains 8 points above its 12-month low recorded last August.

The January barometer survey, which has annually included questions about farmers' operating loans for the upcoming year since 2020, revealed a slight increase in the percentage of producers anticipating larger loans this year — 18%, up from 15% in 2024. Among those expecting an increase, 23% attributed it to carrying over unpaid operating debt from the previous year, compared to 17% last year and just 5% two years ago. The shift reflects a decline in farm income, particularly crop income, over the past two years and could be an early signal of rising financial stress among producers.

Agricultural trade remains a top concern for U.S. farmers. In January, 42% of producers identified "trade policy" as the most important policy for their farm over the next five years, more than double the 17% who selected "crop insurance program." While there is still significant concern among U.S. farmers that a trade war could break out that negatively impacts U.S. ag exports, responses regarding worries about a potential trade war have eased slightly since December, with 40% of producers now believing a trade war is "likely" or "very likely," down from 48% the previous month. Meanwhile, the percentage of farmers who see a trade war as "unlikely" or "very unlikely" rose from 21% in December to 29% in January.

Interest in leasing farmland for solar energy production continues to grow. In January's survey, 11% of farmers reported discussing solar leases for their land within the last six months. Lease rates offered by solar energy companies in 2024 and 2025 were notably higher than in previous years, with 40% of respondents reporting offers of $1,250 per acre or more and 26% receiving offers of $1,500 per acre or more. Additionally, 54% of respondents noted that contracts included escalator clauses, most commonly ranging from 2% to 3% annually, though some reported escalators of 3% to 4% per year. Overall, 3% of survey respondents said either they or one of their landowners had signed a solar lease.

About the Purdue University Center for Commercial Agriculture

The Center for Commercial Agriculture was founded in 2011 to provide professional development and educational programs for farmers. Housed within Purdue University's Department of Agricultural Economics, the center's faculty and staff develop and execute research and educational programs that address the different needs of managing in today's business environment.

About CME Group

As the world's leading derivatives marketplace, CME Group enables clients to trade futures, options, cash and OTC markets, optimize portfolios, and analyze data — empowering market participants worldwide to efficiently manage risk and capture opportunities. CME Group exchanges offer the widest range of global benchmark products across all major asset classes based on interest rates, equity indexes, foreign exchange, energy, agricultural products and metals. The company offers futures and options on futures trading through the CME Globex platform, fixed income trading via BrokerTec and foreign exchange trading on the EBS platform. In addition, it operates one of the world's leading central counterparty clearing providers, CME Clearing.

CME Group, the Globe logo, CME, Chicago Mercantile Exchange, Globex, and E-mini are trademarks of Chicago Mercantile Exchange Inc. CBOT and Chicago Board of Trade are trademarks of Board of Trade of the City of Chicago, Inc. NYMEX, New York Mercantile Exchange and ClearPort are trademarks of New York Mercantile Exchange, Inc. COMEX is a trademark of Commodity Exchange, Inc. BrokerTec is a trademark of BrokerTec Americas LLC and EBS is a trademark of EBS Group LTD. The S&P 500 Index is a product of S&P Dow Jones Indices LLC ("S&P DJI"). "S&P®", "S&P 500®", "SPY®", "SPX®", US 500 and The 500 are trademarks of Standard & Poor's Financial Services LLC; Dow Jones®, DJIA® and Dow Jones Industrial Average are service and/or trademarks of Dow Jones Trademark Holdings LLC. These trademarks have been licensed for use by Chicago Mercantile Exchange Inc. Futures contracts based on the S&P 500 Index are not sponsored, endorsed, marketed, or promoted by S&P DJI, and S&P DJI makes no representation regarding the advisability of investing in such products. All other trademarks are the property of their respective owners.

About Purdue University

Purdue University is a public research university leading with excellence at scale. Ranked among top 10 public universities in the United States, Purdue discovers, disseminates and deploys knowledge with a quality and at a scale second to none. More than 107,000 students study at Purdue across multiple campuses, locations and modalities, including more than 58,000 at our main campus in West Lafayette and Indianapolis. Committed to affordability and accessibility, Purdue's main campus has frozen tuition 13 years in a row. See how Purdue never stops in the persistent pursuit of the next giant leap — including its comprehensive urban expansion, the Mitch Daniels School of Business, Purdue Computes and the One Health initiative — at https://www.purdue.edu/president/strategic-initiatives.

Author: Morgan French 
Source: Michael Langemeier, mlangeme@purdue.edu, 765-494-9557

CME-G 

 

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SOURCE CME Group

FAQ

What was the CME Group Ag Economy Barometer reading for January 2025?

The January 2025 Purdue University/CME Group Ag Economy Barometer rose 5 points from the previous month to a reading of 141.

How much did corn and soybean prices increase in the Eastern Corn Belt between December and mid-January 2025?

Eastern Corn Belt prices for near-term delivery of corn rose by 9% and soybeans increased by 5%.

What percentage of farmers expect larger operating loans in 2025 according to the CME survey?

18% of farmers anticipate larger operating loans in 2025, up from 15% in 2024.

How many farmers believe a trade war is likely according to the January 2025 CME survey?

40% of producers believe a trade war is likely or very likely, down from 48% in December.

What was the Farm Capital Investment Index reading in January 2025?

The Farm Capital Investment Index remained steady at 48, unchanged from December.